As we prepare to enter the second half of 2020 and attempt to reopen the economy after its global prophylactic shutdown in response to the COVID-19 pandemic, manufacturers across the globe are currently confronting grave challenges to their supply chains and operating models.

Industries such as automobile, semiconductors, electronics, heavy metals and machine manufacturing are facing severe obstacles to source raw materials as well as to bring back their workforces in a safe and socially distanced way.  The National Association of Manufacturers is forecasting supply chain disruption well into the reopening, as it takes time for raw material production to ramp back up, and there are considerable uncertainties around bringing back a workforce in a socially distanced and safe environment.

While efforts to implement digital transformation strategies may be deferred in some cases, manufacturers should instead consider accelerating their investment into advanced technologies to enable remote capabilities in operations, process automation, industrial robots, predictive maintenance and machinery inspection, and autonomous materials movement. As we reopen and until we have a cure and a vaccine to combat the COVID-19 coronavirus pandemic, manufacturers will need to operate with reduced worker density throughout their operations. Investment in automation could enable companies to recover faster and reduce dependencies on physical process handling. While investment in automation will certainly experience some slowdown due to the pandemic, the sector holds considerable potential to lead us out of the economic crisis towards a sound recovery.


What is automation?

American economist and social theorist Jeremy Rifkin gave us the seminal definition of “automation” or automatic control as the use of various control systems for operating equipment with minimal or reduced human intervention.  Twenty years ago, the concept conjured up pictures of advanced manufacturing plants full of robotics. While still a valid example, technology innovation in the field of automation has yielded potential applications that far exceed our collective historical imagination.

What do robotics factories and other examples of advanced automation mean for the human workforce? New jobs and employee success, among other factors. Present in modern businesses small and large, automation ranges from subtle features in standard software applications to trendier implementations, such as autonomous vehicles. While there is much back and forth about where workplace automation will lead our economy, one thing many agree upon is that the trajectory is accelerating, pandemic or not.

Right now, we are experiencing an era of disruption led by new, advanced technology that promises us a future of expansive connectivity which could realize incredible business opportunities across the globe. These new technologies will likely drive substantial change in existing industries while concurrently launching new enterprises.

“To thrive in the face of accelerating change, leaders must embrace opportunities presented by hyper automation. These emerging technologies and other new tools offer potential quantum leaps in efficiency. Decisions affecting digital architecture and the DNA of an organization must never be viewed in isolation, but rather planned for during proactive business transformation initiatives.” –Sameer Somal, CEO, Blue Ocean Global Technology.

Enter the Fourth Industrial Revolution

Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, has just authored a book entitled The Fourth Industrial Revolution, which he defines as a fundamental change to the way we live, work and relate to one anotherIn the Fourth Industrial Revolution, we will see emerging megatrends driven by digital connectivity and automation. Technologies like artificial intelligence (AI), advanced robotics, autonomous vehicles, virtual and augmented reality, 3D printing, and the IoT are already changing the way we live. The immense power of these technologies offers new opportunities for people, businesses, and governments alike.


But, just as with any wave of transformation, this revolution also brings a challenge: What does advanced automation mean for the human workforce? Will people lose jobs to technology? In the last few years, we shared concerns about the impact of automation on our roles in the future and the number of jobs that could be replaced by tech. Throw in our current COVID-19 pandemic, and it’s understandable how employees might be concerned about the future of our economy.

Here are some ways automation can create new jobs and empower employees:

– Automation thrives on tedium

These days, the reality is that bored employees are more likely to leave. Boredom can lead to fatigue and, in fact, according to a recent article, fatigued employees are two times as likely to leave than those who are not fatigued, which affects business performance and costs.

This is where automation applications can be an effective evolution insofar as they enable the handling of elementary as well as complex, complicated processes across enterprise IT environments. When implemented, employees can take on more exciting and challenging work that helps grow their careers as well as the business, ultimately keeping them engaged. This technology also allows employers to redeploy those employees to perform higher-value work, while it reduces errors, and adds to the bottom line of the business.

– Automation supports employee success.

Automation has proved to drastically reduce expensive errors, which, in turn, translates into significantly lower risks and trust with customers. Using automation to increase productivity allows companies to grow exponentially.

Regardless of the application, it is essential to understand that digital transformation is as much about people as it is about technology. Globally, 79 percent of CEOs say the future of their organizations is threatened by a lack of skilled workers currently in their employ, according to PwC. As for employees, the two main reasons they offer for being bored at work are the lack of opportunity to learn new skills (46 percent) and unchallenging work that doesn’t use their education (44 percent). The truth is that employees are empowered to take on more responsibility to grow their careers and be successful when automation is successfully put into play.

– Automation is creating new roles

Now, more than ever before, new skilling programs are integral to the success of the business. Automation, emerging technologies, and digital transformation are creating brand new jobs that will require employees to learn new skill sets. We may not yet even have a clear view of what kinds of new skills are and will be needed. A recent survey from Capgemini and LinkedIn says that over half of organizations are facing a shortage of digital talent right now, and it is affecting competitiveness and digital transformation enormously.

– Implementing automation successfully

Following a survey of publications on automation implementation, following is a synthesis of the research that lays out the key steps you can take to begin your company’s automation program:

  1. Identify manual tasks throughout the organization
  2. Decide where to start by determining where automation can provide the most benefit
  3. Design the solution to achieve the benefits of the highest-priority projects first
  4. Install the software and build automated workflows
  5. Run the software and workflow in a test environment to get the hang of things before pushing it into production

In these unprecedented times, the right automation program can improve employee engagement by eliminating redundant tasks, increase recognition by providing a way for employees to contribute to the company’s growth, and offer employees a path for career growth.

Investment trends in automation

According to a recent PitchBook-NVCA Venture Monitor report, venture capital firms invested $34.2 billion globally across 2,298 deals in Q1 2020. Corporate VCs participated in nearly 30% of all deals, the highest rate to date.  Meanwhile, venture funds raised $21 billion across 62 investment vehicles. “There is ample dry powder in the market ready to be put to work in promising startups,” PitchBook and NVCA say.  Late-stage median deal sizes are dropping, but early-stage valuations are still growing.  “The IPO market has rapidly fizzled out, and it’s possible that the M&A market could see hits as well,” the report suggests.

According to a recent report from Meticulous Research, the automation market is expected to grow at a compound annual growth rate of of 41.2% from 2020 to 2027 to reach $18.8 billion by 2027.  Venture capital firms and corporate venturing groups will likely continue to devote an increasing amount of investment dollars into automation to capture those returns and lead us out of the economic crisis.

The road ahead

Opportunities to automate common workplace processes are all around us and becoming a common element of every business. As the technology continues it improve, more tasks will become available for automation. It seems clear we have only seen the beginning of this in our workplaces.

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Louis Lehot
Louis Lehot is a partner and business lawyer with Foley & Lardner LLP, based in the firm’s Silicon Valley, San Francisco and Los Angeles offices, where he is a member of the Private Equity & Venture Capital, M&A and Transactions Practices and the Technology, Health Care, and Energy Industry Teams. Louis focuses his practice on advising entrepreneurs and their management teams, investors and financial advisors at all stages of growth, from garage to global. Louis especially enjoys being able to help his clients achieve hyper-growth, go public and to successfully obtain optimal liquidity events. Prior to joining Foley, Louis was the founder of a Silicon Valley boutique law firm called L2 Counsel.


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