Automation and What the Future Holds

I recently saw a great short film by CGP Grey that touches on the potential impacts of automation on employment.  I also saw a rather heated exchange over on LinkedIn this week disparaging a company’s “valuation software” as a useless “Artificial Intelligence.”

This got me thinking on two items: What’s the future of the business valuation world look like, and more broadly, how are valuations impacted by large scale automation?


It Cannot Be Automated. (Yes, It Can Be)

So like the gentleman in the LinkedIn exchange above, the knee jerk reaction of the establishment is often “there is no way you can automate {insert profession here}.”  After all, can you imagine software taking over the eloquent nature of the slide rule?  Or how on earth could a computer program substitute for typing out words on a typewriter and then ordering pages by hand?  Or laying out a newspaper for that matter?  Heck, there certainly is no way that you could build a car with all those fancy welds with a robot.

You get the point. Let’s just all agree that the robots are coming and that we better just deal with it.  So now what?


What’s In Danger?

The film (see below) referenced a dataset on industry participants by job type.  We did our best to hunt these down these data points (ours are a but different – we pulled from the Bureau of Labor Statistics).


Impact on Value

Our feeling is that in many cases, the impact on value isn’t directly tied to automation of a field.  Instead the key is held in how participants cope with automation.  Are you sitting around downplaying the ability to automate your job?  Your company?  Good chance that you are going to be left behind.  Is the fundamental nature of your field such that every action is one-off in nature?  You’re probably safe for the time being.

Like we’ve seen across many industries, just as valuation multiples vary across industry verticals, valuations are also relative to your position within the industry.  You’re ability to segment from peers and pull away from the pack will always drive a premium on valuation.


Action Items

action_items_smallIf you are like us, your not sitting on your thumbs waiting for the world to pass you by.  An excellent thought exercise (or topic for an offsite) is the detail out what might be automated in your field or even inside your current company.  Disregarding technical ability for a moment, if you had the budget what would you automate?  Where could you save time and man-hours?  Look at your industry leaders.  Where are they saving cost?  And allocating development budgets?

With that baseline in hand… its time to go allocate budget and make some changes.  That’s what we are doing here – everyday.




The BackStory

If you have some time watch the film that got us started down this path… well done! View Humans Need Not Apply

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