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Apr 16, 201912:51 PMExit Stage Right

with Martha Sullivan

Is artificial intelligence the right solution for you?

(page 1 of 2)

Everywhere we go, we are all hearing the same thing: Finding and keeping employees is a bear. No community, industry, or company is immune. The problem is vexing, persistent, and like one of Harry Potter’s dementors, sucks the very life out of us as managers, owners, and co-workers.

It’s little wonder that many companies are rushing to automate many of their tasks. In a recent report from the Brookings Institution, approximately one quarter of all jobs in America are at risk of automation. For the employee, this is a significant threat, especially for those who are low skilled. For the employer, this presents both opportunity and the need for investment. Office, production, transportation, and food preparation are the largest sectors in sight of automation due to the routine, physical labor, or information collection/processing nature of the tasks involved, though the findings recognize that almost all occupations will be affected by technological change and artificial intelligence.

However, geographic differences exist in the reported data. For example, the research indicates that 44 percent of the tasks performed in jobs in Madison are susceptible to automation relative to all the 406,690 metro-area jobs held. Just an hour east, the risks are higher. The Greater Milwaukee area’s 865,040 jobs are at 45.5 percent risk. Each community’s job composition profile drives the risk.

Those jobs that are more “secure” from being replaced by automation include professional and technical roles that have higher educational requirements and those low-paying jobs in personal care and domestic service. These roles demand more non-routine activities that may be more abstract and/or require higher degrees of social and emotional intelligence than the average robot can muster.

The implications of the study are important for an entrepreneur and business owner to wrap their minds around. The opportunities for efficiency gains and lower human resources challenges are appealing. In some industries, such as restaurants and bars, it may become mandatory where annual turnover runs over 70 percent. Automation reduces the risk faced in labor shortages, providing more reliable service and product delivery to customers. The return on that investment impacts profitability and the value of the company in the long run.

However, automation initiatives are not for the faint hearted. It’s an investment that may have longer-term payback horizons, but not short-term paybacks. Automation projects demand considerable research, evaluation, implementation (process mapping, data conversion, testing, etc.), and training, all of which take time — one of our most precious resources. They require plenty of our other most precious resources: money. The payback period depends on how proven the technology is, its ease in implementation, and in-house acceptance. How will our customers accept it? Are the automation tools off the shelf or are you creating your own? Has the market settled in on the pricing for the technology? Early adopters tend to pay a higher price, but they are also the early adopters, so they have the potential to reap the rewards of being first to market.

All business owners face crucial questions considering automation: Do I want to make the investment? Can I afford to make it? To not make it? How patient is my capital? The stakes are high.

(Continued)

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About This Blog

Spending half her career as an advisor to privately-held and family businesses and the other half in CFO/COO roles, Martha Sullivan is a partner and the succession planning practice leader in the business transition strategies group at Honkamp, Krueger & Co., P.C. She and her team have extensive experience assisting business owners achieve their personal, business, and transition goals. “Don’t think of the 'exit' from your business like it’s a four-letter word. Make it your next adventure!”

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