Recently, McKinsey released a report that, depending on your perspective as man or machine, paints a potentially worrisome view of the future. Based on a mind-numbingly detailed analysis of all of the tasks conducted in the global economy, McKinsey estimates that nearly 50% of the activities done today have the potential to be automated based on currently demonstrated technologies in robotics, machine learning, and artificial intelligence. This represents $8 trillion of wages collected by 1.1 billion people globally, and while the study suggested that less than 5% of today’s jobs could be fully automated such that humans are entirely replaced by robots, more than 60% of jobs could see at least 30% of their underlying tasks done more efficiently by machines.
We are already seeing examples that cut across all areas of the economy. Smart warehouses and factories where robots supplement humans, driverless cars threatening legions of Uber drivers – who didn’t even exist themselves five years ago, intelligent chatbots augmenting customer service representatives, a life insurance company in Japan replacing claims adjusters with the algorithms of IBM Watson, and even robot baristas. As investors and entrepreneurs, the technologies enabling this age of automation – machine learning, artificial intelligence, cloud computing, robotics – offer tremendous potential. McKinsey estimates that automation could add more than 1% to global GDP growth as a result of productivity gains. At the same time, a reallocation of how work gets done will create winners and losers in the short term; estimates by McKinsey and the World Economic Forum estimate that somewhere between 5 million and 7 million jobs have already been lost to labor market changes resulting from automation. Managing through the transition imagined by the McKinsey study and the WEF has profound social and political implications that I will actively avoid addressing – those are important debates for other forums.
Instead, I want to highlight some of the ways that technology has already begun to influence what Innovate+Educate and Whiteboard Advisors have described as the education to employment pathway, which requires re-imagination to better fit the unprecedented pace of change and innovation associated with this age of automation. The World Economic Forum estimates that 65% of children entering primary school today will end up working in completely new job types that don’t currently exist, while one third of the skill sets required for jobs today could be completely reinvented in the next five years. The current educational system, with a primary emphasis on a massive up-front investment into a bachelors degree, is poorly equipped to help learners constantly refresh their skill base, which is reflected in surveys such as a 2015 Gallup study that suggested only 11% of business leaders feel that college graduates have the skills necessary to succeed in the workplace or just 44% of students report that their post-secondary education prepared them for the workforce. At the same time, corporations have dramatically reduced their investment in formal training programs (despite spending more than $130B on corporate learning in 2013, according to Bersin by Deloitte), with one study in the UK finding that the average hours of training per week fell by 50% between 1997 and 2009, as reported by the Economist, while another by the Bureau of Labor Statistics reported that the number of hours of training received by young employees fell from 100 hours in 1979 to 11 in 1995. These factors have combined to create a perceived “skills gap,” with 40% of employers in the US reporting that they have positions they are unable to fill while there were more than 4 million open job postings during the height of the great recession when more than 11 million people were unemployed. While several researchers have questioned the existence of the skills gap based on macro level data, very real issues exist at the micro level in certain pockets of the economy. To take one example, approximately 50,000 open job specs in the US asked for a specific cyber security certificate, yet just 65,000 people in the US hold such a certificate, and it take at least five years of experience for someone to earn one.
Innovators on both sides of the education to employment pathway have begun to recognize this disconnect between the skills employers require and the capabilities of the workforce. Innovate+Educate, in their report Shift Happens, highlights a need for solutions across four primary areas. First, how skills and competencies are developed by both educational institutions and employers. Second, how this new content is most effectively delivered. Third, how employers can use data and people analytics to better understand the skills required for the future and create feedback loops to the educational system. And finally, how to create a more efficient process for matching an individual’s skills and competencies with job requirements that move beyond previous experience and a college degree. Technology sits at the core of this re-imagination of the education to employment pathway, and in the remainder of this series of blog posts, I’ll highlight a few interesting companies and approaches across each of the dimensions.