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Management

Cutting-edge retail experiences highlight the importance of humans over robots

Managers should treat employees as real human beings who can add more value to business than any automation

PUBLISHED : Friday, 06 January, 2017, 4:31pm
UPDATED : Friday, 06 January, 2017, 9:09pm

Ever since Amazon.com debuted a grocery store without a checkout line, the world has been forced to ponder a jobless future. Located in the company’s home town, Seattle, Amazon Go looks every bit like a 7-Eleven, selling bread, milk, and cheese as well as pre-made snacks and fresh meals, except there are no cashiers or checkout lines. You walk in, pick up what you want, and walk right out. All purchases are charged automatically. It is one-click ordering, brick-and-mortar style.

The “just walk out” shopping is indeed backed by some real technologies. An Amazon patent filed in 2014 reveals just how shoppers are tracked and items counted via the extensive camera system – much like the driverless cars made by Tesla or Google that are capable of navigating busy streets. Combined with embedded sensors, machine learning, and artificial intelligence, the Amazon Go system is so nuanced that it can distinguish between two people reaching for the same item based on individual skin tones.

But it is exactly the sophistication of such a system that makes many observers squirm. “We are just seeing the tip of the iceberg. No office job is safe,” declares Sebastian Thrun, an artificial intelligence professor at Stanford known for his work on self-driving cars.

Already, machines are used to predict how we click, buy, or lie; companies have automated how they send mail, make calls, offer discounts, recommend products, show advertisements, inspect for flaws, and approve loans.

When IBM Watson beat former champions Ken Jennings and Brad Rutter on the game show Jeopardy! in February 2011, Jennings, who came in second, reflected, “Just as factory jobs were eliminated in the 20th century by new assembly line robots, Brad and I were the first knowledge-industry workers put out of work by the new generation of ‘thinking’ machines.”

As in all cases of displacement, however, it is the poorest and lowest of the population who are most unfairly vulnerable. According to the Bureau of Labor Statistics, cashiers remain the second-largest occupation, with 3.5 million employed in the United States. What Amazon Go is attempting may set a precedent for Walmart and Best Buy to follow in years to come.

This is why big tech companies must now go beyond their founding motto of “Move fast and break things.” To do no evil would require them to take into account the full implications of their own creations. After all, the chieftain of Silicon Valley, Apple, has already pointed out an alternate future in which retailing can be run profitably with real people in the age of smart machines.

Apple’s retail stores – with their airy interiors, winding staircases, and sharp-framed modern furniture – are known as a mecca for its fan base. Apple stores routinely top the list of highest earners per square foot. In 2012, Tiffany (US$3,000 per square foot) came in a distant second after Apple (US$6,000 per square foot).

With more than 30,000 staff members working at the retail branch network, a top Apple sales person can move as much as US$3 million worth of merchandise per year. “These are sales rates for a consulting company,” said Horace Dediu, an analyst who has blogged about the calculation for Asymco. Yet Apple employees’ salaries are not driven by commission. Employees are offered healthcare insurance and stock options, benefits that would seem unthinkable at a time when Walmart is sticking to minimum wage.

Evidence of cutting-edge retailing experience is everywhere in Apple stores, from their use of roving credit-card swipers to their petting-zoo layouts, which encourage customers to test drive products. But none have taken human staffers out of the scene. In fact, the dramatic makeover Apple is about to undergo is meant precisely to play up its human dimension. “We are reinventing the role our stores and employees play in the community,” retail chief Angela Ahrendts explains. “We want to be more like a town square, like a gathering place.”

Apple employees do display a fair dose of real empathy. One employee reportedly saw a woman in tears, obviously upset at having dropped her phone in the water earlier. It wasn’t that her phone couldn’t be replaced under warranty; it was that she had lost the last voice message from her son, who had died in a car accident. His final words, “I love you, Mom,” now had to be saved.

What the employee working at the genius bar did next was truly ingenious. He carefully took out the motherboard and transplanted it into another phone, then retrieved the voicemail and saved it as an audio file so as to avoid losing it in the future. Imagine the level of customer loyalty this single employee was able to generate.

Intentionally or not, staff members are empowered to be helpful, disregarding the cost incurred as a result. Much as Japanese companies did during the quality movement two decades ago, Apple expects every employee to contribute his or her own thinking to resolve issues at hand.

What this all means, of course, is that the role of sales is fast changing. Companies can either treat their employees as substitutable commodities, paying them minimum wage and getting rid of them the moment automation becomes possible, or see employees as real human beings with the potential to add more value than any automation could.

Last year, Wegmans, the century-old family-owned grocery chain, was named the best supermarket in America by a survey conducted by Fortune. It also ranked fourth in 2016 Best Companies to Work, trending only behind Google and the Boston Consulting Group. Wegmans’s secret? “Its focus on employee training to ensure customers have the best experience has been a winning strategy that creates superfans eager for a new location to open near their home,” Market Force Information writes.

It turns out whether to unleash human potential or to automate every single job is in fact a managerial choice. There is no clear evidence to suggest any definitive advantage of one over the other. And that tension might well be the biggest consideration for all business executives in 2017.

Howard Yu is professor of strategy and innovation at IMD Business School in Switzerland

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