I’m a technologist. I believe that technology can empower companies to do better work, make better products, but people and companies do shoot themselves in the foot more often than they should, so everyone should consider the full costs to their companies and to society when making their decisions.
When making a case for any change or marketing in business, especially at public companies, one tool, and a powerful one at that, is a return-on-investment (ROI) calculation. If you’re not familiar, it’s creating all the categories of costs for before and after purchase scenarios. If you save money fast enough after purchase, and it pays itself back in a reasonable period, usually 3 years or less, it’s worth it.
It’s debatable how accurate ROI analyses actually are. They are developed by humans, so they aren’t infallible.
As an example, a company may choose to implement automation systems that replace human labor. It seems like a simple calculation. The cost of the human labor today vs. the cost of the machinery, the operating costs, the maintenance costs of tomorrow, which is cheaper?
Here’s two more items that can be put in the list to make the comparison more fair:
Humans are adaptable creatures. If the marketplace shifts, we need a new reorganization, they can do it at costs probably limited to training time. Automation equipment can be redesigned, reprogrammed, rebuilt, but there is a lot of effort and cost to that. Evaluate costs carefully.
Killing your own market. Henry Ford famously paid high wages for workers. It created demand for his products. Henry Ford is quoted often by executives, but they often ignore his quote, “There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.” Henry Ford understood well-paid employees had money to make purchases like automobiles and that puts money into the economy, and money in the economy floats to people like Henry Ford naturally when that happens. Large corporations are the end-points of consumer dollars. If you make a local, regional or national product and you are a major employer in that locale, region, or nation, if you automate jobs, you may collect more money the first year, but after that, the chain of job loss in your locale, region, or nation can kill demand for your product, all of a sudden those numbers in the ROI calculation are no longer holding true, how do you build this in your model?
Beginning the process of automation can make hiring more difficult. Once people see that the end goal is an automated operation, they don’t see a long-term option. They see uncertainty. Most people try to avoid that. How are you accounting for increased recruiting costs?
Perhaps in the future, executives will consider these points and also consider what would happen if every time they calculated an ROI, they took 50% of the return and asked how they can distribute that to their employees? That 50% will come back. We’re in a system. Increased spending leads to more increased spending, decreased spending leads to more decreased spending. It’s time to recognize this, and be a part of the system for companies own benefit. You can be greedy and be generous at the same time.
P.S. I should turn this into a letter and send it to Fortune 500 executives.