Robotics are starting to transform the industries. In an interview, Xavier Lhuer, a principal associate in McKinsey’s London, speaks with Leslie Willcocks, a technology, work and globalization teacher in the London School of Economics, about his works on the RPA issue and its effects on work and how companies can take advantage of RPA strategically and financially.
McKinsey : Can you start by defining the RPA (Robotic Process Automation) ?
Leslie Willcoks : The RPA removes systematic process tasks to focus your resources on exceptions, where the human is still indispensable. Every worker involved in back-office processes has to perform a lot of repetitive and boring tasks. The RPA is similar to a software that replicates human activity and takes in charge some steps of the process. It can do these actions more quickly and precisely than humans and at any time of the day. Its use allows employees to free time and focus on their missions with real value added.
Softwares are very light in the sense they do not require a lot of development to be operational. Operational employees can learn very quickly how to configure and use the robot. It is also light because it only uses the information system. It does not interact with underlying systems such as logical systems.
McKinsey : To what extent does RPA differ from cognitive intelligence ?
Leslie Willcocks : RPA deals with simpler tasks. It mainly supports actions that do not require any particular knowledge, understanding or perception. These are the actions that can be performed by introducing simple rules the computer will be able to follow.
With the cognitive intelligence, you impinge on the knowledge base of a human being and on other attributes unique to mans beyond the mere ability to do things. Cognitive automation can deal with language, reasoning and judgment through contextualization. It can establish the meaning of things and give a special perception.
Thus, there is a big difference between both.
In addition, whereas RPA is an advanced technology, this is not the case for cognitive automation. I did not see a wave of powerful tools of cognitive automation appear on the market and few companies use it.
McKinsey : What are the benefits of using RPA?
Leslie Willcocks : The main benefice we found among the 16 surveys we did is a return on investment which varies between 30 and 200 percent the first year.
But it would be wrong to focus only on short-term financial gains, especially if they are due to a saving of working time. This approach does not reflect the power of the software as the benefits are numerous.
For example, companies evolving in highly regulated industries such as banking or insurance show that automation is a cheaper and quicker way to resolve compliance issues. You also improve your customer service because you have more control over the process. A company that receives a lot of customer demands, for example, can enable its team to focus only on the more complex ones.
There are also benefits for employees. In every case we studied, employees thank the technology because they hate the tasks that are henceforth taken in charge by the computer. It relieves them of some work pressure. Every organisation that we studied reports that the robot intervenes on large workloads. I think there will be an exponential creation of work to align with the exponential growth of data (50% more each year). There is also a significant increase of the bureaucracy. We need automation just to relieve the stress accumulated by the companies. An e-commerce website measured the success of the RPA according to the number of hours which could have been reallocated to the business. Thus, it is not just shareholders, senior managers and customers who will benefit, but also employees.
McKinsey : What are the most important considerations for those who want to adopt the RPA?
Leslie Willcocks : The most important consideration is the strategy. You can use automation intelligently to decrease your costs. But if you use the RPA as a considerable strategic tool you will benefit much more from it.
The second consideration concerns the launch. You need to have all the managers involved and a very competent project manager to implement the right processes. The project must be stable, mature, optimized, normed, repeatable and used with large volumes. Start with a control test on a difficult part of the process.
The third consideration is to adapt management by integrating automation. This is the key to the launch.
The fourth is to build a company able to use RPA for a long time. By using RPA as much as possible, you will build centers of excellence over time that will be the source of new techniques and processes for your development.These centers are at the origin of employees which will configure robots, install and develop them. They are also the origin of people who will turn those robots on and off, who will planify their actions and their relation with the Human.There is continuous innovation in IT, governance and security services. Organizations committing to RPA must immediately think about building a center of excellence.
McKinsey : How does a company choose to implement a RPA solution or an IT solution? And how do these departments interact?
Leslie Willcocks : When an organisation considers a test phase for the RPA, it looks at the customer case and compares it to a computer science solution. It is often the advantage of RPA. In an organisation we studied, the ROI due to the RPA was 200% the first year and the solution had been implemented 3 months. The IT solution had the same ROI but with a repayment term of 3 years and a setup which lasted 9 months.
In addition, many operational managers find that the implementation of a computer solution is too time-consuming. They prefer something lighter and more adaptable. So, a useful, inexpensive RPA solution that does not require special computer skills to install it is a walk in the park for a business. IT departments are worried because they know the disruptive nature of RPA. Nevertheless, it is necessary to convince them from the beginning of the process.
McKinsey : What do you think will be the most visible effect of RPA in the long run?
Leslie Willcocks : In the long run, RPA means that people will have a more interesting job. For 130 years, we have created unskilled, repetitive and boring jobs. Not all jobs will disappear, but only the least interesting for the human. It will be disruptive but companies should be able to absorb this change. The relationship between technology and people must change in the future for the best, and I think that RPA is one of the key tools actor of this change.
The young talents, a central issue
Let me show you that innovation gets rid of the bad bosses ! As you already know, we are facing a fierce battle for the young talents. Where do the new generations want to work ? In general, they want to work in the major banks, in the cosmetics major groups… But the digital start-ups are accelerating the destruction of the major firms, as specified in the first part of the article, by the roots, recruiting the best talents.
Currently, the major Europeans companies do their utmost to try to reinvent themselves. They started to get rid of the tie wearing, remove the leaders’ privileges. They also deleted several positions. You certainly know this ranking which pompously publishes the presentations of the companies and chooses “the 10 most coveted companies where everybody wants to work in”. It could look like this ranking, don’t you think?
The entrepreneurship, more than a passing fad
A London interim agency stated that 50% of the under-30 year olds want to leave the company where they are working. This agency offers jobs which bring a feeling of gratitude for those who apply. It also helps the young talents start their own business. We often talk about entrepreneurship, which seems to be a trend, a solution to the crisis. But the willingness to undertake a project is a significant aspect that the digitalization accelerates too.
A study from Telefonica about the Y generation states that 1 young person out of 10 in Spain, in Europe, or in the USA, could turn to entrepreneurship in the 10 next years. However, in several countries such as Colombia, only 1 young person out of 4 will undertake in these 10 next years. This shows the changes in vision that there may have been in the most developed economies.
Give a meaning to your job
This transformation in the ambition of our young talents shows us that they want to give meaning to their job. The new technologies give us new possibilities to start a project. Indeed, they facilitate the access to the labour market which is drastically evolving. For your information, 53 millions of Americans are auto-entrepreneurs (freelancers), 34% of the American workforce is self-employed. According to the previsions, by 2020, it will be true for half of the American workers. The world is moving and the digital start-ups, the entrepreneurship, the freelancers are making things happen. The companies that want to survive have to eliminate the authoritarian management. They need to reduce the intermediates and adopt the principles of self-management and/or collaboration.
What is self-management ?
Let me give you an example that I really like: a Brazilian textile company, which a family’s friend inherited from his father in 1995.
After really tough acquisition phase of the company, he decided that it needed to stop. He had to transform the corporate culture. He started by removing the privileges from the senior managers: cars, parking spots, personal secretaries, exorbitant salaries. Then, he decided to grant a decision process to the workers and to the employee representative committee by creating committees. Besides, the employees could decorate their workspaces as they wished, choose the color of the walls etc. He then initiated the schedule flexibility, and finished by implementing the principle of “test and learn”. This allowed him not to loose the focus on the customer.
Twenty years later, the company is now one of the most fruitful industrial companies of the Brazilian market, while managing to survive different financial crises.
The end of the hierarchical organizations
This is a company where the level of self-management is very high and where the employees decide themselves the amount of their incomes. The redundancies are decided collectively. There is no hierarchy, only autonomous and independent groups, where a person is a coordinator, without it being a definitive position. Every year, there is a democratic vote to elect the coordinator. If the person appears to be not so great at his work, then the workers will have to vote for a new one.
This company is not the only one using the self-management. The autonomy at work is today accepted in a lot of surveys as a strong asset for the companies.
The researchers of the Cornell University did a study on 320 SMEs, where half of the companies were giving a lot of autonomy to their employees while the other half were more bossy. Those which left the most of autonomy to their employees developed 4 times faster and have ⅔ of turnover less than the others. But the self-management alone is not enough. We also talk about principles and digital values. It is a sweet utopia and today it can’t always be set up because of the lack of collaborators’ engagement.
The bad bosses won’t resist the transformation
Indeed, during the transformation of a company, the role of the different bosses (CEO, executive officers, intermediate management) will take a significant importance. Unfortunately here, the bad bosses will get lost, showing a lack of empathy, of emotional intelligence, or adaptability. The fear of change is a fact and in general, the companies don’t think enough about this point before boarding into major projects of recast.
The CEO must gather these different directors and managers, explain the strategic goal and the way this new culture will be implemented. The objective is clear: all the collaborators move in the same direction to face the new market challenges. This “education” phase is unfortunately not taken enough into consideration by the management. This can jeopardize the firm. We come back to a mantra that is dear to my heart… The bad bosses dictats, the good bosses educate and help.
And if you didn’t read the first part, click here !
Work is evolving
In May 2017, a company I was supporting was once again about to bankrupt. It had been founded 12 years ago and they ended up not being able to pay their employees anymore. Everything was collapsing. A project in which they had all invested ended up spinning out of control, and all of that, because of a bad customer. Nevertheless, they were reaching a turning point. I remember that this evening, tears in their eyes, the two partners promised each other they would never humble before a customer’s feet ever again. And to succeed, they would have to change, to restart, they would have to redefine their principles and stick to them. Why? because it’s the only solution to stand tall. Without entirely realizing it, this day, we were about to reinvent the corporate culture of their company. We clearly defined the principles, to make sure they were as fair as possible. The final result was that human was their most important resource. It had to be their focus again.
Innovation : the death of bad bosses ?
To be straightforward, the new culture defines the main mission which is “Human-first” and a vision : a world where a company is able to focus on the human, even before its own ambitions. But the idea is not a “flower power” motto, far from that !
Evolutions in terms of computer sciences between the years 2000 and 2010 taught us that digitalization gives people superpowers, huge possibilities to learn and develop. On the other side, companies, to grow or even just survive in this century, will have to learn how to maintain different relationships with their customers and especially to train their teams around a key objective : satisfaction of their customer while defending their offer. The role of a boss will, more than ever, be a key role and will have to change. Stop with sharks, stop with autocrats! The collective intelligence goes way further than the solitary mind.
Change or disappear!
The rhythm of digitalization imposed by innovative companies is frenetic. Companies which do not adapt will die. But to innovate, companies need to adapt their human resources. The idea is to build complementary and motivated teams. Besides, the problem that companies face today is linked to their structure which is not ready for this innovation. Why ? Let us consider an ordinary person in the company we will call Paul.
Paul doesn’t have a sufficient motivation in a hierarchical structure which was built on efficiency only. If we take a closer look at the current structure we see that intermediate managers dictate to their employees what they have to do. These decisions which were taken by other people, higher in the hierarchy, with whom they may not agree. It is almost impossible to maintain the motivation in this context. Unfortunately, this is the plague of 2018. A sadly well-known survey from the Towers Watson office states that only 1/8 person feels motivated by their job. In addition to being serious and critical, it is deeply sad.
But let us come back to the original problem : if to survive in this digital world it is primordial to innovate and that to innovate you need a motivated team, then how can we create a new way of managing that will help us to innovate and develop motivation ?
Read more here!
In 2018, digitalization is the first lever of growth for companies. However, we notice a drastic difference between the smallest and biggest SMB’s.
Indeed, French SMB’s have only recently introduced their digitalization process (or at least intend to introduce it). In contrast, most of the ETI and big companies have already implemented the process years ago. Those companies have already benefited from the advantages of this digitalization for their growth and the well-being of their teams.
What is digitalization or digital transformation ?
According to a recent Deloitte survey, digitized SMB’s are 3.5 times more susceptible to export their products. The shortfall compared to this digitalization is nowadays estimated at 1,5 millions of domestic consumers. Besides, in this same survey, we notice that digital transformation favors the growth in France, increasing sales by 40% on average.
In this new context of constant digital involvement of the consumer, we witnessed a proliferation of digital tools in the few last years, favoring the hatching and prosperity of “digitized”. These different tools come in very different ways. They can be basic such as websites and social networks, or advanced such as marketing automation or the virtual assistants of back office.
Software suites or data analysis programs also favor efficiency and optimization of corporate processes. This optimization of companies processes is possible thanks to RPA (Robotic Process Automation) which enables an intelligent automation thanks by the latest technologies of artificial intelligence. Thus, they enable us to improve the consumer relationship, allowing us to increase the level of available information but also ensuring that processes are systematized and executed at the necessary rhythm. All of that ensures the well-being of the employees, enabling them to be exempted of useless pressure.
For most SMB’s, the transformation needs to go towards digital maturity. Thus, the first step is the integration of digital tools supposed to improve the efficiency of their activity and to offer online sales solution. The end goal of this is to transform the organization into a completely connected structure.
And directors need to be the first ones to be involved in this digitalization. They have to lead the implementation of those tools, or at least help with the process of digitalization and automation.
Think about your colleagues, they have to be able to multitask, however, the human brain has difficulties with this process.
The access to these tools has become really simple and affordable. For a few dollars a month, you can implement a CRM or a virtual assistant for your invoices. These digital tools enable you to boost the motivation and productivity of your teams. Indeed, we are searching to simplify and structure these processes to make value-added tasks the first focus of companies.
But what are the direct advantages of those digital tools?
First, digitalization clearly improves productivity. Indeed, digitizing and automating a number of processes such as your marketing or your customer reminders, you enable your colleagues to focus on high value-added tasks and nor the labor intensive ones. Your foundations are also solidified thanks to digitalization. Take as a concrete example, your customer reminders. Today, in SMB’s, we note that most of the organisations are doing a follow-up of their receipts thanks to an excel spreadsheet. The latter needs to be checked off and analyzed to know who you need to call again.
However, if the colleague in charge of this task is absent or ill, the follow-up cannot be done. But if this colleague’s work is ensured by a digital technology such as Dunforce, he will be assisted by a machine that will ensure the sending of necessary notifications. It will also advise the right person at the right time to realize the follow-up calls.
Dunforce provides you with a relevant and flawless dunning process and quality service. And there are no best ways to take this burden off your team’s shoulders.
Improve competitiveness for your growth
The rise of digital tools improves the competitiveness of SMB’s. It allows them to reach the same markets as the ETI or CAC 40.
Their potential markets are increasing, allowing them to be positioned in front of more important organizations. But how is this possible ?
Indeed, you will have to invest in the right tools to support better balanced teams. Experts in each field, and people who will create links between different parties will be the token to trigger important collaboration in your company.
All SMB’s or startups can be positioned in front of their highest competitors. The benefit of the web is that everybody is on the same level. Thus, if your strategy is better executed, you will definitely win market shares.
Reinforce your customer relationship
The third, and most important, input will be for the customer relationship in two particular fields.
To start, the digitalization enables you to better understand and know your customers. The CRM will be your sales teams’ memory. The sales intelligence tools will in turn tell you how to speak to them, and help you situate them in their purchase process.
This analysis enables you to be more relevant when you communicate with your colleagues, and helps to develop your customer intimacy. This “intimacy” is becoming more and more important in the relationship your develop with your customer because the development of competition transforms the way your customers shop. They buy because they have confidence in your sales teams. They buy because they know they will be able to count on your company.
The second important component is about the time you will dedicate to your customer relation. We know that time is the most precious resource for organizations. The issue is to optimize the way your team organizes themselves to let them free a maximum amount of time to spend with customers. Whether it is for their acquisition, their satisfaction or retention.
Thus, the implementation of automated solutions enable you to make some time for your team, eliminating a high number of tasks. This additional time can be dedicated to your customers to better support and understand the evolution of their stakes. It will help your company to evolve and outperform.
Favour the well-being at work
One of the most important aspects of digitalization: the well-being of your colleagues. It appears contradictory for a lot of people but the digitalization, as well as automation, enable you to improve your colleagues work conditions. Indeed, we can observe a change of their job.
According to a survey of McKinsey, 43% of jobs could be, partly, automated. Thus, supporting your teams, giving them further information and eliminating the tasks less urgent, your colleagues are more motivated information and involved.
With this digitization and automation, you can have a corporate culture favoring well-being, and you can hope productivity to increase from 20 to 50%.
The productivity and well-being of your teams are highly correlated today.
To begin with, well-being decreases the turnover rate, which avoids the loss of expertise. Besides, the involvement of your teams will be a sign of performance improvement.
Indeed, a lot of surveys show that people motivated by their post are 80% more effective.
And this is why this is now time for your company to follow this digital path by developing the well-being of your colleagues, the origin of motivation and involvement of your team.
Find here how to take advantage of a 10-tool-list which enables you to digitize and automate your key processes!
And you, what is your next digital move ?
What is automation ?
Automation consists in making systematic operations requiring human intervention. It assists humans in doing all the simple and repetitive tasks which still require precision and rigor. The purpose of automation is twofold: first, it increases the productivity of your company by freeing up time for your collaborators, and then it transforms their jobs.
It enables them to do manier strategic activities with greater added value. So we will therefore seek for important gains in productivity. The first consequence of those gains: an improvement of the competences of your employees which may give them the opportunity to move on to a more highly qualified job. Automation can avoid potential omissions and human mistakes, thus reinforcing the foundations of your company.
Indeed, automating your tasks with a low added value helps you to strengthen your foundation. And this is a good start for the development of a sustained growth. It will avoid everything to collapse like a house of cards. Technically speaking, the automation of tasks is transposing the human know-how in an automated system: we talk about processes automation.
A process is an organized system of activities using resources (information) to transform inputs into outputs. This will all result with the product.There are 3 ways to consider automation:
The first one automates actions thanks to a series of instructions while the second one examines the action performance before doing an action. The last one offers the most suitable solution building on their capacity to automate the diagnostic process.
What are the tasks to automate ?
We will evoke here what are the strategic tasks that we can automate.
To start with the most common, let’s talk about Marketing Automation. Indeed, companies are increasingly using process automation thanks to scoring systems and scenario implementations. It enables you on average to increase your revenues by 187%, according to Hubspot, leader in this field.
Now let’s proceed to the back-office tasks. From the dunning of your clients to the management of the expense reports, without forgetting the payments, all these functions can be largely automated.
Start with your client’s dunning. Dunforce created the first virtual assistant which sends and duns your invoices just as if it was you. No more mistakes and omissions, you strengthen your financial foundations! Don’t forget that your clients are your first financial source.
For the expense reports management, we can talk about Expensya or IpaidThat which also automates the management of supplier invoices avoiding time loss and improving the tracking of these costs.
Regarding the payment, Payfit simplifies this time-consuming HR process by automating the creation of the pay slips.
Another tool for the HR part but which also promotes the cohesion of the company as well as the motivation is Lunchr. It has just launched in the meal voucher market and it offers an application to order your favorite meals in your favorite places. No more manual distribution of paper that we lose as the credits load automatically in the application! Want more? you can have a credit card in case you don’t have anymore battery on your cell phone!
The list could be very long, but, to simplify, all repetitive task and routine processes can be automated. The point is not to wonder whether you will automate these processes but when you will do it.
Transform the way of working
Automation is not new. On the contrary, it is already very much a part of our daily life. Since the invention of the wheel, human beings have been looking for a way to optimize their works by automating their tasks. Automation helps them getting rid of the most boring tasks to let them focus on the essential. It assists the human without replacing him.
Why is automation in the heart of heated debates ? Indeed, it is often perceived as a threat for our jobs. It is legitimate to ask what will become our human resources if every task becomes automated. However, it not because domestic appliances appeared in the 50’s that the cleaners disappeared. Automation enables the substitution of several tasks, but also offers the possibility to propose new and better services, leaving thus more time for the strategic and commercial part of the company.
- What are the positive effects?
The automation or the artificial intelligence won’t have only bad impacts on our jobs as would suggest popular misconceptions. Everybody remembers the introduction of computers in companies in the 80’s and all the progress that followed. This revolutionary tool has completely transformed the way we work. It is the same for automation which will help the employees in the execution of their activities by enabling them to do more interesting or more motivating tasks.
Now, we are at an inflection point where artificial intelligence, robots and algorithms learn and adapt themselves, to more and more accessible costs and start opening to everyone. Not only are they repeating the same pre-programmed and stiff sequence of the old programs, they also help us to take better decisions, to be better informed and above all to have a better control of our different processes by deeply understanding our client.
In digitizing themselves entirely, companies continually generate precious data thanks to software, their bots, digital platforms and algorithms. Once their data are exploited, they can develop new capacities: to learn, predict, prescribe, personalize.
Indeed, the digitalization will simply create an enormous database which will just have to be transposed in an automated system. The more information an automat will have, the manier tasks he will be ready to automate.
The automation transforms jobs in their content, brings a new way to communicate, to collaborate or to coordinate at work. It is increasingly present in the professional world as well as outside and it also contributes to improve work experience.
With automation, the relationship Human-Machine is reinventing itself. Now, our challenge is to gather all the conditions to innovate with it!