infrastructural technology actually going to be shared by many companies, rather

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1 , best-selling author of The Glass Cage: Automation and Us, discusses his views on Robotic Process Automation and how it has changed the game. Nicholas Carr writes about technology and culture. He is the author of the acclaimed new book The Glass Cage: Automation and Us, which examines the personal and social consequences of our ever- growing dependency on computers. Nicholas sits down with Frank Casale, Founder and CEO of IRPA to discuss automation and where it s taking our society. Frank: In 2004, you published the now famous and maybe some would say infamous article on "IT Doesn't Matter." A decade has gone by since then, do you still believe this to be the case or have your views changed and if you were to substitute a word for IT what would you put in its place today? Nicholas: It's a little more than 10 years since I wrote about that, and it's useful because of the title, "IT Doesn't Matter", which was a good title, but still it's what people tend to remember. They forget sometimes the argument of the piece, which was how technology either helps or doesn't help a company gain competitive advantage or distinction in the marketplace. If you remember back in 2003, there was a huge hype about owning and managing your own IT as a path to competitive advantage. If you had the best server or the best data center, you could get a big competitive advantage. That's what all the vendors were saying. What I argue in that piece and in the book, "Does IT Matter? is that in fact, IT, as we defined it back then, is all about the infrastructure of data processing and data storage. I argued that infrastructural technology is something that's actually going to be shared by many companies, rather than owned proprietarily by one. As a result, you shouldn't think in terms of IT as providing a competitive advantage, because what I suggested is that it was fated to go the way of electricity, for instance, or railroads, which is that it has become a shared kind of utility infrastructure. We've seen that happen with the rise of cloud computing, where 1

2 companies maintain their own servers, storage gear, and applications, it can be very expensive. Now having said that, I think we've seen enormous changes in IT itself and how we define IT over these past 10 years. What's important about IT is figuring out how customers and clients are using it to interact with your business to carry out transactions. I also think that with prognostication, you're going to get things wrong. I don't think I recognized all the ways in which the Internet and automation, and all the trends we're seeing with the cloud have changed how we define IT in business. Frank: No, and I agree, and I would also argue that the advent and emergence of this as a service model further proves your point, right? Nicholas: Right. Frank: So as you're looking at the marketplace now and you've had many discussions with many people; I'm sure you've had some interesting and possibly heated debates. What does matter at this stage of the game? Nicholas: Obviously there are debates. Every successful company, almost by definition, finds some very unusual basis for competitive advantage, because what distinguishes you is something unusual, something that's hard for your competitors to replicate. I think for some companies, that is a technological advantage. If you look at Google, 10 years ago it was a nascent company, just emerging on the scene. Obviously, what it has shown is if you come up with a better search algorithm and a better means of matching advertisements to the content of a Web page, It's about a distinctive product, which may have a heavy technological component or heavy design component. For other companies, it's the depth of the relationship and the trust that you build with your clients or your customers. you can get an enormous competitive advantage. That s a very good example of how software itself can provide an advantage in this world where everything is shared very, very quickly, that distinctive and proprietary software can pay off enormously. For other companies, it's about a distinctive product, which may have a heavy technological component or heavy design component. For other companies, it's the depth of the relationship and the trust that you build with your clients or your customers. I don't think the question of what matters has changed. It's still all about figuring out what is it we do that is not only better than our competitors, but that our competitors will have a very difficult time matching. And that can come from anything, but if you look for advantage from a fundamental resource that's broadly shared a data center, for instance or basic enterprise software I think that s a mistake and that you want to reduce your cost, reduce your risks, and look for competitive advantage in other areas. Frank: Let's switch over to automation for a little bit, which you've written about in "The Glass Cage." You focus on a couple of different perspectives. We started a relatively new network here at the Institute for Robotic Process Automation, and so we have a small and growing ecosystem of people that care very much about this. It's everything from the curious to the cynical, to those that have already dove headfirst into the pool and are embracing this. What, in your opinion, is the big deal with regard to this latest wave of automation as it clearly is not the automation that we knew a decade ago. Nicholas: Right, automation innovation is about the robotics themselves, the kind of mechanical processes, sensors, natural 2

3 language processing, and machine learning, which have been advancing for a long time. What we're seeing now is a kind of culmination of all that progress, and so we're seeing a definite shift from thinking about automation in mechanical terms such as getting robots to do the heavy manufacturing lifting and the factory work, to the rise of what I'll call the multi- talented computer. Suddenly we can see not only rapid progress in traditional robotics, where you suddenly have computer- controlled machines that are able to do things with an extraordinary degree of dexterity and analysis about what they're doing, but also where robotics separated from the mechanical machinery of the robots. We're seeing robotic algorithms moving into medicine and law and all sorts of places where you need to analyze lots of data, make judgments about the world. We re seeing it in places where things that weren't really common, even just a few years back, are becoming more and more common. One thing that's happened is that the breadth of automation has gotten much, much wider very quickly, and suddenly almost every company, whether they're talking about automation innovation algorithms, big data analysis, or traditional robotics themselves, suddenly this is in the mix for pretty much every company, no matter what they're doing. They're facing questions suddenly about, "What can we turn over to computers, what do we keep in the hands of human beings, and how do we optimize that relationship between our very talented employees and our computers?" So we're seeing a definite shift from thinking about automation in mechanical terms such as getting robots to do the heavy manufacturing lifting and the factory work, to the rise of what I'll call the multi- talented computer. Frank: Over the past two decades, we've tracked most of what I will call the critical technology trends, whether it be cloud, recent trends in cyber security, big data, and mobility, and I think you and I can agree, those were all important trends. It suddenly dawned on me that this is beyond technology. It really reinvents how work gets done, and when I use different phrases, like "digital labor," when I speak to people within our network, it flips different switches in their mind, and so we're not just talking digital now. We're talking labor, and it's not just about outsourcing. It's not just about IT, if you will, but it's about how work gets done. And so you think about, wow, even beyond cost- save, there are just so many opportunities there strategically that go beyond tactics. Do you see it that way, or is that just me drinking the Kool- Aid? Nicholas: No, I think that's right, and they're both opportunities and risks that come out of that. When I was doing the research for The Glass Cage, I spent a lot of time looking at the science of automation what human factors, engineers, and researchers find when they look at what happens when a process become automated. One of the most illuminating concepts is what academics and scholars refer to, as the substitution myth. This concept is the replacement of human capability in some particular part of a task or part of a process or part of an organization, so then you say, "Well, we don't need the person to do that, because the computer can do that, or the robot can do that." And you think it's this clean substitution of machine for human being, but that's a myth. It isn't a clean substitution. In fact, what you find over and over again when you study automation is that 3

4 when you automate even one part of a task, or one part of a process, it changes the whole thing. I think we're kind of at the stage where we're seeing the technological progress very, very clearly, but we haven't worked through all the questions about, "How do we design these systems? How do we design the processes around them? And how do we divide labor between people and machines?" You have to rethink the role of the human expert and the human professional, and so it's not just a matter of swapping in a computer for one thing, and thinking that nothing else changes. Everything tends to change. I think we're in the early stages. I think a lot of companies will probably make mistakes along the way and have to rethink some of their assumptions. Frank: Okay, so therein lies the dilemma, right? You could argue that from a holistic sense, it is transformational, and the benefits could be significant. However, I'm saying that the majority of the companies are not ready to treat it accordingly. Correct? It seems to me that we are at a very important stage. Not only for business, but for society as well, asking ourselves "How do we get the most out of automation innovation? How do we get the most out of robotics, without assuming that these systems are going to solve all our problems magically?" Nicholas: Yes, that is right. Frank: In the discussions you are having, what percentage of people are getting it, as opposed to just taking more of a short- term tactical role? Frank: Do you believe, as Bill Gates and Elon Musk and Steven Hawking believe, that automation innovation could be the end of society, as we know it, or are you somewhere in the middle? Are you feeling positive about the outcome? Nicholas: That s a hard question, because I think on the technical side. Things have happened so quickly that the capabilities of computers in a variety of roles have increased very quickly. And deciphering what's real from what's hype is very difficult. On the one hand, you can be on the side where you're overly complacent, and you're not thinking about the opportunities provided by automation. On the other hand, you might rush to simply say, "Why do we have people here at all? Let's just automate everything", and you can get into trouble there as well. Nicholas: I would say I'm concerned, but not so much concerned from the singularity type, that computers are going to suddenly gain consciousness or gain awareness, or somehow become a threat to humanity. I think that's taking on faith a lot of technological leaps that haven't happened yet. Even granting all the great advances we've seen in automation innovation, we're still a long way from a computer than can think for itself, and a lot of those fears about computers taking over assumes some kind of self- awareness or that computers will be able to program themselves.! 4

5 You can't say that's not going to happen, but I don't think that's imminent. In fact, we may never be able to create a computer that can think for itself or program itself, so I don't have those kinds of fears. I think the more practical fears about what's going to happen to jobs in the future is something to be concerned about as a society. I don't necessarily agree with the projections that, "Oh, automation's going to take over all jobs or 70 percent of jobs within the next few decades." I definitely think that we are seeing a shift and a great expansion in our ability to replace talented people with machines and this is going to have effects on the labor markets, it's going to have effects on the income equality or dis- equality, and all of these things are important, and we should be thinking about them. Frank: You referred to the challenges of prognostication, so let's roll out to You have a sense of this trajectory and where things are and where they're going. What do you see the marketplace looking like in 2020? Nicholas: I think what we'll see is an expansion in the role of computers in analytical type of work, such as judgment- making work. What I think we'll also see, though, is that there are human talents and human analytical capabilities in judgment- making, decisions- making capabilities that remain very, very important. We'll see companies struggling to strike the right balance between what the machines can do and what people can do, and I think a hint of this kind of struggle comes from the announcement that Toyota made about a year or so ago. I definitely think that we are seeing a shift and a great expansion in our ability to replace talented people with machines and this is going to have effects on the labor markets. Toyota, great leader in factory automation, robotics, in manufacturing technology in general, decided in its Japanese plants that it was going to rehire some expert craftspeople to work on crankshafts. What I realized is that for all the enormous gains you can get with robotics in terms of saving money, efficiency, and productivity that only expert, experienced human beings can be critical about their work and can spot quality problems, and can think about, "How can we do this in a completely different way that might be better?" I think by 2020, the struggle will be, "How do we get the most out of the machine without losing the unique capabilities that talented people can bring? For more information about trends and case studies visit us at To schedule a 30- minute executive briefing with an IRPA executive, to learn how and where Robotic Process Automation can deliver results within your organization, contact David Goodstein at david.goodstein@irpanetwork.com, or call (516) Ext About IRPA The Institute for Robotic Process Automation (IRPA) is an independent professional association and global network for the buyers, sellers and influencers in the robotic process automation/ autonomics arena. IRPA is the go- to source for market trends, best practices, case studies, events, assessment services and channel opportunities. To learn more and opt into our free global community, visit 5