Productivity improvement through technology/AI and eventual labour market impact
How do we improve productivity of firms using technology ? What are some of the latest tools enabled by recent advances in AI ? What is the estimated impact of Gen AI on labour market ?
Disclaimer: Opinions are personal.
Productivity is a measure of economic performance that compares the amount of goods and services produced (output) with the amount of inputs used to produce those goods and services.
Productivity can be measured at the following levels:
- Individual worker’s productivity
- Company’s productivity
- Industry or sector productivity
- Business sector productivity
- National productivity
We will scope this analysis to worker productivity and company productivity.
A company’s productivity will increase if:
⭐ There is better strategy defined by the leadership that aligns all departments and teams towards a common goal
🤝 There is better communication and collaboration that trickles down the strategy into individual departments and teams
⬆️ Each department/team is able to optimise for their internal goals and are also aligned with company’s goals
⬆️ Each worker is able to optimise for their goals
⭐Strategy Dimension⭐
Depending on the industry or sector, there are high chances that technology can have an influence in the business strategy of companies going forward.
- Retail banks were able to reduce their physical footprints by digitalisation
- Gen AI has already started influencing business decisions — Tyler Perry Puts $800M Studio Expansion on Hold After Seeing OpenAI’s Sora
In addition, AI is also becoming a good assistant during strategy creation. GPT-4 class models and their implementations in many copilots are very useful as
🛠️Tools: ChatGpt, MS Copilot, Glean, danswer
Use-cases:
- Research assistant: Collect data from different sources and present in the required format.
- Brainstorming: Synthesise information from different sources across different dimensions and present a first cut solution for a question.
🤝Communication and Collaboration🤝
We have basic tools like OKR-s for goal setting, JIRA for project management, email & Slack for asynchronous communication, Zoom for synchronous remote meetings.
What is now becoming more possible are features like
- Summary of a long conversation that you have just been added to
- Getting inline external context from different sources added to this conversation
- Better evaluation of the importance of the conversation with respect to other conversations
- A first cut response
- Transcribing a meeting and summarising it
- Getting the summary from multiple past meetings
- Having an AI agent in all your meetings participating as an employee offering their perspective
While all these are great, what is still required is the human element of collaboration. The connections that are formed by having conversations and in-person meetings. The nuances in body language and so on. It will still be a while for the AI to really catch up on these.
⬆️ Optimisation by departments, teams, workers ⬆️
A lot of repetitive tasks are getting automated:
🛠️Tool: Brainbase
Use-cases: Data entry, generic workflow automation and more..
Most of the tools that functional departments were using are having their next versions (AI enabled) on steroids.
- Customer support: Klarna’s AI Assistant Does the Job of 700 Customer Service Agents
- Sales: Top 10 AI Sales assistants
- Product development:
GitHub’s research shows that developers using GitHub Copilot can finish tasks up to 55% faster.
Introducing Devin, the first AI software engineer
Devika aims to be a competitive open-source alternative to Devin by Cognition AI.
🧑🔧️Labour market impact🧑🔧️
AI is bound to have a positive impact on productivity and a large impact for companies who proactively seek out the benefits. This also could mean a disruptive impact on labour market.
For example, a study shows 80% of the U.S. workforce could have at least 10% of their work tasks affected by the introduction of LLMs, while approximately 19% of workers may see at least 50% of their tasks impacted.
Interestingly the most impacted occupations are predicted to be knowledge workers like Writers and Authors, Public Relations Specialists, Survey Researchers etc and the least impacted (for now) are workers that do physical work.
This might be till humanoid robots are mass produced like mobile phones and costs driven down so that everyone can afford them. There are still healthy debates on when and how AGI (Artificial General Intelligence) will be made available and the consensus timeline(2031) is not that far.
🔮The Future🔮
The future is unpredictable.
Sometimes my daughter discusses her career aspirations with me and I realised something -
It is very hard to give career guidance to the next generation who will enter the workforce in 10 or 15 years. Especially about which occupations will give them a stable career. My hypothesis is that humans will still value interactions with fellow humans — Eg. nursing, high value sales. Humans will enjoy doing activities that they enjoy currently — playing sports, performing arts. They will need someone to coach them and they will need tournaments to be organised. We will also need scientists, carpenters, engineers and a lot of other workers but perhaps in much smaller numbers.
Distribution of the benefits of technology is usually uneven. We will continue needing people who can distribute technology to markets at low maturity levels. If Elon Musk succeeds in settling us in Mars, that is an entirely new job market as well😜
On second thought, considering the unpredictability of future, I think it is better to not give career guidance to the next generation now. Let them grow up healthy and happy, and figure things out as and when required.
