Pablo Egana Del Sol, Research Affiliate, International Faculty Fellows Program
From MIT Sloan Management Review
Much has been written about the rise of automation in developed countries. Economists have been busily creating models seeking to quantify the likely impact of automation on employment.1 However, far less has been written about the potential effects on work in developing nations. This is surprising, given that automation may be especially troublesome for developing economies.
We know that economic growth brings significant shifts toward higher-skilled occupations and that the economies of many developing nations rely largely on manual labor and routinized manufacturing work. Because some types of manual and routinized work can be easily handled by computers, machinery, and artificial intelligence, it’s clear that large-scale automation could have significant and wide-reaching effects on workers in developing countries.
Microsoft CEO Satya Nadella recently stirred up a firestorm of criticism for suggesting that silence is the key to success in the workplace—women shouldn’t ask for a pay raise or promotion but just let managers notice their good work and all will take care of itself. Though Nadella later backtracked from his remarks, it’s not just women who should take issue with that advice. It is exactly the wrong advice for everybody. It is time we all start speaking up for and at work for fairness, efficiency and mutual respect.
Just look at where “silence” has gotten us over the years.
We can start with the gap that has grown in wage and productivity growth over the past 30 years. As shown in the chart below, before that, from 1948 to about 1979, wages and productivity grew in tandem; thereby, expanding and strengthening the middle class and making it possible for baby boomers to live the American Dream of improving on the standard of living they experienced growing up. Since then, productivity rose 64.9%, and hourly compensation rose only 8.2%. The decline in the traditional vehicle for worker voice—trade unions and collective bargaining — accounts for a significant portion of this wage-productivity gap. It is clear that all workers should be speaking up at work for their collective and individual fair share of the economic progress they help produce.
In the early days of computers, companies used a fee-for-shared-service model for technology. It was common to pay a company like IBM rent for use of its mainframe machines. As computers became smaller and less expensive, businesses began to purchase their own equipment and the computer rental model went the way of the dinosaur. Interestingly, we’re now seeing a return to that old model, but instead of computers, businesses are renting web and cloud infrastructure services for apps and storage.
This is great news for small- and medium-size companies, as building the data centers to run those services is exorbitantly expensive. By only purchasing the infrastructure cloud services that they need from large companies like Microsoft, Google and Amazon, they eliminate the risk of that huge financial investment.
Even better, we’ve seen recent price wars among those service providers. Some of them slashed their prices by as much as 85 percent this spring in an effort to attract and retain customers.
I sit on the board of several companies that are dependent on web services and have seen this decision to rent play out several times. A good example is Carbonite, which is launching its computer backup services across Europe and recently joined the ranks of Amazon customers for web services. The decision for Carbonite was simple: If it were to build its own data center, not only would it cost excessive funds, it would have to maintain it and then (all too soon) upgrade it. It would be akin to building its own telephone or cable company instead of simply renting what it needs from a provider like Verizon or Comcast.
Even before coming to Seattle for the first time on MIT Sloan’s Tech Trek, I had a feeling that I’d like this place. I’d heard how it’s laid back and outdoorsy. Yeah, rainy weather, but I’d also heard how friendly everyone is. Having just returned from our visit, I can say that the city lived up to its reputation. I really liked the vibe.
We visited three big tech companies on our visit: Amazon, Microsoft and Groupon. They had all given formal presentations on MIT’s campus and are always in the news, so we were all pretty well-informed about them. Visiting on their home turf, however, gave us a unique opportunity to observe and experience their culture, get a feel for the environment, and ask more probing questions. We also visited the venture capital firm Madrona Venture Group, which hosted a startup panel discussion.
Having grown up in Portland, I didn’t really think anything would come as much of a surprise during my career trek to Seattle with MIT Sloan’s Tech Club. After all, I had visited Seattle many times with my family over the years.
While some of my classmates were shocked at things like the weather (yes, the sun does shine here), the silent traffic (no horns!), and the abundance of coffee shops, I knew to expect these things.
Philip Simko is a first-year student in MIT Sloan’s MBA program and vice president of treks for MIT Sloan’s High Tech Club. He is currently working as an intern at Wellframe in Boston, and is interested in working in the high-tech field