The massive global talent shortage is driving businesses to automate in even more areas of their operations. Surveys show that more than 60% of the companies already started their automation journey.
There are always some tradeoffs, of course, when doing any enterprise-wide initiative. It would be cool if you could deploy new automated processes overnight. If you could just start your fully autonomous processes. But that is not possible. At least not quickly. So companies are making various tradeoffs on their way to their automated future.
Here are the 5 biggest tradeoffs I have seen in intelligent automation projects.
1) Top-down vs Bottom Up
2) Hard vs Soft Benefits
3) Speed vs Perfection
4) Pilot vs Scale
5) Short Term vs Long Term
The massive global talent shortage is driving businesses to automate in even more areas of their operations. Surveys show that more than 60% of the companies already started their automation journey.
The majority is doing more basic automation replacing manual, repetitive tasks.
It is amazing to see how companies are learning from each other, crowdsourcing best practices, and replicating successful automation. And some are really advanced, using AI and machine learning to augment human decision-making.
There are always some tradeoffs, of course, when doing any enterprise-wide initiative. It would be cool if you could deploy new automated processes overnight. If you could just start your fully autonomous processes. But that is not possible. At least not quickly. So companies are making various tradeoffs on their way to their automated future.
Here are the 5 biggest tradeoffs I have seen in intelligent automation projects.
1) TOP DOWN or BOTTOM-UP
Some companies are really good at cascading their business goals top-down. They are clear on the 3-5 improvements they want to have and can set a specific target for automation teams to achieve. For example, they know that they want to save $10 million in overhead costs and they set a target for how much of that needs to come from automation based on some benchmarks. Then they assign accountability to the business unit leaders who then manage the automation project to deliver value like any other business initiative.
Other companies are better at decentralized accountability. The bottom-up approach. Each business unit knows the goals they need to hit and uses tools like automation to help them achieve that goal. The efforts are not necessarily coordinating across the company but the learnings may be shared.
In the end, both the top-down and bottom-up approaches succeed only if there is clear accountability for the results.
2) HARD VS SOFT BENEFITS
This tradeoff comes down to corporate culture. Managing tangible business results is not a new innovation. Some companies are very good at this, like 6 sigma shops while others struggle with it. It is common to see some departments manage their projects on hard benefits like sales, procurement while others are measured on soft savings (finance, HR).
Sometimes companies are better at driving certain hard savings like labor cost but struggle with other types like cycle time or process costs. I have seen over and over how private equity owners can bring the hard benefits discipline to a company that is not used to it.
It does take a leadership or ownership change to make a value culture shift. More often automation programs need to align with the existing hard/soft benefit attribution of the company and demonstrate value creation in those terms.
3) SPEED vs PERFECTION
Do you automate inefficient processes or wait to improve the process before starting automation. Many companies struggle with this particular tradeoff. In a perfect world, you would optimize process flows before automating them. Unfortunately, we do not live in a perfect world. The expectation that a process will be unchanging over time is not realistic. So many companies now automate first, then improve the process and then automate again. We live in a world of constant pivoting. The best companies have automation/optimization cycles that they can repeat as a normal course of business instead of a big bang transformation project. The speed/perfection tradeoff becomes a speed to perfection evolution.
4) PILOT VS SCALE
Some companies are more risk-averse than others. I have seen this across industries. They invest in the familiar and underinvest in innovation. The predictable but low returns take precedence over the potential of higher returns and higher risks. This is tradeoff is as old as time.
Many companies will choose to take small pilots with small returns before expanding their automation programs. Value creation in this scenario will take a long time. Sometimes the momentum will be completely lost.
Some companies will make bigger bets and mitigate the risk differently. Instead of using pilots as risk mitigation, they do something else. They control the risk by hiring more experienced automation experts, assign accountability at the executive level, and create incentives for value creation for the project teams.
Every human endeavor carries risk. How you mitigate the risk is the difference. You can choose to take very small steps or you can bring in an experienced leader and align interests. That's the real tradeoff between pilot and scale.
5) SHORT-TERM OR LONG_TERM
The short-term and long-term benefits of digital programs are often in conflict. Saving labor costs in short term may have advantages but long term it could hurt organization capacity or morale. Getting processes automated quickly may conflict with the broader digital transformation of the business. This is one trade-off that cannot easily be resolved. I believe that all automation projects need to have both short-term and long-term benefits.
There is a saying: you need to eat while you dream. And you need to see tangible results from your automation projects as you build the reimagined digital business.
All digital automation programs have to deal with tradeoffs. And yes, there is a best-case scenario. That is when the project is transformational across the business, moves very fast, and delivers significant hard savings along the way. This best-case scenario however is hard to achieve and most companies will make tradeoffs.
I suggest making those 5 tradeoffs consciously. Making sure that the executive team and the workforce understand them.
Then try to do even better.
Talk soon