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The latest issue of McKinsey Quarterly has an article on the “The next revolution in interactions” (here – requires subscription). In it they describe the changing nature of the worker and explore what it will take to improve productivity in the future – both from an organizational point of view as well as from a technology deployment standpoint.

They separate the workforce into three categories:

• transformational workers (miners, farmers, manufacturing workers) – who either extract raw materials or transform them. They made up a majority of the workers at the turn of the last century. By the turn of the 21st century they only made up 15% of the workforce in the US
• transactional workers – those are the people whose jobs involve routine transactional interactions. They include not just clerical and accounting jobs, but also IT specialists, auditors, biochemists, etc. Their jobs are very much rules-based and in many cases have been automated or outsourced. At the turn of century they still made up about 44% of the workforce.
• tacit workers – those are workers whose jobs involve complex interactions – those involving ambiguity and requiring high levels of judgment. They are not rules-based and cannot easily be automated or outsourced. At the turn of the century they made up 41% of the jobs, but had been growing 2.5 times faster than the transactional jobs and 3 times faster than employment in in the entire national economy.

So put another way, 70% of all the jobs created between 1998 and 2004 were tacit jobs that require judgment and experience! And their pay is 55-75% higher than that of transactional and transformational workers. And as mentioned before, the main reason the balance has been tipping is that all other jobs can easily be automated or outsourced.

Of course, those companies that can make this tacit workforce more productive will gain a key competitive advantage – one, which according to the article, will potentially be long term one, as the solutions to make this happen will be difficult to duplicate and best practices will be hard to transfer from one company to the next.

The article continues by saying that the first change that companies need to do to increase tacit worker productivity is to rethink their organizational structures:

“There is no road map to show them how to do so. Over time, innovations and experiments to raise the productivity of tacit employees (for instance, by helping them collaborate more effectively inside and outside their companies) and innovations involving loosely coupled teams will suggest new organizational structures.”

Does that finally mean the end of hierarchical pyramids and the emergence of new models of governance and management? I sure hope so…

Technology is the other place where companies will have to look to improve productivity of the tacit worker. Here again, the authors of the article rightfully warn that:

“First, the way companies deploy technology to improve the performance of the tacit workforce is very different from the way they have used it to streamline transactions or improve manufacturing. Machines can’t recognize uncodified patterns, solve novel problems, or sense emotional responses and react appropriately; that is, they can’t substitute for tacit labor as they did for transactional labor. Instead machines will have to make tacit employees better at their jobs by complementing and extending their tacit capabilities and activities.”

They identify three areas where technology can be deployed – those technologies that eliminate or reduce the low value transactional interactions which the tacit workers perform, those technologies that help them make better decisions, and those technologies that will extend the reach of their tacit interactions, both inside and outside the company (loosely coupled collaborative tools).

Very interesting times we live in… And to me, it’s fascinating to see how all this loss of jobs to automation and outsourcing is actually resulting in new jobs that pay 55-75% more and in new long term corporate competitive advantages that have not been seen in decades!

If only the government could realize the importance of schooling and education in this country, I would feel good about the future.

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