Gadget Blog

Successful businesses will be those that optimize the mix of  humans, robots, and algorithms.

In his new book Automate This, Christopher Steiner tells the story of stockbroker Thomas Peterfy, the creator of the frst automated Wall Street trading system. Using a computer to execute trades, without humans entering them manually on a keyboard, was controversial in 1987—so controversial that Nasdaq pressured him to unplug from its network. Then, with a wink, Peterfy built an automated machine that could tap out the trades on a traditional keyboard—technically obeying Nasdaq rules. Peterfy made $25 million in 1987 and is now a billionaire. Today, automated trading bots account for nearly three-quarters of U.S. equity trading by volume. Trading houses plow millions into fber optics and microwave dishes so their algorithms can send trades a millisecond faster than the next guys’. And although the frst trading robot was built 25  years ago, most of the change on Wall Street  has occurred during just the last few years.

Robots made by Kiva Systems move product shelves on a warehouse foor. Amazon bought the company earlier this year in a step toward automating its distribution system and reducing labor costs.

When it comes to automation, we may be in  the elbow of an exponential curve.

In this business report, we look at this  cutting edge of automation. Consider Amazon. The company not only automated  book buying but also turned the computer  systems it built to do so into a service called  Amazon Web Services, making them avail- able for anyone wanting to repeat the feat.

And now Amazon’s founder, Jef Bezos,  is placing new bets on automation. In  March, Amazon paid $775 million for Kiva  Systems, a company that makes robotic dollies that zip across warehouse foors car- rying shelves full of goods. Kiva found it  was more productive to have the humans who “pick, pack, and stow” items stay in  one place and let intelligent shelves come to  them. Among other reasons, Amazon said,  it bought the robotics frm because the technology ofered the chance to reduce labor  requirements at its dozens of warehouses.


Any work that is repetitive or  fairly well structured can be fully  or partially automated. this may  explain why economic output  has risen while the number of  jobs has fallen.

This is an example of what is going on  in the economy more broadly. As the MIT  economist David Autor has argued, the  job market is being “hollowed out.” High- wage, high-skill employment is still being  created—and so are many poorly compensated service industry jobs for food preparers, home care aides, and others. It’s the  jobs in the middle that are disappearing:  certain clerical, sales, and administrative  jobs and some on factory foors.

Now a combination of growing computing power and advances in data crunching  means automation is primed to threaten  not just tax preparers and travel agents  but higher-rung jobs such as those in the  medical and legal professions, where soft- ware can increasingly do things like analyze images and understand speech more  accurately and in more contexts than ever  before. Any work that is repetitive or fairly  well structured is open to full or partial  automation. Being human confers less and  less of an advantage these days.

Some economists believe automation  may explain why U.S. economic output  has grown since 2007 while the number of jobs has fallen. That kind of dislocation is unusual. The U.S. economy has  evolved from agriculture to manufacturing  to service industries. Each time jobs were  destroyed in one sector, they were replaced  elsewhere. Data from the Bureau of Labor  Statistics provide some clues to what the next economy will look like. Seven of  the 10 fastest-growing new job cat- egories between 2009 and 2011 have  the word “computer” or “software” in  them, according to an analysis by Matt  Beane, a doctoral student at MIT’s  Sloan School of Management.

Some say what’s taking shape is a more productive symbiosis between man and machine—and successful
businesses will be the ones that optimize it. Rodney Brooks, founder of ReThink Robotics in Boston, believes that a new type of general-purpose robot could reinvigorate manufacturing. The machines he’s building aren’t hardwired for any one job; they’re fexible, so many types of businesses could use them for a variety of production tasks. The company aims to democratize automation the way the PC did for computing, spurring similar efciency gains.

There’s defnitely good news here: more people than ever have access to afordable, powerful tools that can help them and their businesses become more productive. Take Todd Ruback, a privacy lawyer in Warren, New Jersey, who handles legal paperwork for companies that have lost sensitive data like credit card numbers. The job involves fling forms and notifying consumers in dozens of states, each with slightly diferent laws and deadlines. He’s been testing software made by a company called Co3 Systems that automates much of the process. It walks attorneys through what they need to do and prints out the right form letters for each state.

Ruback estimates that the software cuts the time it takes him to handle a case by 10 to 20 percent. But lawyers bill by the hour, so why would Ruback want something that makes it all go faster?

It’s pretty simple, he says. The software makes him more efficient. And if he doesn’t automate, the other guy will.