Retailers & Robots

In my last notes, I discussed the peripheral retailing model, the smart and small retail formats and the rise of the surrounding catalog. These strategic changes will demand funding to be implemented. A big chunk of the solution will lie in the savings generated due to the deployment of smart automation. The sooner smart automation is deployed in retailing, the faster the funds will be available for the strategic moves mentioned above. As a matter of fact, several analysts agree that smart machines might increase business efficiency by up to 40% in the coming years. In this regard, a leading bank just announced it could shed as much as half of its 20,000 technology and operations staff in the next five years due to smart automation. Likewise, a popular retailer recently indicated that intelligent machines are 50% more productive and three times faster at scanning shelves than humans.

MAKING OUR SMART MACHINES WORK

In order to achieve a more competitive adoption of the smart machines, retailers should evaluate the opportunity to hire a Chief Robotic Officer to craft a comprehensive strategy, launch a membership model as a fundamental source of ongoing individual shopper data to make smart machines smarter, and finally ensure to implement baby experiments to test new related technologies and consequently remain ahead of the curve.

A Chief Robotic Officer (CRO) will play a fundamental role in bringing relevance to the discussion about the adoption of smart machines, especially considering that these machines are general purpose technologies which can affect almost every activity in retailing. According to the Robotics Business Review, the CRO is one of the fastest growing jobs in the tech world today. Several leading retailers have already hired their CROs. In this regard, Gartner predicts about 10% of the large companies will have their Chief Robotic Officer by 2020.

The Membership Model will not only provide recurring revenues and increase shoppers’ loyalty, but also it will become a fundamental source of ongoing individual shopper data which will heavily contribute to make smart machines smarter. On this point, Jeff Bezos recently announced Amazon has already enrolled more than 100 million Prime members worldwide. The membership model should work in conjunction with what I call a ubiquitous sensing strategy. This means, a strategy on collecting data in as many places and moments as possible.

Finally, a Design for Baby Experimentation will help retailers understand the potential, as well as, cope with the fast pace of change of smart automation technologies. Today, retailers are experimenting with cashierless technologies, smart shelves, drone delivery, self-driving kiosks, among other innovations. To maximize the probabilities of a successful deployment of these new technologies, leading retailers are developing baby experiments with them. For example, Amazon Go – the cashierless store – was tested with Amazon’s employees for more than one year prior to be launched to the public.

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To learn more about the role of human work in an age of smart robotics, I contacted the President of Universal Robots – a global leader in collaborative robotics – Jürgen von Hollen who is in Denmark. He kindly put me in contact with his team in the U.S. His team shared with me the following: “Some experts have a dystopian view of robotics. They believe robots are here mainly to replace humans in their jobs. On the contrary, we believe robots are here mainly to make humans more powerful, efficient and effective.”

The main question that came to my mind was what would be the fundamental and differential value added by humans in an age of smart machines?

The good news for human workers is that smart machines have an Achilles heel: they are not able to be reliable if they don’t have access to enough data. Therefore, when data is not enough, humans will be highly needed and they will provide a fundamental value to the collaboration. In this type of scenario, the smart machines won’t have any other choice more than asking humans what to do. Then, humans – who don’t have enough information either – will have to use their intuition. Their unique ability to rapidly decide without having enough conscious information.

THE RISE OF THE INTUITIVE RETAIL WORKER

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In my journey to learn more about the power of intuition, I contacted Dr. Joel Pearson who is a National Health and Medical Research Council fellow and Prof. of Cognitive Neuroscience at the University of New South Wales, in Sydney Australia. He also leads the Pearson Lab, a multidisciplinary agile Cognitive Neuroscience research group that does both fundamental and clinical research about the power of human intuition among other fields.

Dr. Pearson told me “our intuition uses unconscious information stored in our body or brain to help guide us through life. This is a human ability that sets us apart from smart machines. I think you are right, in a smart machine + human collaboration; intuition will be one of the fundamental and differential values that humans will bring to the table.”

During our conversation, we identified three main areas to be considered by retailers to foster the intuitive power of their workers. They are: provide more freedom for retail employees to decide on their intuition, facilitate employees’ brain/body storage of unconscious data through job rotation, and foster intuitive creation through the work with outside disruptive entrepreneurs.

• Provide more freedom for retail employees to decide on their intuition.

Today, most retail employees are trained to reduce economic waste by following strict procedures in front of the client. This type of robotic work performed by human will tend to vanish. New HR policies will have to be developed by the retailers to accommodate their workforce to a new reality where human workers won’t need to perform robotic work anymore. A good example of these kinds of policies is the famous Ritz-Carlton’ $2,000 Rule where employees are authorized to spend up to $2,000 per incident – without asking the manager- to rescue a customer experience. I am positive that policies like the one indicated above combined with a culture of appreciation for the right intuitive decisions made by the employees will contribute to make the intuitive power of the retail workforce stronger and more valuable in an age of collaboration with smart machines.

• Facilitate retail employees’ brain/body storage of unconscious data through job rotation.

As mentioned earlier, our intuition uses unconscious information stored in our body or brain to help guide us through life. Consequently, shifting employees from one job role to the other will significantly help the collection of unconscious data which will be fundamental for the employees to improve their intuitive decisions. Additionally, policies to reduce employee turnover should be considered well as part of a generic strategy to foster the development of a more intuitive workforce. The more time in the organization the employee will have, the more the unconscious data collected at work and consequently the higher the chances for the right intuitive decisions.

• Foster intuitive creation through the work with outside disruptive entrepreneurs.

Successful disruptive entrepreneurs are intuitive by nature. Their intuitive abilities help them see opportunities where data-rich corporations can’t. Due to the intrinsic inertia of most retailers, most of their transformational innovation will have to come from partnerships and acquisitions of disruptive startups. In this regard, I recently had an interesting conversation with Ali Ahmed – founder and CEO of Robomart (https://robomart.co/).

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He plans to revolutionize the grocery market with the launching of a unique fleet of self-driving grocery stores. Ahmed told me “I don’t have any doubt that most retailers will have to rely on outside innovation to remain competitive. They will have to work with a constellation of startups whose solutions show a strategic fit with their vision. In this regard, Robomart – the self-driving grocery store – will be ready soon to help these retailers provide a superior and more convenient shopping experience.”

In conclusion, the deployment of smart machines is urgently needed for retailers to liberate the funds required to implement the new business models and practices discussed in my prior articles. As part of this transformation, HR strategies will need to adapt to foster not only traditional rational decision making but also intuitive decision making. I don’t want to say by any mean that intuitive decision making should be prioritized versus the rational one. However, in an age of increasing rational decision making due to the rise of smart machines, my argument is that intuitive decision making – a fundamental ability of humans which cannot be copied by smart machines – needs to be nurtured and protected for retailers to remain competitive.

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Dr. Evaristo Doria worked as an international marketing executive for leading multinationals in Latin America, Asia and the U.S. for more than two decades. Currently, he teaches international business at one of the largest public universities in the U.S. He is also a business consultant helping foreign middle-market companies and startups to successfully expand their businesses into the U.S. market. Dr. Doria is a frequent keynote speaker on topics related to business strategy invited by trade associations, universities, and other institutions from across the world. You can reach him at edoria@edoria.info.

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