What about Innovation & Layoffs?
Layoffs can be a good thing. It can make a company leaner and easier to pivot to other business ideas, especially when the business may be struggling to make the changes necessary to improve profitability.
There’s also the thought that layoffs can cause a business to be more innovative because they have to be just as productive with fewer people, especially when they are struggling with profitability.
The issue is when companies want to leapfrog the implementation of innovative tools and ideas by reducing staff first to save money, especially when its not due to a downturn of business. The productivity gains from the slowdown of the implementation of innovative ideas (like AI) leads to further opportunity losses the companies won’t see right away, but will impact their ability to compete with companies that do give their employees a chance to be less productive and more innovative.
Layoffs Galore
The tech sector has met its reckoning over the last year or so. Tech layoffs have reached over 42,000 at the start of 2024 due to a myriad of pressures including:
Continued requirements for tech companies to prove they are still “growth” companies (even though their growth may be fueled by unproductive innovation, stock by backs, or staff reduction).
Increase in interest rates causing downward urgency to spend money on costly productive innovation, especially for products or services that haven’t produced returns because they have been focusing on cornering the market.
Increase in productivity requirements while decreasing headcount to satisfy the short term goals of their shareholders.
Businesses are looking at AI for new ways of reducing costs while boosting profits. There is a downside to pushing productivity, reducing head counts and implementing new technology at the same time.
Productivity > Professional Development
While anecdotal evidence, businesses are not as interested in investing time in encouraging professional development anymore. Why should they? Either the business will let them go or the employee will leave before the business will get their benefit from the professional development investment. You can see this through the downward trending average tenure at the same business.
This is especially true for those who don’t see their income increase once they have provided more value to the business through their own professional development, so the employee sees the need to be more mobile to recognize those personal gains. In the end, it’s seems that companies are more interested in hiring knowledgable workers and gain instant gratification and productivity rather than hire and develop those employees into strong candidates.
Heres the problem. Being productive means reducing the time spent that knowledge workers can transfer their knowledge to other employees or invest time in productivity tools that can further increase their productivity. What ends up happening is knowledgable employees work until they have gained enough knowledge for upward movement and leave, being the only knowledgable person in their area because just like the business, they are only interested in their own well being and KPIs, rather than being interested in transferring that information to other’s professional development or productivity tools.
AI Growth
AI growth will require less productive employees. Employers can’t just flip a switch and say “use AI.” If employees aren’t given the chance, funding, or capability to develop themselves professionally or train other employees or AI because of their productivity requirements what chance do they have to consider their actions, document their process and train an AI…. Unless its done for them.
This is where businesses can use third party AI companies that come in to be the “AI Expert”. The business can then replace their employees with AI after they teach the AI the ropes and allow the business to replace the employee after the AI has been trained.
Problem is, now we have a cyclical downward trend, where employees, who are already feeling threatened by businesses laying off “unproductive employees” but now feel that if AI can do their job, with no offer of mobility to another business unit, or encouraged to grow their skills outward, why should they help AI? Why should they help the business succeed if they too are not encouraged to try something new and be OK if they get AI to replace their position?
Final Thoughts
I get it, if employers and businesses could make money with no employees, they would easily get rid of all their employees. But innovation is driven by people searching for faster ways to improve their product, and expand their offerings to improve their financial well-being. Most of the time, that requires innovation from different walks and knowledge-bases, which while AI can provide ideas, still requires time for employees to plan, prep, and cultivate the AI.
If employees are told to be as productive as possible with their current work to maintain their KPI’s that have been set by tools made to maximize profitability and productivity, they likely won’t have time to be slow and unproductive to think of new ways to implement the AI we currently have to improve productivity further. Even then, AI is not yet an innovation driver; it can produce and provide input from methods that other people have created AND had the time to write about, but not create new methodologies. That requires a human touch… at least for now.
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