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I had an interesting and unexpected debate on the sidelines of a private equity conference last week in London. It was fascinating because the topic was automation and the protagonist, a hedge fund manager.

For years there have been arguments in various corners of digital advocacy about the future of digital enterprises comprised of mostly automated (doing the work of humans) and even autonomous (working completely without humans) businesses. We have seen this in the blockchain world with decentralized autonomous organizations (DAOs) based on smart contracts but nothing yet mainstream. The DAOs referred to humans as “oracles”, necessary to perform specific tasks in the physical world, like load a pallet, underwrite an insurance policy or raise investment funds. Although some argue, those functions can be eventually automated too.

My friend argued that the core business of hedge funds (trading) is already 80% automated, and the rest can be completely automatic. What’s left for humans is the “strategy bit,” like the investment thesis. On the other hand, traditional businesses, like manufacturing, services, and even technology, are laggards with less than 30-40% of their core business automated.

The most exciting segment of automation is about augmenting human performance. An oil & gas investor at the same event told me that they wanted their high priced engineers freed up from filing documents. A hospital chain wants its physicians ultimately augmented with robots that can take care of patient reports, insurance coding, and even preliminary diagnosis. A strategy firm wants its consultants to be 100% customer facing and file engagement status updates and expense reports with bots.

The brave new world is imminent, and as some of the early adopters of augmented robots have seen, augmented businesses will always outperform traditional ones both in EBITDA and in customer and employee engagement.

Mature businessman or a scientist with gray hair with a robot.


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