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Digitization of Business: Why the Economy Still Needs Horses

Some think that the role horses now play in the productive economies of the rich world foreshadow what will happen to humans over the next 50 years or so, but the story is more complicated than it seems

Canaries may signal trouble in coal mines, but apparently horses are a better bet when comes to understanding what robotics will do to the human workforce.

In its recent review of a paper by Daron Acemoglu of the Massachusetts Institute of Technology and Pascual Restrepo of Boston University, The Economist used the example of the horse to illustrate what could happen to human workers as firms deploy robots. In the early 1900s, 21 million horses and their literal horse power moved the US economy.

But the value of horses for their muscular power plummeted with the development of the internal combustion engine. By the early 1960s, the number of horses in the US fell below three million, a roughly 85% decline from their peak. A clear example, if you needed one, of the disruptive power of technological advance.

Factory Floor and Trading Floor Alike

Examples like the fate of the horse are not hard to find. Acemoglu and Restrepo, for example, calculate the US lost between 360,000 and 670,000 jobs between 1990 and 2007 due to the deployment of industrial robots.

And the factory floor isn’t the only place to look. The highly skilled, highly compensated lawyers no longer needed at JPMorganChase or the traders at Goldman Sachs, recently unemployed because software can do what they do, give evidence to the widespread reshaping of the workforce firms should expect in the coming years. Indeed, McKinsey and others have calculated that most jobs are at risk of significant change as a result of new technology.

But before the pessimist faction in the robots versus humans debate declare victory, everyone would be well-served to take another look at horses. Horses have made something of a comeback. Since their nadir in the early 1960s, the number of horses has grown to over 10 million and their direct and indirect economic impact has grown to over $100 billion. While few are now pulling plows, many are running around in the West or on horse tracks or simply grazing out in the pasture.

Horse employment in the US has grown by roughly five times in the past 50 years but horses are doing nothing like what they were doing before. Two decades into the 20th century horses were valued for their muscle. Two decades into the 21st, they are valued for their beauty and the aesthetic pleasure of their “horseyness.”

The obvious rejoinder is to point out that even at 10 million and $100 billion, horses represent only a fraction of what they were a hundred years before. But the real moral of this story is what it says about the potential for how “talent” and what constitutes value can be reinterpreted. Horses didn’t reinvent themselves. People reinvented horses. Imagine, then, what people could do for themselves if – or when – the situation calls for it.

Still a Growing Need for Humans

The need for uniquely human qualities in business is great and getting bigger. As business leaders automate, replicate, and “robotize” human labor in both cognitive and muscular roles, as they surely will, they must also ask themselves what they need to grow their companies.

Robots and software can’t produce those answers, at least not yet. Those answers, and the implementation of them, reside with people. Just as humans gave a new future to horses by deploying their “horseyness” differently, the most thoughtful business leaders are putting exceptional time and attention into how they engage and deploy the distinctly human qualities of creativity, problem solving, and invention present within their workforce. And they are doing so in three ways.

  1. Grow the strategic capacity of their teams: Operational activities consume much of the day-to-day bandwidth of many teams. This renders them unable to focus on higher value-added or “strategic” activities that are essential to supporting a firm’s growth and innovation over time.

    Leading firms unlock growth by unlocking the strategic capacity of their teams.

  2. Align functional priorities with strategic opportunities: Firms should deploy human capacity in the right way by ensuring business leaders’ priorities are well-aligned with planned functional support.

  3. Institutionalize “efficient growth” disciplines: Efficient growth leaders, defined as those companies who have paired long-term revenue growth with simultaneous margin expansion, use their human workforce to do four things (see this research for more).


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2 Responses

  • Debra Logan says:

    Full disclosure here: I am a Gartner analyst and Peter mentioned this blog post to me a while ago at a meeting we had to integrate our two companies. I try and mention horses in every conversation I have but not ONLY because I ride and love horses. When the inevitable happened (I talked about horses) Peter mentioned this blog post. Here is why its important for a business audience. I am involved in work that is an outgrowth and evolution of riding for the disabled (as it officially known) which has been going for many years now. As it turns out, horses can do a lot more for us than be beasts of burden or even beautiful expensive pets. Horses are participating in a huge range of activities aimed at the human body, mind and spirit. They are co-facilitators for example in therapy aimed at helping people on the autistic spectrum, those with psychological difficulties such as PTSD & trauma and also for helping individuals achieve personal insight and growth. The work I am learning to do is aimed at teams and leaders in corporations, helping them to communicate, work together and focus. The horse’s repertoire of behaviors is much larger than we had imagined and seems to be expanding all the time as we study them scientifically and especially their interactions with people. Every economic & technological advancement it seems leaves some people & even animals behind. The answer is not to go back into the past and recreate hard, dirty, or simply soul destroying work for human being or to discount the jobs that animals can still do. We need to train people for the future and yes – provide a social safety net for those who are unable to change focus or career for whatever reason. I think the partnership between humans and machines will yield the same set of outcomes, but mostly, as with the horse, machines will be our partners, not our masters. Work can & will evolve to be more fulfilling and creative. There are many things that machines cannot and will never be able to do, no matter how much science fiction you read. We don’t even fully understand how humans do certain things (like acquire and generate language) let alone how we would teach a machine to do it. It can be and will be a brave new world – with the same beings playing different roles as with the horse whose possible contributions to human development and growth we are only now beginning to understand and explore. Here is my very favorite example: Miniature guide ponies for visually impaired or injured people.

  • Jo Mills says:

    I really enjoyed this article – thanks for sharing. I look forward to seeing how we leverage our unique human-ness in the coming ‘creative’ age. It is exciting to think of what is possible if we are freed up from menial tasks with our time is liberated to focus on innovation, creativity, helping others and new ways of adding value to the world.

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