Automation is the name of the game especially within retail and service industries, according to Michael Saltsman, research director at the Employment Policies Institute. As minimum wage laws increase, retail and service industry employers are relying on technology, such as self-service kiosks or tablet-ordering at restaurants, to replace customer service jobs. His zinger at the end of his WSJ article sums it up: “San Francisco-based Momentum Machines has a burger-flipping robot that replaces three full-time kitchen staff, makes no wage demands and stages no walkouts.”
While that is a hard robot to out-compete, Saltsman does not look far enough down the trend-lines. Competitive advantage based on technological advancements is temporary, as those advancements can be easily replicated and commoditized. The printing press was revolutionary at its time, but now there is a printer in every home. Apple’s iPhone is losing ground to Samsung’s brand. On the other hand, truly human behaviors and characteristics – our character, creativity, ideas, and so on – are much harder to replicate. If machines are going to take over more and more human tasks for us, the question for employees and employers alike is what can they do that is singularly and uniquely human, because therein lies lasting competitive advantage.
Problems arise when we start to pit machines against people in a way that forces people to become more machine-like, to be more industrious, efficient and productive. MIT academic Zeynep Top has recently published a book, The Good Jobs Strategy, which argues that low-cost retailers who treat their employees well and entrust them with freedom — as humans, in other words — outperform those who don’t on some key metrics.
The retail industry is a perfect test because retailers primarily compete based on cost, so the intuitive logic would be that those who save on labor costs have an advantage. But Top profiles four low-cost retailers who treat employees well — Costco, Trader Joe’s, Mercadona and QuikTrip — and contrast them to the Walmarts of the world. Here is a stunning metric:
If you had invested $100 in Walmart 10 years ago your money would have grown 40 per cent; invest in a company with a “good jobs strategy” such as Costco and your money would have tripled.
How is this so? One of the reasons is that “bad job” employers lose money in lost performance through bad training. Walmart hires staff at the last minute on hourly rates to deal with unpredictable customer traffic, whereas Costco “shifts employees between jobs and occasionally offers staff unpaid time off work.” Another is that “good job” employers give their workers more power. Zara allows shop assistants to suggest local improvements to window displays, “sending snapshots back to head office for approval.” Her book is a collection of case-studies rather than a standardized survey of all major retailers, but these detailed examples demonstrate that competitive advantage can lie in simple humanity.