Reports of our death are an exaggeration

Deutsche Bank’s CEO John Cryan thinks his employees’ days are numbered. Machines will do for them, in due course. Not just back office grunts: everyone. High-rolling bankers are vulnerable. Even, presumably, Cryan himself.

“Today,” he warns, “we have people doing work like robots. Tomorrow, we will have robots behaving like people”.

No bad thing, you might say — who will miss a few bankers?

One can detect in this the fashionable view that technology is at a tipping point, at which we will be tipped out. No longer will machines be better than we sacks of meat at routine tasks, but they will outdo us at the hard stuff, too.

A fashionable view. But a big call, all the same.

Technology is not new. As long as there has been the lever, wheel or plough, humans have used machines to get things done: boring things; repetitive things; things requiring brute strength beyond our frail earthly shells. Because machines follow instructions better than we do, by definition: that’s what means is to be a machine. They’re quicker, stronger, nimbler, cheaper and less error-prone.

But they can only operate in constrained environments. They make flawless decisions, as long as the question and the answer are pre-configured. But take a machine out of its designed environment and it is useless: Good luck getting a Jacquard loom to plough a field.

We sacks of meat are better at handling ambiguity, conflict, novel situations. We’re not flawless at it, but whatever the conundrum we can at least produce an answer. We don't hang or freeze waiting for a dialogue box to be clicked: syntax errors are par for the course: we don’t crash.

It’s a partnership. A division of resources. Technology is an extended phenotype. It has caused the odd short-term dislocation but the long-term prognosis has been benign: “labour-saving devices” have freed us to do things we previously had no time to do, or hadn’t realised you could do, before the technology came along. As technology has developed, so has the world's population has grown and rates of poverty and indolence have fallen. Whatever technology is doing, it isn’t putting us out of work.

For technology opens up design-space. It expands the intellectual ecosystem: It domesticates the ground we know, and opens up frontiers we don’t: places where we need smart people to figure out new tools and new ways of operating.

So, if you want to say this has all changed — that now the machines will put us out of work — you have to explain how. What has changed? Why is this time different? We’ve heard this record before: twenty years ago, the wizards told us the internet had changed start-up valuations forever. Didn’t work out so well.

So, are the robots coming for us?

Firstly, remember Cryan is talking his own book. Banking is a hard business to make money in these days. Opportunities to develop new businesses (read: opening new frontiers) are diminished; managing to margin is de rigeur. Mr. Cryan needs to fire as many people as he can. What he doesn’t automate, his competitors will, and they’ll take his lunch. “We’re ditching the meat sacks”: that is what DB’s investors want to hear.

And banking requires less novel judgment than it used to. The West has been — well, won: ploughed over and converted into shopping malls. Much of it can be boiled down to formulating rules and following them by rote. Only the edge cases — where pioneers stand on the frontier gazing into the horizon — require judgment. This is no place for an algorithm. These are the situations of real risk: the “unknown unknowns”.

So, as a strategy for coping with “known knowns” automation is good business. Humans are bad at following rules. They are expensive. They occupy real estate. They require human resources departments. They misunderstand. They screw up. They leave. They don't write things down. Machines are much better on all of these measures.

But, still the race to automate “known knowns” is a race to the bottom. The value in a product is the resources and skill required in producing it. Banking products do not need no fields, raw materials or warehouses: they only require skill. A skill that can be automated, can be replicated. The value of a “skill”, once automated, tends to nil. The margin it generates will tend to zero, too: everyone with a decent PC will be at it.

If Mr. Cryan thinks that is the future of his business, he needs his head read.

Your future, sir, is in your people Those ones who stand at the frontier, staring resolutely into the horizon. They may have robots at their disposal, but only your human pioneers can set them to work.