Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Kal Juman, principal of Industry Labs and business sales consultant; Imran Abdool, president of Blue Krystal Technologies and Business Insights, and lecturer on finance, economics, and strategy at the University of Windsor; Richard Douglas-Chin, associate professor, English Literature, University of Windsor

In their continual quest to cut costs, boost revenue and maximize shareholders' value, today's corporate bosses have made automation their standard modus operandi.

However, what is often good at the individual firm level is problematic at the societal one: automation has meant bigger bottom lines for shareholders at the expense of "less-skilled" workers becoming unemployed or underemployed. With the rise of populist politicians in America and Europe, companies would be well-placed to rethink their level of automation going forward.

Story continues below advertisement

There are two important aspects to increased automation: brand experience and long-term strategic planning. Automation affects brand experience through reduced – or even eliminated – interaction with the customer. Almost everyone has heard an anecdotal story of a frustrating experience with a self-service or self-checkout counter. Automation has touched all industries; even law and finance have now seen their consumer-interaction significantly eroded. At the corporate level, increased automation represents a trade-off between brand experience and cost savings. The challenge for companies is to find the optimal level in this trade-off, but the difficulty arises in comparing a tangible quantity (cost savings) with an intangible one (brand experience).

The iconic retailer Sears has had ailing brand experience for years preceding its current financial decline. During Sears' profitable years the company hastily paid out excess cash to shareholders rather than reinvesting in Sears' in-store experience. In decades past, Sears had a unique brand experience. Now, Craftsman has been sold off from the larger Sears Holding Corp. and the fate of Kenmore is questionable too. Without a unique brand experience, Sears' bricks-and-mortar stores cannot compete on price point and convenience with online retailers such as Amazon. Sears failed to utilize its vast inventory, cataloging and corporate resources for a first-mover advantage in online retailing before Alibaba and Amazon.

Conversely, when brand experience is successful, a premium can be charged for that success. For example, Apple is famed for its achievement in developing its brand and its ensuing customer experience. Walk into any Apple store and compare first-hand this experience with another technology retailer. One of Apple's star products, the iPhone – at its most basic functional level – is no different from similar products, but the "Apple" experience always commands a price premium.

Being cognizant of the trade-off between automation and brand experience not only benefits corporate shareholders but our broader society as well. Two futures can exist in the relationship between corporations and their workers: one where corporations have higher profits and less employment or one where employment and corporate profits rise in tandem. A company can boost innovation, profits and employment by combining risk-taking with empathy for consumers and workers.

It can be argued that a company's present stock price captures the market's perceptions of automation benefiting a company – this is a standard assumption of modern stock pricing in which the current price is based on all available information. However, it can also be argued that market perceptions can and have been significantly wrong – e.g., the dot-com bubble, the recent subprime crisis and behavioural finance research. Therefore, current financial markets may be overvaluing automation.

With regard to strategic planning, it's no secret that investors and financiers are short-term rather than long-term oriented. Wall Street's culture, as well as the high speed of Internet communication, promote bonuses reflecting short-term performance demarcated by quarterly or annual time frames. The recent incident involving a United Airlines (UA) flight and the forceful removal of one of its passengers demonstrates how quickly capital markets react to perceived company performance: immediately after this story broke, UA stock was down 4 per cent in the next morning's trading – reflecting the speed of capital markets and also consumers' swift negative judgment on UA's brand experience.

Perhaps it is time for a novel approach: link corporate bonuses to a long-term performance horizon. Specifically, CEOs shouldn't leave with a golden parachute or be able to cash out stock at current prices. Instead, there should be a time delay of five to 10 years before cashing out a significant portion of their stock – thereby aligning their incentive with long-term corporate (and incidentally societal) good.

Story continues below advertisement

This trend is already beginning: the number of IPOs in America has fallen significantly over time. Private capital markets are seen as longer-term oriented than their public counterparts. Company founders and stakeholders are beginning to express their preference for this type of governance and financing. They are recognizing that automation can be a substitute or a complement, and with proper planning the latter is quite profitable.

Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies