APRIL 2, 1981
Humanizing Technology--A Business Challenge
AN ADDRESS BY James D. Robinson III, CHAIRMAN,
AMERICAN EXPRESS COMPANY
CHAIRMAN The President, Reginald Stackhouse
Ladies and gentlemen: On a cold March day in 1850, a group of men in beaver hats and broadcloth coats met in Buffalo's Mansion House Hotel to organize a new company to carry goods, money and valuables to their destinations swiftly and safely. They could not know that their company would not only be in existence 131 years later, but be known the world over.
They certainly could not know that their enterprise would become more than a company, in fact almost a government--issuing its own form of currency, maintaining its own kind of diplomatic corps, conducting its own foreign missions, carrying on its own international trade, operating its own type of post office, providing even its own efficient police force.
Such, however, is what the American Express Company has become. It did not invent the express business. That's at least as old as those couriers who ran throughout the ancient Persian empire carrying the emperor's messages. But the company has brought the business to where today it is as much a part of our global village way of life as the jet plane and the communications satellite.
The capital of this worldwide commercial empire is the Broadway office over which today's distinguished speaker presides. James D. Robinson joined the company in 1970 after several years in senior business positions. Appointed executive vice-president, he advanced to the presidency in 1975 and two years later became chairman and chief executive officer.
The wide respect his business leadership enjoys is demonstrated by the various directorships to which he has been elected, such as Bristol-Myers, Coca-Cola, Trust Company of Georgia, Union Pacific. His high sense of social responsibility is shown by his membership on the boards of nineteen service organizations including the influential Council on Foreign Relations.
The Empire Club of Canada is therefore privileged to hear a distinguished business leader from the United States and the head of a world-renowned company whose services probably all of us here have used. It therefore gives me great pleasure to introduce Mr. James D. Robinson.
Ladies and gentlemen: It's a great pleasure to be here today, and an honour to address you from this prestigious platform.
Canada and the United States have long enjoyed a unique relationship. We share one of the world's longest and most peaceful borders. We are each other's largest trading and travel partner. From time to time there may be strains in our relationship, but they are momentary in the sweep of history. Our economic future and defence are linked, and I am confident we will continue to work closely together--in a spirit of mutual respect--for many decades to come.
American Express, with Canadian ties stretching back to 1853 when we opened our first offices in Toronto and Hamilton, feels at home in Canada. Since then we have grown with Canada and, we like to believe, have developed a special relationship along the way.
Today, I would like to address an issue which knows no boundaries, and which will become of increasing concern throughout the eighties. That is, the effect of new electronic technologies on our businesses. I am thinking specifically of the business application of data processing and telecommunications.
To put it bluntly, is technology friend or foe? And, is business doing the best possible job of positively integrating these new technologies into the marketplace and the workplace?
You know, as well as I, that there has been a dramatic rush to embrace technology as a key to productivity and prosperity in the eighties. This is as true for service businesses, such as American Express, as it is for manufacturing businesses. But it is equally true that many companies are not managing technology properly. Thus, they are not getting the positive results they expected.
The Japanese, on the other hand, according to a recent Booz, Allen study, have been much smarter about integrating technology into the workplace. What they have done is not a mystery. And it does not require their tradition of lifetime employment. What it does require is the firm conviction that technology can be an ally, provided it is humanized within an organization. Without that approach, many companies fail to achieve the gains in productivity offered by their new investment in hardware and systems.
American Express is convinced that new frontiers in data processing and telecommunications can help businesses navigate the turbulent waters of the 1980s. And we are glad to see an increasing amount of attention being paid, by business, government and labour, to the positive side of technology.
For too long, business and government have been seen as the bad guys in technology debates. We have been accused of being indifferent to the individual worker, and insensitive to the social consequences of our actions. If there was some truth to that accusation in the past, we cannot afford to let it be true in the future. Clearly we must pay more attention to the ways in which we introduce, adapt and employ technology. By doing so we will determine whether technology works for us or against us.
The major question is, "Will man ride technology or will technology ride man?" It was posed by the Pulitzer Prize novelist and poet, Robert Penn Warren, in the business pages of U.S. News and World Report. And that, by the way, is exactly where the question belongs, because it affects the practical decisions the business community makes every day. These decisions range from questions of consumer privacy, information security and the design of high-technology products, to automation in the workplace and its effect on employee motivation, morale and productivity.
Before sharing with you my views on how business can minimize the possible adverse effects of technology, let's look for a moment at two opposing views that frame the technology--friend or foe--debate.
George Orwell's grim vision of 1984, for example, has haunted our thinking about this decade. Orwell predicted a world in which individual privacy was doomed by the all-seeing eye of technology, personified by Big Brother. In effect he warned us against a new form of tyranny, the impersonal, push-button world of science and technology.
On the other hand, Canada's Marshall McLuhan described a more positive role for technology. He recognized, for example, that the reality of instant communication would break down previous barriers between nations and peoples, and would transform our earth into a "Global Village." Other optimists envision electronic technology as offering the prospect of enhanced productivity, rapid growth in new industries and the solution to many of our energy problems. They see the liberation of human beings from the drudgeries of dangerous, repetitive and unpleasant labour.
What these divergent perspectives should bring home to all of us is that the individual and society have ambivalent feelings towards technology and business cannot ignore these love-hate feelings as it increasingly integrates new automated and electronic systems into the lives of its customers and employees.
Indeed, if business wants the advantages of technology, it must take a leadership position in dealing with consumer and employee fears about privacy, information security, technological unemployment, retraining, depersonalization and so forth. To ignore these issues is to run the risk of a social backlash, which would seriously threaten economic growth. This is extremely important in Canada and the United States right now; more so, perhaps, than elsewhere in the world. Why? Because in Canada--as in the U. S.--the technology of Orwell's 1984 is already upon us.
In fact, Canada has been a leader in the communications revolution since the turn of the century. It is the country where Alexander Graham Bell first explored his inventions. It is where Marconi owned and launched the world's first commercial radio station. And it is where the batteryless radio was invented by Edward Rogers, father of modern-day cable innovator, Ted Rogers.
Most recently, Canada pioneered satellite development. It has built and marketed one of the most advanced teletext systems--Telidon. Telidon may well make Canada a major exporter of hardware in the communications industry during the eighties and beyond. Incidentally, American Express thinks so highly of your technology that we are in the midst of converting to point-of-sale terminals in Canada supplied by Northern Telecom. Also, because these terminals are superior to the state of the art in the U.S., we are purchasing over five hundred more for use in the U.S.
In another area, Canada is way ahead of the United States in cable penetration. With sixty-five per cent of the population linked to cable, you are now where we hope to be in five years or so. So it is likely that Canada will quickly become one of the most advanced users of that medium, and will have a better preview than most of the assets and liabilities of our electronic future.
The electronic advances of the 1970s, which have wed the computer and communications industries, will have as profound an effect on society as did the industrial revolution. So one of the questions raised by technology (and well framed by Orwell) is very much on the public's mind: Will we be moving towards a world of increasing uniformity and authority, in which people have less choice, less freedom and less privacy? Or will we be moving in other directions?
I think it is fair to say that, at present, each of us wants the best of both worlds--the advantages of technology coupled with a system of values which responds to and enhances the dignity, rights and needs of the individual. In other words, we want humanized technology, not only with our employees but also in the marketplace. I am optimistic this challenge can be met.
American Express is, among other things, a worldwide data-based communications company. Today, our global communications network carries information essential to providing reliable payment systems, such as the American Express Card and Travellers Cheque. We also are involved in international banking, insurance, publishing and cable television.
Like most of you in this room, many of our backoffice operations are automated and increasingly sophisticated capabilities are being introduced. That's a must, if we're to deliver our products and services more cost-efficiently and effectively. But our experience has taught us about the customer's ambivalent feelings towards automation.
Take, for example, an area like electronic techniques for transferring money--the so-called Electronic Funds Transfer Systems. Will they partially supplant people and paper? Is the cashless society around the corner, as many have predicted? The answer, I believe, is highly dependent on whether consumers believe EF T systems expand or limit their choice, their privacy and economic freedom. In the early 1970s, bankers predicted that EFT systems would totally revolutionize the financial world. They were wrong. They had not reckoned on the voice of the consumer.
The concerns of the public have been well articulated. They fear the lack of permanent paper records, and the potential of fraud. They often object to the immediacy of the funds transfer, which denies them their "float." They prefer the human interaction to the impersonal one. Above all, of course, they fear the invasion of their financial privacy.
In my opinion, these concerns have merit. Business has not paid enough attention to the issue of privacy. And certainly, a high-technology society can't be allowed to be a low-security society where the customers' choice of services is severely limited. Insofar as EFTS is concerned, the financial community has learned it cannot think only in terms of technological efficiency. It must also pay attention to what the consumer wants and needs.
The public's concern about EFTS is but one example of much larger issues that affect nearly every business. More broadly, individuals are concerned about who has access to computer information. They are also concerned about the right to correct misinformation. They are worried about the potential misuse of computerized records, whether by their bank, their healthcare industry, retailers or credit card companies. They want to be assured that the individual is still heard and guaranteed an equal voice with the computer, if problems arise.
Businesses that ignore these fears do so at their peril. That is why many corporations which collect, retain and disseminate substantial amounts of personal information are taking steps to reassure customers that the privacy and security of the information they gather is being maintained.
AT T, for example, the single largest employer in the United States, has redesigned employee personnel forms. And it has taken steps to limit the amount of information it collects from customers.
American Express also has a strict, company-wide privacy code which restricts the use of personal information and third-party access to customer files. In addition, in 1976, we began offering our card-members the option of removing their names from mailing lists rented to other companies. Furthermore, we have endorsed EFT legislation in the US. which protects consumers.
We believe, then, that the business challenge in the eighties will be to harness technology to the service and security needs of the consumer. That may prove far tougher than refining the technology itself.
Let me pause to make one additional point about technology and the marketplace. Others have noted that much of the Western industrialized world has been moving in the direction of becoming a "hightech and high-touch" society. Among other things, this may mean that every technology must have a hightouch component or it is rejected by the customer. Computer games and two-way interactive cable are good examples of systems that offer both. These have been welcomed by the public precisely because they offer a high degree of personal physical interaction with the computer. It is my guess that this is a future direction of consumer technology, so automated teller machines may multiply. But the cashless society may not, because it does not reflect the consumer's needs for control, choice, personalized service and human interaction.
'Now let me turn to the effects of technology within institutions.
The advent of rapid technological change poses a variety of managerial problems. Most people are, in fact, suspicious of change and particularly fear "technological unemployment." Blue-collar workers worry about their jobs being taken over by machines. Clerical workers fear that computers will further routinize their jobs. And when the compensation of middle managers is tied to the number of people supervised, they are undeniably afraid of new staff-reducing programs. Business executives can no longer ignore these issues. The morale and productivity of companies in the next decade may well hinge on how well organizations ease employees' fears about new technologies and the dislocations they will bring to the workplace.
There are a number of steps that senior managers can take. Involving employees in the design of new systems which will affect them is one. Giving great care to the way in which new technologies are psychologically presented is another. Here is where the Japanese have excelled and the West has not.
What happens if a new technology is deployed without proper explanation or sensitivity? A classic example of a poorly presented program took place at an American university not long ago. A highly automated calendar system was installed, essentially to aid the administration in scheduling. However, faculty and staff effectively sabotaged the system, because they saw it as limiting their professional freedom and overregimenting their workstyle.
It seems clear from this, and other examples which I am certain you could supply, that individuals, improperly consulted, instinctively will suspect the worst from technology. Since it has been predicted that future productivity increases will come, in large part, through office automation at the non-clerical level, management must better understand and present these systems if business is to profit from them.
Automation is also changing the mix of blue-collar and white-collar workers. Therefore, addressing the structural problems brought about by technology is another obligation of business. Training programs must be arranged for those whose jobs may be affected.
Employees must be convinced of the long-term benefits of new technologies to both themselves and their companies. We must help them understand that finding ways to do existing jobs more efficiently is in their best interest as well as the company's. Therefore, it should be the personal goal of all business leaders to make certain that people ride technology both in the marketplace and the workplace. Only when businesses address themselves to the impact of technological change on the individual and society will we be certain that technology works for everyone. The coming years will bring, to all of us, the opportunity to tame and humanize technology so that it will be servant to man's needs and not master, so that it will be friend, not foe.
The thanks of the club were expressed to Mr. Robinson by Henry Stalder, a Director of The Empire Club of Canada.