Robots are fast expanding beyond car factories, where they have traditionally been used the most. Mobile robots are carrying food and linen at hospitals. Drones are increasingly used for surveillance and inspection. And farmers are expecting robots to take on a range of new jobs in the fields. But for society as a whole, we are looking towards mass adoption of robots and automation on an unseen scale, says Lars Tvede – a renowned entrepreneur, investor and author, whose work in his words is about “looking into the future”:
“We stand at the cusp of a new hyper intelligent type of economy, driven by an explosive development within artificial intelligence (AI) that enables automation on a whole new level,” he says.
For manufacturers and other businesses relying on physical labor, he expects the technological advances within AI to enable robots to take on many new tasks more efficiently. And when it comes to robots, mass adoption will be a necessity because of especially three important macro trends, he says.
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Geopolitics drive manufacturing reshoring
Since the Covid-pandemic disrupted global supply chains, reshoring manufacturing has become a hot topic in the manufacturing community. Businesses have become wary of exposing their supply chains to global risks that can cause long production delays and critically affect their financial performance.
Lars Tvede does not believe businesses are going to abandon offshoring entirely, but he does expect it to decelerate in the years to come.
“The geopolitical tensions of today creates an incentive for businesses to pull out of danger zones,” he says referring to the war in Ukraine as an example. The growing tension between China and Taiwan is another factor being considered.
Reshoring production to what companies consider to be safer zones is a way of reducing these supply chain risks, he says. But doing so will require an increasing use of robots and automation to enable cost-effective production, especially in those areas where labor costs are high.
There are already signs of reshoring happening, with the growth of US gross domestic manufacturing output outpacing that of imports from 14 low-cost countries in 2022 according to the Kearney Reshoring Index.
Meanwhile, political leaders are creating financial incentives to expand local manufacturing capacity in certain industries where having a local supply is considered critical. The US and EU recently passed legislation to invest tens of billions of dollars into their semiconductor industries aimed at boosting local manufacturing. And this may just be the beginning:
“There is a growing awareness about the need for securing local supply in a range of industries. Many global industries – such as battery and solar panel production – are having their manufacturing concentrated in few places such as China. Without a well-functioning trade with these countries, other countries would be in trouble,” Lars Tvede says.
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Mass customization requires automation
Mass customization is another macro trend that will require a wider adoption of robots and automation according to Lars Tvede. It is a trend that has been spreading across many industries for some time, and continues to be a huge growth opportunity, he says.
Mass customization can be seen in the music industry, for example, when Spotify autogenerates custom playlists for the listener. But also within manufacturing, the trend is seen: Some cars are custom manufactured to the configurations of the individual buyer, and even muesli can be produced in custom mixes ordered by each customer. It’s customization at scale:
“Mass customization often implies a huge number of possible configurations that are only now feasible in a manufacturing context because of automation,” Lars Tvede says.
“It would be way too expensive and complicated for people to do this manually. Automating the entire process and have robots take care of production will be the way to achieve cost-effective custom manufacturing at scale,” he adds.
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An innovation revival requires reversing offshoring trend
The third factor that Lars Tvede expects to impact the use of automation and robots in the future is an unintended consequence of decades of offshoring: the separation of manufacturing from design and development. What this has caused, he says, is a decline in innovation.
Simply put: The best ideas happen when you are actively involved in creating things – and by offshoring production, the main source for innovation has gradually disappeared.
“It is by being practically involved in making things that you come up with new, innovative solutions. In many cases, we see innovation decline when things are no longer developed and made in the same place,” Lars Tvede says.
China, he suggests, has become an innovative country over time for this exact reason: By manufacturing many of the world’s goods, it has gained the practical experience to excel in creating innovation. Countries that have highly concentrated manufacturing clusters in certain industries are much more likely to add new innovation on top of the existing, he says, suggesting a few examples: Luxury watches in Switzerland and luxury boats in Northern Italy.
“That’s why it’s so dangerous to give up on the manufacturing craftmanship. Reshoring manufacturing is necessary to reignite innovation – and to do this in a cost-competitive way, robots and automation will be inevitable,” Lars Tvede says.
Mass adoption of robotics requires a commercial mindset
While the need for robots and automation is growing, mass adoption does not happen by itself, Lars Tvede points out. He founded the company Supertrends in 2019 to track and predict global innovations, and recently co-authored the book From Malthus to Mars about how to adapt to technological change as organizations and individuals. A key lesson about technology adoption, he says, is that it takes time and requires building a commercial ecosystem to build out its applications.
The effect of this is also illustrated in the well-known hype cycle from Gartner, where a core technology at first creates wild enthusiasm and then often disappoints after meeting real-life applications.
“The technology adoption gap happens because the people building the core technologies are often different from those who turn them into useful applications. It’s a different mindset that requires deep customer knowledge and seeing new and often unthought of ways to use the technology,” Lars Tvede says.
He names radio and movies as two examples of how new technology has previously been underestimated by being compared to what is already known:
When the radio was invented, it was at first assumed that people would use it to have books read, he says. And movies were at first thought to be meant for showing theater play. Discovering the full potential of the technologies took time.
“In the robotics industry of today, there is a huge need for people who can look at robots the same way and understand what customers really need them for,” Lars Tvede says.
Why the “as-a-service” model is key to mass technology adoption
Looking at how technologies have picked up massively in other industries can be a key to understand how it can happen within robotics, he suggests. A mistake repeated through history, according to Lars Tvede, is to assume that technology will automatically be adopted when it is technically superior.
“It is very often good commercial development that drives mass adoption,” he says and points out that one of the keys is to look at the types of business models that have worked well for other industries. A common denominator for many of them is the “as a service” concept, he says.
An example was how the photocopy machine was adopted. At first, Xerox faced difficulties selling the machines. But after promising to install them for free and only charge per photocopy, adoption took off, Lars Tvede says. Other examples include the music industry that was disrupted by Spotify’s streaming-as-a-service concept, and the IT industry where software and computing power is purchased on a subscription basis based on usage.
For the robot industry, selling robotics-as-a-service could be the way to increase adoption beyond the early adopters, Lars Tvede suggests. This would mean that end-users start paying not for the robot but the output it produces.
He concludes with a metaphor:
“The purpose of a drilling machine is not the machine but the hole it makes. Most people don’t care about buying a robot – they are only interested in what it can do for them.”
About Lars Tvede
Lars Tvede is a Danish entrepreneur, investor, and author. He has dedicated most of his career to understanding future trends and technologies, both as an investor, author of 18 books, and founder of 13 companies. His latest company, Supertrends, tracks and analyzes past and current innovations with the purpose of predicting future trends.
