Automation’s double-edged impact on efficiency

"The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” – Bill Gates We tried the eGov app for the first time when my wife and I arrived at the Ninoy Aquino International Airport to fly to Singapore.

We snapped the QR code, registered our passport information, and received our travel registration within a minute. "Wow," we said, "from the usual handwritten travel registration to a fully online one—this is amazing!" But upon reaching immigration, we were shocked by the extensive queue at the immigration counter, which delayed us for two hours. Some may argue that this is a great first step in automating travel in the country.



Indeed, it is. However, it also magnifies the inefficiencies plaguing our airport, especially when compared to Singapore's fully automated immigration process. Automation can streamline processes, cut costs, and improve output quality.

Yet, it also carries inherent risks, especially when introduced into poorly structured systems or those with underlying inefficiencies. When applied to inefficient systems, automation can exacerbate existing problems, leading to increased costs and compounded inefficiencies. Real-world examples, particularly in the Philippine context, demonstrate this principle and serve as a reminder of the importance of strategically evaluating processes before implementing automation.

One clear example of automation enhancing an already efficient system can be seen in logistics. Take Lalamove, a major player in the Philippine delivery sector, which has optimized its operations through automated route planning and real-time tracking. Lalamove already had structured and efficient operations with standardized procedures for delivery management.

By adding automation, they scaled their services effectively, providing faster deliveries and optimizing fuel costs through meticulous route calculations. With these efficiencies amplified by automation, Lalamove not only met increasing demand but also strengthened its market position. This example highlights how automation can expand an already efficient business model and elevate customer experience by reducing delivery times and providing live updates on parcel locations.

In contrast, consider an example of automation applied to an inefficient process where it exacerbated existing issues. The Department of Education (DepEd) implemented a nationwide learning management system to adapt to online learning demands during the pandemic. However, due to a lack of proper infrastructure and connectivity issues in remote areas, the system experienced numerous failures.

Instead of improving access and learning outcomes, the automated system led to increased frustration among students and teachers, who often faced interrupted service, unresponsive modules, and inadequate technical support. This automation magnified the system's inherent inefficiencies: insufficient internet infrastructure, lack of appropriate devices, and inadequate teacher training on digital tools. Without addressing these foundational issues, the automation worsened existing inefficiencies, leading to wasted resources and unmet educational goals.

This scenario exemplifies the principle that applying automation to a flawed process only magnifies its deficiencies, underscoring the need for foundational improvements before investing in technology. In manufacturing, Jollibee Foods Corporation, the iconic Filipino fast-food chain, provides another pertinent example of automation amplifying operational efficiency. Jollibee successfully automated its supply chain management.

Jollibee's well-organized supply chain and inventory management systems were further enhanced by automation, enabling consistent customer service and high standards. In addition to benefiting Jollibee, these improvements also positively impacted their franchisees, who could rely on a steady supply chain to improve their sales and customer service. This case demonstrates how automation can be a powerful tool when applied to processes that are already well-managed and efficient.

One key lesson from these examples is the importance of assessing and improving operational processes before embarking on automation. When a process is streamlined and efficient, automation can yield exponential benefits by replicating best practices and enabling scalability. Conversely, automation can expose and exacerbate inefficiencies in poorly designed processes.

For businesses considering automation, this calls for an initial phase of analysis and improvement, ensuring that systems and workflows are optimized. Establishing a strong foundation, in terms of efficient processes and adequate infrastructure, is crucial to avoid common pitfalls associated with poorly implemented automation. Another consideration is that technology should not be viewed as a blanket solution for all operational challenges.

Both companies and government entities need a nuanced approach, aligning automation initiatives with clear goals and a strong understanding of their specific needs. In the Philippines, where digital infrastructure varies widely and operational challenges can range from logistical issues to bureaucratic complexities, the stakes are particularly high. Businesses and government agencies should not rush into automation without carefully assessing their existing workflows.

By aligning technology with efficient practices, they can harness its true potential and achieve the positive outcomes that automation promises. In the end, the principle articulated by Bill Gates serves as a practical reminder for business leaders: automation is only as powerful as the processes it supports. The lesson is clear: businesses must refine their processes first and recognize that technology is an enabler, not a cure-all.

This approach not only maximizes returns on technology investments but also fosters resilience and adaptability, empowering organizations to thrive in an increasingly automated world. The author is the Founder and CEO of Hungry Workhorse, a digital, culture, and customer experience transformation consulting firm. He is a Fellow at the US-based Institute for Digital Transformation.

He is the Chair of the Digital Transformation IT Governance Committee of FINEX Academy. He teaches strategic management and digital transformation in the MBA Program of De La Salle University. The author may be emailed at [email protected].