This guest post is authored by Cherubic Ventures. Founded in 2014, they are an early-stage venture capital firm that’s active in both the US and Asia, with a total AUM of 400 million USD. Focusing on seed stage investments, Cherubic aims to be the first institutional investor of the next iconic company and back founders who dare to dream big and change the world. Their team sits across San Francisco, Singapore, and Taipei.
The Japanese translation of this article is available here.
The global tech industry is seeing wave after wave of layoffs, from the unicorn level to the top internet giants. Statistics from Layoffs.fyi show that in the less than three months since the start of 2023, layoffs have already exceeded 100,000, with Google, Microsoft, and Meta topping the list.
It’s easy to write these job cuts off to companies cutting spending during an economic downturn, but take a deeper look. The mainstream adoption of work automation tools coupled with the effects of the pandemic has led to a tremendous shift in how manpower is used and organized. And we need to pay attention to the fact that the target of these layoffs has been in many cases middle management.
A recent Bloomberg report discovered that in its latest wave of job cuts, Google has targeted mid-level managers, of which the company revealed it has over 30,000. At the same time as this news, Meta identified 2023 as its “Year of Efficiency”. Tesla CEO Elon Musk has always been at the front of the “lean and mean” approach to management, so it’s no wonder that when asked about his least favorite part of running Twitter, his answer was that every engineer’s code seems to be managed by ten people.
Managers are supposed to make organizations more efficient in hitting targets, but in the current environment, the word “management” is starting to be seen as the new enemy of workplace efficiency and agility.
There seem to be 10 people “managing” for every one person coding
— Elon Musk (@elonmusk) October 30, 2022
When managers become “human routers”
In a tech industry where new technologies can be iterated rapidly and agility is essential to survival, companies are putting more stock in the “lean” mentality. But there’s no getting around the reality that as companies scale, they need to expand their workforce, which is why they need managers to handle communication and make sure all departments are aligned.
However, the result is that managers’ time becomes more and more consumed by managing communication. And when management has no time left for more growth-focused, value-added tasks, companies fall into the trap of organizational hypertrophy. Thus enters the concept of “human routers”, or mid-level managers with little function outside of organizing and disseminating information.
Work automation tools are rewriting the nature of work
The root cause of this trend is that automation and productivity tools are rewriting the nature of work. Today’s software tools can essentially perform the historical functions of mid-level managers, e.g. supervising team productivity, overseeing progress, and document management. At Cherubic Ventures, our productivity tool JANDI solves the interdepartmental communication pain point by letting us create special chat groups based on project, department, task, or topics. It can also assign tasks, monitor progress, and integrate with other apps such as Google Calendar and Salesforce.
A study by a Wharton Business School professor points out that automation in fact creates jobs, referencing how machinery freed past generations of farm workers to take on jobs in the newly created service industry. But when machines can take over tasks like reviewing reports, and perform them without human error, a reduction in the need for managers is inevitable – Gartner predicts that nearly 70% of daily tasks for middle managers will be fully automated by 2024, which will lead to a complete reshaping of this role.
The recent emergence of generative AI like ChatGPT and Midjourney give us a picture of where work automation is heading. All that these tools require is a few keywords or prompts to automatically generate blog posts or design images, with the human user only providing instructions and suggestions for optimization.
This does not, however, signal the end of management. If managers use automation tools to their advantage, more time will be released for high-level tasks such as team building and talent cultivation. And as the 2021 Harvard Business Review article “It’s Time to Free the Middle Manager” emphasizes, companies need to start looking at alternatives to the traditional promotion systems that allow workers to advance without necessarily taking on management responsibilities.
It’s a historical pattern that every new technology results in the replacement of some jobs. The only other constant is that those growth-minded individuals who are not afraid to disrupt the status quo and can coexist with the new technology will always come out on top.