Opinions expressed by Entrepreneur contributors are their own.
Shoppers in Seattle recently got a taste of the future with the debut of Amazon Go. This new store offers a retail experience like no other: Customers walk in, grab items and walk out — no cashier required. Thanks to hundreds of cameras and sophisticated software, the store tracks which items customers take and bills their Amazon accounts for the total.
Remember those once-ubiquitous gas station attendants? In some ways, Amazon's shopping revolution resembles those attendants' demise. Both scenarios represent the same process, where economic growth through increased productivity leads to a new understanding of the value of labor.
Today, we pump our own gas, and nobody thinks twice about it. Now, shoppers in Seattle don't need cashiers.
Certainly, for entrepreneurs, Amazon Go and its new vision of shopping offers exciting opportunities for the future. But, when cashiers become as unnecessary as gas station attendants, where will that labor go? And what will this shift say about the evolution of tech?
A matter of priorities
Austrian economist Friedrich August von Hayek (1899-1992) defined capital as “those non-permanent resources which [cannot be consumed directly] to contribute to the permanent maintenance of the income at a particular level.”
His definition is a mouthful, but von Hayek was on to something. True, cars don't automatically fill up their tanks when they pull into gas stations; people still have to interact with fuel pumps. But pump technology has become so intuitive that the value of a gas station attendant is lower than the value of that same labor in another industry.
What's more, those attendants want to work elsewhere where they can make more money.
The same situation will soon be true for retail cashiers. While these employees once memorized prices and did math in their heads, today's cashiers drag barcodes over a scanner and place products in bags. Anyone and anything can do that — many stores already offer self-checkout lanes. So, what Amazon Go's automated process does is call into question the value of cashiers altogether.
When a customer encounters an issue at the pump today, that person goes inside the gas station to talk with a worker behind the counter. Stores might soon follow a similar model, employing one or two cashiers to troubleshoot problems but eliminating the need for eight open lanes. This qualifies as a cost-cutting measure that ultimately lowers prices for consumers, but that's not the end of it. The real value of these advancements is not the money saved — it's the increases in other types of production. The salary of a gas station attendant creates more value when that money is used in different ways.
Advances like Amazon Go and attendant-free gas stations help both sides of the buying equation. Society as a whole enjoys increased output from workers who are in more productive positions, and those workers earn better wages in more relevant roles. Everyone wins.
Lessons entrepreneurs can learn from Amazon Go
To stay ahead of the curve, entrepreneurs should take lessons from the implementation of Amazon Go and prepare for a world of new opportunities.
1. Embrace technology as a value. Entrepreneurs often use technology to cut costs, but that reasoning in and of itself is flawed. Technology should not serve as a way to spend less; it should offer an avenue to provide more value for customers.
According to Chief Executive, the mid-market companies with the highest growth spend more than double the industry average on research and development. That growth doesn't come solely from cost savings — it stems from increased productivity and new offerings. Any advancement that increases internal efficiency should also provide an external benefit to consumers, such as faster service, better products or lower prices.
2. Stay at the forefront, but don't overextend. Push the boundaries of your comfort zone, but maintain a balance between old and new tech. You don't want to fall behind competitors in terms of technology adoption, but you also don't want to jump on new tech simply for the sake of an upgrade.
Before implementing any new tech, consider the needs of your customers: How will this affect the customer experience, the quality of product or speed of service? The worst technological investments confuse and repel customers, while the best ones fit seamlessly into their existing expectations.
For a prime example of what not to do, remember the doomed juicer startup Juicero. This company raised $120 million to create a product no one wanted: a $700 juicer that was slightly less effective than squeezing produce by hand. The tech failed to make customers' lives better, and the company shut down soon after launch.
3. Be prepared, even when you're not investing. Technology will never stop improving. Regardless of whether your company adopts the newest tools, you still need to be aware of how the presence of those tools could affect your marketplace.
Stay on top of any technological developments relevant to your industry. Even if you naturally avoid early adoption, you'll at least want to know what's going on and position your company to respond if consumer expectations quickly shift.
Had it not been for Waymo, Google's self-driving car subsidiary, automotive companies might have delayed their own autonomous car initiatives. Once Waymo initiated its driverless car pickup program, though, General Motors and Ford both hustled to announce their own plans for ride-sharing services with their vehicles.
Once consumers learn to love a new feature, companies that can meet that need will thrive. Those that wait too long to get started will scramble to catch up.
4. Keep tabs on advances in other industries. Some technology has obvious uses, like a customer-relationship management system for a marketing firm. Other technology does not have such clear applications. By thinking outside the box and considering the possibilities of cutting-edge technology from other industries, entrepreneurs can gain unique advantages.
Look for imaginative uses for tech that would increase the value of what your company offers. Could something that works in a different industry help you streamline your own business, expand your offering or reach a new category of customers? Find uses that aren't obvious or being considered by your competitors.
Another strategy: Create an internal team to evaluate potential uses for new software. Microsoft Garage allows employees to explore new technology and play with unconventional ideas. The fear of failure doesn't exist here; what does is the potential for employees to provide the company with unique technology applications.
In the end, cashiers won't disappear overnight. New technology requires up-front investments, which most companies are not ready to make. Nor are some consumers comfortable shopping at a store like Amazon Go — in the same way some drivers didn't want to pump their own gas after attendants began to disappear.
The future is coming, though. Cashiers will not stick around forever, and new technology will continue to change consumer expectations. By staying on top of trends and investing in the right technology, entrepreneurs can keep pace in evolving industries and create more value for their customers — as well as jobs for those reduncant cashiers.