When consulting firm McKinsey’s Global Institute published a report about the business impact of artificial intelligence in November 2017, the big takeaway, boiled down, was that robots are coming for your paycheck. The report’s prediction that 800 million could lose their jobs to automation by 2030 conjured images of metal men marching into factories and kicking humans off the production line.
Scared? Don’t be. The reality will (in all probability) not be so catastrophic. Perhaps aware that its own hyperbole might have been a bit too effective, another McKinsey report on AI published in April 2018 had an altogether different feel, listing many real-life applications of AI, including technology that can monitor a truck and its driver and coach the human to drive so she uses less fuel, or to watch weather and congestion at airports to reduce flight cancellations. An altogether more reassuring vision.
Even if we don’t know precisely how, we can be sure that the rise of artificial intelligence will affect business. But how? Given that this is an area full of unknown unknowns, how can future leaders prepare for the AI revolution? This was the question asked at a recent conference at Barcelona’s IESE Business School, titled The Future of Management in an Artificial Intelligence-Based World. “We put on the conference because there is a lot of talk about AI, but less about what it means for management,” said Franz Heukamp, IESE dean. “The important thing to remember is that this is not a natural disaster. This technological change is not something that is happening to us, that we can’t control. It is happening because we want it to happen. Dealing with AI is not like putting emergency planning into place to prepare for a volcano erupting.”
Canals added: “A general manager’s task is to make sure the impact is positive. That is the responsibility of society as whole, but at the level of an organisation the task falls to managers. Managers should be thinking about it now, when there is time to prepare.”
‘100% OF JOBS WILL CHANGE’
The first thing to realize, experts say, is that if you think AI will not affect your job — you are wrong. Although many jobs won’t be automated out of existence, they will be impacted. “Ten to 20% of jobs will be lost but 100% of jobs will change,” said Bruno Di Leo, senior vice president of IBM, adding that “this requires education decisions” by students. Indeed, the most forward-looking are already making educational decisions to prepare themselves. Just a decade ago, said Dario Gil, IBM’s vice president for AI and quantum computing, just 30-odd people took the Introduction to machine learning course at Stanford. Now the number of around 1,000. “They don’t want to be computer scientists,” said Gil. “They just know it’s an important tool for everything.”
Tool is an important word. A recurring theme that at the conference was that, despite the hyperbole, AI should be seen as something to be used by managers, not as some independent force with a life — or even a mind — of its own. General AI, a machine that could do anything a human can, is very far away and perhaps even impossible. Much of the excitement about AI is based on experiments like Google teaching an AI to beat human champions at Go, a complex Japanese board-game. However, said Darius Gil, we shouldn’t necessarily see that success as a paradigm of AI’s potential in the real world. With a game the cost of failure is low — losing doesn’t really matter — so it is fairly easy for the program to learn from its mistakes. When teaching a machine to drive a car, for example, we are all aware that the costs of failure can be far higher.
A realistic and non-hyperbolic understanding of AI is vital. “The most relevant competency for managers is to know what’s possible,” said Ilian Mihov, dean of INSEAD business school in Paris. “Algorithms will find patterns in the data, but they can’t interpret them. Managers have to think about what might be happening, then ask themselves how they can create an experiment to test if it’s true. Machines on their own cannot do a lot — you need humans to use them.”
BENEFITS OF AI WON’T BE GAINED WITHOUT EFFORT
Rather than being a threat, AI should be seen as a liberating force, said Professor Tomo Noda of Shizenkan University, Tokyo. Perhps this requires a shift in perception for some of us. Prof Noda said that Westerners tend to be pessimistic about robots and AI, whereas in Japan, with its aging and shrinking population, they are seen as a boon. The Western movie paradigm of an AI such as Hal, the robot in 2001 which kills its human crew-mates, contrasts with Astro Boy, a Japanese manga character who is a cute human-like robot with feelings and a family who saves the city where he lives.
Just as AI can take on boring, routine tasks in factories and free up people to take on more rewarding jobs, so it could do the same for managers. Noda says that if you take management guru John Kotter’s model of management versus leadership, it is clear that many of the managerial jobs such as planning, budgeting, and staffing — in general those tasks which create order and consistency — could plausibly be done by machines. However, leadership tasks such as establishing direction, aligning people, motivating, and inspiring, sound far more like human tasks. “What an AI world means more than anything, is that tomorrow’s business people will shift away from management and towards leadership. Machines will help us become more curious, creative, and entrepreneurial,” said Prof Noda.
Managers have to understand, however, that the benefits of AI won’t just magically appear. “It is true that digital natives are at home with technology and use it for things that older people are not comfortable with, but that is not the same as saying that they all understand the inner workings of digital technologies,” said IESE’s Heukamp.
It isn’t enough just to employ people who do understand the new technologies, either. General managers will still have to create organisations where technological savvy is able to flourish. Nico Rose, vice president of employer branding and talent acquisition at German media giant Bertelsmann, said that they struggled with this. “When we found our businesses would be disrupted by Amazon etc., our first step was to hire brilliant talent from those companies,” Rose explained. “Nothing much happened. Mostly they left again after two or three years because they couldn’t have an impact. It wasn’t their fault; in an ecosystem that isn’t AI-data ready, data people can’t have a large impact. When you hire data scientists, you need two or three data architects, then you need an MBA to translate the results to top management. Then you need to educate top management on what questions they should be asking.”
HUMANS ‘HAVE EMPATHY, AND WE ARE GOOD AT MOTIVATING AND INSPIRING’
Even in an AI world, then, specifically human skills will still be necessary. At the newly launched Shizenkan University, the philosophy is that students should of course take courses in coding, data analysis, and analytics, but also place this in a wider social context. Noda says that the new technology could transform society so fundamentally that we need to ask what sort of a world we want to live in, and what role we want businesses to play. Traditional management education, he believes, is stuck in “20th century paradigms” which assume centralization, silo-ing and hierarchy. The new world might not look like that at all. Thinking about AI involves thinking about the radically new business models that technology enables.
Many softer skills will also remain the domain of humans. For example, we are better at understanding values and evaluating trade-offs, and we will probably remain better than machines at dealing with others who differ in perspective and getting the support and co-operation of others. “Also, we are good at assuming responsibility, which machines can’t do. We have empathy, and we are good at motivating and inspiring,” says Noda.
One important responsibility of general managers will be to ensure that the worst predictions of an AI world do not come true. The workplace is already a hostile environment for some employees andincreasing automation could make it worse. “General managers will have to pay more attention to health and well-being of employees,” said IESE’s Heukamp. “Managers need to be responsible. There is a shared responsibility in society to use AI for positive ends, and inside businesses for general managers to make the workplace a positive environment for employees.”
Examples of technology firms that have ploughed ahead with clever products without sufficient thought about the social effects are easy to find. Uber, for instance, is often criticised for exploiting its drivers. Spotify pays artists so little that they cannot afford to continue making music. Amazon is often blamed for driving shops to the wall. Technology makes many things possible, but are they always desirable? There is no doubt that the emerging technologies can make the world a better place. Perhaps the job of the next generation of general managers is to make sure that they do.