How AI will Fundamentally Shift Business Management Practices
…a human approach to managing AI for your business
Abstract
This white paper aims to guide small and medium-sized business leaders with insights into how artificial intelligence (AI) will reshape business management practices and provide practical strategies for leveraging AI and adapting to the opportunities and challenges it will bring. Understanding its implications is essential as AI becomes more integrated into business operations. With the inevitable integration of more advanced AI and machine learning tools into business, it is crucial to understand the implications of AI in the workplace, prepare for the changes it will bring, and capture the opportunities it presents. Namely, to turn your small or medium-sized business into a new workplace based on human-machine interplay – or collaborative intelligence – that can explode the possibilities of efficiency, value, and even reinvention of your company.
Introduction
Business will undergo a dramatic transformation driven by the rapid advancement and inevitable integration of artificial intelligence (AI) into everyday business processes, including decision-making. As a small or medium-sized business owner, you may have understandable concerns about how AI technology could impact or transform your business. The good news is that AI technologies can redefine organizational roles and functions in a positive way, showcasing their potential to enhance human capabilities rather than replace them. The challenge lies in the fact that there are not nearly enough people with even a basic understanding of AI technologies. Yet collaboration with AI systems will become not just an advantage but a necessity for organizations and their leaders seeking to thrive in an increasingly complex business world. Integrating AI tools into business management offers unprecedented opportunities to enhance decision-making, optimize operations, and foster innovation and change. However, it also raises vital questions about the future of work, the skills required for those changes, and the ethical considerations of delegating not only specific tasks but potentially critical decisions to algorithms.
To tackle some important business management issues, let’s discuss five essential questions:
What’s really going on out there, how is AI likely already impacting your business decisions, and what will likely occur in the near term?
What do you want to accomplish with AI, and how can AI help your business grow, thrive, and evolve?
What is a reasonable strategy to address the impact of AI from a business management perspective?
How do you make this new AI technology work for your business?
As a leader, how do you enable your organization's culture to succeed with AI?
The Current State of AI in Business: What’s going on out there?
Looking back 10 years from now, we will undoubtedly view today as the beginning of artificial intelligence in our business practices. As AI has moved from the fringes of Silicon Valley to the core of business strategy and operations, its impact will be transformative and far-reaching. AI is being integrated into various business models, transforming traditional operations and setting new benchmarks for efficiency, but it is far from being fully utilized. According to the US Census Bureau, 77% of the American workforce is employed in businesses with fewer than 500 employees, presenting an enormous opportunity for those small businesses to leverage AI, and compete more effectively with this transformative technology.
You can see AI’s footprint in many types of businesses in different industries. For example, in financial services, AI algorithms are deployed to detect fraudulent transactions and manage risk, using vast datasets previously untapped due to their complexity.
Retail uses AI to personalize customer experiences by analyzing shopping patterns and preferences, thus enhancing customer loyalty and increasing sales.
In healthcare, AI assists in diagnostic procedures, patient data management, and predictive analytics for patient care, fundamentally changing the approach to providing patient care. And in medical research, AI holds incredible promise for advancement in scientific discoveries and hope for patients. These advancements will change how medications are designed, developed, and leveraged to enable physicians and other healthcare providers to diagnose, advise, and consult with patients about their medical conditions.
Manufacturing and logistics will see a significant shift with the integration of AI. Predictive maintenance, powered by AI, anticipates equipment failures and schedules preventative repairs, helping reduce downtime and operational inefficiencies. Supply chain management has the potential and has been revolutionized with AI-driven logistics, optimizing routes and inventory levels, and responding in real-time to changes in demand or supply chain disruptions.
In human resources, AI streamlines the recruitment process by automating routine tasks, like sifting through resumes to identify the most suitable candidates, thereby allowing HR professionals to focus on activities that cannot be automated.
Marketing departments leverage AI to analyze consumer behavior, predict market trends, and automate digital campaigns, leading to more targeted and effective marketing strategies.
What’s going on out there? There has been a complete change in the business landscape, and these examples represent just a glimpse of AI’s current applications. They underscore AI's versatility and ability to enhance human capabilities, leading to more informed decisions, greater efficiency, and novel approaches to all manner of business and societal problems. As AI continues to evolve, its potential to reshape industries becomes even more profound, highlighting the need to understand and embrace this technological and cultural reality.
Human Solutions in the Age of AI: What do you want to accomplish?
As AI becomes increasingly standard in business, the role of human expertise will undergo a significant transformation. Rather than being replaced by AI, human skills and capabilities will become more crucial than ever in guiding, interpreting, and leveraging AI systems for optimal performance and outcomes. Skills like domain expertise, creativity, and ethical judgment will become even more critical. These human capabilities are integral to interpreting AI-generated data and making strategic decisions that align with a company’s vision and mission—decisions that computer programs cannot make.
In the age of AI, being able to apply creative problem-solving and critical thinking to complex business challenges will become an increasingly valuable trait. Although AI is highly proficient at analyzing large datasets and recognizing patterns within them, humans possess unique skills for making sense of complex data and creating innovative solutions. AI does not generate novel ideas and engage in imaginative problem-solving alone. A striking example of this is the case of Airbus, the European aerospace corporation, which used generative design (an AI process that quickly produces many possible design solutions based on set criteria) to create a new aircraft partition that was 45% lighter than traditional designs. Once created, however, it was the engineers who interpreted the AI-generated designs and applied their own expertise to ensure the partition met safety standards and could be manufactured efficiently [2].
Another area where human oversight and judgment remain key is in making ethical judgments and navigating moral dilemmas. As business management increasingly relies on AI tools and reports for decision-making, there is a legitimate and growing concern about algorithmic bias and the potential for unintended consequences. To ensure AI technologies operate following organizational principles and social expectations, it is crucial to have human supervision and the ability to intervene when necessary. For instance, when Amazon discovered that its AI-powered recruitment tool was discriminating against female candidates, it was human managers who recognized the issue and took steps to correct the bias [1]. To thrive in the age of AI, businesses must prioritize the development of human skills that complement and enhance AI capabilities.
Although people are no doubt concerned about their jobs and whether they may be made redundant by these AI systems, the reality is that AI will create new or different job opportunities, demanding uniquely human skills.
So, what do you want to accomplish? As we’ll discuss further, you must reinforce the value of empathy, emotional intelligence, and interpersonal communication skills as highly valued because humans will manage and oversee these systems. While there may be job loss, your team members who thrive will adapt and embrace new, expanded opportunities rather than resist these changes.
Collaborative Intelligence with AI: How do you begin to make it all work?
Collaboration between humans and machines is the key to making AI work appropriately in your business. As AI becomes more sophisticated and ubiquitous, the most successful organizations will be those that can effectively harness the power of human-AI collaboration. Rather than viewing AI as a replacement for human workers, forward-thinking companies recognize that AI's true potential lies in its ability to augment and enhance human capabilities.
The most promising model of human-AI interaction is collaborative intelligence, where humans and machines work together in a synergetic way. In this model, AI systems are designed to support and enhance human decision-making rather than replace it entirely.
For example, in medicine, AI algorithms can analyze vast amounts of patient data and provide doctors with insights and recommendations. Still, the physician ultimately makes the final diagnosis and treatment plan based on human expertise, judgment, and consultations with the patient. So, in this case, we see collaborative intelligence at work—avoiding putting too much faith into algorithms but augmenting the knowledge of the doctor and the patient to make a workable and more informed decision.
Engineering applications are another area where collaborative intelligence shines. By leveraging AI's processing power and pattern recognition capabilities, humans can generate novel ideas and solutions that may have previously been overlooked or considered impossible. A prime example is generative design in product development: Engineers can input design parameters and constraints into an AI system, generating hundreds or thousands of potential designs, to recommend several optimal solutions. The human designers can then evaluate and refine the AI-generated designs, leading to innovative products that may not have been conceived through traditional methods alone, as in the Airbus example above.
A primary key to successful collaborative intelligence is design and use of AI systems that are transparent, explainable, and aligned with human and organizational values and goals. Many AI systems are "black box" algorithms that make decisions based on opaque criteria. However, AI systems should be developed with “clear box” parameters and feedback loops, sometimes including stopping points in the process, allowing human oversight and intervention. While this approach runs contrary to how many AI application interfaces are designed, it enables teams to fully understand why decisions are being made and how the system arrives at a conclusion. This not only helps build trust in AI among the team but also ensures that the AI is being used in a way that is ethical and beneficial to the organization.
To fully realize the potential of collaborative intelligence, businesses must also invest in training and education programs that help current team members understand and adapt to work effectively with new AI systems. This includes not only technical skills but also "soft skills" like critical thinking, creative problem-solving, and emotional intelligence. By fostering a continuous learning and adaptation culture, organizations can ensure that their workforce is prepared to thrive in an AI-driven future.
How do you make it all work? By combining the unique strengths of both people and machines, organizations can unlock new levels of innovation, productivity, and growth. The key is to approach AI not as a threat or a panacea but as a tool that can help us achieve more than ever before through collaborative intelligence.
Challenges of Integrating AI in Business Management: What’s a reasonable strategy?
While the potential benefits of integrating AI into business management are vast, the process is challenging. As organizations navigate this change, they must address various concerns, from the fears of job displacement to the ethical implications of relying on algorithms for decision-making.
As a business leader, the most critical issue is the need for a significant shift in managerial skills and mindset. As AI takes on more complex tasks and decision-making responsibilities, leaders must learn to work alongside these systems, interpreting their outputs and making judgments based on a combination of data-driven insights and human intuition. This requires new skills, including data literacy, critical thinking, and especially the ability to communicate and manage change effectively within their teams about the AI systems they oversee. Business leaders who can successfully adapt to this new paradigm will be well-positioned to lead their organizations in the age of AI and enhance their own skills and careers.
Effective communication is essential for successfully integrating AI into current processes because the integration of AI raises legitimate questions about decision accountability and transparency. As AI systems become more complex and autonomous, it becomes more difficult to trace the reasoning behind their outputs and recommendations. Lack of explainability can erode trust, particularly in cases where AI-driven decisions have negative consequences, such as in the Amazon discrimination example above. Leaders must clearly communicate with their teams to implement AI systems and processes that are transparent and auditable, with established methods for human oversight and intervention to resolve the inevitable problems that will occur with these technologies.
Communication is the key to effective change management. AI has a tremendous capacity to enhance productivity and decision-making, but introducing AI into business processes can be disruptive, requiring significant changes to workflows, roles, and entire organizational structures. Leaders must carefully plan and communicate these changes, engaging everyone in the process and providing the necessary training and support to help them adapt. This will likely require a significant investment of time and resources, but it is essential for ensuring the smooth integration of AI while maintaining employee morale and buy-in.
What’s your strategy? Clearly, AI's potential benefits in business management are too significant to ignore. By proactively developing a strategy to leverage these benefits and invest in the necessary skills and infrastructure, organizations can position themselves to thrive in the age of AI. As with any transformative technology, the key is approaching AI integration with a clear strategic plan, an open mind, and a commitment to continuous learning and adaptation. With the right leadership, vision, and effective communication, AI will become a powerful means for accelerating business success and unlocking new opportunities.
The Role of Leadership in Human-AI Collaboration: How do you embrace this new culture?
The cultural implications of AI transformation cannot be understated. And when it comes to culture, leadership is everything. The role of leadership in fostering successful human-AI collaboration cannot be overstated. Leaders have no choice—they must navigate the complexities of this new landscape, ensuring that their organizations are well-positioned to leverage AI's power while supporting the needs and well-being of their workforce.
As in all radical change, the primary responsibility of leadership in the age of AI is to develop a clear and compelling vision for how the technology will be used to drive business and personal success. This requires a reasonable understanding of AI's capabilities and limitations and a clear strategic method to align AI initiatives with organizational goals and values. Leaders must communicate this vision effectively to all stakeholders, building buy-in and enthusiasm for transforming the culture of their teams to weave AI into nearly all aspects of their work.
The need for cultural leadership, a practical example.
While Robotic Process Automation (RPA) is a precursor of AI (RPA is “doing,” while AI is “thinking”), both technologies can have similar disruptive effects. For example, in 2019, process mining was implemented in various financial areas at a site of a large global company. Process mining identified areas for efficiency improvement, primarily by eliminating unnecessary repetitive activities.
As a result, it was decided to introduce RPA (substituting relatively simple algorithms for costly staff time that could be used more productively on more difficult problems). The whole endeavor was fraught with concerns from the employee population. The main question was: Will my job be eliminated?
Addressing an audience of over 500, some of whom were tense, the executive in charge responded to that question, saying, “Maybe,” but then added a more optimistic outlook, encouraging those worried about implementing algorithmic systems to view it as an opportunity for development: “This is a chance to use your brain power for more important work. Embrace it, learn, use your natural human interaction abilities, and become a lifelong learner. If you do that, you’ll be great.”
Implementing a simple RPA system, seemingly harmless after five years, caused great angst. But the concerns are like AI implementations today. Your teams need to embrace and learn these new methods. Remember, human relationships are everything. The cultural emphasis on the importance of personal change in the face of positive disruptions like AI reinforces continued relevance, reassuring people about the true value of their interpersonal and intellectual skills in the evolving workplace.
The takeaway? Those who flourished viewed RPA as a catalyst for expanding their personal horizons. AI implementation will be similar because changing a culture to adapt to any disruption ultimately comes down to the “me issues.” Cultural leadership is about communicating personal value to those who run your business on the front lines. And all of us who adopt lifelong learning and prioritize the human element in our work will thrive.
To bring this vision to life, leaders must invest in the necessary infrastructure and talent to support AI adoption. This includes the technical resources required to develop and deploy AI systems and the human capital needed to work alongside them. Leaders must prioritize recruiting and retaining employees with the skills and mindset to thrive in an AI-driven environment, such as data literacy, adaptability, creative problem-solving, and even more teamwork. They must also provide ongoing training and development opportunities to help their workforce stay ahead of the curve as AI technologies evolve.
Effective leadership in the age of AI also requires a solid commitment to ethics. As AI systems become more influential in decision-making processes, leaders must ensure that they are designed and used in ways that align with organizational values and societal norms. This requires establishing clear guidelines and governance structures for deployment and fostering a culture of transparency and accountability. Leaders must also engage in discussions with employees and customers to address concerns and build trust in the organization's use of AI.
So, how do you, as a leader, embrace this new culture? Perhaps more than the technological changes, the cultural changes in the age of AI highlight the criticality of solid leadership practices. By developing a clear vision, investing in the necessary resources and talent, prioritizing ethical and responsible AI practices, and managing cultural change by modeling collaborative behaviors, leaders will unlock the full potential of human-AI collaboration and drive their organizations forward in profitable, new, and innovative directions.
Looking Forward
Several key trends and predictions emerge as we look to a future where AI will fundamentally shift business management practices. While the exact trajectory of AI development is difficult to predict with certainty, some clear trends are already emerging.
The most obvious trend is the rapid growth and advancement of AI technologies. As these new machine learning and artificial intelligence systems become more sophisticated, they can perform increasingly complex tasks and aid decision-making responsibilities. This includes everything from strategic planning and risk management to supply chain optimization. Organizations that can effectively leverage these advanced AI capabilities will have a significant competitive advantage in efficiency and productivity.
Another key trend is the rising importance of good data. As AI systems rely on vast amounts of well-curated data to learn and make predictions, organizations that can effectively collect, manage, cleanse, and analyze Big Data will be well-positioned to reap the full benefits of AI. This will require investments in data infrastructure, data governance, and data analytics capabilities, as well as a culture that values data-driven decision-making.
As AI systems become better at understanding and responding to natural language, they can engage more naturally and intuitively with everyone. This will lead to better collaboration and co-creation, where people and AI work side-by-side to generate ideas, solve problems, and make decisions.
The ethical and social implications of AI will also become increasingly important. As AI systems become more influential in shaping business decisions, organizations must grapple with fairness, transparency, and accountability questions. This will require the development of robust ethical frameworks and governance structures to ensure that AI is being used responsibly and beneficially. It will also require ongoing dialogue and collaboration with customers, policymakers, and even community organizations to address the broader societal impacts of AI.
Most importantly, the future of AI collaboration within your business will be shaped by managing culture: the evolving skills, capabilities, and engagement of the workforce. As AI takes on more tasks and decision-making responsibilities, the unique perspective of people in a diverse workplace will become even more important, requiring a focus on developing skills and capabilities that are uniquely human: creativity, empathy, and critical thinking will dictate the success of our AI systems. Organizations that invest in their employees' ongoing learning and development will be positioned to harness the full potential of collaborative intelligence.
While integrating AI into business management presents its share of hurdles, organizations that proactively embrace this transformation and adapt their strategies stand to gain a significant competitive edge. Have a clear vision, invest in talent, and foster an innovative culture of continuous learning—these are the human solutions needed to harness AI's immense potential and expand your business for innovation, growth, and success in our increasingly complex world.
[1] Dastin, J. (2018, October 10). Amazon scraps secret AI recruiting tool that showed bias against women. Reuters. https://www.reuters.com/article/amazoncom-jobs-automation/insight-amazon-scraps-secret-ai-recruiting-tool-that-showed-bias-against-women-idUSL2N1VB1FQ/?feedType=RSS%26feedName=companyNews[2] Autodesk. (2020, January 21). Airbus: Reimagining the future of air travel with generative design. Autodesk. https://www.autodesk.com/customer-stories/airbus