“The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process.”
– Economist, Joseph A. Schumpeter
According to Fortune, FUD—or fear, uncertainty, and doubt—among CEOs surrounding AI has noticeably diminished lately. We would agree. In our own recent in-depth interviews with CEOs, we heard near unanimous excitement about the potential of AI to drive growth and profitability, specifically to improve productivity, reduce costs, and unlock new revenue streams. Still, we also heard trepidation over the workplace implications. As one put it, “AI will likely reduce some existing employee headcount across all levels, but it is still too early to predict.”
What remains to be understood is how work will shift and restructure with the adoption of AI. There are optimistic voices that state that the anticipated loss in jobs due to automation will be more than outweighed by the gain of new AI-related jobs. Despite the overall lack of clarity on this important topic, what CEOs are telling us is that they feel the weight of this piece of the puzzle now—that it is time to better grasp the scope of potential change and begin to actively address the people and cultural implications for their organizations.
* * * * * * *
From the beginning, one of the most articulated fears about AI has been that it will displace workers—and that machines will, by and large, take over the operations of organizations. By now, we have largely moved beyond apocalyptic predictions of a fatally unemployed, automated world. Co-piloting features alone have already taught us how AI can elevate our work by saving time from menial tasks and make jobs more creative and innovative. And we are only at the very beginning of unlocking the potential for enhanced human productivity that AI can and will unleash.
It deserves to be noted that the coming and going of companies, industries, roles, and jobs in relation to innovation and technological disruption is nothing new. Early in the 20th century, the Austrian economist Joseph Schumpeter coined the term “creative destruction” to underscore the fact that change is the one constant in capitalism. Innovation—and technological innovation in particular—has always led to the destruction and eventual equally innovative reconfiguration of work and labor. So, where leaders need to devote new energy and resources is not around questions of if work will be displaced but instead how the workforce will [re]adapt for the AI age—what this is expected to look like and how their organizations can initiate the changes.
The jury is still out about the jobs that will be added and replaced by AI. Theories abound and many have been short-lived. A couple years back, it was believed that programming languages would be essential for the future workforce. But because ChatGPT and other Large Language Models have the potential for automating coding, this requirement might also become obsolete. And just a few months ago, the rise of professional “Prompt Engineers” was expected, but already that also seems to have become invalidated.
Making these predictions in a fast-moving environment such as AI is almost impossible. We can, however, lay down a few certain hypotheses from which leaders can start to plan and move ahead.
Organizational Structure will Change
“Pyramids will become rectangles,” one CEO explained in our interviews. “The traditional pyramid model doesn't work in the age of AI, as clients are expecting service providers to use these technologies to drive efficiencies, reduce costs, and improve quality. Engagements that use AI will require highly skilled resources with specialized knowledge of the underlying models and data architecture, which reduces the leverage model we have traditionally applied in the services sector.”
This means that AI will substitute especially from jobs at the bottom of the pyramid and force many to upskill and reskill. These jobs will involve more management tasks–either managing people or bots (in this context, one CEO asked when these bots will start to show up on org charts). CEOs expect the impact on organizational structure and team size brought on by the adoption and implementation of AI technologies to be slow but noticeable.
Preparing employees for this new organizational reshaping will be no small task and highly dependent on both in-depth skills training and trans-organizational cultural development work, which leaders need to start anticipating and planning for. In other words, companies need to invest in upskilling employees and reshaping a culture that integrates AI at the core.
Repetitive Tasks will be Automated First
This process began some time ago, and it continues. The changes will vary across functions. For example, some CEOs expect a reduction in the size of certain teams, such as Customer Support, R&D, Sales & Marketing, Finance, and Legal, while increasing the importance of IT and data teams. Overall, teams are expected to become smaller and more specialized in the use of AI to achieve outcomes for clients.
Here’s how one CEO summarized his predictions: “Bottomline: Improve productivity of almost all functions including Engineering, Sales, Marketing, Customer Services, and even HR. To put a number to this, I expect this to be in excess of 20% improvement in most of above-mentioned roles. This will likely increase as more technology platforms (e.g., Sales Enablement, Talent Sourcing, Developer IDEs, etc.) embrace GenAI into their core stack.”
New Skills are Needed for Both New and Existing Roles, and at Every Level
Ultimately, AI will penetrate the entirety of the organization by creating many loops that will move fast. Every level of the organization needs to begin to be prepared to think and work differently. As one CEO put it, “Doing things the old way with traditional technologies, people, and labor arbitrage will not be sufficient.” There will be new tech understanding in every role. All VPs, for instance, will be required to become fluent in the applicability of AI in their functions. In short, AI’s deployment will initiate change on every level, over time. This too will be gradual and an evolving process.
Now more than ever, CEOs are placing an increased emphasis on executives becoming fluent in the applicability of AI in their functions and the costs/benefits of AI applied to their deliverables. In addition to the need for the Tech team to deliver on tangible, value-adding use cases with AI, they know they will also need leaders capable of both understanding and driving the forthcoming changes.
AI will Advance New Leadership
“At this point, I'm looking at leaders' ability to understand and drive adoption of these technologies,” explained another of the CEOs we recently surveyed. The transition into AI will increase demand for leaders who can define a future state and lead their organizations through the changes required to get there. Whether this means hiring new leadership or developing existing leaders (or both), it will depend upon individual organizational situations and resources. Some will instill new highly technical “AI Builder” leaders, while the best fit for others will be more of an “AI Transformer,” who is less technically oriented but chosen for strong value creation and strategic thinking skills. There are multiple possibilities, again all varying according to industry and business plans. Overall, the position of an AI leader and its role depends on a company’s AI maturity and the way these capabilities are embedded in the organization.
Regardless of these choices, in assessing all current and future executives, CEOs will place more emphasis on leaders who can define a future state and lead their organizations through change. Being able to evangelize the benefits of AI and to get people excited about the possibilities will be key to ensure AI adoption. Additionally, there is a need for increased change agility and reasonable technology fluency in general management roles, with AI and broader technical understanding becoming imperative. Finally, embracing a growth mindset in the adoption of AI will be key for success.
The great and challenging work of deploying and effectively integrating AI into organizations will be highly dependent upon the leadership.
* * * * * * *
The challenge with AI lies in how the workforce will come to adopt it. CEOs know that it is time to begin to redirect organizational culture for the evolving AI age. Achieving a level of AI proficiency that enables organizational efficiency and team synergy will require a comprehensive strategy from the top down. This means a plan that goes well beyond pure technological tools, that places organizational cultural priorities at the core, and that is guided by leaders who not only understand the challenges but can also lead the successful material and cultural adaptation of the entire organization through the ongoing AI journey.
