Corporate Management and Artificial Intelligence

 

 

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AI, and its effect on the future, are the subject of growing speculation across much of society and many of its issues are already presenting challenges. The effects it might have on corporate governance are only now being contemplated.

The fact is that no corporate executive, or a board composed of experienced management types, can possibly have the education and experience that can be displayed by the current first generation AI systems. These systems are certain to evolve to even more sophisticated levels.

Correctly predicting the future is perhaps  the most important task of business leaders, and in fact, all humans. This can be done only by an analysis of the past and present. History is littered with predictions and subsequent actions that resulted in disasters. Assuming that these actions were believed at the time to be the best choice of the available options, they were the result of either faulty analysis or incomplete and erroneous information. An individual responsible for an important decision may very well disregard important factors based on his own personal idiosyncracies. There isn't any truly scientific methodology for choosing one course over another.

Until now. Future AI will be able to scientifically evaluate the decision-making process to such an extent that corporate management will be tied to its recommendations even more than they are now to those of consultants. In fact, consultants like McKinzey and Company should go out of business. Making a decision that ignores AI input will be an act of career destruction if it fails so executives will be extremely reluctant to follow a path that diverges from the AI map. 

What does this mean? Or rather, what should it mean? There will, of course, still be corporate governance through upper management and boards. But their role will not be the same as it is now. The rules will change to the extent that AI input will be regarded as akin to the laws of physics. 

So what this really means is that the era of incredible compensation packages for corporate superstars is over. Almost any literate person will be able to successfully run a corporation. Why would consultants be able to bill millions of dollars for much cheaper AI services? If this is so, why would a spectacular compensation package be needed? The current payoffs to executives will no longer be subtracted from the potential dividends to stockholders. Stock options for corporate nabobs will end and stock buybacks, much of which are disguised rewards, will no longer take place.

It's possible that this scenario may not take place. If so, it will be because the AI revolution is being ignored in favor of retaining an obsolete paradigm that defies science. We'll see what happens.

Update: I told you so. A survey of executives indicates that they feel that their work could be done better by AI. Oddly, they also believe that they'll still find employment in the C-suite even when replaced by AI. Maybe the new Luddites will be management types rather than people working at looms. 

   “This data makes clear the startling ways AI is transforming the world of work,” said Anant Agarwal, Chief Platform Officer, 2U, Founder of edX, and former director of CSAIL, MIT's Computer Science and Artificial Intelligence Laboratory. “As a leading developer of talent, edX continues to rapidly expand its portfolio of AI-focused educational offerings, including hundreds of AI-related courses and a new AI Boot Camp in partnership with top universities across the U.S."

Yeah, there has to be a buck to be made somewhere in all this. The whole idea of AI is to take human decision-making out of the business process. AI is computer work done by computers, not by nerds and its produce eventually won't involve any human choices. Who needs to go to a "boot camp" in order to say "OK, that's what we have to do"?