Companies That Replace People with AI Will Get Left Behind

The debate over job displacement from artificial intelligence (AI) is settling into a consensus. While AI is unlikely to cause macro-level unemployment in the long term, its rapid adoption by companies may lead to significant job displacement in the short term. This is a result of companies integrating AI into their operations quickly, potentially leading to job losses before the gains arrive. White-collar workers are particularly vulnerable to this displacement, and it is estimated that tens of millions of people may be out of work due to AI automation.

To mitigate this risk, two possibilities are considered. The first is government intervention, either by slowing down the commercial adoption of AI or by offering welfare programs to support and retrain the newly unemployed. The second possibility is for companies to rapidly innovate and create new jobs at the same pace that AI eliminates existing ones. By integrating generative AI into their systems, companies can empower employees to be more productive and spark new value creation, thereby generating enough new jobs to escape the short-term displacement trap.

Going on the Offensive with AI

Microsoft serves as an example of a company that went on the offensive with AI by transforming its hierarchy and forging partnerships, including with OpenAI. Elon Musk aims to make Twitter an AI leader, but its success remains uncertain.

So what does it mean for a company to go on offense with AI?

To answer this question, a team led by Tabrizi studied 26 substantial companies from 2006 to 2022, categorizing them based on agility and innovation. What set the agile, innovative companies apart from those who remained neutral or defensive? The team narrowed the differentiators down to eight drivers of agile innovation: existential purpose, obsession with what customers want, a Pygmalion-style influence over colleagues, a startup mindset even after scaling up, a bias for boldness, radical collaboration, the readiness to control tempo, and operating bimodally. Most leaders praise those attributes, but it turns out it’s remarkably hard for big organizations to sustain any of them over time.

A Bias for Boldness

Taking a cautious approach and making incremental investments in AI may yield modest results for companies. However, to truly harness the potential of this technology and create significant value, a bias for boldness is necessary. Many large organizations, driven by risk aversion, prefer to play it safe and acquire startups for innovation, often resulting in conservative improvements. But as Brené Brown emphasizes, true progress requires choosing courage over comfort.

Adobe, a leader in photographic design with its Photoshop program, could have adopted generative AI cautiously, waiting to see how it would develop. Similarly, companies like Kodak and Motorola were hesitant with digital photography and telephony, respectively. However, Adobe boldly integrated generative AI deeply into Photoshop, empowering users to create new types of content. They didn't view AI as a threat but as an opportunity to enhance their product.

Nvidia, a prominent chipmaker, has gained recognition for providing top-notch semiconductor chips for AI applications. Their success is not coincidental; over the past decade, Nvidia aggressively pursued AI expertise, developing customized chips and software. This boldness has positioned them to offer higher-value solutions and explore AI's potential beyond cost-cutting measures.

While boldness doesn't guarantee success in every instance, it is crucial for overcoming risk aversion prevalent in corporate hierarchies. To fully leverage the benefits of AI, companies must embrace a mindset that embraces calculated risks and pushes the boundaries of innovation.

A Startup Mentality

Adopting a startup mentality is crucial for successful AI implementation, regardless of a company's size or age. Startups excel at swiftly identifying customer demands and entering markets, leveraging their agility. Open AI, with the support of Microsoft and other investors, exemplified this mindset and surpassed Google in AI innovation. The startup mentality involves a commitment to extraordinary achievements, embracing partnerships, and challenging existing structures and biases.

Amazon demonstrated this mentality by embracing AI to create the Echo speaker and Alexa digital assistant. Despite lacking expertise, Amazon acquired the necessary AI capabilities through hiring, acquisitions, and internal development. The result was a transformative product that expanded beyond e-commerce, creating new avenues for value creation and job opportunities. Amazon continues to aggressively invest in AI, recognizing its potential to enhance customer experiences across various domains.

Companies cannot adopt these drivers overnight, but they can start moving toward a serious commitment to new possibilities. Employees also play a crucial role by investing aggressively in AI, acquiring the necessary skills and experience to add value at a higher level and protect their careers. It is crucial for many firms to break out of the discipline of churning out reliable products at low cost and accelerate the AI future to prevent mass unemployment.

To harness the power of AI, it is important to embrace it rather than fear it. Innovation is essential for human progress, and AI can be a powerful tool to achieve higher levels of achievement and collective success. By putting AI in the hands of every human being, society can thrive and flourish.

Source: Harvard Business Review

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