In Netflix’s cyberpunk series Altered Carbon, an artificial intelligence personality called Poe is running a hotel, pre-designed to please the guests at any cost. While for now, this is only figment of our imagination and a part of science fiction narrative, it may not be such a distance future.
Last year, in a worldwide survey conducted by Dell Technologies, 3,800 business leaders were asked about how the business world will change during the next decade. 96% of the respondents answered positively on whether companies will automate many of their tasks, many of them falling in the managerial and administrative scope.
Platforms, data and algorithms have already transformed the structure of business. Companies like Uber or Airbnb are already essentially ran by an application, self-driving cars are introduced on to the streets, the Internet of Things enables our devises to communicate with each other and use of robo-advisors is increasing in the financial sector.
But how far are we from the scenario — or for some from the dystopian future — of an algorithm having a position on the board or even owning a company?
In a report by the World Economic Forum’s Global Agenda Council on the Future of Software and Society, published in 2015, nearly half of the respondents expect that artificial intelligence (AI) will become part of companies’ board of directors by 2025.
One year before this report, Deep Knowledge Ventures, a Hong Kong based Venture Capital firm, appointed — even quasi — an algorithm to its board, granting it the possibility to vote, becoming the first company to do so. The algorithm VITAL made investment recommendations and it was granted the possibility to vote on whether the specialized in regenerative medicine company would make an investment or not.
In 2016, Tieto, a Finnish software company, became the first European company to appoint a bot, named Alicia T, to its management team also with the authority to vote.
How will AI change business management?
AI and machine learning are still immature, but they are evolving rapidly, while becoming more accurate.
AI is already used by innovative companies to offer a more tailor-made experience to their consumers by analyzing their preferences or immediately replying to their questions through bots. This allows them to provide better services or products, on a direct, fast, and inexpensive manner, making these companies more competitive.
By letting AI in the boardroom, tedious and time consuming administrative tasks, like monitoring and reporting, will be off the managers’ hands, allowing them to focus on more important business aspects, such as the company’s future strategy.
As for the important business decisions, for instance whether a merger or an investment should take place, AI, instantly analyzing a plethora of data, will suggest the optimal decision, while considering the relevant regulation.
The trust in a human-machine collaboration was showcased in a recent survey by Accenture Institute for High Performance. 78% of the managers questioned answered positively on whether they will trust suggestions or advices given by intelligent systems when making a business decision.
The Trouble with AI
As with any human creation, the problem with AI lies with the will of its creator. As Elon Musk says in Werner Herzog’s documentary Lo and Behold: Reveries of the Connected World; “if you were a hedge fund or a private equity fund and you said, all I want my AI to do is maximize the value of my portfolio, then the AI could decide, the best way to do that is to short consumer stocks, go long defense stocks and start a war”. For that reason, a paradigm shift in corporate governance is necessary.
At the same time, many fear the unpredictability of AI’s decisions. But is there an actual problem with the unforeseeability of the decisions made by an intelligent machine? And how do those decisions differ from a human’s decision-making process? In the widely praised book Homo Deus, writer Yuvan Noah Harari explains that our own decisions, are utterly random, a combination of predetermined biochemical events and subatomic accidents. And most of the time we will make these random decisions based on incomplete, incorrect and emotionally biased information.
The possibility of an AI facilitating the decision-making process or being appointed with the authority to vote on the board has a law-relevance. First, if AI is used to make suggestions which are subsequently adopted by the board who will be held liable? Is the business judgement rule as a safe-harbor and a standard of care sufficient enough for an “enhanced” manager? And will a type of personhood be granted to the AI to be appointed and able to vote?
As for the latter, on the 2016 European Parliament resolution with recommendations to the Commission on Civil Law Rules on Robotics, a suggestion was made for considering granting in the future an electronic personality to robots — the embodied version of AI — “when they make smart autonomous decisions or interact with third parties independently”.
Managerial Qualities Revisited
Although we cannot predict whether robo-directors will substitute humans in boardroom, managers should still be prepared for the automation era and companies should try to remain relevant.
· Start using AI: In the age where competition is driven by technology and innovation, integrating the plethora of new emerging technologies, including AI, is pivotal for a company to show its adaptability and relevancy to the modern needs of the market, to flourish on the short-term and to survive on the mid- and long-term.
· Appointing an AI Officer: In the Dell Technologies survey 76% of the respondents advised in favor of appointing a Chief AI Officer delegated to oversee the human-machine collaboration. Moreover, an AI Officer can help training and educating the management team about AI, while paying attention to future developments in the field.
· Creative thinking: In the abovementioned Accenture Institute of High Performance survey, 33% of the managers surveyed believe that for a manager to be successful in the future, creative thinking and experimentation are necessary. As AI can be more efficient in analyzing data and information, improvisation, and managerial experience will become of outmost importance.
· Social skills: As the machine takes over many of the administrative tasks, the managers will have to do what the machine cannot. Empathy and social intelligence will bring the human touch in the decisions-making process, while they will enable the collaboration between the board members and the stakeholders.
Conclusion
AI will not necessarily remove human directors, but it will definitely change the character and the dynamics of their work tasks. Directors will very likely become more focused on creativity and new strategies for their business, freeing their minds from repetitive and administrative type of work.
Iakovina Kindlyidi, Guest Blogger
