Emplyeeless?

We have all heard of AI and the expected implication on how our business and society can change in radical new ways.

AI is the driving force behind the fourth industrial revolution, also known as the Age of AI. The driver behind the value that AI creates is its ability to make decisions and solve tasks.

Have you considered what this could mean for you and your business?

Have you considered the possibility of reaching a state where your business becomes employeeless? A business on autopilot?

Most people will dismiss such claims as either utopia or something that perhaps will happen in a future far away from now. As you are about to learn, it is not, and the implications are many, diverse and real.

So we begin by explaining why AI can perform tasks in a business in ways that can change the way your business could be run.

Whatever your business is involved in and what the goal of your company is, a central condition will always exist. You make decisions, and you solve tasks.

Today, some tasks are solved by your IT systems, some are solved as ad hoc tasks, and in other contexts, you use processes as the way to ensure that tasks are completed. AI will become a new vital component in this picture, and to understand the level of potential change it can generate, we go back and look at what has happened with internet use in the last 20 years.

The Internet has made communication digital, and thus almost free

The Internet has made communication digital, and thus almost free. Once you have created a website, for example, it costs — almost — the same for you to run it if ten people a day read your web content as if 10,000 people visit your site.

Of course, that is not entirely true, as there are definitely additional operating costs for large volume sites. But, compared to the “non-digital alternatives” which could be to call the same 10,000 people, send them a letter, or talk to them at a trade show. Then, digital communication is free to scale up.

It is the same dynamic we are now seeking with AI. However, with the difference that it is not the digital (information) we now are getting for free, it is knowledge and automated decision making.

The difference between the potential business impact between AI-driven growth and digital-driven growth is almost beyond comparison.

Free data and information have catalyst the ability to create exponentially increasing value for Internet solutions. The same mechanisms will also work when we look at what happens when knowledge and decision making becomes free.

You can now have the potential similar growth dynamics in areas where you work with knowledge and decision-making.

AI makes knowledge and automated decision making free

Your new mindset in this context should be to think of tasks as something that potentially could be solved free of charge for you, even in a way without any capacity constraints. So, the focus goes from communication to solving tasks.

In popular terms, you could say that the Internet made it possible for you to reach 1 billion people for free. With AI, you can solve 1 billion tasks for free.

So, using AI is another way of creating value that can both complement and compete with your employees and the way they perform their jobs. One of the dilemmas you now have to face is the extent you want to use the technology.

As you are about to learn, some cases will accrue where a business could be run without employees. A business could become employeeless. Some specific requirements need to be fulfilled, so not all business can become employeeless. But some will be able to.

It is you, as a manager who has to decide if this is a way you want to pursue. And you will learn that the answer is not as black and white as it might seem now.

Before we start this talk a warning: It is obvious that when we look at factors that can automate the core of what you are as a business, then the consequences and the impact can be brutal compared to how you run your business today.

When you challenge the core of how you create value and how you run your business, then there will be consequences. The level of change that we now look into will have consequences for your employees and how your business is organized.

So I understand if some people will read this article with equal fear and fascination. Because AI at this level will remove jobs at a large scale, just at the way we see the word and how we are organized will be very different from what we know today.

One of the ethical dilemmas with AI, in general, is that the technology can be used in areas that we might not want to use it in, even if we could. It is not normal for us to doze the level of tech that we use. The typical case is always to get the best and smartest.

We know that the newest smartphone is always better than last years model, and the better the technology we have, the better we are off. That is not necessarily how you should look at AI. It is more like driving a Porsche 911 on a racetrack. You don’t win by using the cars power potential all the time. You win by dosing it, so you use the power when you need it. If you don’t, you won’t make it through the tracks the first corner.

AI, at its highest corporate level, is like that. You could choose to use AI in many different aspects. It might make sense, or it might not. You have to decide the dose of technology that you what to use in your business.

So, there is an ethical dimension as to how much you should work with AI. There is another dimension too. The answer to the questions determines the level of high-level AI use in your business. It is:

How much of your company’s intelligence should be artificial?

This question might be misinterpreted as a philosophical question. It is not. It is the most fundamental AI business question that you will ever have to answer.

The consequences of how you answer this question define your corporate and strategic use of AI.

You need to see your company’s artificial or — digital intelligence — relative to your company’s overall intelligence. Your current intelligence is the sum of what enables you to solve the tasks that are handled by your company.

Your employees’ knowledge, education and experience help you solve tasks. So does the knowledge that is incorporated in the way your processes and IT works. So, you could say that your company has a total amount of intelligence that allows you to function as a company and solve the tasks you need to achieve your goals.

The arrival of AI marks a new way of looking at intelligence in your business.

In some areas, AI complements what you already do, so you get better. In other areas, AI is superior to other forms of intelligence and therefore, will take over tasks from them. These are some of the dynamics we dive into this article. So you can understand the business weight of the changes that technology can drive for you.

So, in other words, your choice on the level of AI use in your business is not a technical choice.

It is basically a profound fundamental choice on the core of what should define your business and how you work with knowledge.

Today, it is the sum of the knowledge, you as a company has that more than anything defines what you are as an organization.

So, if AI gets a more or less dominant role in your overall knowledge presence, then it has the potential to have major consequences for how you as a company function and how you define yourself.

We now try to answer the question “How much of your company’s overall intelligence is artificial?” with: Everything. Thus, an employeeless company. A company where all tasks are performed by AI and where AI makes all decisions.

Surely many will think. It is never going to happen that a business in itself is run with Artificial Intelligence, completely without employees.

But can you be sure?

What if one could design a business model where AI could run your business?

Where AI’s ability to deliver value matched the business goals that were for the business, then you would have a self-managing business with no employees.

The commercial aspect of a self-managing business is obvious:

If you can create such a business in Denmark, then you can copy the set-up to all other countries as well. And maybe you can take the model from one market and copy it into another market — or create versions with different products or service.

Before you get introduced to a particular case describing how an employeeless business could be designed, then the prerequisites for what is required will be outlined to you.

In other words, business models that are designed to enable AI to handle the entire value creation of a company.

The employeeless company

Here is such an example of how to design a company with the AI technology that is available today.

Thus, a company whose business goals and requirements for all the products and services can be produced based solely on the use of AI at its current level of sophistication.

The business model that I have in mind is a certain type of webshop that can be automated to a state where no employees are needed. There are, of course, some special preconditions that need to apply. This also means that not all webshops can become employeeless. But, as you will see now, some can.

There is a type of webshops that is called Drop Shops. They are unique in the way that they sell other companies’ products without even having them in stock themselves.

For example, if you buy a book on a website that operates as a Drop Shop, they do not have the book physically in stock when they sell it to you. Their business model is that if you buy a product from them, they will get another company that they partner with to send you the book to you directly.

You could say that the webshop acts as a virtual sales agent. Parts of the sales on Amazon.com are following such a model, so it is not an unknown way of doing online business. When you buy a product on Amazon.com, it is often an affiliate of Amazon.com that sells you the book and sends it to you directly. So as an Amazon customer, you are getting serviced by Amazon, but the logistics behind is run by a partner shop.

The tasks to run a Drop Shop business can be described as follows:

In our example, the Drop Shop thus establishes the contact between their customer and the business that has the book in stock. The reason why this model works well is that Drop Shop sites are usually good at sales and marketing, and may also have a large customer base that they can sell to.

Therefore, they partner up with corporations such as the store they are selling from (the supplier store) who cannot reach the same customer base as well as the Drop Shop can. Amazon, as an example, has a large customer base that stores selling through Amazon network never otherwise would be able to reach.

A Drop Shops business model is thus 100% digital. They do online marketing that attracts customers to their website. They sell the products online and manage the part that ensures that other shops send their goods to customers. They thus create value by performing a number of digital workflows.

Therefore, in order to become an employeeless Drop Shop, it is required that AI can control all the workflows that exist in their business. It is also required that AI can make all decisions that need to be made about their business. Every AI technology component that is required to do so is already available today.

Let’s start with the marketing part. There is already a rapid development in online marketing and the use of AI.

There is already a service available today that can automatically adjust communication and the ads placement to make it work as well as possible. Among other things, they work by training algorithms on which (personal) messages work the best and which automatically placed banner ads have the most impact. This means that AI can efficiently ensure that you get the right potential customers to a site.

Drop Shop’s profits from the difference between what it costs them to do marketing and the profits they make on their product sales. AI can also learn the management and selection of which products are most profitable. The ordering and administration of the products and the publication on their websites are already automated, so there will be no new tasks for AI in this part of the flows.

So, what you have now seen is an example of a complete set of business processes, workflows and decisions that can all be automated. The machines learn how to sell the products and which products sell the best. It decides which products to sell on the site and does all the marketing automatically.

The consequence is an employeeless company.

Of course, it is a very simple business model, and some will argue that it is not even a real business.

However, that can be a dangerous attitude. Keep in mind before judging such a model that it can be extremely profitable. If the business model as described here works, then it scales super well. Once the algorithms have discovered a profitable way to sell, it will automatically scale out in many equally profitable directions.

The strength of AI is that it master both the complex overview and volume. So, the automatic Drop Shop can easily handle 10,000 daily orders. Or 100,000. Capacity in this business model is not an issue. If it finds a new market, it can continue to open similar new ones up. It will do so as long as it can make a profitable match between customers and products. So a very simple business model can become extremely profitable.

The point of the example is that it is already possible today to find a level where business requirements, the complexity to be handled and AI’s technical level all match.

Proof of Concept

You have to think of the Drop Shop case here as a Proof of Concept.

If it works for that type of business, then we all know that you can build better solutions that can handle even more complexity, and thus do more than just sell products online. You must, therefore, see it as the beginning of an evolutionary process.

The Drop Shop’s evolution process will be the opposite of the one you’re likely to look into if you’re working in conventional business, and you are, considering how, and how much, you can use Al in your line of work.

In a typical business, you will reflect on how far you can use AI in your existing business set-up.

The drop shop starts at the end level, employeeless, and their journey is the opposite. They will work with increased complexity management while maintaining their employeeless state. So they work in a direction to compete in more mature markets with more sophisticated products and solutions, without compromising the benefits their employeeless conditions gives them. They become more advanced but still employeeless.

AI is the foundation of this type of business because they have been designed to reach an end goal that enables exponential value creation through an organization without capacity constraints.

Originally published at https://cognifirm.com on April 30, 2020.