Many people fear that AI could cause a “job-pocalypse”. This year’s Davos gathering sounded the alarm over the technology’s implications for employment, while recent announcements about job cuts in white-collar industries are widely viewed as straws in the wind.
But AI’s broader effects on businesses have received far too little attention. While a majority of firms have so far not adopted AI, according to the most reliable surveys, continued uptake will likely be accompanied by significant corporate reorganisation. That is because AI is an information technology that affects decision-making processes.
Prior waves of digital technology from the 1990s onwards transformed businesses in several ways. Computational and communications advances underpinned the internet, which became mobile with the arrival of smartphones and wireless network technologies. They enabled the shift from vertically integrated production to globally distributed supply chains, and from corporate hierarchies to “delayered” organisations.
Another consequence of digitalisation has been the rise of platform business models, which use algorithmic tools to mediate between suppliers and customers, building extensive logistics networks on digital infrastructure. Data- and algorithm-driven platforms operate in many sectors, often dominating their markets, and have transformed both employment and consumption patterns.
The question now is how AI will further rewire firms. Last summer, at the World Intellectual Property Organization, Vivek Mohindra, Senior Vice President and special adviser to the Vice Chair and COO of Dell Technologies, argued that “organisational capabilities” are the source of a firm’s sustained competitive advantage (with Dell’s key intangible asset being its supply chain). But AI, he added, is shifting the capabilities that matter and making them hard to measure.
Some industries appear particularly vulnerable to AI disruption. Several commentators have already noted the technology’s potential to automate entry-level jobs in sectors like law, accounting, and finance.
Similarly, tech companies are increasingly using their own AI models to reduce the time and cost of software development, suggesting that fewer computer programmers will be needed in the future.
But if the junior ranks of businesses are thinned out, how will businesses ensure that future employees gain the expertise they need? For example, there is emerging evidence that using AI to write code compromises human workers’ skill acquisition.
Generative AI will also reshape corporate structures. One possible outcome is that the technology will continue the process of flattening organisations, enabling them to contract out ever more work.
Sam Altman of OpenAI has even predicted the possibility of a one-person “unicorn”(a billion-dollar startup). AI agents could smooth the frictions inherent in negotiations between different entities and monitor complex supply chains.
But some economists predict that generative AI will recentralise organisations, because it will be able to capture the “tacit” knowledge embedded in human perception and practice — knowledge on which all businesses depend.
Consider a small example: the maintenance engineer working for the London Underground who realised that the wheels of carriages on the Victoria line require extra grease because of its unusually curved track. When this employee retired, that know-how vanished, and the trains on the Victoria line began breaking down more often as their wheels succumbed to wear and tear.
Tacit knowledge, like that of the maintenance engineer, is rarely written down or formally taught. But if reflected in the repeated actions of human workers, new AI applications may be able to capture this know-how and codify it.
Business and political leaders should track AI-induced organisational change as it occurs, to be better prepared to respond to the seemingly inevitable structural shifts. An important part of this effort will be ensuring that individuals can navigate any large-scale labour-market disruption more easily and successfully than was the case in previous waves of automation.
They should take special care not to repeat the inadequate policy response to manufacturing automation in the 1990s, which left many advanced economies scarred by post-industrial blight.
Please credit and share this article with others using this link: https://www.bangkokpost.com/opinion/opinion/3204575/ai-will-transform-business-not-just-our-jobs. View our policies at http://goo.gl/9HgTd and http://goo.gl/ou6Ip. © Bangkok Post PCL. All rights reserved.
Source – https://www.bangkokpost.com/opinion/opinion/3204575/ai-will-transform-business-not-just-our-jobs