Is there still a need for human-run firms in an AI world?

PEOPLE worry that AI will make them redundant and force them out of their jobs. And it’s not just factory workers and administrative staffers who’re concerned, it’s also managers and the C-suite.

So the real question is, can AI replace firms as a whole?

Traditionally, firms help coordinate complex business processes and transactions in the most efficient way. AI, by design, is only expected to simplify and streamline those processes and transactions – not replace the firm itself.

Julian Birkinshaw, Professor of Strategy and Entrepreneurship and Deputy Dean at the London Business School authored a post for the Harvard Business Review detailing the need for firms, even when the world is filled with robotic processes.

All firms share the same goals – to make profits consistently (short-term goal) and to stay relevant in the market they’re in (long-term goal).

AIs can help streamline business processes to boost revenue; it is also useful for exploring new strategies to keep the company ahead of the competition. However, it may prove complicated for an AI to manage both and determine which takes precedence.

Humans working in firms balance between these goals by taking calculated risks over time, even when the supporting data is ambiguous and unproven. An AI would have to not only look at the data available, but also be sensitive to context, and weigh in on emotional or intuitive factors.

“These are the capabilities that lie at the heart of organizational ambidexterity and I don’t believe AI can help us with them at all right now,” Birkinshaw argued. “AI can devise seemingly-cunning strategies that look prescient but only when the rules of the game are pre-determined and stable.”

In terms of innovation, humans still surpass AI. A machine powered intelligence is only as good as it’s algorithms, which are great for making logical, reasonable decisions.

Humans that were considered visionaries, such as Steve Jobs, Jeff Bezos, and Richard Branson, have qualities of thinking out of the box. The environment of firms encourages these behaviors that don’t necessarily conform to perceived logic.

This is important if society wants to move forward. Firms would play a social role to nurture unconventional thinking, encourage experimentation, and allow room for failure.

It seems appealing to have a world where firms wouldn’t act as a middleman, meaning users don’t have to pay extra for obtaining a product or service. However, there is still plenty of room for error regardless of how sophisticated piece of technology is.

It’s reassuring that in case things didn’t work out with certain technologies, there are still competent humans or companies who can take over and move things in the right direction.

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