3 Reasons Why Generative AI is Transforming Management in Organizations

Just a year ago, in early November 2022, the substantial impact of a new technology, Generative AI, was unforeseeable. This technology has reshaped business models, professions, and skill sets in ways that have been highlighted in various reports and studies.

1. The Risk of Management Dissolution

The Surge of Generative AI

Generative AI has emerged as a significant force, contrasting sharply with the advent of the metaverse three years ago, which was more of a “flop” than a “top”. Its revolutionary capability lies in generating text or images based on training with billions of data points, as discussed in “Why Generative AI is a Significant Revolution” (HBR France, 2023).

Not Intelligent, but Transformative

Luc Julia, a leading AI expert in France and author of “Artificial Intelligence Does Not Exist” (First, 2019), emphasizes that Generative AI is not intelligent in itself but produces probabilistic content in response to a prompt. The true intelligence lies in the question posed.

Expanding Impact on Management

Analysts and researchers have explored the impact of Knowledge Management on strategies and roles in companies since late 2022. However, its influence on management has been somewhat overlooked. This technology has the potential to significantly alter traditional management structures and processes.

2. The Hope for Management Enhancement

Management Transformation

Generative AI’s introduction into company operations could profoundly affect management. Henri Fayol, who formalized the management process in “General and Industrial Management” over a century ago, defined five operations of management. Generative AI could potentially replace managers in several of these operations, thereby reducing their traditional roles.

Soft Skills Remain Crucial

Generative AI has yet to master the operation of command, which relies heavily on a leader’s personal qualities and soft skills. These skills, challenging to automate, remain crucial. Generative AI can disrupt the hierarchy of knowledge and skills, as observed in “The War of Intelligences in the Era of ChatGPT” (Laurent Alexandre, Lattès, 2023).

3. The Necessity for a Profound Transformation of Managerial Postures

Virtuous Cycle

A virtuous cycle leading to the enhancement of management by Generative AI is possible, similar to what was observed when “reverse mentoring” developed to accelerate digital transformation (“Digital Transformation for All”, Eyrolles, 2022). This approach can foster mutual understanding and bridge generational gaps within an organization.

Investment in Soft Skills

Managers will need to invest significantly in soft skills to make technology an ally. The importance of these skills in the era of digital technological revolutions is emphasized in “The Challenge of Soft Skills, How to Develop Them in the 21st Century” (Dunod, 2022).

Extended Discussion

Generative AI’s impact goes beyond automation and efficiency. It introduces a paradigm shift where traditional roles are redefined. For instance, the role of managers may evolve from being knowledge holders to facilitators and strategic thinkers. The integration of Generative AI can lead to more collaborative and innovative work environments.

Moreover, the potential risks and ethical considerations of implementing Generative AI in management structures cannot be ignored. Organizations must approach this transformation responsibly, ensuring that the technology is used to augment human capabilities rather than replace them entirely.

In conclusion, Generative AI represents both a challenge and an opportunity for management. By referring to insights from previous posts, it’s evident that the landscape is evolving rapidly, and adaptation is key.

Bibliography

1. McKinsey (2023). The State of AI in 2023: Generative AI’s breakout year.
2. Hatzius, J., Briggs, J., Kodnani, D., & Pierdomenico, G. (2023). The Potentially Large Effects of Artificial Intelligence on Economic Growth. Goldman Sachs.
3. Laborde, O., & Carrière, A. (2023). Why Generative AI is a Significant Revolution. HBR France.
4. Julia, L. (2019). Artificial Intelligence Does Not Exist. First.
5. Fayol, H. (1916). General and Industrial Management.
6. Boyer, L. (2006). 50 Years… of Organizational Management. Editions d’Organisation.
7. Alexandre, L. (2023). The War of Intelligences in the Era of ChatGPT. Lattès.
8. Fayon, D., & Tartar, M. (2022). Digital Transformation for All. Eyrolles.
9. Lamri, J., Barabel, M., Meier, O., & Lubart, T. (2022). The Challenge of Soft Skills, How to Develop Them in the 21st Century. Dunod.