AI is Eliminating Middle Management and Changing the way Corporations are Organized
10 July 2018

AI is Eliminating Middle Management and Changing the way Corporations are Organized

The End of the Middle Manager-- What does this mean for you? If you’re a middle manager now, you aren’t doomed to early retirement. But you must be prepared to make two crucial investments.

If you’re a middle manager, you aren’t doomed to early retirement or an imminent layoff. However, you must be prepared to make two crucial investments. Middle management were invented to bridge this gap and make sure that information and projects were flowing from the execution level (rank-and-files) to the leaders (executives) and money was being made along the process curve.
By some measure, 82 percent of managerial hires end up being the wrong one. Go talk to your CEO if you can get some time with him. Tell him that an aspect of his business has an 82 percent failure rate. He’ll dive through a plate glass window then immediately call a “strategic all-hands” for Monday. And yet, it probably does. That’s middle management. It’s usually not very effective.
 
Now look: there are a lot of challenges to being a middle manager, for sure. I wrote about a few once before. One of the biggest challenges in middle management is that you’re the only people in a company who have to manage both up (to execs) and down (to your direct reports). Execs don’t manage up, really — and rank-and-files don’t manage down. Only middle management does both. It’s taxing, and that’s a big reason why engagement numbers are so low. As you try to keep the boss happy, you often can’t keep your own employees happy. And that’s especially true in organizations without clear priorities — which is many of them.

As corporate business models have evolved from Industrial Age concepts to Knowledge Economy concepts, though, some of the fundamental roles of middle management might be shifting.
 
 
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(1)
The first is in acquiring and building knowledge or competencies that are valuable and rare—what I would call your “signature.” Without it you will become invisible, no longer propped up by the trappings of managerial life. Visibility will come not from the HR departments of the past but from the rapidly emerging guilds of the future. Some, like the virtual guilds Sermo (for U.S. physicians) and LawLink, already play the role of the medieval guilds by verifying skills and increasing knowledge.
 
(2)
The second investment is in developing new areas of proficiency, or moving into adjacencies, throughout your working life. But in the future not all deep knowledge will be valued the same. It is important to think hard about which competencies are rare and difficult to imitate and which careers will be most successful. My research suggests that advocacy, social and micro entrepreneurship, the life and health sciences, energy conservation, creativity and innovation, and coaching will be highly prized in the decades ahead.
 
 
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The End of Middle Management
 
The demise of middle management isn’t due to technological advances alone. Start-up cultures have had just as big an impact. Start-ups hate middle management! Within start-ups, there are people who generate business ideas, people who write code, and people who sell what comes together from those ideas and that code.
 
None of these essential jobs in the start-up world is dependent on middle managers making sure people do what they’re supposed to do. Instead, start-ups embody the notion that you can do more with fewer, pushing each individual contributor to take on greater job responsibility.
 
 
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Why Artificial Intelligence Will Replace Managers
 
AI presents significant challenges for executives and managers, forcing them to reconsider and redefine their own roles. As collaboration among human employees and machines increases, everything from the division of labor, training, performance management and talent development will have to change. Given the value that organizations are increasingly placing on experimentation and collaboration, creative and social intelligence will undoubtedly grow in importance as AI takes on more rules- based responsibilities.
 
 
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When Machines Replace Middle Management
 
As Reinhardt thoughtfully points out, humans are on the verge of becoming literal cogs in a machine, completely anonymized behind an API that controls and monitors their every activity. While there may be a great level of autonomy in the freelance economy that entices people to join these software layers, workers are entering a dichotomous workforce, which is effectively a dead-end with little opportunity to progress, learn, or develop skills that invest in their future.
 
With management being done by software, the door is now wide-open for complete automation once the respective technologies become available or go mainstream. Will Uber or Lyft keep any drivers once self-driving cars become mainstream? Likely not. Will Amazon continue to doll out its delivery business to FedEx and UPS once drones become a reality? Likely not. Companies like Lowes are investing in robots as store assistants – will they need middle-managers to manage those robots, or will they be managed by software layers in the cloud?
 
 
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The AI Threat Isn’t Skynet. It’s the End of the Middle Class
 
In the end, no one left Asilomar with a sure way of preventing economic upheaval. “Anyone making confident predictions about anything having to do with the future of artificial intelligence is either kidding you or kidding themselves,” McAfee says.
 
 
 
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Here’s How Artificial Intelligence Is Going to Replace Middle Class Jobs
 
 
"AI has the potential to replace us all in this room," predicted Gavet. "It's an interesting cocktail waiting for us to fundamentally change."
 
Crucial to this transition, though, are the structures provided by the government to support a change of this magnitude, said Salle Yoo, general counsel for ride-sharing giant Uber, which is currently developing its own line of AI-powered automated, driverless cars.
 
 
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How AI Is Changing The Way Companies Are Organized
 
Artificial intelligence tools are only beginning to penetrate the workplace, but are causing leaders to rethink how their businesses run.
 
“AI is definitely not eliminating jobs, it is eliminating tasks of jobs, and creating new jobs.”
 
“To integrate AI, you have to have an internal team of expert product people and engineers that know its application and are working very closely with the frontline teams that are actually delivering services,” says Ian Crosby, cofounder and CEO of Bench, a digital bookkeeping provider. “When we are working AI into our frontline service, we don’t go away to a dark room and come back after a year with our masterpiece. We work with our frontline bookkeepers day in, day out.”
 
In order to properly adapt to changing technologies, organizations are moving away from a top-down structure and toward multidisciplinary teams. In fact, 32% of survey respondents said they are redesigning their organizations to be more team-centric, optimizing them for adaptability and learning in preparation for technological disruption.
 
 
 
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World’s largest hedge fund to replace managers with artificial intelligence
 
Bridgewater Associates has a team of engineers working on a project to automate decision-making to save time and eliminate human emotional volatility
 
 
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Reinventing the Company in the Digital Age
 
Our transformation, as we now envision it, is in progress and far from complete. Far more importantly, technological change continues apace, and society is changing with it. We are witnessing the dawn of Big Data technology. The Internet of Things is only just taking o , but is set to grow exponentially. In these realms, as in so many others—some of which we can as yet barely imagine—“more is di erent,” in the words of Kenneth Cukier in his article for this book, “Big Data and the Future of Business.”
 
So we are running a race which, for as long as the present stage of scientific and technological progress accelerates, has no discernible finish line. If we are not to lose our way, if we are not to become complacent or resign ourselves to being second-best, we must modify people’s attitude to change—we must not merely accept, but embrace and promote change. This calls for strong and cohesive leader- ship throughout the organization. Our leaders must advocate change, encourage change by example, recognize those who support change, and take steps to remove the practices and structures that stand in the way of change.