InsightaaS: McKinsey & Co. is a world-leading management consulting firm, known for advising senior management within the world’s largest enterprises. Given its position, the post featured here has particular weight: it asks management to consider what the role of the executive will be in a world where machines rapidly solve complex problems. "What would it take for algorithms to take over the C-suite?" McKinsey asks, "and what will be senior leaders’ most important contributions if they do?"
The answer, McKinsey believes, is that computer-driven management "will transform the lives of senior executives only if managerial advances enable them to." Management styles will need to evolve away from command and control - an approach that is doomed in an environment where an explosion of analytics insights empowers employees throughout the organization to make faster and better decisions - to an approach that is aligned with the strengths and weaknesses of highly-capable systems. In McKinsey's view, this will require leaders to focus on tasks that computers do poorly, such as motivate workers, set policies that address multiple objectives, and build understanding through "
This will no doubt prove to be a challenging path, but success in dealing effectively with computer-dependent management options will be essential to overall success. As McKinsey notes, "The incentives for getting this right are large–early movers should be able to speed the quality and pace of decision making in a wide range of tactical and strategic areas...Without behavioral shifts by senior leaders, though, their organizations won’t realize the full power of the artificial intelligence at their fingertips." This duality permeates the piece, and the situation generally: technology is changing management options, which introduces change to management; the pace and efficacy of management responses will play a large role in determining which firms benefit from these new capabilities.
In a 1967 McKinsey Quarterly article, "The manager and the moron," Peter Drucker noted that "the computer makes no decisions; it only carries out orders. It’s a total moron, and therein lies its strength. It forces us to think, to set the criteria. The stupider the tool, the brighter the master has to be–and this is the dumbest tool we have ever had."1
How things have changed. After years of promise and hype, machine learning has at last hit the vertical part of the exponential curve. Computers are replacing skilled practitioners in fields such as architecture, aviation, the law, medicine, and petroleum geology–and changing the nature of work in a broad range of other jobs and professions. Deep Knowledge Ventures, a Hong Kong venture-capital firm, has gone so far as to appoint a decision-making algorithm to its board of directors.
What would it take for algorithms to take over the C-suite? And what will be senior leaders’ most important contributions if they do? Our answers to these admittedly speculative questions rest on our work with senior leaders in a range of industries, particularly those on the vanguard of the big data and advanced-analytics revolution. We have also worked extensively alongside executives who have been experimenting most actively with opening up their companies and decision-making processes through crowdsourcing and social platforms within and across organizational boundaries.
Our argument is simple: the advances of brilliant machines will astound us, but they will transform the lives of senior executives only if managerial advances enable them to...