Beyond automation: the same AI can concentrate or spread authority

A new piece from INSEAD Knowledge by Phanish Puranam, Piyush Gulati and Arianna Marchetti speaks to the question I get asked most in conversations with various stakeholders, which is how many jobs AI will automate. Their argument is that this captures only half of what is happening, because the same AI can be deployed as a production technology, which changes how the work gets done, or as what they call OrgTech, which changes how the organisation coordinates, allocates authority and handles exceptions.

The distinction that matters is between vertical and lateral OrgTech. Vertical OrgTech gives managers better monitoring and decision support, so one manager can supervise more people. Lateral OrgTech lets peers route information and sort out dependencies among themselves. Both flatten the organisation chart, but only the lateral version decentralises it. Their evidence is firm-level and predates agentic AI: across roughly 3,000 large US public companies between 2010 and 2019, adopting tools like Jira, Asana and Slack was followed by fewer managers per employee.

The authors are careful to say that technology does not decide which future we get. A business case built on hours saved says nothing about which of the two an agent is doing, and in most organisations that choice is made by whoever configures the agent, usually a project team solving a local problem.

The two deployments move authority in opposite directions. An agent that monitors and escalates concentrates it, and the manager now covering more people answers for more decisions than before. An agent that lets peers coordinate spreads it, and the accountability has to be written down somewhere other than a manager's job description, because there will be fewer managers to hold it.

Choosing between them is a governance decision, and it belongs with the executive who signs off the operating model rather than the team that builds the agent. A business case that cannot say which one it is should not be approved.

Source: https://lnkd.in/gxdaVzXr

#AusBiz #FutureOfWork #OperatingModel