Management That Must Change: Embracing AI for a Competitive Edge
In an era where technology is making significant leaps and impacting society in general and the business environment in particular, managers cannot face new challenges with old tools. The increasing use of AI tools in organizations across a wide range of fields requires managers to adopt new approaches, embrace innovation skills, and rethink their work methods.
In 2020, it was the coronavirus that impacted management environments and forced organizations to rethink. Concepts that seemed like science fiction to traditional organizations in 2019 became the standard, and many managers changed their approach and management methods. The pandemic was an imposed constraint, something no one asked for or wanted, but it also acted as a catalyst for significant efficiency, adoption of new models, and breaking conventions.
Despite the strongest evolutionary ability being adaptation to change, it is difficult for humans and the organizations they manage to change. We see how outdated concepts can lead to national disasters of unimaginable magnitude. How an organization like the U.S. Secret Service struggles to prevent a person with a sniper rifle from approaching 150 meters from a presidential candidate when only a neck movement separated him from the beyond.
Similar to recent formative events, the AI revolution is also a crisis, and crises, as is known, are meant to change world orders. But unlike disasters and unwanted events, the AI crisis is a side effect of a deliberate process that comes to bring the enormous advantage inherent in the use of data into immediate practice.
Discovering the Data
Management is the process of planning, organizing, and controlling organizational resources efficiently and effectively to achieve organizational goals while constantly adapting to a changing environment and creating value for shareholders—this is my favorite and most fitting definition to explain why AI has such great potential to change the face of management. Simply put, AI affects the availability of information, processing, analysis, and accessibility. AI allows for the processing of large volumes of information from various and numerous sources simultaneously, relatively accurately (and it’s improving), making it quickly accessible, thereby optimizing decision-making processes at all levels in the organization.
So, what’s new? There’s no revolution in the idea of efficient data use, and data-driven decisions are the aspiration of every manager. But it’s not the “what” that has changed, but mainly the “how,” “when,” and “where.” Complex things have become simple, efficient, and available, and this has tremendous significance. Managerial models have always changed and adapted to the changing business environment, but if in recent decades the change was relatively gradual and outdated models lasted too long, now the change will be rapid and accelerated, unlike anything we’ve seen before.
Changing the Hierarchical Structure
In an era where complex information will undergo rapid processing and can provide insights and accurate recommendations at the push of a button, complex hierarchical structures may delay decision-making processes and create a “competitive disadvantage.” In an era of fast and changing technologies, flexibility is critical, while traditional hierarchical structures are cumbersome and rigid. Beyond the slowness in decision-making, such structures struggle with adopting new technologies, limit creativity, and hinder the ability to respond quickly to frequent changes. Although agile methodologies (approaches from project management that emphasize rapid adaptation to changes) have been in the management toolkit long before the AI era, now, beyond project management, they will be a cornerstone in the cross-organizational management philosophy.
The Organizational Melting Pot
But it’s not just the hierarchical structure that needs to change; the structure of the business units themselves also does. Any organization, especially one that sells services to customers through digital means, must adapt to a competitive environment and be able to respond quickly. The way to achieve this is through the integration of technology and business. Technology is no longer just a provider in the organization but a function in business decision-making processes. Still, at the same time, technological solutions are no longer confined to people who speak in unclear foreign abbreviations and do not always understand the customer’s language (the one the company defines as a customer). Beyond no-code programming, AI technologies enable the simplification of technology production by non-technical people, which is a significant step towards closing the gap between poles in the organization. When technical skills are pushed aside and make way for creativity, which will become the most important factor and the fuel in the organizational engine. Mixed departments of marketing, service, and product people working alongside developers under a joint manager, focusing on creating solutions rather than developing technologies and products.
Moreover, as fintech solutions become more integrated with traditional financial services, regulators need to adapt their frameworks to ensure they’re fit for purpose. This might involve revisiting data protection laws, updating anti-money laundering protocols, or creating new categories of financial licenses that bridge the gap between traditional banking and fintech innovations.
The Manager's Role
The manager’s role will change dramatically. Managers’ decision-making processes at all levels will be much more data-driven, facilitated by AI tools, as managers will be required to develop the ability to apply these insights effectively. The manager’s role will focus on guiding, coaching, and developing employees’ soft skills while creating an environment that encourages creativity and innovation. Managers will become leaders of change and innovation as a daily business necessity. The manager will need to bridge the technological capabilities of AI with the human needs and abilities of employees and identify opportunities for optimal integration between them. To do this, managers will need to be well-acquainted with AI capabilities and limitations. Managers will need to manage hybrid resources simultaneously, consisting of humans from various disciplines and artificial intelligence systems like multiple agents and similar systems. These challenges will require managers to be more generalists (understanding diverse areas and navigating between them) and less “the most professional worker in the department.” To address the challenges posed by new technology, managers will also become gatekeepers to ensure accuracy and minimize risks arising from the use of AI, both in terms of misuse by employees and ethical challenges resulting from the use of AI itself.
It doesn’t really matter if the AI predictions come true; the change in how we manage businesses has already begun, and it will not stop. The change will be fast and powerful, and we, the managers, must be prepared for it.
The ongoing AI revolution, in particular, offers exciting possibilities for the fintech sector. Machine learning algorithms can enhance fraud detection, automate credit scoring, and provide personalized financial advice at scale. Meanwhile, natural language processing can improve customer service through chatbots and voice assistants. By embracing these technologies, fintech companies can offer services that were previously unimaginable or prohibitively expensive.
Furthermore, as global supply chains face unprecedented challenges, there’s a growing need for innovative financial solutions. Fintech companies are well-positioned to develop tools for supply chain financing, real-time payment tracking, and currency risk management. By addressing these pain points, fintech can not only create new revenue streams but also contribute to the resilience of the global economy.
This article was originally published in the newspaper Israel Hayom on July 24, 2024, as an opinion column by the company’s CEO, Jonathan Kuzmanko.
The original article you can read here: https://www.israelhayom.co.il/business/article/16134895