Role of Artificial Intelligence in Organizational Decision-making

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Sreejith M
Business Consultant, Netherlands

AI Should Continue as a Facilitator of Operational Competence

The relevance of AI is basically as a computational facilitator. I believe strategy has and should have a human-centric element.The higher computational competence can inform the strategic setting, but should not control or govern its outcome.

Rahul Mehta
Analyst, India

Data, Predictive Analytics and Artificial Intelligence can Augment, not Replace Human Intelligence… BUT

As a business analyst and consultant, I find that instead of using analytics to augment human intelligence, managers very often just abdicate their role and let algorithms decide for them.
I have experienced this in different industries, different countries and at different management levels.
Some managers do it as a "playing safe" approach in decision making. I feel this approach is shrugging responsibility.

Jaap de Jonge
Editor, Netherlands

Managers Remain Responsible for AI Augmented Decisions

In my opinion, such approach by managers (abdicating their own role/responsibility and letting algorithms decide for them) is ignorant, irresponsible and dangerous. Especially given the childhood stage that the field of AI is still in.
Having computers decide for you is really just a case of delegation. So managers remain (even legally) responsible for what happens.

Jaap de Jonge
Editor, Netherlands

The Responsibility of Business Analysts and Consultants in Predictive Analytics and AI

Another thing is that in my opinion business analysts and consultants active in Predictive Analytics and AI have a responsibility to:
A. Explain the above to users (both operational and those responsible) of the systems they design and program.
B. Ensure the systems they create are able to clearly explain how and why they took the decision in each individual case as well as overall.
I expect this moral responsibility to become a legal responsibility soon in various jurisdictions.

Jaap de Jonge
Editor, Netherlands

The Permissionless Organization

Effects of digital and AI on decision-making processes

Another future effect of AI and similar advanced digital/IT systems on decision-making is that they enable to change and improve the decision-making PROCESSES in organizations. More specifically, the responsibility for making most decisions can be delegated to a lower level. The processes can also run a lot faster. And local information/knowledge can be used. And many decisions at lower and medium levels can be left to the software algorithms altogether.

What is a Permissionless Organization

According to Michael Sikorski, in the future we can expect "permissionless organizations", using highly advanced, digital systems and AI in order to require far less hierarchical layers and in order to make much quicker decisions.
"A permissionless org pushes decision-making out to the farthest edges of your organization, capitalizing on the scale of ideas you already have. It empowers the people (…) to make decisions and seek new opportunities to improve the business—without requiring approval".

Requirements for a Permissionless Organization

To make such kind of organizations happen obviously requires state of the art information systems and the skills to use them.
Besides that, McGrath and Charan recommend certain work practices to get started on this daunting transformation

SWEAT THE METRICS: Highly integrated systems and clever digital metrics, helping teams to understand (through extensive testing and experimenting) what are the causal effects of their actions on the results.
BRING THE INFORMATION TO THE FRONT LINE: Easy to use, user-friendly representation.
COMMUNICATE CONTEXT. People need to understand the strategic vision, the mission and organizational values of the parent company and understand well how their works should fit in the "big picture".
SWITCH TO MULTIFUNCTIONAL TEAMWORK: See: multidisciplinary, cross functional teams.
LEADING THE TRANSFORMATION: See: Transformational Leadership.

I do not expect we're going to see a large, fully permissionless organization any time soon. But clearly this is the direction in which we are heading and companies are wise to be prepared and start early. The rewards and the challenges are immense.
Sources:
Sikorski M. (2021), "How Permissionless Organization Design Gives your Company an Advantage", Fast Company
McGrath R. and Charan R., "The Permissionless Organization, HBR Jan-Feb 2023, pp. 86-95".