A human interacting with an AI executive in the film 2001: A Space Odessey.
Artificial Intelligence (AI) is the newest business craze. AI has been presented as the solution to cost problems, primarily by replacing mid-level workers throughout the economy. This technology has teething problems. These are but two examples. In 2023 Sports Illustrated got in trouble for using AI to generate articles, “written” by fake authors. The AI generated articles included nonsensical sentences such as, “Volleyball can be a little tricky to get into, especially without an actual ball to practice with.”[i] Lawyers have been caught using AI to create legal filings that cited non-existent cases.[ii] In these examples, and other cases, the quality of the work seems to not measure up to human output. The damage can be more than reputational, Tesla has twice the fatality rate per mile driven than the industry average.[iii]
By focusing on middle management, business has missed the most obvious opportunity for implementing AI, the replacement of Chief Executive Officers. CEO jobs are a better fit with the major strengths of AI, which are more generalist. Middle management jobs are actually too specific in nature. One day in the future perhaps AI can replace a specialist in legal questions based on the Jones Act.[iv] The day a computer can make effective decisions on a limited number of data points is not here, but today AI stands ready to run the corporations of the world efficiently, effectively and without distraction.
The fundamental error has been to confuse automation, which was the first wave of computer assistance in business, with AI. They do different things. AI is not enhanced automation, it is a replacement for the opposite of automation, which is reason.
The middle range of human judgement actually requires more nuance. Each situation is more unique and there are not enough data points for AI to craft an adequate plan of action. One can’t replace a specialist who is drawing on just five specific cases over a career to make a decision for the sixth instance. AI needs thousands of similar scenarios to teach itself. AI taught itself chess using thousands of chess matches, not five. AI can’t decide if the company should settle a lawsuit without knowing all the players and their goals, desires, and weaknesses. The optimal solution is case specific.
The reasons AI can be used to replace CEOs, while it can’t replace middle managers are legion. Business leadership articles all stress that the CEO must; 1) manage huge amounts of information, 2) see big picture, and 3) learn to adapt. These align with the advantages of AI.
The AI can analyze data faster and can compare a current problem with a wider array of similar situations. Finally, AI will not get inappropriately distracted by people leading to lawsuits for sexual improprieties, a rampant problem is some C suites.
Replacing CEOs is the golden AI opportunity of the age. The benefits go way beyond the faster, smarter and more robust leadership that AI offers. AI will save costs.
The CEO is the single biggest expense item in most large companies. They get paid tens of millions of dollars. Giving this job over to AI saves a company more than any other AI opportunity currently available. Even if AI were to only match human performance in the CEO role, the cost saving is compelling. CEO pay has risen to absurd heights, Legendary management theorist Peter Drucker wrote that a CEO was only worth twenty times the average employee. Today’s CEOs now earn 272 times the average employee. The former CEO of Stellanis America was paid $24 dollars per car sold in America in 2024, while the stock price dropped by half.
This is an obvious opportunity to enhance shareholder value through the application of AI. Unless, of course, one lives in Lake Wobegon where all of the CEOs are above average.[v]
The human CEO is, well, human. They have an unfortunate tendency to sexually exploit co-workers and suppliers. This leads to complicated and expensive lawsuits where the corporation ends up settling for large sums of money. The process is also distracting for management and can harm the corporation’s reputation. A company like Fox News has spent millions to settle a wide array of sexual impropriety claims,[vi] all of which could have been avoided by using AI to replace humans in the CEO role.
To err is human, but turning the management of our large corporations over to artificial intelligence will lead to greater top executive competence, if not perfection.
[i] https://futurism.com/sports-illustrated-ai-generated-writers
[ii] https://www.cnbc.com/2023/06/22/judge-sanctions-lawyers-whose-ai-written-filing-contained-fake-citations.html
[iii] https://www.roadandtrack.com/news/a62919131/tesla-has-highest-fatal-accident-rate-of-all-auto-brands-study/
[iv] The Jones Act regulates American maritime commerce. https://en.wikipedia.org/wiki/Merchant_Marine_Act_of_1920
[v] https://www.brainyquote.com/quotes/garrison_keillor_137097
[vi] https://www.nytimes.com/2017/08/14/business/media/fox-harassment-settlements-cost.html