Robot CEO: Your next boss could run on code

A report shown at the 2016 World Economic Forum in January says millions of jobs will be lost to robots in the next few years. When thinking about who is most vulnerable, factory workers, drivers, and pilots come to mind. Surely the jobs requiring a human touch, such as artists, entertainers, and managers, will stick around, right?

Maybe some of those jobs will be safe. Managers, not so much; very soon, robots will be replacing humans in top management positions, even up to the CEO level. And that may happen much sooner than expected.

Robots are improving faster than we think

The Web is full of articles prophesizing which professions will remain unaffected by robotization. Two years ago, the most common were lawyer, doctor, and financial analyst. The surprising fact is not how wrong these articles turned out to be, but how rapidly our perceptions of which jobs can and will be automated are being eroded.

In 2004, the best self-driving vehicle in a DARPA challenge could not even navigate eight miles before getting stuck. Eight years later, Google autonomous vehicles had driven 300,000 miles without a single accident.

The world watched in awe 20 years ago as a computer beat the chess world champion Gary Kasparov. While amazing, the chess program (IBM’s Deep Blue) used a set of brute force and predefined rules to win, not real machine intelligence. At the time it was predicted that it might take another hundred years until computers would beat top human players at the boardgame Go.

But a few days ago, Google’s AlphaGo beat the world’s champion Go player in a five-game series. The amazing fact is not that a computer is now the world champion but that AlphaGo is essentially self-taught and mimics what we call intuition.

An invisible rise

For a long time humans thought Earth was at the center of the universe. At least we still have the illusion that everything in modern life has a human goal. The reality is our world is becoming optimized by, and for, robots.

Online content, written mostly by humans, is already designed for machines. Any article you read on the Web has been optimized with enough key words and relevant links and phrases to be crawled by Google’s algorithm and achieve a high “pagerank” score. Google’s success in the online search industry proves that robots do a better job deciding when, and where, information should be presented to be most effective.

This idea that computers are better at making decisions extends to the physical world as well; the automation of fast-food chains has already begun. Not yet with the installation of burger-flipping-robots — human handling is still cheaper — but with software making staffing decisions about who will work and when.

Employees may not like it, but computerized staffing decisions are more efficient. This is because human managers have a limited perspective of the workspace, whereas a robot can monitor the data generated from hundreds of human beings at once. Even more importantly, robots are much better at optimization, and software can be easily scaled to more locations through cloud technology. Once a new scheduling method shows an improvement in a factory’s productivity, the new strategy can be replicated within seconds to hundreds of locations and immediately implemented. Without expensive training seminars. Without resistance to change.

Ironically, we have already reached the point where some humans have a more unpleasant job than their robot colleagues. Next time you are speaking to an automated phone system, try swearing; you’ll be immediately redirected to human operators because they are the ones handling rude clients.

What a CEO does, a robot would do (mostly) better

When imagining a CEO, you might think of an overpaid ruler behind a mahogany desk in a large, glass office, staring down at tens of thousands of minions. Reality is quite different: 89.56% of U.S. businesses have fewer than 20 employees, according to the 2012 US Census Bureau. While small companies are less at risk of a board voting to replace them with a robot, the small business CEO will see his/her duties and decisions being slowly “optimized” with big data and predictive analytics, whether they like it or not.

Business books and management consultants commonly list six functions that a CEO is responsible for: determine the strategic direction, allocate resources, build the culture, oversee and deliver the company’s performance, be the face of the company, and juggle with everyday compromises. For most CEOs, developing objective, data-driven decisions is advantageous for the success of the company.

Imagine the owner of a small construction company contemplating the purchase of an additional truck. Yesterday, the decision was entirely his. Today, real-time analytics of his company’s numbers begins to shape how much loan interest he would pay. Tomorrow, analytics will determine the location of his building sites and his employees’ trips. It will even monitor local economic trends to come up with a financial proposition. Soon after that, a computer will tell him “I’m sorry, Bob, I’m afraid can’t let you buy that truck.” Computers first help humans to be more efficient. Then they make them redundant.

Allocating resources is a job best done by computers. Not only can a computer take more parameters into account at once, but the output is both neutral and reproducible. That makes the decisions harder to dispute. Rules are followed persistently and consistently. For employers who are scared of legal risks, algorithmic management is the ultimate solution: Discrimination lawsuits are reduced to auditing software source code. Software can also bring the benefits of optimization to non-technical business owners. A contractor will not need to be fluent in linear programming to choose which project to work on next.

Computers are not smarter than humans, but they can make better decisions by taking into account factors beyond human sight. For example, Waze can show you the best path, even for your daily commute, because it knows if cars are currently stopped a few miles down the road.

Investors and shareholders may ultimately push algorithmic management into mainstream use. Not only does this type of management provide more transparency, it also prevents favoritism, embezzlement, and whimsical actions. Office politics soon become irrelevant. The robot ensures its decisions will always follow the board’s strategy. Human managerial decisions will switch focus to the “why” rather than the “how” as data-driven decisions slowly creep from scheduling to resource allocation to performance measurement and reporting, and finally to daily management tasks.

Some innovative companies already do without central leadership, or at least define it differently. Even company culture is best defined by a set of rules and incentives, rather than loosely based on a CEO’s mantra du jour. Valve Software has no managers or bosses and laid down its company culture in a short employee handbook (a fascinating read). “Nobody reports to anybody else,” the handbook states. “We do have a founder/president, but even he isn’t your manager.”

Crisp, a boutique consultancy company in Sweden, is made up of approximately 30 people, but none of them are truly “employees.” They have zero managers; not even a CEO. Decisions are made through consensus, and instead of relying on some manager to allocate tasks, Crisp developed its own protocol detailing the chain of responsibilities when a new task appears.

The role left for human CEOs will be to deliver the company’s gospel. In other words, CEO will become first and foremost storytellers. Companies will be like a country where all the decisions follow a protocol predefined by congress; a country where the president is only a press secretary.

Workspace decentralization will accelerate the transition

While the large, centralized offices and production facilities of our not-too-distant past required the careful planning of managers (those non-productive workers who greased the wheels of production), that has changed over the last 20 years.

Physical gathering has become less important, and monumental companies and offices are being replaced by ad-hoc networks of independent contractors. Even Apple, the world’s most valuable traded company, doesn’t own a single factory.

With the increased importance of the software economy, the impact of a business becomes uncorrelated with its size. The largest messaging application in the world, WhatsApp, was acquired by Facebook for $19 billion. The company was five years old and had only 55 employees when it was purchased. AirBnB is now the largest hospitality company in the world. Yet it doesn’t own a single hotel room and employs not even a one cleaning lady. Robot-managers are particularly suited to this new kind of scale-free organization, because they can adapt and grow these organizations instantly.

Ready for your robo-boss?

Today, every day, millions of people already follow schedules or instructions created by software. We may not call these instructions “orders” just yet, but that time will come as the realm of big data and analytics-driven decision moves up in the corporate hierarchy. One robot is already exercising “direct managerial control,” including performance evaluation, over more than 200,000 workers: Uber’s automated management system.

The sad news is, your next boss will have even less empathy than your current one. The good news is, it won’t have anything against you personally.

Emmanuel Marot is the CEO of LendingRobot, a robo-advisor for peer lending.