Brief Summary
In this episode of Harvard Business Review's "The New World of Work," Adi Ignatius interviews Raffaella Sadun, a Harvard Business School professor, about reskilling in the age of AI. They discuss the potential impact of AI on the workplace, strategies for managers, and how employees can prepare themselves for this transformation.
- AI has the potential to dramatically transform workplaces, affecting even white-collar jobs.
- Firms have two ways of reacting to the technology: substituting workforce or rethinking organizational processes to create new tasks and opportunities.
- Reskilling programs should be embedded in company strategy and offer clear career pathways for employees.
Introduction
Adi Ignatius, Editor in Chief of Harvard Business Review, introduces the show "The New World of Work," which aims to provide insights into the changing dynamics of the workplace. This week's guest is Raffaella Sadun, a professor at Harvard Business School specializing in strategy and the managerial drivers of productivity and growth. She is also the co-author of an upcoming HBR article entitled "Reskilling in the Age of AI."
Potential Impact of AI on Workplaces
Raffaella Sadun discusses the potential impact of AI on workplaces, distinguishing between the potential and the reality. The potential is very high, with AI technologies capable of radically changing occupations, including white-collar and high-skilled jobs that were previously insulated from technological revolutions. However, the actual impact depends on the adoption process, which can be messy and slow, relying on integrating these technologies into workflows and incentives for adoption.
Job Creation vs. Elimination
The discussion shifts to whether AI will lead to net job creation or elimination. The outcome depends on firm strategies and organizational responses to these technologies. Some firms may take the "lazy way" by simply substituting the workforce with AI, leading to job losses. Others may rethink their workflows and organizational processes to create new tasks, opportunities, and potentially new jobs. The critical point is that the impact of AI is not predetermined and depends on what firms do.
Reskilling Strategies for Managers
The conversation turns to reskilling from a manager's perspective. Firms are constantly sourcing talent externally and investing in training. However, sourcing external talent is becoming tricky due to tight labor markets and the need for AI technologies to be integrated with specific use cases. This is creating a renewed focus on internal talent, specifically upskilling and reskilling, to enable the workforce to transition between occupations.
Understanding the Use Cases of Generative AI
The discussion explores the use cases of generative AI and how companies are adapting their workforces. It's still early stages, and predictions are unreliable due to the need for adaptation to specific firm processes. Managers will need to look for external talent and reskill their own workforces.
Creating Effective Reskilling Programs
Raffaella Sadun shares insights on creating effective reskilling programs, highlighting that despite enthusiasm at a high level, reality often differs. Even well-designed programs face low take-up rates due to resistance from employees and middle managers, who fear losing talent. The challenges in implementing reskilling programs are discussed.
Incentives and Program Design for Reskilling
The conversation addresses the risk of training employees for their next job elsewhere. Organizations should embrace the risk and focus on training programs embedded in company strategy. Articulating the importance of reskilling and the rewards for employees can change the salience of the program. Clarity on career pathways and personal benefits is crucial for increasing take-up rates and ensuring program success within the firm.
Defining AI and Its Applications
The discussion clarifies the definition of AI, distinguishing between broad definitions and specific applications like decision support systems. Examples include AI in buying decisions for supply chain managers and decision support systems for clinicians. The structuring of unstructured information is highlighted as an immediate application of AI.
Preparing Employees for a Transforming World
Raffaella Sadun emphasizes that learning new skills is often scary, especially for adults. Besides choosing high-quality training programs, the mindset is crucial. Individuals should prepare for moments of fear and consider cohort models for support. Learning in the flow of work can also lower frictions and inevitable bumps in the road.
Addressing Fear and Uncertainty in the Workplace
Businesses can alleviate fear and uncertainty by having a clear strategic vision on how training programs fit within the company's future and the future of its employees. Structuring incentives and responsibilities to embed training in the organizational fabric is essential. Acknowledging risk on the employee side and making training as frictionless as possible, with clear career pathways and aligned incentives, is also important.
Maintaining Corporate Culture in the Age of AI
Companies with a great culture are expected to make the most of new technologies because change is easier. It's important to ensure that technologies contribute to the growth of employees rather than just substitution. Companies should carefully consider how they present technologies and opportunities for employees to grow with the introduction of new technologies.
Leadership Skills for Executives in the Age of AI
Executives need leadership skills that combine knowledge and the ability to combine all the knowledge that exists in their company. Social skills that allow for the trading of expertise and persuading and helping people cope with change are also crucial. The unique mix of cognitive and social skills is what will allow leaders to thrive going forward.
The Importance of Good Management
Good management matters and contributes to higher productivity. Managers should not underestimate the importance of basic management practices. There is heterogeneity in the adoption of basic management practices across firms and countries, and this heterogeneity matters for firm performance.
Potential Downsides of AI and Safeguards
The potential downsides of AI, such as deep fakes and hallucinations, are addressed. Managers should safeguard against these by thinking about the use case and never trusting something that just comes out of the box. The costs of adopting these technologies will be in adapting them and truly understanding them for specific use cases. Adaptation should be done carefully and iteratively to check for hallucinations and ensure added value to the production process.
Transformation in the Workforce Due to the Pandemic
The pandemic has caused a transformation in the workforce, with many still in hybrid work environments. There has been a shift in job adverts to include remote work options. However, there is tremendous heterogeneity across firms in the extent to which hybrid and remote jobs are being accepted. What matters is the design of the job complemented by other organizational choices, such as documentation of work and ways of communication.
Techno-Optimist vs. Techno-Pessimist
Raffaella Sadun identifies as an organizational economist, suggesting that the impact of technology will vary across firms. New technologies may lead to a polarization of outcomes, with some firms successfully using them for their benefit while others lag behind. It's important to be alert to the opening up between those at the frontier and those that remain behind.
