AI Leadership Insights: Middle Managers Must Embrace Change

Mike Vizard: Hello and welcome to the latest edition of the Techstrong AI Leadership Series. I’m your host, Mike Vizard. Today, we’re with Ugo Orsi, who’s chief customer officer for Digitate. We’re talking about, well, how middle management might be getting in the way of some AI progress here because well, we’re all humans and humans have victims and here’s where we are.
Hey Ugo, welcome to the show.

Ugo Orsi: Thank you for hosting me. I would like to start with one thing. I don’t really want to demonize middle management, certain behavior are also driven by culture and how organization works and functions. It goes back to a point how culture is created is a set of mixed procedures or policies and then, unwritten rules. Just to be clear, it’s not that we have a bunch of middle management that are against AI and they do whatever they can to obstruct it. I think it’s a little bit quite different. We have a lot of capable people that have been trained and used and rewarded on a specific way. Introduction of AIs is changing it so naturally they are opposing because they do not understand how well they can function, especially how well they can be rewarded and recognized. The word is changing and I don’t think sometimes we are talking about upper management is helping them to change. Does it help, first of all, how to frame what the problem is? So we don’t understand, we have people issues.

Mike Vizard: I think you’re spot on. I think this comes down to what we used to call organizational behavior and we have studied this in the past and maybe you want to walk through people through because people behave at work differently than they do at home and so, it’s not always clear how anybody’s going to respond to this level of change. But do we need to revisit organizational behavior as a science?

Ugo Orsi: Well, that’s a bigger task than me. I’ll try just to explain what is my point of view on Artificial Intelligent adoption and if you want engineer a lot of IT adoption. Let’s start with some common statement. I think everybody acknowledge that it’s very common that IT business case hardly achieve a value that is committed. I did some studies in analysis. One things I’m quite convinced, it’s also how IT, it is represented within the company business record. What I mean, if you think about it, majority of the company, it is part of general expenses and by definition, general expenses are those expenses that do not directly contribute to the profit margin are those expenses that are needed. You need insurance, you need a place where to stay. Now, offices are not really in fashion anymore, but still, you need an office and you need IT. When you put it in that kind of costs or classification of cost, automatically the top of the house, the CIT not as a direct contributor of a profitability.
There is already a reaction or we are talking about organizational behavior, so there is already a behavior to see it as generic a cost center, but never to contribute to profit. This is quite important because every time you go to any IT pitch, pick the company, they always all describe how their solution can radically change the business or create value. These are one of the first disconnect and it’s an important one. Give you another practical example.
I give you an example that is close to my heart because I’ve been managing IT operation for a while. If you’re managing IT operation and you miss an SLA, a storm is going to happen on you. The business is going to start crying that they lost millions of dollars, most probably, even they marriage got ruined by your SLAs. In the country, if you push your team and you drive a continuous improvement and you improve SLAs, it’s not that they’re going to come back and say, “Oh thank you, you made us save this amount of money.” It’s almost given. This is important because if you think about it and how also AI get introduced in a lot of businesses is not a radical change, so it is a continuous improvement, so it’s difficult to capture this continuous improvement but being a change where is a risk.
Let’s go to a first point of a behavior. I am a middle manager and I want to embrace a new technology. I am well aware of the risk, I’m struggling to showcase the value and this is something where we are going to have to help quite a lot. The second one, it is how AI radically change their behavior.
Now, let’s use another analogy that I usually use. Let’s talk about gravity. If you think about it, everybody knows that it’s easy to drop a ball on the ground because you’re going to naturally fall. If you have to pick it up, it requires some energy. If you think about the organization, our design are designed by gravity and order from the top naturally flow easy down to the bottom. The opposite, it’s quite hard. What does it mean is that our organization are designed for what they call an old school demand and control. You set goals and you control that get executed and you expect it. Old school people say, “Execute, do not think.” Now, AI comes in and what is going to take care? It’s going to take care of a majority of execution. It’s not secret, but a lot of what a classified white collar job can be fulfilled by AI. Now, it comes to a problem.
As a manager, I don’t control a machine what I do. This is another part of spot on, the business behavior has radically changed. The future organization, as I see, are not anymore of a classical pyramid. We are more cogs where the manager or the leader or the middle manager job is to make sure that all the pieces of his engine are working all together. So he has to create a lot of empathy and he has to contribute to that because he’s inside the cog, he’s not outside. That’s a radical change because it’s quite a change that need to be fought and translated. I go back to the two majoring pavement, more than the people, which is more a culture behavior. It is how you reflect the value and how you support the fact that the job of a manager is going to radically change. Does it make sense to you, Mike?

Mike Vizard: I’m with you so far. Will the pyramid flatten and the nature of my job is going to change in the sense that I need to think more rather than just execute. But how does everybody who’s going to be unquote thinking kind of collaborate because we’re used to a small number of people doing the thinking and a large number of people doing the execution?

Ugo Orsi: You’re spot on what the problem is because a large number of people doing execution now is inside the machine. If you think about it, it is how many years of history of taylorism do we have? Quite a lot. I’m struggling to make the count but I think it’s more than almost 100. But think about it, all the job that is being very well organized and categorized is going to be executed by machine but we left out the human part, the power part. I am an optimistic by nature, but think about it, if you can add this, that power of people thinking, how much you can really more improve, how much you can create. Is it difficult? Yes, because we are not structured and I think this is one of the reasons why of this low adoption of AI.

Mike Vizard: It seems like it’s still early days for AI, but most of the organizations I talked to are trying to figure out how to operationalize it and then essentially, seems to be a lot of experimentation, a lot of trial and error and nobody seems to have a clear plan for where to implement it and then they’re also trying to figure out if I only have enough money to do one or two of these projects, which ones to do first?

Ugo Orsi: Let me answer in a different way. I have a different point of view and I often meet customer with the same approach, meaning I want to try, where do I try? If I agree with you, for many people, it’s early day on AI, but AI is an established technology and many products that are outside are proven. It’s not that you need to test it if it works. For me, an analogy is like when you buy a car today, you don’t test if a car drives, you test it if a car fits you your needs. These, I think is one of the biggest problem because they’re trying to see if the technology works more than say how we fit with the technology. For AI, it’s fundamental because if you think about it, what AI is going to do? AI is going to do a lot, as I said, white collar jobs. But what really means is that a lot of how the organization, any business is organized, this has radically changed.
Let me give you a stupid and practical example. I’m pretty sure you everybody else can do math. A calculator does math, but they don’t follow the same process. They use a binary. We use decimal and I don’t know if you ever tried to do a calculation in binary, it’s not natural to us. Maybe for you because you might be a genius, but to me, I tried a few times, it’s extremely hard. What is my point? My point is a lot of organizations that try to think how the technology can adapt to my process instead of says, “No, no, this is radically different. How do I adapt to the technology?”
If you want a practical example that human can do it, think about it, any average, let me say American or any [inaudible 00:11:38], they’re much quicker to adopt technology than any organization. Think about how many device connected to internet, any family has and they did it in what last 25, 30 years. The speed of adoption, if you think about the family versus the organization is not matchable. Not comparable.
The humankind has the ability, what I’m saying is the organization that are a little bit the problem of adoption and it is the mindset. The mindset, it is the technology need to adopt to my organization, not how the organization adapt to the technology.

Mike Vizard: Aren’t we slaves to our existing processes because that’s what we know and we’re comfortable with and we’re not comfortable with the whole idea of let’s just blow it up and start over again based on new capabilities that we have that at the time when we created the original process, we didn’t have?

Ugo Orsi: The word slaves is a strong word to be used, but I would say we are more slave to our fears because the real problem, what I’m saying, a lot of people might say, “Well, it’s great talking, it makes sense. Why don’t we do it?” Because what I’m suggesting is related to risk. Think about, we are talking our organization that have been functioning pretty well for years. What is a motivation to change? Think about what I said at the beginning of discussion, IT is considered general expenses. It’s like, I’m well exaggerating, you asking to change my business model because my renting agreement for my office is changing. Doesn’t make any sense.

Mike Vizard: Do you think that-

Ugo Orsi: It doesn’t make sense what I’m telling you because-

Mike Vizard: Yeah, I get what you’re saying [inaudible 00:13:34] but work it through the other way and say, eventually somebody’s going to come along and use the technology to drive a way of doing something differently than the organization currently does and that rival will force the organization to change no matter what because that’s evolution, right?

Ugo Orsi: Well, I would say not eventually, it’s already happening. Now, let me quote a graph that I like a lot is a graph that Astro Teller draw and it showcase the speed of adoption and the speed of ability to generate innovation. We are in a millennium where the ability to generate innovation is much, much greater. If you think about two curves, it’s much higher than the ability to adopt. Where are the winner? The winner are the one that adopt better the new emerging technology creating new technology. Think about what Amazon did. Amazon created a new market if you think about AWS and a new way of Amazon selling, adopting technology better and faster than others. I’m not saying it’s the only one, so I would say it’s already happening. It is inertia and the risk.

Mike Vizard: It seems to me at least, most organizations when confronted with a rival who’s doing something more innovative than they are, well, they may go out of business, but more often than not, they just buy the new rival and adjust. And that’s how they make the adjustment is they basically absorb the innovation that somebody else created because they get stuck up in their own version of the innovator’s dilemma, right?

Ugo Orsi: Yeah, I was thinking about Christensen as well. The innovator dilemma, it is because sometimes… Now, we are talking generics and then we have to be specific, but sometimes, it’s jeopardizing or cannibalizing the existing business. We have a tendency when you say what we are slave, we are not slave of a process, we are slave of habits and fear. If I ever think about the old saying, if it works, don’t change it. I have a work, a business that give me that profit. Why change it?
Remember another things. In a capitalistic economy, especially if you are a public company, you spend [inaudible 00:16:05], you counted in years in month. It’s very short, one, two years, few months. Transformation like that takes more time. How many CEO are going to bet their career to embark on a journey that you were describing? In fact, nobody bought Amazon. They didn’t even see coming. They could have bought it when it was more a library book and says, “Okay, let’s buy them out.”

Mike Vizard: I guess that would mean Barnes and Noble could have been the largest computing platform in the world, right, theoretically?

Ugo Orsi: Just an example. You know what I mean, there are other examples like this, like Kodak.

Mike Vizard: There is plenty of companies that are on the scrap heap of history because they weren’t paying attention to the technology innovation or they just couldn’t absorb it.

Ugo Orsi: Yes.

Mike Vizard: What’s your best advice to A, middle managers and B, senior managers about how to navigate this technological change because it is at a level of scale that most have not seen or experienced in their lifetime?

Ugo Orsi: Well, you will be surprised that my advice has got nothing to do with technology. You go back to basics, build trust. Let me explain. When you bring into AI and you do a program, there are people that will have to change up. If you have not established the trust, it will very difficult says, “Trust me, we are going to teach you how to work in this new environment.” If you don’t have established a profound trust, you got my back, it’s not going to work because adoption is about change. As we discussed, and I think you tended to agree with me, change brings fear and discomfort. How you cope with that is it within your organization establish trust?

Mike Vizard: Do we need to establish what amounts to therapy sessions then for these managers to establish that trust because so much of what they do in these organizations is they compete internally with each other for resources and they’re not always aligned? Do I need to put everybody in a room and say, “Hey guys, this is how we’re going to do this together going forward”?

Ugo Orsi: Well, it’s very difficult because answer to a question depends on the culture of the company and it is difficult to provide a generic statement for everybody.
But we go back to what you just said, people behave sometimes different in office and at home. I don’t think the majority of the humankind is competing with their neighbors. We are competing with our colleagues, so depends again, the culture of the organization and and depends the drive.
Because honestly, if I’m an organization that is in a dominant position and I have no urge to adopt technology, why should I? Because tomorrow, someone comes, what I think it is to this company says, “Well change, as you say will come.” If you look to the history, the company were dominant 50 years ago or 100 years ago are no longer almost in the books. The things start thinking long-term and built a trusted relationship that takes time. The one that are in early. Meaning, they are under a pressure, I would strongly advise to build a transformational roadmap where you think not only of the technology of adoption, but you take the process and the people impact. Because usually from my experience, what slow down or can kill any technical project, specifically talking about IT project is the adoption part, not the technical issue. Technical issue get always resolved.

Mike Vizard: Folks, there you have it. Fundamentally, it’s not about the technology, this is a massive exercise and change management and it has to do with humans and all kinds of things that go into that that are, shall we say, the intangible qualities that make up our business and that’s more likely to trip us up than anything else. Hey, Ugo, thanks for being on the show.

Ugo Orsi: Thank you. May I have a last comment?

Mike Vizard: Go for it, my friend.

Ugo Orsi: If you think about it is, and that is a little bit a comment or ask, for people like you who make communication. Too often, AI is pictured as a threat. You start from movies and the news every day. I think that if we want to start adopting this technology, we should also spend some time to see that it might be a help in more thinking that a Schwarzenegger is going to take over the world.

Mike Vizard: Well, every tool ever invented cuts both ways.

Ugo Orsi: Yes.

Mike Vizard: Positive and the negatives, they all go together hand in hand.

Ugo Orsi: I agree. There is a fear of the atomic bomb as now atomic… Nuclear energy can provide, in these days, some [inaudible 00:21:34] clean. It’s always how you use it, but the technology per se should not be feared.

Mike Vizard: All right. Folks, thanks for watching the latest episode of the Techstrong AI video series. We invite you to check out this episode and others on our website. Until then, we’ll see you next time.

Ugo Orsi: Thank you for having me here.