See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/332082521

ARTIFICIAL INTELLIGENCE IN MANAGEMENT: CHALLENGES AND

OPPORTUNITIES

Conference Paper · March 2019

CITATIONS READS

14 17,539

2 authors:

Alexey Chernov Victoria A. Chernova

Peoples' Friendship University of Russia Peoples' Friendship University of Russia
7 PUBLICATIONS   21 CITATIONS    7 PUBLICATIONS   21 CITATIONS   

SEE PROFILE SEE PROFILE

All content following this page was uploaded by Victoria A. Chernova on 29 March 2019.

The user has requested enhancement of the downloaded file.

 38th International Scientific Conference on Economic and Social Development – Rabat, 21-22 March 2019

ARTIFICIAL INTELLIGENCE IN MANAGEMNET: CHALLENGES

AND OPPORTUNITIES
Alexey Chernov
RUDN University, Russia
chernov-av@rudn.ru

Victoria Chernova
RUDN University, Russia
chernova-va@rudn.ru

ABSTRACT
Technological development of society, and in particular the universal digitization of the
economy, will have a significant impact on the labor market and on the managers job functions.
The use of Artificial Intelligence systems and robotics carries with it both tremendous
opportunities and threats of changes and even disappearance of certain professions. The ability
to re-design the management system in accordance with new opportunities and challenges will
be a key factor in adapting organizations to the new conditions in the interests of workers,
employers and society. This study includes the analysis of the Artificial Intelligence usage
trends and its influence on the labor market and manager’s job roles. It also highlights the
opportunities which AI provides to business and employees and main challenges of its
implementation in the organization’s management system.
Keywords: Artificial Inelligence, AI, digital economy, digital management, smart decisions

1. INTRODUCTION
In the continuously changing uncertain and complex business environment new digital
technologies are reconstructing the landscape of the economy, organizations characteristics and
the ways we interact with organizations (Snow et al., 2017, p.1, 5). The digital transformation
of business has major implications for our society, business life, management and labor market
(Brynjolfsson & McAfee, 2014, p. 9). Artificial Intelligence (AI) will bring a strong challenge
to organization’s management systems as it could be considered as a 4th industrial revolution
accelerator (Brynjolfsson & McAfee, 2014, p. 92). The ability to ensure correct and timely
assessment of this challenge as well as ability to adjust management systems in accordance with
new conditions and opportunities could be considered as a key success factors for modern
organizations. All technological innovations have two types of influence on the labor market:
• Direct replacement of employees from their previously performed job tasks;
• Demand increasing for those job roles which arise due technology progress.

Todays deep machine learning technology development leads to global automation in different
fields and intelligent machines can perform more and more non-standard tasks like increasing
efficiency of e-Commerce projects or managing production lines in heavy industries. This trend
leads to the emergence of reasonable concerns about complete replacement of human beings
by intelligent machine systems in various industry verticals and job roles. After all, artificial
intelligence not only provides great opportunity to create added value, but also poses quite
complex tasks to managers. They will have to review their fundamental principles of work,
which they have adhered to so far focusing on full cooperation between human and artificial
intelligence. Organizations will have to adapt their training system and strategy to attract talent,
focusing on those tasks that require evaluative judgment skills, such as collaboration, creativity,
the ability to experiment.

133
 38th International Scientific Conference on Economic and Social Development – Rabat, 21-22 March 2019

2. ARTIFICIAL INTELLIGENCE – DEFINITION AND FUNCTIONS

Artificial Intelligence is considered as a machine being able to emulate cognitive human tasks
(Jarrahi, 2018, p. 1), it is used in a different fields, such as finance, healthcare, transport, art etc.
(Dejoux & Léon, 2018, p. 190). Figure 1 shows the broad range of functions AI can perform.

Expert System
Deep Learning

Machine Learning Supervised

Not Supervised
Robotics
Extraction of content

Classification
Artificial Natural Language
intelligence Processing Translation by machine

Answer to questions

Creation of content

Image recognition

Machine Vision
Computer Vision

Oral to Written translation

Speech Recognition
Written to Oral translation
Figure 1: AI Functions (Dejoux, Léon, 2018, p. 188)

The AI which is performing today includes the following types: Expert Systems, designed to
simulate the problem-solving behavior of a human, Machine Learning, which is “the ability of
a computer to automatically refine its methods and improve its results as it gets more data”
(Brynjolfsson & McAfee, 2014, p. 91), Natural Language Processing, designed to understand
and analyze language as used by humans and at the same time considered to be the base for the
Sepach Recognition AI, and finally Machine Vision which is “algorithmic inspection and
analysis of image” (Jarrahi, 2018, p. 2). Coming to the AI which can emulate the main functions
of human intelligence – we are still far from it. This type of AI is quite polemical issue which
divides specialists’ opinion into three school of thoughts. The first one considers AI as a useful
technology being helpful in decision making (Dejoux & Léon, 2018, p. 191) and managers
should treat it as a colleague. The second group expect the merge between AI and human in
order to improve humanity (Dejoux & Léon, 2018, p. 191). The third school of thoughts
considers strong AI as a threat for humanity because it can take human jobs by automation of

134
 38th International Scientific Conference on Economic and Social Development – Rabat, 21-22 March 2019

their working tasks (Jarrahi, 2018, p. 2). This group insists that AI developers should keep in
mind ethical and social issues while creating intelligent machines.

3. RESEARCH METHODOLOGY
For our study we used a mix of primary and secondary research. In the initial stage of the study
we collected data regarding main trends of modern management, managers job roles and AI
application in management through the primary research using Delphi method using 3 iterations
with Key Industry Participants (KIPs) which are the representatives of system integrators and
market leading companies in different industry verticals. During the second stage we used
secondary research collecting the big massive of data from different competent data sources
such as technical journals, trade magazines, independent studies and paid data sources. In order
to reveal the impact of AI on management we have assigned weight to the following factors:
• Managers job roles trends
• AI application industry trends
• AI market drivers

Weighted average formula is the following:

Weighted Avgx=w1x1+w2x2…wnxn
w = relative weight
x = value

4. FINDINGS
For the AI application in modern management study it is important to discover how managers
see their main job tasks and how much time in percent they spent on performing each of them
(Table 1)

Table 1: Time spent by managers for their job tasks performance (prepared by authors)
Time spent
№ Job task
(%)
1 Coordination & control 21
2 Decision making 19
3 Reporting 14
4 Scheduling & planning 11
5 Problem solving 9
6 Strategy development 9
7 Data analysis 8
8 Allocating resources 5
9 People development & coaching 4

Managers spent 47% of their working time on such routine job tasks as coordination and
control, scheduling, planning and reporting. Figure 2 reflects the percentage of managers who
are ready to transfer some of their job functions to AI.

Figure following on the next page

135
 38th International Scientific Conference on Economic and Social Development – Rabat, 21-22 March 2019

42%
Ready
Not ready
58%

Figure 2: Share of managers who are ready to transfer some of their job functions to AI
(prepared by authors)

The share of managers who are ready to transfer some of their job functions to AI in terms of
their specific job tasks is shown on Figure 3.

Coordination & control

Decision making

Reporting

Scheduling & Planning

Problem solving

Data analysis

Strategy development

Allocating resources

People development & coaching

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Ready (%) Not ready (%)

Figure 3: Share of managers who are ready to transfer some of their job functions to AI in
terms of their job tasks (prepared by authors)

Only 8% of managers are ready to delegate people development and coaching to AI. 67% are
ready to transfer to AI allocating resources, 24% - strategy development, 84% - data analysis,
26% - problem solving, 82% - scheduling and planning, 73% - reporting, 32% - decision making
and 56% - coordination and control. Figure 4 shows the ratio of conditions under which
managers are ready to transfer some of their job functions to AI.

136
 38th International Scientific Conference on Economic and Social Development – Rabat, 21-22 March 2019

18% AI decision making algorithm is

clear
36% AI provides convincing arguments

AI can perform Big Data analysis &

24% interpretation
Never

22%

Figure 4: Conditions under which managers are ready to transfer some of their job functions
to AI (prepared by authors)

Percentage of managers that selected the given skills as the top 3 skills they will need in the
next 10 years is shown in Figure 5.

Digital technology usage 52

Creative thinking 48
Strategy development 43
Leadership 39
Networking 37
People development 33
Time management 28
Data analysis 24
Lean production 18
Planning 16
Reporting 12

0 10 20 30 40 50 60

Figure 5: Most requested managerial skills in next 10 years (prepared by authors)

Main ways of making decision are highlighted on the Figure 6. 52% of managers use their own
previous experience for making managerial decisions, 26% use their intuition and 22% use
decision making techniques.

Figure following on the next page

137
 38th International Scientific Conference on Economic and Social Development – Rabat, 21-22 March 2019

26% 22%

Decision making techniques

Previous experience
Intuition

52%

Figure 6: Main ways of managerial decision making (prepared by authors)

Main challenges of business environment which affect the decision making process from the
managers’ point of view are highlighted on Figure 7.

27% Uncertainty of the environment

41%
Complexity of the environment

Ambiguity of environmental
factors
32%

Figure 7: Main challenges of business environment for decision making process (prepared by
authors)

5. DISCUSSION AND CONCLUSION

According to Table 1 managers spent 47% of their working time on routine administrative job
tasks. Most of these tasks like scheduling, reporting, allocating resources, data analysis could
be transferred to AI in the nearest future. And according to Figure 3 managers in general support
this transfer. In particular, 73% of managers are ready to transfer their reporting functions to
AI, 82% are ready to transfer scheduling and planning and 67% are ready to transfer allocating
resources. 84 % of managers are ready to transfer data analysis job function to AI which seems
very logical due to the fact that AI can analyze big amount of data in a relatively short time.
Such job functions as people development and coaching, strategy development and problem
solving managers are not ready to transfer to AI – 92, 76 and 74 percent respectively even
though technically it can perform them. The reason is that those functions need not only ability
to analyze Big Data, find correlations and choose decision options but also such skill as human
judgment which is combination of intelligence, experience and certain level of expertise in
business decision making. There are three types of human judgment:
• Abstract thinking which could be considered as an ability to operate with concepts beyond
the usual reality. AI can perfectly function in terms of existing rules but can’t go beyond

138
 38th International Scientific Conference on Economic and Social Development – Rabat, 21-22 March 2019

the existing frame in planning, decision making or generating ideas. AI is not able to create
carsharing service in the society where almost everyone has a personal car.
• Context analysis. In case human does not have enough information for decision making or
this information is ambiguous he is able to take into account historical, cultural or
interpersonal context. AI can make an accurate assessment of a candidate for the job
position in terms of his competence and psychological characteristics but the results of such
assessment can not take into account the potential interpersonal incompatibility with other
employees or his incompatibility with the organizational culture. But at least AI could be
trained in terms of context analysis.
• Intuition which could be considered as an ability to make decisions without using logic or
rational thinking. This is type of judgment that AI can’t perform.

As for the decision making job function which 32% of managers are ready to transfer to AI it
should be mentioned that there are 2 ways of business decision making – rational way and
intuitive way. Rational way is based on data analysis by means of logical algorithms and
choosing alternatives by means of rule-based methods. That means that AI can make business
decisions based on this way. Intuitive way could be considered as an emotional judgment based
on previous experience, implicit learning, creative thinking and imagination. According to
Figure 6 managers mainly use their experience and intuition in business decision making rather
then decision making techniques and methods because of the fact that rational way of business
decision making process is quiet complex and time consuming for a manger the help of an AI
is a good solution. According to Figure 7 main challenges of business environment for decision
making process are:
• Uncertainty which is based on the fact that it is impossible to predict future with 100%
accuracy there is always a lack of information about the environment (Jarrahi, 2018, p. 4).
• Complexity which is based on an abundance of elements or variables of the environment
(Jarrahi, 2018, p. 5). Decision making in complex situation needs Big Data analysis in a
short time.
• Ambiguity is related to the presence of several simultaneous but divergent interpretations
of a decision domain (Jarrahi, 2018, p. 5).

In terms of uncertainty and ambiguity AI can’t make correct and accurate business decision
based on a rational way, but in terms of complexity it can perform well. So in terms of business
decision making the most effective method is a collaboration between managers and AI.
Intelligent machine by means of rational way of decision making can offer several alternatives
to manager who has 2 options – make a decision based on his experience and intuition or let AI
to make a decision. Regarding manager’s trust to AI it has to be mentioned that in general 58%
of managers are not ready to pass some of their job functions to AI (see Figure 2). This is mainly
due to the lack of understanding of the algorithms of the AI – Figure 4. The most requested in
the next 10 years managerial skills could be divided into the following groups:
• Individual judgment skills: creative thinking, strategy development, data analysis
• Social skills: leadership, networking, people development
• Routine skills: time management, lean production, planning, reporting

Digital technology usage skill is not included into this classification – it is a basic skill which
is necessary to work with AI. Routine skills in general are necessary to perform routine job
tasks which could be transferred to AI in the nearest future. Summing up, we can say that the
rapid development of AI will seriously change the labor market structure, but it will not be able
to completely replace a manager because it is impossible to AI to acquire individual judgment
skills and social skills. It will not be able to make decisions based on intuitive way.

139
 38th International Scientific Conference on Economic and Social Development – Rabat, 21-22 March 2019

But it will take over routine job functions from managers and will help them to make right
decisions in time by means of Big Data analysis. This means that the requirements for managers
will not remain unchanged - they will have to reconsider their approach to work, thinking and
making decisions. Taking into the account the fact that AI will take over routine job tasks which
47% of managers’ working time they will need to focus on other job tasks which will require
for example such skills like creativity - managers will work more like ideas creators. Also they
need to train their personal judgment skills in order to perform their business tasks and make
right decisions in right time. Ability to collaborate with other people, create professional social
networks in order to engage collective judgment for solving their business tasks will be
necessary to perform as a manager. Managers should also be able to use various digital
technologies to accumulate knowledge and judgments of partners, customers, external
stakeholders, as well as to search for “best practices” in other industries. And finally manager
should be able to collaborate with AI and even to treat it as a colleague because it can make
almost ideal rational business decisions which can help manager in case when exactly rational
decision is needed.

LITERATURE:
1. Brynjolfsson E. & McAfee A. (2014). The second machine age: Work, progress, and
prosperity in a time of brilliant technologies. New York, NY: WW Norton & Company.
2. Brynjolfsson E. McAfee A. (2012). Race Against the Machine: How the Digital Revolution
is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming
Employment and the Economy. Lexington, Massachusetts: Digital Frontier Press.
3. Computer Law & Security Review, 32(5), pp. 749-758.
4. Dejoux C. Léon E. (2018). Métamorphose des managers. 1st edition. France: Pearson.
5. Dirican C. (2015). The Impacts of Robotics, Artificial Intelligence On Business and
Economics. Procedia -Social and Behavioral Sciences, 195, pp 564-573.
6. Epstein S. (2015). Wanted: Collaborative intelligence. Artificial Intelligence, 221, 36-45.
7. Ford M. (2015). The Rise of the Robots: Technology and the Threat of Mass Unemployment.
London: Oneworld Publications.
8. Galbraith J. (2014). Organization design challenges resulting from Big Data. Journal of
Organization Design, 3(1), pp. 2-13.
9. Gurkaynak G. Yilmaz I. Haksever G. (2016). Stifling artificial intelligence: Human perils.
10. Hengstler M. Enkel E. Duelli S. (2016). Applied artificial intelligence and trust - The
case of autonomous vehicles and medical assistance devices. Technological Forecasting &
Social Change, 105, pp. 105-120.
11. Jarrahi M. (2018). Artificial intelligence and the future of work: Human-AI symbiosis in
organizational decision making. Business Horizons, vol. 61, no 4, pp. 577-586.
12. Kornienko A.A. Kornienko A.V. Fofanov O. Chubik M. (2015). Knowledge in artificial
intelligence systems: searching the strategies for application. Procedia - Social and
Behavioral Sciences, 166, pp. 589-594.
13. Olsher D.J. (2015). New Artificial Intelligence Tools for Deep Conflict Resolution and
Humanitarian Response. Procedia Engineering, 107, pp. 282-292.
14. Snow C.C. Fjeldstad Ø.D. Langer A.M. (2017). Designing the digital organization.
Journal of Organization Design, 6(7), pp. 1-13
15. Wauters M. Vanhoucke M. (2015). A comparative study of Artificial Intelligence methods
for project duration forecasting. Expert Systems With Applications, 46, pp. 249-261.

140

View publication stats