Despite the advent of personal computers, the internet and other high-tech innovations, much of the industrialized world is stuck in an economic growth slump, with O.E.C.D. countries expected to expand on aggregate just 1.7 percent this year. Economists sometimes call this phenomenon the productivity paradox.
The big new hope is that artificial intelligence will snap this mediocrity streak — but doubts are creeping in. And one especially skeptical paper by Daron Acemoglu, a labor economist at M.I.T., has triggered a heated debate.
Acemoglu concluded that A.I. would contribute only “modest” improvement to worker productivity, and that it would add no more than 1 percent to U.S. economic output over the next decade. That pales in comparison to estimates by Goldman Sachs economists, who predicted last year that generative A.I. could raise global G.D.P. by 7 percent over the same period.
The bullish camp has great hopes for A.I. Sam Altman of the ChatGPT maker OpenAI sees A.I. wiping out poverty. Jensen Huang, the C.E.O. of Nvidia, the dominant maker of the chips used to power A.I., says the technology has ushered in “the next industrial revolution.”
But if the boosters are wrong, it could be trouble for the developed world, which is in desperate need of a productivity breakthrough as its work force ages and declines.
A.I. won’t reverse stagnation, Acemoglu told DealBook. One reason: The technology can automate only about 5 percent of an office worker’s tasks, he found. “A.I. has much more to offer to help with the productivity problem. But it will not do that on its current path, that’s why I’m so troubled by the hype,” he said.
Acemoglu sees A.I. as a tool that can automate routine tasks — for example, speed up writing emails, sales pitches or basic computer code. That could free workers to tackle more brainy challenges like developing a business strategy for a new product launch. But he questioned whether the technology alone can help workers “be better at problem solving, or take on more complex tasks.” Achieve that, and companies will see worker productivity climb, he added.
Acemoglu’s downbeat view is perhaps not surprising. He has been writing for decades about the good and ill effects of technology’s influence on the job market and the economy, and has warned that the Big Tech arms race to dominate A.I. could have a destabilizing effect on society.
And he’s not alone in questioning the A.I. hype. David Cahn, a partner at the V.C. giant Sequoia, and analysts at Barclays and Goldman Sachs have warned recently that the billions of dollars companies are pouring into A.I. could create a speculative bubble. (That said, Sequoia just led a funding round for the start-up Fireworks AI.)
Critics say Acemoglu is underplaying A.I.’s potential to spur scientific advancements and its effect on the business world. “A lot of the benefits of A.I. will come from getting rid of the least productive firms,” argues Tyler Cowen, an economist who says the model behind Acemoglu’s study is wrong.
Lynda Gratton, a professor of management practice at London Business School who advises companies about adopting A.I., is optimistic. But she thinks it’s too early to know if the technology will be a killer app for boosting productivity until it’s tested in the workplace over the next few years.
Gratton says corporations are already running vibrant A.I. experiments. Some businesses will see A.I. “as a tool to ground out costs and inefficiencies,” she told DealBook. “But if the company wants to build for growth, it will need tools to innovate.”
Acemoglu also notes the importance of spurring innovation to bolster workplace efficiency, and in turn, make aging countries more competitive. Is A.I. the tool to make that happen? To that question, he answered with a figure: 40 percent. If A.I. tools could automate roughly that percentage of a typical worker’s task load then he’d reconsider his position on the technology. “I am not a total doomer,” he added. — Bernhard Warner
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Experts weigh in: How to know when it’s time to go
Is it time for Joe Biden to step aside? That’s the question Democrats and their donors have been squabbling over since Biden’s meandering answers at the first presidential debate.
The conversation got us thinking about a parallel conundrum for chief executives. Almost 50 C.E.O.s of public companies are over the age of 67, the age when full Social Security benefits kick in for people born after 1960. Some are founders with long tenures, like Warren Buffett, 93, of Berkshire Hathaway, and Roger Penske, 87, of the Penske Automotive Group. Others, like Tom Kingsbury, who became Kohl’s permanent C.E.O. at the age of 70, were appointed as recently as last year.
At some point, it’s time for every leader to retire. But it’s not always clear when. We asked experts in succession planning, management researchers and former C.E.O.s how to know. Their responses have been condensed and edited.
David Novak, former C.E.O. and chairman of Yum! Brands
Novak is the author of “How Leaders Learn.”
The thing I loved about the job was being out in the field. And back in 2016, my wife had some significant health problems, so I needed to be home more. If you can’t do what made you successful in the job, for whatever reason, that’s when it’s time.
I don’t like ironclad rules for how long tenure should run. One thing that drives high performance is having continuity in people and processes. What matters is whether the person is attacking the job like they did in their first year.
But sometimes people do stay on too long. They start acting like they’re entitled to the job. They try to protect what they’ve done versus take it to a new high. You want a C.E.O. with a healthy dissatisfaction with the status quo.
Peter Crist, chairman of the executive search firm CristKolder
Crist has worked in executive recruiting for 45 years.
If you’re a public company C.E.O., every quarter you’re going to be in front of some really tough audiences. Cognitive capabilities are very apparent. If you’re a board member, it’s easier to hide.
It’s hard to dislodge someone who is the leader of a company that is doing really well. If there’s a declining enterprise, there’s going to be a change. One sign that it’s time for the C.E.O. to retire is a pace issue. Every company has a cadence — one has to keep up with it. The other is they start making ill-fated decisions. Basically it’s all performance.
Bill George, former chairman and C.E.O. of Medtronic
George is an executive fellow at Harvard Business School.
I actually started these discussions about stepping down two months before I became C.E.O. I had studied the tenures of C.E.O.s, and I found that when C.E.O.s lasted more than 10 to 12 years, their company’s performance declined. Past that mark, stock performance may remain strong but C.E.O.s lack the initiative to really transform the company. They’re not looking ahead as much as they are holding on for another few years.
Amy Edmondson, professor of leadership and management at Harvard Business School
Edmondson is the author of “Right Kind of Wrong: The Science of Failing Well.”
If you’re the C.E.O., look for these signs: when you stop sincerely wanting to keep learning; when the changes in the company or the market feel dispiriting rather than energizing; when there’s a plausible case that successors are ready to step up or step in; when there’s a plausible case that someone else could do a better job than you. That’s four. And five is, when you don’t believe that four can be answered in the affirmative. If you don’t believe there’s someone else who could do a job, that’s a problem, because there almost always is.
Job Therapy
When Tessa West, a professor of psychology at New York University, started surveying people about their career struggles, she noticed that many of them sounded like they were talking about relationships with people. “Something much more was going on with people than bad bosses and salty coworkers,” she writes in her upcoming book, “Job Therapy,” which delves into common sources of unhappiness in the workplace.
DealBook talked with West about how understanding people’s feelings about their careers can help executives build better organizations.
What are some signs that people are unhappy at work?
Often it’s not what you think. I’ll give you one example. People have really complex emotions around being spread too thin. They’re trying to get ahead. They’ll say, I’m up for anything, throw it all at me.
A lot of employers see that as a good sign. But that’s actually a red flag. You don’t want someone who is just a yes person. You want someone who’s going to show some restraint, who’s going to ask you to rank order the importance of roles.
You write that one source of frustration is that most people aren’t told why they don’t get promoted. How should organizations think about that?
It isn’t just saying “you’re not good at this.” It’s giving people a sense of who they were being compared to: Here are the top three characteristics of the people who made it to the top ten for this role, and here’s what’s maybe missing from your résumé.
Companies also need to share how many times it usually takes to go up for promotion. Most people assume the number is pretty low. I have a friend who just got promoted on the fourth attempt. It took eight attempts for the average person at his company, but he didn’t know that, and he felt bad about himself.
I think a lot of executives look at feelings at work, or unhappiness at work, as a distraction. Why is it something they should pay attention to?
It’s like ignoring your feelings in a marriage: You can still make the bed, you can still put your kids through college. But you’re not going to get the most productive version of a person.
I would also say you are in denial if you don’t think those emotions matter and you have millennial and Gen Z workers. When they leave a job, it’s most often because of emotions.
And so you might not like that part of the workplace, but that’s just the reality.
Thanks for reading! We’ll see you Monday.
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