Do Managers Actually Understand AI? (I’m Not So Sure.) | AI Reality Check
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Do business executives really understand how AI is impacting jobs?
Do you ever get that sense when you're hearing business executives talk about AI that they seem to be living in a completely different world than the rest of us? I mean, I get that feeling a lot. I want to give you a recent example. Last week, I came across an article from the New York Times business sector that interviewed multiple executives from the German software company SAP, as well as several European business and economics executives. analyst. Now what struck me was how confident everyone was that AI had already started massively disrupting the economy and would continue to do so at an accelerating rate in the near future. Here, let me load the article on the screen here. Look, the title was, Can You Embrace AI Without Layoffs?
This Company Says It's Trying. And look at the subhead here. The German software giant SAP says it's betting that employees can reinvent jobs instead of eliminating them. Experts are divided on whether it will work. So let's think about that wording for a moment.
What specific claims did the New York Times article make about SAP and layoffs?
That article, this interview with the SAP executives, takes for granted, right? The people they talk to take for granted that AI, if left unchecked, is poised to eliminate large number of jobs. The only question is whether or not there is something we can come up with to stop that by having maybe new jobs to replace all those that we are for sure about to lose. Now, these are incredibly bold claims, and yet they're made so confidently and so casually when you hear business executives talk. And to me, this raises some key questions, such as why is the business community so confident that AI will definitely eliminate lots of existing jobs? What is it that executives and SAP are seeing about their own employees and their clients that makes them think that these massive changes are imminent?
And most importantly, are they right? Well, it's Thursday, which means it's time for an AI Reality Check episode of this podcast, which is the perfect opportunity to go seeking some measured answers. All right, so here's my plan. I'm going to dive deeper into this article and try to better understand what the business community over there in Europe actually believes about AI. And then I'll step back and give you my take. I want to give a trigger warning here. If you're an executive at one of these companies or a business analyst, you might not like the conclusions I end up reaching. All right. Anyways, let's dive in. As always, I'm Cal Newport, and this is Deep Questions, the show for people seeking depth in a distracted world.
All right, so I want to return to the article here and read another quote from it that I think sets the stage for how executives at SAP are thinking about AI and its impact. I'll put this on the screen here and read it. Its leaders concede that AI is eliminating the need for humans to do many of the tasks its software engineers did until very recently. In a round of restructuring two years ago, SAP cut nearly 10,000 jobs, some as a result of AI, the company said. All right, I want to stop right there. That's an incredible claim. So the executive cited in this article said that the job cuts they did two years ago were in part in response to AI. So in the spring of 2024, they claimed they were laying people off because AI
of the power of AI. Well, look, I've been reporting and writing about AI since the beginning of ChatGPT. Let me bring you back to the spring of 2024. The state-of-the-art generative AI in the spring of 2024 was ChatGPT powered by GPT-4.0. which its main claim to fame is that there was more input types it could accept than GPT-4. You could have, for example, audio as input. So it was like a multimodal thing. There were no real programming harnesses back then. The very first serious programming harness, Devin, had just been released that spring in a highly restricted experimental form. So there's no one using... AI in any systematic way to program. We were still mainly talking about the potential for this technology in the future.
We were still dealing with relatively limited chatbots.
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