Why CEOs are the very last job that AI will replace
The CEO as agent of the capitalist-entrepreneur
I think most people have a misconception about CEOs, imagining them as some kind of glorified accountants who produce financial reports, oversee hiring and firing, and devise strategies to cut expenses. However, these tasks represent the most basic and visible aspects of their job, far from encompassing the breadth and depth of their responsibilities.
A CEO's job encompasses a wide range of responsibilities, but the core and most significant one is: they are the agent of the capitalist-entrepreneur. The capitalist-entrepreneur is effectively the owner of the business, whether this is a single individual or millions of stockholders in the case of a public company. In a corporation, the capitalist-entrepreneur(s) nominates a board of directors, whose primary responsibility is to select the chief executive—the CEO—who in turn is responsible for the strategic appointment and management of all other roles.
In essence, the job of the CEO is to serve as the agent of the capitalist-entrepreneur. They are tasked with implementing the company's mission and maximizing profits. Ultimately, their job involves making value judgments—deciding which products the business should produce, whether profits should be returned to stockholders or reinvested in the business, assessing how much risk to undertake, and determining when to cut losses and terminate products. The salary of a CEO reflects this vast responsibility—they bear the ultimate responsibility for all successes and failures of the business.
I expect AI capabilities to improve and potentially reach and surpass human-level intelligence. However, the critical need for value judgments will remain. Take Apple for example—its mission statement is “to create technology that empowers people and enriches their lives.” Interpreting what it means to "empower people" and "enrich their lives" requires a nuanced understanding of human values and desires. Given a directive to produce an Apple car, or Apple shoes, an AI could eventually figure out all the technical details. But the crucial question remains: who makes the value judgment of which markets are compatible with Apple's philosophy, and which are worth the risk of betting a three-trillion-dollar company on? My assertion is that these value judgments represent the very last responsibilities we would want to entrust to an AI.
A common misconception among the public is the belief that CEOs exist primarily to maximize profits. This viewpoint is oversimplified and misleading. CEOs are responsible for maximizing profits, but they achieve this by fulfilling the company's mission. "Maximizing profits" by itself is an aimless endeavor. Imagine if you tried to "maximize profits" in your finances. Should you stop eating out? Look for a new job? Cancel a vacation? Invest your 401K in Bitcoin? These choices present an infinite number of possibilities. In reality, the best way for an individual to "maximize profits" is to dedicate themselves to a professional mission—"I aim to be a leading graphic designer for financial planning apps"—and then pursue this goal through strategic and thoughtful decisions. Merely cutting out Starbucks Frappuccinos and optimizing your 401K are minor adjustments in comparison.
In addition to the nuanced decision-making and value judgment aspects previously discussed, CEOs hold several key responsibilities that are uniquely human and critical to the success of any organization:
Strategic Direction and Vision: Crafting and communicating the company's strategic vision to guide long-term success.
Cultural Leadership: Shaping and embodying the organizational culture, setting standards for values, ethics, and behaviors.
Innovation Leadership: Steering the company's innovation efforts to maintain its competitive advantage and adapt to market changes.
Crisis Leadership: Acting decisively in crises, balancing the needs of stakeholders, and steering the company through turbulent times.
Stakeholder Relations: Managing relationships with key stakeholders, including investors, boards, governments, and the public, to align interests and support the company's goals.
Visionary Decision-Making: Making forward-looking decisions that balance risk and innovation, shaping the future of the company.