4 Comments
Oct 20Liked by Erik J Larson

Thanks Erik and of course the other brother Mike and little one Snorble

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I like to believe its true but ultimately, the idea that "people using AI will replace people who dont, but AI wont replace people" sound a lot like "cars wont replace horses, horses driving cars will replace horses."

Note Harvard Business Review indicating CEO outperformance by AI.

https://hbr.org/2024/09/ai-can-mostly-outperform-human-ceos

The creativity argument, I think, is ultimately an red herring profoundly not backed by research, and in many ways, seems just like another vain hope:

"Artificial Intelligence is Already More Creative than 99% of People"

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10858891/

But I suppose exposing children to fake people cant be too terrible, if their souls are already to be stolen to make other chatbots after they are murdered.

"An AI Company Published a Chatbot Based on a Murdered Woman. "

https://mindmatters.ai/2024/10/character-ai-let-a-user-recreate-deceased-woman/

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Unfortunately that HBR link is behind their paywall.

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I wasn't able to find a clean archive.is link for it, unfortunately, though https://archive.is/iNlGe appears to carry it as a podcast. It seems to work with an incognito tab, but I can also paste the relevant parts, which can be interesting(and I'll highlight parts for skepticism).

***

Players made a slew of corporate strategy decisions through a game interface, on a per round basis. Each round represented a fiscal year, and this structure enabled participants to tackle strategic challenges over several simulated, interlinked years. The game thus had over 500,000 possible decision combinations per round and no fixed winning formula. The goal of the game was simple — survive as long as possible without being fired by a virtual board while maximizing market cap. The former is determined by a group of unique key performance indicators (KPIs) set by the board and the latter being driven by a combination of sustainable growth rates and free cash flow. This objective served as a realistic proxy for measuring real-world CEO performance.

After the human participants completed their turn, we handed control over to GPT-4o. We then benchmarked GPT-4o’s performance against four human participants — the top two students and two executives. The results were both surprising and provocative, challenging many of our assumptions about leadership, strategy, and the potential role of AI in decision-making at the highest levels of business.

GPT-4o’s performance as a CEO was remarkable. The LLM consistently outperformed top human participants on nearly every metric. It designed products with surgical precision, maximizing appeal while maintaining tight cost controls. It responded well to market signals, keeping its non-generative AI competitors on edge, and built momentum so strong that it surpassed the best-performing student’s market share and profitability three rounds ahead.

However, there was a critical flaw: GPT-4o was fired faster by the virtual board than the students who played the game.

Why? The AI struggled with black swan events — such as market collapses during the Covid-19 pandemic. We had programmed these unpredictable shocks to shift customer demand, collapse pricing levels, and strain supply chains. The top-performing students adopted long-term strategies that accounted for them. They avoided rigid contracts, minimized inventory risks, and managed growth cautiously, ensuring flexibility when market conditions shifted. Their strategy was clear: preserve adaptability rather than chase aggressive short-term gains.

GPT-4o, on the other hand, after a string of early successes, locked into a short-term optimization mindset, relentlessly maximizing growth and profitability until a market shock derailed its winning streak. AI can rapidly learn and iterate in a controlled environment, making it less ideal for coping with highly disruptive events that require human intuition and foresight. Interestingly, top executives also fell into this trap; they, like GPT-4o, were fired faster by the virtual board than the students. Both GPT-4o and executives succumbed to the same flaw — overconfidence in a system that rewards flexibility and long-term thinking as much as aggressive ambition."

***

The conclusion it has, while trying to be cheerful, is actually pretty chilling.

***

"Ignoring generative AI in corporate strategy is no longer viable. This experiment demonstrates that even untuned models can offer unique and creative approaches to strategy when properly prompted, generating strong results. If generative AI can help companies maximize shareholder value more effectively, why resist? After all, maximizing shareholder value is the raison d’etre for the role of the CEO.

The real risk to human CEOs? Clinging to the illusion that we alone will hold the reins in the future. The future of leadership is hybrid — where AI complements human CEOs focus on vision, values, and long-term sustainability. The CEOs who thrive will be those who master this synergy, leveraging AI not as a rival but as a partner in decision-making."

***

Of course, while attempting to indicate that humans have a role, it seems more much akin to "listen to the advisors like listen to chess advisors", where the human is reduced increasingly to the rubberstamp(e.g. human adds net negative value).

This gets us both to AI takeover in effect, and unreliable outcomes(that you can't oversight or see, due to deception effects) as seen here:

https://futurism.com/sophisticated-ai-likely-lie

This "goodharting" leads you to the Failure Looks Like This scenario:

https://www.lesswrong.com/posts/HBxe6wdjxK239zajf/what-failure-looks-like

Note that this is not the first nor the last example of AI performing superhumanly on what seems to be flexible tasks, which I think generally gives the lie that humans aren't going to be replaced including emotional and diplomatic aspects. Good examples are also AI winning at the Diplomacy game(top 10%)

https://www.science.org/content/article/ai-learns-art-diplomacy-game

And AI winning at poker generally:

https://www.science.org/content/article/ai-learns-art-diplomacy-game

Let me know if you have any more difficulties with the paywalls. 12 feet wall is great.

PS: the biggest reason to be skeptical of it is that the study authors also were testing their CEO game using Strategize, a program they are developing, so there is a conflict of interest. They also mentioned that they had very good data for this field, so clean data might not be the case for all businesses(though eventually we are going to have data for everything).

I'd be a lot more skeptical if it didn't do well at both poker and Diplomacy. The overall evidence is quite bad for human need.

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