Small Teams, Big Impact: How AI Is Reshuffling The Future Of Work?

🌈 Abstract

The article discusses the impact of AI on the future of work, including the reshuffling of job roles, the potential rise of entrepreneurship and small businesses, and the challenges of AI adoption in the workplace.

🙋 Q&A

[01] The Big Picture of AI and the Future of Work

1. What are the key points about how AI will impact the job market?

• There is growing evidence that the US labor market is cooling, with white-collar hiring remaining dampened and sentiment for income loss increasing.
• While the exact number of jobs directly replaced by AI is unknown, companies are increasingly looking to hire workers with AI skills.
• AI technologies are "goal-seeking" in nature, automating parts of processes or entire workflows within individual functions, reducing the scope of certain roles and allowing teams to accomplish more with fewer resources.
• There will be an increase in the scope of certain existing roles, such as engineering managers, as well as the creation of new roles, such as AI Operations Manager and AI Avatar Manager.

2. How will AI impact entrepreneurship and small businesses?

• Entrepreneurs and small businesses will gain access to AI capabilities that can abstract away the headaches of business operations, enabling them to scale faster and focus on building and nurturing meaningful customer relationships.
• The rise of vertical AI companies providing specialized AI tools and services will empower small businesses to compete with larger organizations.

3. What are the challenges and uncertainties around the adoption of AI in the workplace?

• The adoption of AI workplace assistants has faced some hiccups, as they require a fair bit of "handholding" and accurate enterprise data to function effectively.
• The pace of innovation in AI is hard to predict, and the impact on jobs will not be a straightforward line, with some roles at higher risk than others.

[02] The State of the Labor Market

1. What are the key trends in the US labor market?

• The US economy continues to create jobs, but the trend is cooling, with the unemployment rate rising and wage growth slowing.
• The difference in wage growth between "job stayers" and "job switchers" is shrinking, indicating that employers are no longer offering lucrative pay packages and perks.
• There is a growing number of US workers expecting a loss of income, particularly among those earning over $100K.

2. How are companies responding to the current labor market conditions?

• Companies have been heavily investing in AI proof-of-concepts to automate and augment various tasks across functions, with the goal of "doing more with less."
• While the exact number of jobs lost to AI is not fully known, some evidence suggests a decline in certain freelance categories, such as copywriting and translation services, as AI-powered tools become more prevalent.

[03] The Reshuffling of Roles and Teams

1. How will AI agents impact the structure of teams and roles within organizations?

• AI agents are "goal-seeking" in nature, automating parts of processes or entire workflows within individual functions, reducing the scope of certain roles and allowing teams to accomplish more with fewer resources.
• The size of teams is likely to shrink, as AI agents can perform the unbundled goals of certain roles, reducing the "voting power" of those roles.
• There will be an increase in the scope of certain existing roles, such as engineering managers, as well as the creation of new roles, such as AI Operations Manager and AI Avatar Manager.

2. What are the implications for different types of roles and talent within organizations?

• The classic "perfect size" engineering team of 7 may expand to 20+ engineers per person manager, with an overall decrease in the number of management roles.
• The Product Manager to Engineering ratio may shift, with PMs expected to manage broader engineering and design teams.
• Junior talent can now produce senior-level output with the help of AI-powered tools, allowing companies to hire promising junior talent and equip them with AI tools to supercharge their productivity.

[04] The Rise of Entrepreneurship and Small Businesses

1. How can AI empower entrepreneurs and small businesses?

• Entrepreneurs and small businesses can purchase AI capabilities in the form of agent-based tools or "AI teammates" that automate parts of a process or entire workflows, enabling them to scale faster without growing headcount proportionately.
• The rise of vertical AI companies providing specialized AI tools and services can abstract away the headaches of business operations, allowing small businesses to focus on building and nurturing meaningful customer relationships.
• This can potentially unleash a wave of small businesses that can scale fast with small teams, a phenomenon that would have been difficult in the past due to size and capital constraints.

2. What cultural and economic factors may contribute to the rise of small businesses?

• There is a growing trend of small business applications, with a record 5.5M small business applications in the US last year.
• 50% of GenZs aspire to start their own businesses, and a growing number of Americans are looking inward for employment.
• The "meaning economy" concept suggests that consumers will be increasingly willing to pay a premium for "meaning" (something that is scarce and differentiated) in a world where content creation becomes commoditized, leading to the rise of more artisanal-like and privately-owned businesses.

[05] Challenges and Uncertainties

1. What are the current challenges with the adoption of AI workplace assistants?

• AI workplace assistants still require a significant amount of "hand-holding," as they can provide incorrect answers based on outdated or inaccurate enterprise data.
• Adoption of these AI tools is not yet widespread, with only about 41% of total full-time employees currently using generative AI at work.

2. What is the overall outlook on the impact of AI on jobs?

• In the near term, becoming familiar with AI tools and how to use them in one's role is crucial to remain relevant and have an upper hand in salary negotiations.
• As the technology matures, we are likely to see an increasing number of organizational goals get unbundled from certain individual roles, reducing the scope of roles and team sizes.
• However, new jobs will be created in the form of AI Operations Manager, AI Agent Builder, and vertical-specific roles.
• The author is optimistic about the potential rise of small, scalable businesses that can leverage vertical AI agents to abstract away business operations and focus on building meaningful customer relationships.