How AI can turn good bosses into great ones

Replacing human judgement with Al is far too simple. True success requires understanding where human insight enhances its outputs

- Saravanan Kesavan

Consider the following statistics about AI’s growing influence: Microsoft is forecast to invest $88 billion in capital expenditure this year—more than India’s entire defence budget of $79 billion. If the Mag 7 companies (Microsoft, Tesla, Amazon, Alphabet, Nvidia, Meta and Apple) formed a country, their combined GDP would make them the world’s third-largest economy. To call AI’s impact “profound” would be an understatement.

AI is shaping how organizations operate and compete. For managers, this shift is not just about mastering new tools; it’s about redefining their role in decision-making. When an MBA student once asked me what keeps me awake at night, my answer was simple: the way AI will change management. Business leaders, educators and policymakers alike must now grapple with a core challenge—how to prepare managers to lead in an AI-enabled world.

Managers may need to transition from being sole decision-makers to becoming decision augmenters, with AI as the backbone. This transformation, however, is easier said than done. Two major challenges stand in the way. The first is psychological. Many managers are reluctant to surrender decision-making authority to technology. In one large US department store I worked with, the CEO invested heavily in AI software to optimize labour scheduling across hundreds of locations. Yet store managers overrode nearly half of the tool’s recommendations, reverting to familiar methods. Millions of dollars in potential value were lost—not because the AI was ineffective, but because its outputs were never fully embraced. This phenomenon is so common that academics have coined a term for it—algorithm aversion, or the tendency to distrust, avoid or reject algorithmic decisions, even when those algorithms consistently outperform human judgement.