Capitolo 1
The Algorithm Revolution: When Machines Become Our Managers
In an era where artificial intelligence is rapidly transforming every aspect of society, David De Cremer's "Leadership by Algorithm" arrives as a timely examination of how AI is reshaping organizational leadership. This book has garnered significant attention from business leaders and tech enthusiasts alike, with Bill Gates naming it one of his must-reads for understanding the future workplace. When AlphaGo defeated the world champion at the ancient game of Go in 2016, it marked a watershed moment that forced us to reconsider the boundaries between human and machine capabilities. De Cremer, a behavioral scientist with appointments at Cambridge and Singapore's NUS Business School, doesn't simply analyze the technical aspects of AI but delves into the profound philosophical questions it raises: If algorithms can outperform humans in increasingly complex tasks, what remains uniquely human about leadership? And as we rush toward an automated future, are we considering the full implications for our humanity?
Capitolo 2
The Dawn of Algorithmic Management
The victory of Google DeepMind's AlphaGo over the world Go champion in 2016 marked a watershed moment in AI development. This achievement was particularly significant because Go's complexity had long been considered beyond AI's capabilities. Unlike chess, which can be approached through brute computational force, Go requires intuition and pattern recognition that seemed uniquely human. This breakthrough, coupled with our growing desire to connect globally and process massive data sets, has created what De Cremer calls an "obsessive focus on AI" across industries.
At their core, AI systems make external data more transparent, allowing for more accurate interpretation through machine learning algorithms that autonomously identify patterns. These algorithms have become so integral to society that they now interact with humans across various domains, particularly in business management where they promise significant economic benefits. PwC predicts AI could boost the global economy by $15.7 trillion by 2030, with 56% of managers expecting algorithms to impact business management and 84% believing they'll create more effective work environments.
Companies are already deploying algorithms for recruiting, promotion decisions, compliance monitoring, and tracking employee satisfaction. One study showed that using algorithms to judge employability helped low-skill service-sector workers stay in jobs 15% longer, demonstrating their practical value in human resource management. Beyond HR, algorithms with deep learning capabilities are penetrating diverse industries. In the legal sector, automated advisors contest small fines and help judges review evidence. Financial services have embraced digital adoption so thoroughly that banks today function as "technology companies first, and financial institutes second," with projected IT spending reaching nearly $300 billion by 2021.
In healthcare, automation improves medical record administration and disease detection-research shows combining AI with human doctors reduces cancer detection error rates to just 0.5%, far better than either approach alone. This widespread adoption creates a fundamental tension: we're simultaneously obsessed with AI's benefits while worried it may render humans obsolete. We tend to view humans and machines as fundamentally different entities-"us versus them"-making true partnership difficult.
Capitolo 3
The Leadership Challenge in the Algorithm Age
As algorithms increasingly demonstrate human-like capabilities in decision-making, we must question whether this constitutes true leadership. While rational self-interest might suggest embracing AI leadership for its efficiency benefits, De Cremer challenges whether optimization alone equals leadership. Our emotional addiction to technology's rewards may lead to compliance with algorithmic authority, but this overlooks deeper questions about the nature of leadership beyond mere optimization and intelligence.
The machine age has arrived, and today's need for machines appears limitless. Drawing on Jeffrey Pfeffer's work, De Cremer argues that leadership is often determined by situational demands rather than unique individual capabilities. This situational perspective suggests algorithms could potentially fill leadership roles if the business environment demands it. Our volatile business environment requires organizations to be fast and agile, driving the exploration of how technology can improve efficiency. Given these situational demands, algorithms may soon drive management processes.
Business leaders have embraced this idea, questioning not if automating leadership is feasible, but how best to implement AI management strategies. Modern organizations have become so complex that they seem to require leaders with superhuman abilities-precisely what algorithms offer. As Frank Pasquale noted, "authority is increasingly expressed algorithmically," and by incorporating algorithms into leadership systems, we create dependencies where algorithms coordinate what we do and how we do it.
Corporations are increasingly embracing a business model where algorithms lead decision-making while humans follow. Analytics provider SAS views digital data management as a strategic advancement, and efforts are underway to create algorithms based on successful CEOs' neural imprints. The World Economic Forum's survey indicates expectations that AI machines will join company boards by 2026-a reality already emerging with Hong Kong's Deep Knowledge appointing an algorithm called VITAL to its board. By 2019, Amazon allowed AI to fire employees without human consultation.
However, these developments risk creating existential doubts as people fear devaluation of human labor and unemployment. The emerging business model for the future appears designed by people who may lack comprehensive understanding of algorithmic capabilities or the human skills necessary for leadership excellence. Despite automation trends, research shows that 41% of CEOs report their organizations are unprepared to implement data analytics tools in management structures, and only 22% have adopted algorithms in HR practices. Human sophistication, moral awareness, and emotional intelligence remain critical leadership qualities that algorithms lack.
Capitolo 4
The Trust Paradox: Leading by Algorithm
For effective leadership to emerge, trust is essential-without it, no leadership can materialize, regardless of technological sophistication. Peter Drucker once noted that computers make no decisions but merely execute orders. This raises questions about algorithms' leadership potential, as true leadership requires wisdom and influence. Research shows people perceive machines as lacking a "complete mind" with full emotional and cognitive capabilities. Since we only follow leaders we perceive as legitimate-inferred from wisdom, fairness and mindfulness-algorithms' inability to understand human emotions complicates their potential as leaders, particularly regarding ethical decision-making.
Despite these limitations, discussions about algorithmic leadership persist, possibly indicating frustration with current human leadership. We may be redefining leadership wisdom to prioritize accuracy and speed in decision-making-qualities at which algorithms excel. Leadership literature has historically valued "making good decisions in a timely way," and in today's digital era, the focus increasingly shifts toward leaders who optimally handle data. As self-learning algorithms become faster, more accurate and consistent, humans may gradually transfer leadership power to them, especially in complex, volatile business environments demanding rapid decision-making.
Surprisingly, humans may be more willing to accept algorithmic leadership than expected. Research shows people often trust algorithmic guidance over human judgment. Uber riders react less negatively to price increases set by algorithms than by humans, as algorithms aren't perceived to have intentions or biases. Studies in Nature Human Behaviour revealed employees prefer being replaced by algorithms rather than humans, as it feels less threatening to their self-image and self-esteem. This preference emerges because algorithms remove the emotional, biased aspects of decision-making, making decisions feel more fair and less personal.
However, effective leadership fundamentally depends on influence-the ability to motivate, inspire and direct others toward change. Leaders need followers who accept and support their decisions, requiring clear explanations of why change is necessary and what value it creates. Without buy-in, nothing happens regardless of a leader's formal authority. In today's environment of digital disruption, leaders must not only provide direction but also cultivate willingness to follow that direction.
For algorithmic leadership to succeed, algorithms must influence humans to trust and follow them-a significant challenge given current attitudes. Studies show widespread distrust of AI in financial and hiring decisions, with only 4% of US consumers trusting AI in hiring processes. The "black box" nature of algorithms-their lack of transparency and explainability-breeds suspicion among potential human followers. Even engineers struggle to explain how advanced algorithms reach decisions. This opacity creates distrust in work settings, making algorithms poorly suited for leadership roles where social pressures demand clear explanations for decisions.
Capitolo 5
Management Controls, Leadership Conquers
Organizations today operate under bureaucratic cultures where systems seem more in charge than humans. Management has evolved into an art form with companies doubling their managers and administrators since 1983. Modern organizations have become increasingly bureaucratic with comprehensive matrix systems and procedural controls that prioritize stability over human agency. As Max Weber observed over a century ago, the more perfectly bureaucracy develops, the more "dehumanized" it becomes. Today's large organizations typically bury first-level employees under eight or more management layers, with management becoming the foundation upon which companies operate.
Management as we know it emerged during the Industrial Revolution when rapidly growing organizations needed structure to prevent chaos. Chester Barnard inspired modern management as an administrative approach to control employee behavior. Frederick Taylor's 1911 "Principles of Scientific Management" cemented the idea that systems and control mechanisms should be prioritized over human judgment, based on experiments showing unobserved workers were inefficient. This established the assumption that human workers require constant performance monitoring.
Management, barely a century old as a field, remains essentially an administrative function derived from the French word "menage" (household running). While management brings necessary order through planning, budgeting, and standardization, it has become excessive. Organizations now suffer from overwhelming bureaucracy that maintains stability but stifles innovation. The focus on administration has become so dominant that the paperwork and box-ticking leave little room for anything else, creating a nightmare for those who want to encourage change and growth.
Organizations globally recognize they have too many managers and not enough leaders. While administrative systems create stability, they also paralyze workforces with paperwork, preventing innovation and added value. Management provides necessary foundations, but companies need to foster cultures where employees think beyond formal requirements. The leadership journey begins when people explore ambitions beyond their formal positions.
A management-only culture breeds an introspective mindset focused on maintaining systems and fighting fires rather than growth. This status-quo thinking, while natural for humans who avoid uncertainty, fails in today's complex, volatile business environment. Such cultures become overly complex with slow decision procedures, poor communication, and ambiguous processes. While employees efficiently tick boxes and meet targets, they lose sight of whether these activities actually benefit the organization in a changing world.
Leadership begins where management ends. While management creates stability, leaders drive change through compelling visions of what can be achieved. Leaders inspire and empower by communicating purpose and direction. Unlike management's coercive processes and rigid targets, effective leadership influences others to embrace organizational purpose and collective interests. Leadership scholars show that influence and persuasion are key to making change happen, requiring social skills and trust-building. As Bass noted, leaders "move followers to go beyond their own self-interests for the good of their group, organization or community."
Capitolo 6
The Algorithmic Manager: Efficient but Limited
Companies today function as data-processing machines, treating data as "the new oil." This obsession with collecting, processing and evaluating data creates additional bureaucracy but is considered essential for performance management. The challenge for organizations is to use this data effectively while avoiding unnecessary complexity. The fundamental question emerges: if management processes run in rational, consistent ways, should algorithms replace human managers entirely?
Algorithms outperform humans in data management-they're faster, more systematic, impartial, accurate, and cheaper. This efficiency makes them seemingly ideal substitutes for human managers, especially as management work narrows to administration and performance evaluation. This realization terrifies many MBA students who wonder if their education in rational business strategies is becoming obsolete. Some even question whether becoming coders would be more valuable than competing against algorithms' superior rationality.
Human intuition isn't some mysterious sixth sense but rather the result of unconscious training through extensive experience. Experienced recruiters demonstrate this-their "intuition" about candidates comes from years of pattern recognition. However, this intuition is domain-specific and takes significant time to develop. Board members often rely heavily on gut feelings for decision-making, believing their intuition got them to their position. Their brains have subconsciously stored career experiences that manifest as intuitive responses to similar situations.
While humans can become reliable data-processing machines through intuition, algorithms work much faster-though they're modeled after our understanding of the human brain. Despite our technological advancements, the human brain remains incredibly complex and not fully understood. Nevertheless, algorithms already demonstrate value in management functions, particularly in data-heavy administrative tasks that consume 54% of managers' time. Companies like IBM employ algorithms for HR operations, while Robotic Process Automation handles repetitive tasks.
Blockchain technology, known primarily for Bitcoin, is increasingly viewed as a management tool. A Deloitte survey found 83% of executives see compelling organizational applications for blockchain, with 86% believing it could be used for leadership functions. As a distributed database recording past behaviors in a transparent, immutable way, blockchain creates trust by establishing a risk-free environment where exploitation risk is virtually eliminated. By providing verification that interactions are safe, blockchain can increase cooperation while protecting individual interests-essentially performing what managers should be doing.
Management by algorithm has become reality as algorithms demonstrate ability to assess, monitor, and evaluate employees with speed and accuracy. Beyond monitoring, algorithms are advancing into decision-making roles, analyzing employee skill sets and suggesting appropriate pay levels. People may accept algorithmic decisions because they perceive them as unbiased. However, as self-learning algorithms become more complex, we risk surrendering decision-making responsibility to machines we don't fully understand.
Despite their decision-making potential, algorithms lack understanding of human emotions and the ability to make nuanced judgment calls. They're vulnerable to errors and biases that may violate respect for human identity. Amazon's hiring algorithm demonstrated this by favoring white males based on historical data patterns, without recognizing changing diversity norms. While humans also make biased decisions, we can identify remedies through emotional awareness.
Capitolo 7
The Human Edge: What Algorithms Can't Do
Organizations consist of data that business executives use to develop strategies. While algorithms can analyze data and create transparency, they cannot lead because leadership requires interpreting information according to human values and priorities. Meaningful experiences make our lives worthwhile, helping us feel authentic when our values align with our actions. This authenticity requirement explains why we distinguish between artificial intelligence (for automated processing) and authentic intelligence (for human-driven decisions). Both influence organizations but at different levels-artificial intelligence drives management, while leadership requires authentic intelligence.
Authenticity is essential to effective leadership because leaders must be agents of change who inspire and motivate people to create collective value. Transformational leadership research emphasizes that leaders who act genuinely, driven by purpose and able to connect with others, successfully motivate followers to deliver value-driven change. Leaders influence people by making their vision meaningful to them, not just by presenting facts. This requires touching people's hearts and making human connections-understanding what changes are needed while communicating in ways that resonate with followers' perspectives and values.
Leaders must go beyond algorithmic analysis to connect with followers through meaningful communication. While algorithms provide information and advice, they lack the ability to recognize what information means to human employees and communicate authentically to inspire change. In today's complex business environment, leaders must be agile while maintaining focus on company priorities and purpose. True leadership means making sense of information in terms of company values and stakeholder interests, not just responding to market changes.
Algorithms cannot authentically connect with humans the way other humans can. Effective leadership materializes only when followers feel their emotions are understood and values shared-social skills algorithms fundamentally lack. True leadership requires moral capability to evaluate others' interests, which we don't attribute to machines because we don't perceive them as having a "complete mind." Research shows humans perceive minds along two dimensions: agency (capacity to plan and exert self-control) and experience (capacity to feel and make sense). While algorithms might have some agency, they lack experience, making us uncomfortable letting them make decisions affecting stakeholder interests.
Leadership in today's world requires authentic human intelligence to be effective. The core function business leaders must fulfill is sense-making-helping others understand organizational goals, purpose, and implementation strategies in complex, volatile environments. Leaders define organizations and must make sense of what they're doing and why, providing guidance when formal rules don't exist. This responsibility requires moral awareness, not entitlement.
Sense-making requires an interplay of uniquely human abilities that algorithms cannot replicate. These abilities operate across multiple psychological dimensions: motivation (desire to create meaning), cognition (thinking about meaning), and emotion (understanding how meaning makes people feel). This complexity distinguishes humans from algorithms, which learn solely by observing and modeling behavioral trends without deeper reflection. Future leaders need critical thinking, curiosity, agility, imagination, creativity, ethical judgment, emotional intelligence, and empathy-human qualities that create meaningful leadership in the algorithmic age.
Capitolo 8
The New Empowerment: Humans and Algorithms Together
In today's interconnected world, teamwork has become essential for addressing complex challenges. As organizations increasingly structure work around networks of teams, a new kind of member is joining-algorithms. Effective leadership connects people's personal experiences with organizational decisions, creating emotional bonds that legitimize those decisions. When leaders employ uniquely human abilities to forge these connections, they empower others. Decades of research confirms that empowering leadership enhances employees' sense of meaning, autonomy, self-esteem, and control over their work.
Human empowerment becomes even more crucial as employees begin interacting with autonomous algorithms as coworkers. This new work dynamic creates a more complex psychological experience for human employees, requiring tomorrow's leaders to develop specific empowerment abilities. These include managing employees' aversive emotions by reducing fear and uncertainty, addressing distrust through avoiding power struggles and increasing transparency, and providing technology education to help employees adapt to their algorithmic colleagues.
Algorithm aversion is a real psychological phenomenon where humans irrationally discount algorithmic solutions even when they perform better than human alternatives. This bias leads to less informed decision-making and can even result in the stigmatization of employees who do follow algorithmic advice. Leaders must identify the root causes of this aversion within their teams and present compelling counterarguments that highlight the benefits of algorithmic collaboration.
Fear of algorithms stems from unfamiliarity and uncertainty about non-human decision-makers that lack human values and emotions. Employees distance themselves from algorithms because they feel uncomfortable with these "different animals" in their workspace. Effective leaders must minimize these fears by making algorithms more approachable, ensuring digital transformations align with company purpose, and clearly explaining how and why algorithms are being implemented, rather than following technological trends blindly.
Humans have a fundamental need for control, especially in decision-making contexts. Research shows employees will make financial sacrifices-even using work budgets inefficiently-to maintain control over algorithmic systems. This behavior damages organizational effectiveness and requires leaders to develop greater empathy and emotional intelligence to help employees adapt to algorithmic coworkers without feeling their autonomy is threatened.
Just as leaders must empower humans, they must also empower algorithms to fulfill their potential in revealing new business opportunities. Leaders in the age of automation need specific abilities to create the right circumstances for algorithms to function optimally as part of the team, guiding the transformative process of integrating algorithms into the workforce. Leaders must decide which tasks to delegate to algorithms and grant them appropriate autonomy. This delegation process has two crucial aspects. First, leaders must create space for algorithms to perform while taking full responsibility for the outcomes. Second, they must establish boundaries through continuous feedback meetings to evaluate algorithmic performance.
Leaders must prioritize data quality for algorithms to perform optimally. Poor-quality data leads to underperformance and wasted automation investments. Purpose-driven leadership provides the framework for selecting the right data by establishing clear organizational priorities. This approach helps leaders ask the right questions across different business departments, ensuring data collection aligns with company goals. Rather than processing massive amounts of available data, leaders need to decide which specific data types are required and why, translating organizational purpose into actionable data selection criteria that optimize algorithmic decision-making.
Capitolo 9
Building the Future: Purpose-Driven and Inclusive Leadership
Leadership remains the currency that makes organizations run and survive, especially with rapidly changing technologies. Today, data has emerged as an equally valuable resource, requiring leaders to integrate insights from massive data analysis into decision-making. This raises questions about algorithms becoming autonomous decision-makers and potentially leading organizations. While algorithms excel at consistent learning, data processing, pattern recognition and creating transparency-all valuable organizational skills-they lack human-like intuition that recognizes changing contexts.
Data serves as the essential fuel for algorithms to create organizational value. While data has always been crucial to business success, today's focus on big data demands structured approaches to determine which data matters most. Organizations need leadership that can interpret data through the lens of company purpose-defining why we're in business and what value we aim to create. Purpose-driven leadership acts as a compass, guiding companies through complexity by helping focus on priorities and selecting relevant data.
When integrating algorithms into workplaces, visionary leadership becomes essential to help employees find meaning in this transformation. Effective visionary leaders energize people by building bridges between present circumstances and future possibilities, communicating a compelling narrative about humans and algorithms collaborating to create value. This transformational approach signals what truly matters to the organization while making the journey appealing enough for employees to commit to change.
Purpose-driven leaders demonstrate ethical awareness through sound moral judgments that inspire employee commitment. Unlike algorithms, ethical leaders connect with humans through shared values, serving as role models who lead by example. This human connection elicits ethical mindsets in followers through virtuous actions that algorithms simply cannot replicate. People naturally prefer following those they perceive as having integrity and taking responsibility, making ethical leadership a distinctly human capability in the algorithmic age.
As algorithms join the human workforce, a new diversity context emerges requiring collaborative partnerships. Inclusive leadership focuses on creating settings where both humans and machines can participate effectively, not by exerting power but by facilitating conditions that promote full participation. These leaders build connections between humans and algorithms through trust and respect rather than mechanically-designed coordination, helping the workforce accept this diversity of skills to create valuable outcomes.
Effective leaders connect others rather than focusing on individual performance. They invest in establishing high-quality relationships that facilitate collective mobilization and change. This requires understanding what drives people, communicating authentically, and especially listening-not as a passive act but as an active process of gathering information that highlights similarities between people to forge strong connections. Once connected, leaders must communicate clear, inspiring messages that mobilize people toward a shared purpose.
Capitolo 10
Preserving Humanity in an Algorithmic World
AI has become the new hero in our society, processing vast amounts of data at high speed to reveal insights humans couldn't see without technological support. Organizations view algorithms as perfect advisors for decision-making-rational, systematic, and accurate. However, while this "cool" approach has value, organizations also need a "warm" approach that considers stakeholder interests. As the Business Roundtable acknowledged in 2019, companies must serve all stakeholders, not just shareholders. In our increasingly tech-driven world, we need more humanity, not less-ethical judgments that satisfy all those affected by decisions.
Digital transformation doesn't signal the end of human activity in the workplace, yet fear has increased as algorithms penetrate organizations. Corporate executives embrace automation as the most effective business model-paying less while getting more. But this optimization risks losing our human identity. The goal should be to optimize a humane society, not to implement AI at levels where we forget to serve human needs. The end user should be human, not technology itself. If we develop technology solely to perfect technology, then algorithms become the end users of the AI revolution.
As AI advances, concerns about human identity grow. While few question technology's potential limitations, many express fears about humanity's future. Employees fear working with new technology, understanding algorithmic functions, and becoming redundant. This existential fear manifests as algorithm aversion-people distrust "black box" systems they can't understand. As even design engineers struggle to explain how algorithms work, AI may evolve from narrow task-focused intelligence to something that could surpass human intelligence entirely. Human dependence on technology will increase while technology's dependence on humans will decrease, fundamentally changing our position in organizations and society.
Co-operation between humans and algorithms offers our best chance for survival and innovation. Rather than developing technology beyond human boundaries, we must apply it to enhance human survival efficiently. This requires setting limits before the gap between algorithms and humans becomes unbridgeable. Currently, a concerning disconnect exists between corporate leaders and employees regarding technology implementation. While 90% of executives believe their companies consider people's needs when introducing new technology, only 53% of employees agree. This perception gap must be addressed through constructive dialogue that embraces both automation's inevitability and employees' legitimate concerns.
Management by algorithm poses less threat to our human identity than leadership by algorithm. A Boston Consulting Group report reveals most employees don't aspire to management positions-only one in ten Western non-managers want to become managers, and only 37% of current managers wish to remain in these roles. This creates a win-win situation: humans increasingly don't want management roles while algorithms become better equipped to handle them. However, this only works if we simultaneously cultivate uniquely human leadership abilities that provide direction and meaning.
In our quest for technological innovation, we must guard against losing our defining human identity. Our obsession with efficiency as the ultimate path to public good risks forcing us to submit to machines and evaluate ourselves by machine criteria. This path leads to humans becoming machines, removing humanity from the equation. Science fiction like Avatar and Oasis warns us how quickly our progress-at-any-cost mentality can escalate into submission to technology that strips away our humanity. These fictional scenarios may soon become reality, as demonstrated by Elon Musk's Neuralink developing brain-machine interfaces. While AI augmenting human capabilities isn't inherently problematic, we need a strong moral compass to avoid being blinded by unlimited technological opportunities. Without ethical awareness guiding our use of algorithms, we risk losing the unique human features that define our societies and organizations. The leadership of the future will likely remain human.
