Former Google CEO Eric Schmidt argued on the In Good Company podcast that software can eliminate the coordination tax spent aligning departments. In a hypothetical 10,000-person firm, he estimated that thousands of middle-tier roles moving numbers around could become obsolete. Schmidt cited an acquaintance who laid off 20 percent of his company's administrative workforce to reflect this shift. Nevertheless, he stressed that businesses will still require core inventors, leaders, salespeople, and regulatory staff.
Key points
Deploying artificial intelligence allows businesses to eliminate the coordination tax cre…: Deploying artificial intelligence allows businesses to eliminate the coordination tax created by interdepartmental organizing and planning.
Employers considering staff reductions must oversee workforce adjustments through legal a…: Employers considering staff reductions must oversee workforce adjustments through legal and humane management processes.
Established corporations risk missing major efficiency gains because standard business ro…: Established corporations risk missing major efficiency gains because standard business routines and cultures resist structural overhauls.
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Eric Schmidt believes AI could let large companies run with fewer employees. The former
Google CEO said businesses could spend less time coordinating work, potentially eliminating roles focused on planning and administration. Speaking to Nicolai Tangen on the In Good Company podcast, he illustrated his argument with a hypothetical company employing 10,000 people.
“My guess is you’ve got a couple of thousand people who you don’t need,” Schmidt said. He urged employers to manage those transitions
“legally and humanely”. Describing an unnamed friend’s decision to cut a fifth of his workforce, Schmidt called those affected “The glue people”, the ones who handled planning and moved numbers around. His comments offered an estimate of possible staffing changes, not a finding that every large business could eliminate the same proportion of jobs.
Why Eric Schmidt thinks AI could reduce management work
Schmidt said coordinating thousands of employees is inefficient. He remembered saying his job was sitting in meetings for twelve hours a day, five days a week, plus working weekends.
“Much of that coordination tax can be eliminated by these AI platforms,”…
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