Idea in Brief
The Problem
AI predictions often improve the quality of specific decisions but can have a disruptive effect on overall systems of decision-making.
Why It Happens
Decisions are usually a combination of prediction and judgment. When predictions are extremely accurate, as can be the case with AI, decision rights will flow to where judgment is still needed, potentially changing who makes decisions and where, when, and how. And more-accurate predictions in one part of a system will have ripple effects on other parts.
The Solution
In the absence of perfect, instant communication, organizations and whole value chains need to create systems that balance modularity in design with coordination. Modularity enables many decisions to be made on the basis of locally observable factors, while coordination enables decisions to be optimized over a wider network.