There’s no question that the coming of artificial intelligence (AI) will disrupt everything that humans do. As such, it will also disrupt the fundamental nature of what an organization is and reshape the way that an organization can deliver value.

Everywhere I go now in China, I can see and feel both incredible interest in and major concerns about AI by corporate executives. They are both intrigued by the opportunities that AI brings but are also concerned by the risks and challenges arising. There are plenty of questions about what impact AI may have on their businesses.

In general, many organizations are now aware of the need to embrace AI, but they are still at a relatively primitive stage of trying to understand the basics of how to use it effectively within their organizations.

Some companies are beginning to apply AI to specific areas such as research and development for drug companies, sales and marketing for consumer-facing businesses, and production for manufacturing businesses. And some others are applying AI to streamline their support functions such as finance, human resources, and procurement operations.

Through their actions, businesses in general are beginning to find tangible impacts. But so far, they are only scratching the surface. AI will drive much deeper and more profound changes to organizations all over.

With the drastic progress in algorithms, computing power and data, the capability of AI is increasing by leaps and bounds. The application of AI agents is at a major tipping point, and with it, the ways organizations work will fundamentally change.

AI agents will empower people with much greater access to information, knowledge, and hence decision-making power. In the past, much of such information and knowledge resided within people with long experience in the field. Today, even a relatively inexperienced person can access a vast pool of information and knowledge through AI. And whereas in the past, functional specialization was key to skills development as expertise was built up over years of practice within a certain area. In the AI era, employees can cut across boundaries of functions through the use of AI agents. The adoption of AI agents will capture the invisible knowledge and institutionalize it within the organization.

By now, most corporate leaders know that organizational structure in the AI era will become flatter, as middle management in the traditional organizations will be phased out. However, most corporate leaders I met have not fully appreciated what the new organizational structure will look like and how a flat organization will actually work.

And importantly, most corporate leaders have yet to appreciate and figure out what the role of a corporate leader will be in an AI-era organization.

In the industrial era, organizations functioned based on “command and control”. Thus, the leader’s job was to be a commander. In the internet era, companies were built on platforms where speed to market and users’ data were key. The leader’s role was often to provide directions and did not stand in the way as front-end organizational units made swift moves.

In the AI era, the front-line staff, supported by AI agents, will become much more capable. Their interactions with customers will be always on, fully integrated and highly interactive. Feedback of their actions will feed into AI agents to create optimized responses. There won’t be much, if any, room for command and control. So, what will corporate leaders do?

The definition of what processes mean in an organization will also undergo fundamental changes. Whereas in the past, processes were meant to “standardize” ways of doing things, in the AI era, AI agents on both the supplier side and the customer side would do co-creation and optimize themselves with feedback. This is especially prevalent in “B2C” businesses. For “B2B” businesses and businesses with heavy physical assets, traditional notions of processes will still be relevant.

So, the traditional definition of “business processes reengineering” (BPR) (which became a fashion in the 1990s with the arrival of mainframe computers and continued to stay on as core to businesses thereafter) is now outdated. Businesses need to fundamentally recognize and redefine what processes or work flows really mean in the AI era.

Processes drive structure and help define what capability will mean. How will a highly autonomous organization with groups of humans and plenty of highly capable AI agents working sometimes largely independently and sometimes in collaboration with each other work? While command and control is no longer the most prevalent, no organization can exist in anarchy. How will this type of organization work in reality? After all, “Silicon-based workers” will work side-by-side with human beings.

And fundamentally, what kind of capabilities will people need to develop in this kind of organization? In the internet era, some people in organizations became “makers”, meaning they could become entrepreneurs of and by themselves. I think this notion will apply in the AI era too. On top of being entrepreneurs, people can also become “creators”. They will create new ideas. Critical thinking and creativity will be key requirements for people.

In this respect, corporate leaders will also become “thought leaders”, leading staff members in generating new ideas and helping individuals and teams go beyond their comfort zone into new lanes of development.

Increasingly industry boundaries will become increasingly blurred. Companies will be able to crisscross between different industries as their ability to master capabilities across industry-boundary manifests.

Thus, I believe all corporate leaders must possess an “AI mindset”, which means, in short, embracing AI in all dimensions of an organization. There won’t be any exception to this. The difference is only a matter of degree, which is often determined by the nature of the underlying industry. For example, heavy business-to-business industrials will be very different from B2C consumer-facing businesses.

Practical frameworks have been developed to assess the stages of AI development within organizations. The journey typically begins at an “AI-Aware” stage, where companies experiment with small-scale pilot programs to explore AI’s potential. At the “AI-active” stage, they will move toward broader deployment, begin building foundational AI platforms, and establish initial AI teams. In the “AI-driven” stage, AI becomes embedded in core business operations, enabling end-to-end automation and delivering measurable impact. The most advanced stage, “AI-native”, is where AI powers the entire business model — driving adaptive workflows, scalable infrastructure, and an organization-wide AI mindset.

I believe every incumbent organization will need to undergo an AI transformation. There is a need to put in place an AI transformation office to help drive these changes. To what extent and how the transformation is effectively carried out could fundamentally define the future of the organization.

The author is founder and CEO of Gao Feng Advisory Co, a strategy and management consulting firm with roots in China.

The views do not necessarily reflect those of China Daily.