Three key actions for COOs in the AI era Â
Master AI-enabled operations: identify persistent bottlenecks, unite ops/data/IT in one hub, and design human-centered AI systems...
by Michael Yaziji Published September 22, 2026 in Brain Circuits • 3 min read
Organizations plan in three- to five-year cycles, but AI evolves in six- to 12-month cycles, creating a fundamental mismatch. Traditional planning approaches – centralized control on the one hand and chaotic adoption on the other – fail to address this reality.Â
The third way, which I refer to as radical federalism, pushes adaptive capacity to the unit level while maintaining minimal coordination centrally. Each department designs its own human-AI configuration based on its specific variance, velocity, and local knowledge. This temporal fracturing, combined with high variance and local knowledge requirements, makes federalism not just useful but necessary. The operating model follows four concrete principles:Â
Give departments budgets and let them decide their optimal mix of people, AI subscriptions, and hybrid approaches.Â
The center defines what to deliver, not how to deliver it.Â
Different departments can use different AI platforms as long as data exchanges cleanly.Â
Each department reorganizes at the pace its domain requires.
Let departments choose the right balance between humans and AI, and focus on outcomes.
This model fails unless incentives change. Traditional managers maximize headcount because power and prestige are often measured that way. Federal managers, by contrast, need to be rewarded for configuration creativity – achieving better outcomes regardless of the human-AI mix.Â
Go through the following questions to check you’re on the right path:
When variance is high and change is faster than planning cycles, adaptation beats optimization every time. Let departments choose the right balance between humans and AI, and focus on outcomes, not rigid processes, to keep pace with rapid technological change.
Professor of Strategy and Leadership
Michael Yaziji is an award-winning author whose work spans leadership and strategy. He is recognized as a world-leading expert on non-market strategy and NGO-corporate relations and has a particular interest in ethical questions facing business leaders. His research includes the world’s largest survey on psychological drivers, psychological safety, and organizational performance and explores how human biases and self-deception can impact decision making and how they can be mitigated. At IMD, he is the co-Director of the Stakeholder Management for Boards training program.
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