In a recent experiment conducted by researchers at the University of Cambridge, artificial intelligence generally outperformed human executives. However, AI struggled with decision-making during unexpected "black swan" events, leading to it being dismissed by a virtual board of directors faster than its human counterparts. The study indicates that replacing CEOs with AI may not be feasible. While the AI excelled in most scenarios during a real-world business simulation where it competed against human participants, it failed to effectively manage unforeseen events such as a pandemic. Hamza Mudassir, one of the researchers, explained to Business Insider that AI surpassed human participants in key performance indicators, including profitability, product design, inventory management, and price optimization, yet this proficiency couldn't prevent its termination when unexpected challenges arose. "It struggled to survive in the C-suite due to its ineffectiveness in handling sudden changes or situations requiring innovative thinking, " stated Mudassir. The experiment spanned from February to July and involved 344 participants, which included senior executives from a South Asian bank and college students. Notably, the AI component was represented by GPT-4o, OpenAI's large language model. Participants engaged in a game mimicking real-world decision-making scenarios faced by CEOs, specifically those leading a car manufacturing company, devised by the researchers' educational technology startup, Strategize. inc. The objective was straightforward: survive as long as possible without being fired by the virtual board while maximizing market capitalization, detailed the researchers in the Harvard Business Review. Mudassir remarked that the AI effectively analyzed data, recognized patterns, and made deductions. For instance, when tasked with designing a car, participants had 250, 000 potential combinations based on factors such as available materials, cost, consumer preferences, and demand. The AI-generated designs significantly outperformed those created by humans as it approached the task as a problem of optimizing customer value. However, this does not imply that AI is the ideal candidate for the CEO role.

When confronted with a "black swan" event, the AI struggled to react as adeptly or swiftly as human leaders could. For example, when dealing with drastic market changes like a pandemic, the AI faltered, indicating that it lacked sufficient information to adapt in time. "How do you respond to COVID if it’s your first encounter?Different CEOs have various strategies, " Mudassir explained. "In this case, the AI did not have enough information to react effectively and avoid termination. " Thus, current human CEOs can remain secure in their positions. Researchers concluded that while AI's performance in a corporate setting was commendable, it hasn't reached a level that could replace human leadership. Nevertheless, Mudassir noted that AI's capabilities are significant enough that it should be incorporated into corporate strategies. Mudassir also suggested that in the future, AI models could be tailored with real-time data from specific companies, which could enhance their performance beyond what was observed in the experiment.