Cloudflare has made a record revenue, yet it has laid off 20% of its workforce. The CEO justifies himself, explaining that AI has rendered a whole group of people redundant.
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Cloudflare is a US company that offers and sells internet services. The company claimed to have made record revenue. A few days later, it announced that it wanted to lay off 20% of its workforce.
This is a shock for the employees, but the CEO of Cloudflare, Matthew Prince, explained that only a certain group of people had been laid off. And that primarily includes analysts. You can find the CEO’s entire statement on HTX.com.
According to the CEO, AI primarily renders analysts redundant because artificial intelligence is much more accurate
How does Prince argue? The CEO presents the layoffs as a necessary adjustment to the AI-driven business transformation, relying on Peter Drucker’s model of the three corporate roles: “Makers”, “Sellers”, and “Analysts.”
Prince argues that AI mainly targets the “Analysts” – that is, functions in the areas of auditing, finance, law, compliance, middle management, and operations. AI systems can perform these measurement and monitoring tasks with superior objectivity, efficiency, and at a larger scale, enabling continuous auditing and faster financial processes. Thus, Prince writes:
The AI wave is not aimed at “Makers” or “Sellers”, but clearly at “Analysts”. Tirelessly, completely independently, extremely efficiently, and always online – when today’s AI systems analyze and evaluate a company, they achieve a level of objective detail accuracy and precision that even the most outstanding employees of the past could not reach.
And the layoffs would not only serve to reduce costs, but primarily to redistribute resources in order to hire more people from the other two groups.
He further explains that this redistribution will also happen in other companies. People will no longer need to collect or analyze data, but can focus on the things that, according to Drucker’s model, are truly important:
AI will significantly improve our capabilities for performance measurement in our company, allowing people on our team to focus all their energy on where they can truly create and generate value: in building and selling.
Artificial intelligence is becoming increasingly important in many companies. One CEO has even gone so far as to lay off all employees who refused to work with AI. And he stated that he would do it again to make his company AI-ready: A CEO laid off almost 80% of his employees because they refused to use AI: Two years later, he says he would do it again
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