Stephen Wunker is Managing Director of New Markets Advisors, a global consulting firm helping ambitious innovators, including 32 of the Fortune 500, find their next wave of growth. One of the world’s leading authorities on innovation, he’s led a decade’s worth of AI initiatives, advised hundreds of organizations, and authored five bestselling books. He’s the co-author, with Jonathan Brill, of AI and the Octopus Organization: Building the Superintelligent Firm. Learn more at www.aiandtheoctopus.com.
The AI revolution goes far beyond technology; it should be a tectonic shift in how work gets done, how decisions get made, and how companies compete. Yet, for too many companies, AI is a feature enhancement layered on top of existing, suboptimal practices.
AI has not only upended the economics of knowledge work, it’s also broken the model of the traditional, top-down enterprise. To thrive, companies must evolve beyond the rigid structures of the Industrial Age and embrace a radically different model – what we call the Octopus Organization. And no one is better placed than the CIO to lead this transformation.
The Octopus Advantage
Why an octopus? Because it has a totally alien anatomy. It has nine brains – one in the head and one in each arm – allowing it to sense, decide, and act locally while coordinating as a unified whole. It is a living model of distributed intelligence.
That’s the kind of organization we need in the AI Age: fluid, sensing, fast-moving, and intelligent at the edges. AI enables it, but only if we break from the centralized command-and-control hierarchies that were originally built for a telegraph economy, not an AI one.
CIOs as the Architects of Change
To achieve this promise, change has to reach well beyond technology. And that’s where CIOs have a unique superpower: they sit at the intersection of technology, operations, and strategy. By orchestrating data flows, enabling data to surface where it’s needed most, and empowering teams in the “arms” with the information required to make decisions, CIOs become architects of intelligence.
Take Travelers, the giant insurance company. Mojgan Lefebvre, its Chief Technology and Operations Officer, isn’t just digitizing workflows; she’s transforming the very nature of decision-making. Her team has used domain-trained large language models to empower underwriters and claims professionals with instant access to specialized knowledge. They can spend less time chasing documents and more time engaging customers and collaborating across teams.
Management by Org Chart Is Over
In traditional organizations, decisions flow upward for approval, and information flows downward in cascades. Matrix management, introduced in the 1960s, didn’t really change that dynamic. But AI breaks that model.
In Octopus Organizations, AI becomes the nervous system that connects distributed teams. The goal of the technology is coherence, not centralization. Frontline teams gain access to real-time data, predictive models, and AI agents tailored to their roles. They act faster, smarter, and with greater context.
For this to succeed, middle managers must also evolve. They need to be much more than information processors, which is work that AI can do quite well. They must focus on being coaches of their teams and critical thinkers about AI-supplied outputs. It’s not about shrinking the middle layer but redefining it.
As for senior leaders, they must fight a tendency exemplified by what happened in navies during the early 20th century. Around 1900, a ship’s captain had tremendous autonomy, yet by 1930 that had largely vanished. A single invention was the main culprit: radio. Because senior officers could dictate orders, they did. AI introduces a similar capability for leaders to peer into far-flung operations and direct operations. Rather than use this transparency of information to meddle, leaders should seek reassurance from it that their devolution of authority is resulting in intended effects.
For CIOs, this is a cultural opportunity as much as a technical one. They have the tools to instrument the organization, to build feedback loops, and to create an octopus-like neural necklace (which connects its arms) to bring together insights across silos. They also need to help re-skill managers and foster the trust that makes decentralized decision-making viable.
From Sensing to Action, in Real Time
The power of AI isn’t just speed but also sensing.
At Travelers, for instance, underwriters can now analyze aerial imagery and risk data faster than ever. More profoundly, junior staff are empowered to act, building confidence and capability that once took years to develop. AI is accelerating development and flattening hierarchies.
That said, AI tools are only as good as the organizations they serve. The promise of faster decision-making evaporates if frontline teams are still waiting on approval gates or drowning in meetings. The CIO must lead a ruthless push to eliminate friction – whether it’s outdated processes, irrelevant KPIs, or legacy architecture. The best Octopus Organizations hunt for blockers of progress and define risk bands that allow safe autonomy.
Beware the Cultural Cliff
Let’s be clear: not everyone will love this.
AI tools, if poorly deployed, can demoralize teams. People fear being replaced. Worse, they may feel their work is being devalued. Studies show that while AI can improve productivity, it can also undermine motivation, especially when it feels like people are being treated as executors of AI orders rather than as critically-thinking humans.
Here again, the CIO has a role to play. By working closely with HR and business leaders, CIOs can help shape a narrative that is empowering, not threatening. Frame AI as a career accelerator, not a job destroyer. Invest in continuous learning. Build systems that augment judgment rather than eliminate it. And always lead with purpose.
Your Transformation Clock Is Ticking
Very quickly, the gap between truly AI-infused firms and everyone else will become insurmountable. You don’t need to overhaul everything at once, but you do need a roadmap. Start with:
- Determining which decisions can start being redistributed to the frontline
- Building a unified knowledge architecture (your neural necklace)
- Reimagining the role of management (it will take time to build the needed capabilities and comfort with new behaviors)
- Setting clear risk and AI use boundaries
- Continuously measuring cultural and operational readiness
Above all, work with your C-level peers to lead from the center without controlling everything from it.
If you’re the CIO, you’ve got the blueprint. Time to build.