The Need to Balance "Cold Tech" and "Warm Tech"

Championing bold simplicity is less risky than implementing weak strategies.

Reviewed by Hara Estroff Marano

Key points

• Cold tech uses digital technology to produce results “faster, cheaper, and more productively.”
• Warm tech makes use of interpersonal behavior that increases stakeholder trust.
• Leaders can be sensitive to cold and warm tech simultaneously.

There is a necessary distinction to be made between "cold tech" and "warm tech." Cold tech puts machines first. Warm tech puts humanity first. It's important to balance the two.

Terence Mauri, founder of Hack Future Lab and leadership consultant to Google, Pfizer, HSBC and other companies, presents an example of managing with cold tech in his recent book, The Upside of Disruption (2024).

Delta Cafes introduced artificial intelligence and machine learning into its coffee stores to analyze staff productivity. Within a month, the speed of serving coffee increased by 33%. That is a significant positive gain in one of the company’s key performance indicators (KPIs).

As KPIs increased in a positive direction, however, two key behavioral indicators (KBIs) started to erode: Customer complaints about the quality of the coffee increased, and employee morale decreased because workers felt they were under constant electronic surveillance.

The Delta Cafes case is an example of the dangers when leadership focuses on cold tech without balancing the warm tech of business.

The Jumbo Example

There is a grocery chain in the Netherlands called Jumbo. Like many grocery chains, it has replaced human employees with automated self-checkout machines. That is cold tech.

Unlike many U.S. supermarkets, Jumbo now also features checkout lanes with employees at the register. These lanes are called “chat checkouts.”

“Chat checkouts” have the most extended customer lines. These lanes are also the most profitable. It turns out that many Jumbo customers are lonely. Even a brief, superficial social interaction with a well-known face provides positive reinforcement for customers.

The Dangers of Faster, Cheaper, and More Efficient

The mantra of cold technology' is “faster, cheaper, and more efficient.” Jumbo, on the other hand, integrates cold and warm technology for better business results. In an earlier Psychology Today blog, we argued that as AI use increases, the importance of interpersonal trust also increases (Stybel Peabody, 2024).

This is not an argument against cold technology. It is an argument for recognizing the need for balance between cold and warm tech. For example, Hack Future Labs reports that 73% of surveyed leaders feel “overwhelmed by the volume of their daily emails.” The result is increased leader time spent communicating via emails and text. These communications vehicles are efficient but cold.

A balanced approach would be to establish key behavioral indicators for how many minutes a week the leader spends in one-on-one in-person or online meetings with critical stakeholders to thank them for their cooperation and competence in helping the company achieve its objectives. This is a warm tech investment in building trust.

Another key behavioral indicator would be the percentage of team members contacted by their leaders wishing them a happy birthday or acknowledging the anniversary of their first day of employment with the company. Another KBI would be in-person or telephone acknowledgments to customers of product or service purchase anniversaries.

Fight Complexity with Bold Simplicity.

The creation of chat checkout lanes exemplifies bold simplicity in employing warm technology. Another example of bold simplicity is holding one team meeting without any operational issue on the agenda. The only issue on the agenda is this question: “What If...?”

Digital technologies, including artificial intelligence, are cold because the focus is on “faster, cheaper, more efficient.” While cold tech is valuable to corporate productivity, it erodes stakeholder trust in the long term.

Cold approaches must be balanced with warm approaches that build trust. Key performance indicators must be supplemented with key behavioral indicators, and compensation systems should be designed to reward both.