Rita McGrath, Alex Osterwalder and Ryan Shanks - The Future of Consulting in an Age of Ai

The world of consulting is going through a dramatic change. a shift that I don't think even the best consultant could have prepared for. We're joined today by. Three people who are experiencing it from different stages, different companies, different geographies. We welcome to the show, head of innovation for a mayor, Ryan Shanks, great to be here. Part of the show, Aidan. CEO of Strategyzer and author of all these books over my right shoulder here, Alex Osterwalder hey, pleasure to be here.

Thanks for having me. Columbia professor, author. Of all these books over my left shoulder and indeed entrepreneur Rita mcgrath welcome to the show Hello. Hi. Nice to be here with you.

It's great to have you all here i thought it was such a an important topic for us all to share our world is going through an absolute tumultuous change, read i thought we'd hop the ball with you first you tee us up and we'll all play off you Pleasure to do that. so if you think about traditional consulting it was based on a leverage model and David Meister, who studies professional service firms called it very famously, you've got the role of the finders.

Those are the people that get the business, the role of the minders, the people that actually run the engagements. And then grinders are the ones working at the coal face who are doing all the work. And the traditional model was you marked up the work of the grinders and that fed the others and gave you the ability to have very high incomes and very high access at the top of the house. And the leverage model is, , very traditional and it went together with certain structures, right?

So you had the up or out idea where, you have an incoming class, but then. Those that don't succeed to higher levels in the firm are either asked to leave or decide to leave on their own. You've got these dense networks of alumni ties. So when people leave McKinsey and they go become something senior at another firm, very often they'll bring a McKinsey or someone with them.

And then you've got these structures which really look at very limited numbers of partners, but lots and lots of the other types.

So one of the things I would argue that AI is highly poised to do is Kind of eliminate the need for a lot of the grinder kind of work, because if you can push a button and get the answer to an analytical question in a matter of seconds, why would you pay for that kind of consulting? And I think that's a sea change that's likely to affect the whole sector. it's such a an important one because. Without that grinding, you don't, you don't build the muscle.

And that's one thing that I'd be very concerned about is that the muscles not built and Alex, I'd love to come to you next and talk about your experience of building that muscle, because you've built it in a different way. And now you're actually hiring those people and changing the business model of Strategyzer itself. So if I look at this, you know, I think it's an interesting evolution. First, first of all, it's going to create a lot of white collar unemployment.

A lot of consultants are irrelevant. So building on what Rita just said, you just don't need them anymore, right? That's the first thing. So that's a pretty interesting evolution because we're going to see a lot of change. People who used to be like the crème de la crème. But the second thing I think that's super important is that going to see a bigger cliff or gap between unqualified and extremely qualified people.

actually to use AI well, you need to understand a domain even better, right? That's the last piece we can have, at least for the time being. I think that's where, where humans can still create value. five years, I'm not so sure, right? Because there's just crazy stuff that AI and Gen AI can do that. It's not quite clear. Also looking at AJI, you know, the broader movement towards reasoning.

not quite clear where humans can still create value, but unemployment and, you know, actually a bigger gap between the very qualified consultants. So there are going to be a very small number who are going to get paid even more are going to be sought after, sought after even more. Because a large part of it is replaced by, by AI That's kind of the two trends I see.

So Ryan, as somebody who's hiring a lot of grinders in the past, those people who are starting off in the organization , coming out of college, maybe come from different consultancies as well. You're seeing it from every angle. And one of the things we met and we talked over a coffee in the past was about how, say, for example, you have a senior consultant coming to the end. And if you clone that person as a digital twin in a way.

Then you're actually doing away with the top layer as well as the bottom layer. So there's change that we can't even foresee right now. That's happening in real time. Yeah. You know, I have to say in many ways, I think consulting is needed more now than ever. But for sure, as Rita and Alex have described, the way we're going to do it and how it comes apart, comes about will be very different.

And, and there is a real legacy, particularly in the classic consulting houses of the pyramid and the grinders. And as we say, I'm moving up and I'm 28 years in Accenture. So I've, I've lived through many grinds, if that makes sense, through the process. But.

You know, I had a, I had a moment probably six months ago where we have a product that we've been incubating that it's an invoicing product that won't go into the details, but we were putting it out into Europe and we're testing it, product market fit, Alex leveraging some of your stuff as well. While the, the, the junior person was presenting the status of where we are with this, they kind of off to the side said you know, that we're getting 20 RFPs for this every week.

created a language model and now I just, you know, answer it very quickly. And we're like, what? And basically he's trained an RFP response model on his own accord, just because he found replying to RFPs is annoying. that's a huge part of consulting business, you know, and cost of sales is replying those RFPs.

the fact that this wasn't condoned by the organization more broadly, but when we bring in this talent, they're the ones that come up with these ideas very often, they're the ones that pull this stuff through. So the notion that, again, as you say, some of the people's jobs on the bottom are in jeopardy, it's actually a, it's not stuck to one level.

I think as we rethink the type of people we need in consulting and the The diversity, I would also say, of talent in consulting, I think, from traditional sources of MBAs to merging proper technologists with MBAs, with creatives, side by side, and properly multidisciplinary teams, I think, is also part of the change.

Rita, building on that, I thought about your work on a permission less organization and how Ryan there was talking about if you have those people, which we often have, they come into organizations with that mindset of, I have a problem I want to fix. But they often get condemned or they have to hide or build it in secret somewhere on sector 7g of the organization and it means that the organization culture needs to change to enable people like that. Yeah, I would agree.

And I think, you know, certainly the first wave of companies experimenting with how they use AI has been to kind of use AI on top of all the stuff that they brought with them as their legacy. And I think the companies that are going to be really successful in this brave new world are going to be in two flavors. One is the sort of AI natives that are being founded and growing up now and that they don't have legacy.

You know, they're, they're, they're building, they're leaning into this new technology from scratch. And then the other group are firms that are going to be willing to really say, Hey, if we were building this from the ground up, what, what legacy operations would we get rid of? What reporting structures would we eliminate? And this idea of having freedom and ingenuity right at the what I call the edges of the organization, I think is something that the leaders are going to have to embrace.

So I'll give you an example. There's a company called Klarna, which you're probably familiar with their based processor. Basically, they, They, they're, one of their original products was the original sort of buy now, pay later idea, a link to a credit card. well, they had a group that was working in their customer service operation. Their CEO really leaned into AI and one of their teams said, Hey, there's this process of dispute resolution.

which is time consuming and it's basically the, the, the buyer, the customer says, I never received this thing from the merchant. And the merchant said, yes, I sent it to you. And so there's some kind of dispute resolution that has to happen in the middle. And it's a process that can take weeks. It's frustrating on everybody's part. And Klarna kind of inadvertently gets put into position of being the judge, you know, the court, the court to which these things appeal.

And it takes them a long time to get to the bottom of it. And while this small team decided to tackle that problem and they've gone now from a system that used to take literally weeks to resolve, to a system that can be resolved in a matter of minutes by really leveraging AI. And the other thing they did was to protect themselves against the risk of hallucinations.

They built an early version of what we would now call a RAG to make sure that the, the data that the, the answer that the AI was spitting back was actually validated with real live information. And according to their CEO, he said he thinks they can save 700. Full time people by using AI in this way. i've seen many many people.

Bring a new structures into an organization in order to make their job more efficient and what do they get rewarded with more work and i really think that this culture shift in organizations needs to be if i do free up that time i should have time to be learning more.

Or I should have time to maybe focus more on the human based skills, but that's way easier said than done when you're under pressure and you're trying to actually change an organization's culture and deal with all these pressures. Like, I feel so sorry, Alex, you as a CEO, so much stuff coming at people. Business model changes, AI, GDPR, even data people haven't even caught up with digitalizing their businesses yet, and all this stuff is coming at you, that's so difficult.

And we need to have a bit more empathy from board level, but also from a leadership level for leaders of organizations, That's definitely true, but I think that's the exciting part, right? So as a CEO of a scaling company. You know, these technologies have huge opportunities and of course they require you to change, but that's where I make a difference between the managerial and the entrepreneurial CEO.

think the consulting firms, you know, that are going to have a tough time is when they have managerial CEOs that can't evolve. The consulting business model and every consultancy has a slightly different business model with complexities and what they focus on. But the managerial CEOs of these consulting firms will have a very hard time. I think entrepreneurial CEOs who see these things as opportunity. Kind of hard to see GDPR as an opportunity, but actually there were, right?

So you could actually frame yourself to do value creation, but when it comes to AI, that's definitely the case. So, will you have to transform because of these, you know, extremely powerful technologies for sure. This is the, you know, I don't, I'm not a, Somebody who loves hybrids, but this is a fundamental transformation. It's, much more substantial than what we've seen with the internet.

It's probably, you know, like when we, when we invented trend transistors and came up with computers, that's the kind of change that we're going to see. That's more fundamental than what happened with the internet. And it's kind of hard to see what's going to happen. So the only way to approach that is to, you know, while you're running a business. really experiment. There's no other way. And, you know, the technology is not new. AI has been around for decades as a technology.

It's just become way more popular. What has changed, and this is the big thing that people don't always understand, the accessibility of AI today. That's the thing that, you know, Chad TPT changed. The technology was there, but the accessibility. It's like when Amazon launched Amazon Web Services. Well, all of a sudden, as an individual programmer, you had access to the world's best, you know, internet infrastructure.

Well, it turns out now as an individual, you have access to the world's, you know, most powerful AI infrastructure, which was not the case. So innovation is going to go through the roof. Not because we have smarter people. It's just a law of large numbers, right? So there's no way around being an entrepreneurial CEO. I you know, have that. It's been probably my downside for a long time. Now I developed the managerial side. That was my challenge to become a managerial CEO.

But I think a lot of companies in particular, also consulting companies, they're going to have to adapt their business model. So it's not just the, how the profession is going to change the business model. Again, consulting is a, you know, it's a word for a lot of different business models, but there's no doubt that AI is going to change advisory and consulting in a fundamental way. And entrepreneurial CEOs will be able to drive their consulting firms through it.

others will have a very hard time. That pace of change. I'd love to talk about that because if you think about the Everett rogers distribution curve meant you had time to react but now because the installed base is everywhere. We're moving towards what your old colleague ryan paul Nunes used to call the shark fin is that it's this compression of the diffusion curve and it's almost like a spike now so all of a sudden it's an on top of you and by the time you actually build the muscle.

Come back to that metaphor it's already too late you've already lost the curve so what advice have you got for consultancies and, more particularly individual consultants who are maybe two three four man, companies even on the solopreneurs who are dealing with that how can they lean into this world

I think we and it's a term that I know many of you use as well, reinvention, and the idea of continuous reinvention, and it's one of the ways that we're seeing it no longer in the realm of, , launch transformations, transformation complete. Now we can relax. This is now just continuous. And so that, Alex, like your word experimentation, I think that notion is a cultural attribute of experimentation and change being like a, a real core. It's a key ability.

And I find the role of a consultant, part of it is giving insights. and experience and data and et cetera to clients and there is a piece of it too, particularly in our business of flexible sources of labor in different areas and talent that's powered by assets and so forth, which will be disrupted as you've mentioned read as well. But part of it is I just generically called creating confidence.

And I think, creating confidence in clients to address that reinvention and to really step up and to do it and to be a sort of coach. And I think that's one of the things that helping clients to build this muscle, to really get into the reinvention game is what I think that they're looking for. And I've, noticed some. We talk about let's say managerial versus entrepreneurial.

I would also say some of my clients are more engineering oriented, while some are more marketing oriented, while some are more like run by accountants, if you know what I mean.

And I think what they're finding is in this world of reinvention, you need to have all of those disciplines a little bit side by side and not be overly ruled by one, because don't know which, which lever you're going to pull, whether or not it's the consumer one, a new business model, or it could be a new piece of tech or some More than likely combination of all of it that, that they're bringing together. So I'm finding of my most valuable consultants are, are.

aware of multiple disciplines and how to cross and speak language across the place and to really focus on value delivery as opposed to maybe traditional silos of the technologists that over here and the business model strategist people are over there and the creatives are over there and, you know, and we don't meet as often. I think this ability to pull people together will be really important, even for those smaller consultancy that you mentioned earlier. on the timeline, if I may, is that.

I had this, this anecdote, I was with Steve Blank in California, the inventor of modern entrepreneurship education in the lean startup movement, who started all of this. And we were talking about return on investment and the time that it takes, you know, for business model innovation. I was talking about six years. And so he said, Alex, that's over.

So the, the time now, if you look at Silicon Valley, you know, from, this obviously doesn't apply everywhere, but from the idea to the transformation is happening in, in a much, much shorter timeframe, right? So, I mean, just looking at, looking at how fast AI and AI infrastructure and the capabilities are changing. This is at lightning speed. Will that apply everywhere? No, but everything is getting compressed.

I mean, we work on innovation processes, the things that were 12 weeks, you can condense it down to, to one day or two days. So the speed of innovation is going to go through the roof. Now that doesn't have specifically to do with and, but, you know, even that aspect. And then maybe that's where the, what you just said, You know, consultant as a coach, how do you use these technologies? How do you actually, you know, when you're running a business, you don't have time to stay up with everything.

That's maybe the role of the consultant to figure out the capabilities to coach. That's really interesting about the, compression of time. So say you're selling hours. Now you have a dilemma. And the one I thought about Rita, you and I talked about this before the blockbuster versus Netflix. Story really, you know, one of the franchises were in place, having a digital offering meant now that that would threaten the, the bricks over the clicks and also getting rid of late fees.

And that caused all kinds of consternations in the, at leadership level with Carl Icahn, the investor at the time. And we're going to see a bit of that as well. It's going to be, people are going to have this ethical dilemma as well. Can you, that's only taken me now. Days where i could be charging our you know weeks for it and people have to grapple with that those ethical elements of all of this,

Well, I think you're gonna increasingly see people charging for the outcome or the end deliverable that, that the, you know, whether it's consulting or anything else you're, I think the by the hour thing, you know, should we, should, we should wish it farewell in good riddance. And, you know, this connects to another. Tussle, which is happening in the workplace right now, which is, we're seeing a lot of companies resorting to this, you know, return to office, badge in, we're going to ding you.

If your people don't badge in, you're going to have to be the bad cop enforcement. And I think it's a real dilemma for companies because if you've got one person in your firm who does something that breaks the mold and it takes them 10 minutes and it completely changes the value proposition in a whole sector, well, that should have a lot of value, even if it only took them 10 minutes. So I think we need to really rethink how we're.

establishing value and charging for it, you know, and it's not going to be ours. And I think firms that are really hung up on hours are really stuck in a mechanical model for how organizations work. And let me fill in that Rita. It's interesting to bring that up because I mean, think of how the consulting model changes, right? So we shifted away from ours because I had an allergy. I just really didn't like it because we're extremely effective and efficient with innovation.

So if we're, if we're looked at, you know, by the hour, we're actually a lot more expensive than McKinsey, but you know, what matters hours or not, no, it's the result, but here's the challenge that we were facing for very long time. It's the purchasing department, right? Cause they have a box to tick and it's, Oh, how many hours are your people spending on this? Now think of AI, that's another, you know, we compressed it to an outcome that we can deliver and guarantee.

But now with AI, the same outcome is going to go down. To, you know, a day or a couple of hours, and then people are going to get even more suspicious. So we already saw that, you know, we're, we've been made way too expensive per hour with AI, you're going to be way too expensive. For per minute, it's like insane, the out output that you can create. So I think it's gonna not just change the way we, the business model of consulting, it's also going to change, you know, purchasing of consulting.

People are going to be very confused all over the place for quite a bit of time. And that's when the interesting opportunities happen is when everybody's confused and then there are a few players who really get it and stand out.

Reminds me of the famous story of the ship builder and the story goes something like this i'm gonna paraphrase it for brevity there's a ship builder and he's called upon because the king, has the ship that he absolutely adores it cannot be repaired all ship builders in the land and abroad are called for nobody can fix it along comes the ship builder he walks in, he comes back out a moment after a tiny little noise.

I'm the ship is working he gives his bill to the king's emissary and the emissary goes oh my god what ten thousand dollars you were in there for like two minutes and the ship the repairman says, i'll give you an itemized bill on the itemized bill it read use of hammer two dollars knowing where to tap nine thousand nine hundred and ninety eight dollars. They'd rather you put in FaceTime and see hours and hours on a spreadsheet rather than what outcome did I achieve? And is it outcome based?

I think what you're tapping on is the difference where, at least for the time being, humans might have a difference. I'm saying might because I'm not certain about anything anymore these days. Is that human ability to, put things together and create something new. So that's not what AI is made for, right? AI is today, at least because it doesn't have the human reasoning ability yet. It can't really interesting new stuff. What it can do is find patterns in a lot of different data sources.

I think what's uniquely human is exactly what you just said. And AI is not there yet, right? So for a while, that's probably where consulting can make a difference. Thanks. Is, you know, knowing how to, how to put these things together. And then it's just one tap of a hammer, right. But actually to get there, that's today. And I'm very careful because today, like how long, I don't know, that's where humans in particular in consulting can play a role.

Of the advantages I have in Accenture is being a big organization. We can go from strategy to delivery, which enables us to shape deals based upon outcomes at the end. So I do think that there can be occasions when clients are not interested in just the report and then find someone else and do something else. But if we share. investment and share rewards.

They're more interested I'm finding nowadays in skin in the game with the consulting partners than simply because the other downside from them is we, you know, if we just do time and materials sorts of models, it also means we take no risk and you take the stuff and if it works great. And if not, thank you for the payment. Whereas skin in the game now means, so we have a hypothesis that we can grow in this particular area.

And Okay, Accenture, if you're so smart, let's go into this together and let's see if that actually happens. And we share the risk reward together. I think that is, that's, that's one piece that I would come with the business model. second I think that I see emerging is, I call them unconventional collaborations. think business is also not going to just be bilateral and this is starting to confuse things a bit.

You've got the technology partners in there as well, which will also contribute money to some of the deals, plus the broader ecosystem and so forth. And particularly when you get into supply chain reinventions or even energy transition projects, there is a certain emergence of a new. Sort of consortium, I think, which is interesting. But there's a whole commercial construct around that in terms of who's who's protecting the data, who's getting the value out of it and everything else.

So there definitely, believe, is a future in consulting and a quite profitable future in consulting, but it will mean unlearning a number of things that we're quite comfortable with and experimenting with new commercial models. Because consortiums don't have a huge history of working out super well. They were being relatively high risk. And so I think we're kind of innovating the way we innovate,

Let me jump in there because there's something that is actually an old theory, but I think it's now becoming very, very much of the moment, which is this whole notion of when do you need a firm versus when can you do market. Contracting, right? And what I've been writing about for some time now is increasingly, we're seeing more and more things able to be managed through a marketplace, like type of contracting that used to have to be managed by a bureaucracy or by a firm.

So if AI allows me to have both sides to a transaction to have the same information. information transparency. I know what I'm giving. I know what I'm getting. I know what the costs are. Then you can make that a marketplace transaction. And what we're seeing now is that in more and more places companies are actually behaving much more like markets than they had before.

And that gives rise in turn to this notion of ecosystems competing with ecosystems of individual gig people kind of plugging themselves in. The other thing that I think is really important, really interesting is if you look at the fate of organizations like Chegg which is an educational test prep, learning environment. It has been in very short order, completely decimated by AI.

I mean, it's shares have just gone straight down the hill because people are now saying, why do I need then when I can just go directly to the AI and ask it myself. So I think you're going to start to see the rise of much more marketplace contracting, a lot more transparency around costs and prices and who gets benefits.

And those that are able to navigate that will, I suspect do pretty well, but those who on imposing a model on their customers, for example, that customers aren't enthusiastic about, that's, that's just not going to work. I think Rita, you're opening up a really interesting topic with the theory of the firm. There might actually be completely new types of. businesses emerging.I mean, think of it. I met a couple of AI founders.

They're saying, no, no, I'm going to go for a small firm, but with AI agents, I can still have a big impact. So what you're going to see is actually some companies that are tiny. but are unicorns because they know how to use AI to create massive impact. So it's going to be a very interesting breed, at least in the short term, till we figure this all out, a breed of companies emerging that with very few people is going to create hundreds of millions in revenue as is mind boggling, right?

Thinking of that, because you're going to have completely different constructs of collaboration between. Very large companies, very tiny ones, but with the impact of a large company. So I think that bringing up the theory of the firm is a pretty interesting provocative thing because that is definitely going to happen. Whole new models emerging.

That's gonna have a massive effect on if you push it down into the education system if like we're still dealing with this being trained for a steady state environment that doesn't exist anymore and it's gonna unlock kids that were never unlocked before. Kids that are almost dampened by the system and depressed going into having to work in their little block inside an organization, it means that you're hiring different people as well.

And I'd love to us to share what type of people, what type of characteristics and attitudes are you hiring for these days? Just a quick detour on what you just said, because I participate in a study by SAP for a conglomerate of companies and looking at AI and they were looking at specifically what's changing. Same day I had one on human intelligence. So kind of my brain was going. They were asking great questions. I never thought of.

But the educational system, I don't know if you know, the school of life by Alain de Botton, modern day philosopher, but we're not educated to do anything that is relevant, you know, for humans today and for society. So basically, I mean, my kids hated school. I hated school. Like I'm unemployable. That's why I'm an entrepreneur.

What we do not educate at school are the human aspects. How do I actually. How do I understand my emotions, deal with my emotions, you know, regulate my emotions, how do I have a conflict with colleagues, with friends, with partners and resolve that without, you know, getting into ideology and all of that, what is uniquely human, which AI cannot do today. is not taught at schools.

So like, if you were looking for those profiles and we actually hire, unfortunately, those profiles don't really exist, you know, in a CV yet, but when we, when we hire people, we test for one also uniquely human ability to actually receive and embrace feedback and do something with it. The ability to take it on and change. AI is today not extremely good at evolving and becoming something better than it is today. Yeah, we're training models, but we're training them, right?

It's not self reflection. So when we hire people, we screen for people who are able to take on feedback from others. We have methods to do that. Because we know that if you do not have that, you can't have constructive conflict in an organization. So those unique things, to date, AI cannot deal with those, right? That is uniquely human. Bringing things together, but also to evolve.

So, we do actually screen for that, and I just today made that link with AI, I didn't realize that we're actually screening for humans, not for, for AI systems. But there, there are a couple of those things that I do think. AI won't be able to conquer for at least five years. Anyways, five years is already a long time knowing the speed at which this is evolving.

It's a reverse Turing test. Are you really a human? And by the way, I just want to say, Ryan said the word reinvention, all these great people are involved in the reinvention summit next April 29th and 30th, I'm so delighted they're going to be all part of that. So really looking forward to joining you all there. I was going to say to you, I lecture in Trinity college here in Dublin.

I'm for years i've been running this course i call emerging trends and technologies and i change everything is called a transformation for organizations and individuals. I've been telling about the impact of a i have been telling how habits form and how the brain creates connections and how then you need to be able to rewire those connections should the business world change i'm one year.

This is not too long ago, three years ago, one of the kids left the tinfoil hat on my desk to suggest I was a conspiracy theorist. I thought the world is crazy. This year though, I have to say, this year was a massive change. They were, they were hanging on every word because they could see it. And I totally get that people couldn't see it. And I don't think I knew how quickly it would actually change the business world. And it is causing massive change on the types of folks you have.

I've noticed that with your business model changes that you've all slightly changed a little bit more platform a little bit more different type of person in your organization as well and. I'd love you to share a piece on that because this will help everybody listening to the show On your skills point earlier and to that question in our life trends that we released recently, one of them is around the dignity of work and a real discussion around that.

And half of it was in part of what we were mentioning is there's a lot of rhetoric about humanizing tech, but what we're watching is let's not dehumanize humans. because there's a little bit of that happening amongst all of the austerity globally at the same time. And it just pushes back into this.

And also when we go into these more intricate deals or consortiums or new ways of doing business, at the end of the day, there's an interpersonal trust required in order to make some of this stuff work. It's not the lawyers or if we wait for that, it's going to be ages. a lot of interpersonal trust related. So we need people that are able to. develop trust and trusted relationships.

Consultants have always needed that with clients, but I think it'll be an even more defining characteristic going forward.

And I want to add, we, when we set up the Dock, our global R& D center in 2017, I co founded that. And it was, of course, full of technologists and folks with specialties in AI and a whole design firm, Fjord, at the time that we had brought in, they were part of our organization. But it probably, I think it was three years ago, we created the Human Sciences Studio, which is a group of 20 PhDs in social sciences and humanities.

working for Accenture, next to our technology people and our business innovation people, because the questions of ethics or why some of our products don't work in the home because people are afraid of privacy.

When people talk about fairness, I find it interesting, you know, the engineers will talk about algorithmic fairness, but If you bring in someone that's actually studied the philosophy of fairness, and by the way, we've done this partly out of we should be doing, but it's also to accelerate innovation.

I'm sick of innovating in ways where we stop because we can't see the ethical dimensions, or we stop because we can't get the interpersonal social psychology of a supply chain to work so that the blockchain works. So we're trying to bring in more of that perspective out of the interest of trying to accelerate the process of our new products and services to go live and market. i found that interesting Rita with your crew as well that the Valize crew.

i've had the pleasure to work with Scott and Kes and Ron of your crew and they're all so different in that they're. The trait that I would say that's common is all is very human, but also very curious. And that curiosity is something that you can interview for and has been hitherto underappreciated in the workforce. Like Alex was saying there, you're, if you think of the Janus face, your Explorer face is kind of, you're hiding it in an organization. You go, I can, I can take orders.

I can do what I'm told. But actually this Explore side is so important for people today. Well, and I think that the premium on that is only going to go up uncertainty increases, because, as Alex already said, when you're facing genuine uncertainty, you just, it's not, you know, it's not an unambiguous problem. You just really don't know. And you can't put odds on things. The only way you're going to make progress is by learning. And I've been writing about this forever.

So I think curiosity is, is absolutely core. I also think that that forming those trusted relationships is, is key. I was just recently at Constellation Connected Enterprise, a conference that Ray Wang's group does out in California. a huge theme of the whole conference was how do we trust these things? But Like it gives us an answer, but how do we know the answer is trustworthy? Or how do I know that it's safe to put my data in with everybody else's data?

Is that not just going to give my competitors insight into what I'm doing? So there's just a whole thicket of trust issues around AI. And when you think of trust, right, that's a very human to human quality. And one of the things I'm concerned about is with so much distrust in our institutions, some of which has been deliberately designed.

You know, there's, there were almost at a, at a Tower of Babel where everybody's talking slightly differently and no, nobody knows who the trusted arbiter is going to be of those things. So I think it's a huge issue. And, what do we find trustworthy? You know, it's a really good question.

Really that, that thing you've suffered from this. So we see artists, for example, given out about, Oh, well, it was my art that trained the AI trained these language models, I deserve some type of, compensation, or I'm just annoyed. Cause you used my stuff without telling me.

And, and this has happened and I'm sure it's happened both of you with your prolific writing is that you've trained models and you don't even know you had, but it really, you had an instance where this actually was sprung upon you. Oh, yeah. So I was some astonished to find myself being listed on the Board of Innovation's website as an AI agent.

And it was like the headline was something like great strategic advice without the big price tag, completely without my permission, completely without my endorsement. And I probably without the endorsement. knowledge of the people running the company, I would imagine. At least I hope, I hope not. So I, I went back to them and I said, what, what are you doing? And it all got taken down and I got told muffle, muffle. Well, it's, it was an intern's idea, blah, blah, blah, blah, blah.

But you know, that's just a very early example of the kinds of things that we're going to be seeing. And this is back to this idea of, you know, How do you trust? And a fascinating conversation with this CEO of, of Klarna.

And he said, one thing that we are going to need, and we need this globally, is we need some electronic version of a passport where I can tell if I'm actually speaking to you versus the human versus any kind of endless numbers of avatars or doubles or, digital twins that we might have. And right now, I don't see any infrastructure for making that happen. And If you don't have that, am I really, are we really talking to each other or did I just send my avatar to hear it?

And I'm fascinated at the prospect that I could send my avatar to a zoom meeting and you could send yours and we didn't have to go to the meeting at all and they'll just figure it all out. It's amazing. I Alex, your point about the, the solopreneur unicorn , and on your LinkedIn page, it has like 10 people work for you, but they're all avatars. They're all like these generated images of like, we're going to see that.

And, you know, people are going to be signing up LinkedIn profiles for their avatar now. What the heck's going to happen in that world? I to Vala Afshar of Salesforce, and we were talking about AI. I think it was, Two years ago or quite, quite a long time ago, and he was telling me, you know, at one point that what they're discussing already is, you know, how is it going to be when you report to a AI agent, so your boss is not going to be human anymore, right?

So that brings up what Ryan said, you know, about like, okay, that's a pretty challenging kind of ethical, human, like there are a lot of things that are involved. What that all comes back to is the ability to deal with change. Just to come back maybe to what you asked before about characteristics we are going to see less managerial talent, talent that can execute simply because change things are changing even faster. And I know we always say, I think.

Change is faster, change is faster, well it actually is getting a lot faster. And the pieces that are more management related, that we execute, are getting smaller and smaller. So the type of talent that we're going to need in companies going to be increasingly around people who can deal with change. And, I was saying before, and I don't take this easily saying a lot of consultants are going to, lose their job. Those are lives that people are going to be scared.

And not every country has the right kind of system, to help people when they're 30 years old. Well, what are they going to do until the rest of their days? So. There's going to be an enormous amount of change and, that people are going to have to be able to deal with change more in particular people who were never used to dealing with change. They were at the top of the food chain, and that's the advantage, you know, looking at emerging economies, a lot of those people had to change.

There was that was just pure survival. And looking at Europe, well, we should have probably changed a while ago and we just are not very good at dealing with change and that goes down to institutions. So I think the big one I'm, you know, kind of curious about is how are we going to deal with this as institutions employing people, but then even countries. I mean, this is a massive change that is going to go further. Again, I don't like talking about, Oh, this is crazy.

This is big, this is massive. Yeah. But this is something that will require quite substantial wise government intervention. I'm an entrepreneur, you know, less regulation is often better, but I'm also, a father and a human being in society. This without the right regulation is going to go in the wrong direction. So this is huge. There's a lot of work that we're gonna have to do in the next couple of years. Yeah, I mean, let's just take one specific example.

If you look at all the translators that are employed in Brussels to translate all of these European, Union documentations backwards and forwards, well, their jobs are 95 percent now able to be completely replaced. What are you going to tell somebody who's in their fifties? And that's what they've spent their career doing, right? You know, developing these really advanced skills, , translation is something the machines are very good at now.

Maybe the last 5%, you do need a human laying eyes on it, but the bulk of the routine translation stuff. And that goes for a lot of things. So I'm talking a lot with clients in the media space and all of their clients are saying, Oh, you know, I can just have AI do, you know, the first cut of a press release or a bit of whatever. And you still need the humans doing the imaginative creative stuff, but where maybe you needed 50 of them before, maybe you need one or two now.

And so I think it's a really interesting dilemma, , like, if you think about who writes the press release, right, it's not the partner at an advertising agency, it's the intern and, and, you know, today AI is probably better than the intern. And that leads to all kinds of discussions. Right. Yeah. And then the other one is that, so there's the effect that a lot of jobs are going to go away, but there's also the opportunity side, right?

So our joint friend, Marshall Goldsmith had already created the Marshall Bot quite a while ago, and he's the first to say, well, this Marshall Bot is actually getting better than me. In particular, since Marshall Bot speaks way more languages than I don't know how many Marshall actually speaks. Well, let's not make that public, but so this is crazy stuff that creates whole new, what's allowed, what's not allowed, how do we help transition? Where do we put breaks on the transition?

It's just a lot of open questions and it's new for everybody. Like beyond the technology part, technology part is known to a small group of people who are going to run the infrastructure. But everything else is new, like how we're going to create value with this, positive? destructive? Like, all of that is new. So this is new for everybody.

There's very few people who know what they're doing right today, which makes it a little bit more dangerous than if we had people who knew what they were doing. I'm not talking about the infrastructure layer, the technology part, not new. But on top of that, what we do with it, that is completely new to everybody.

I think the systems part is really what I, I'd push, you know, that on the government level when we're talking about societies, but then also in, in organizations, right? So the challenge already with simple innovation, not evenhinking AI, is that today companies, it's not the teams, the ideas, it's the governance structures. So today ideas won't make it because leadership is not creating the governance structures to take advantage of the opportunities that are there.

It's not a technology problem, it's not an idea problem, it's not a talent problem, it's a lack of governance to embrace innovation. So if we really want to get the best out of AI, it has nothing to do with technology, like zero. It's the ability. of an organization as a system to embrace change. And that's leadership.

So, you know, the Rita McGrath test is great, Rita, when you say if the leadership doesn't spend 20 to 40 percent of, I don't know what your numbers are, I have my limit there, they don't spend that time on innovation, guess what, not going to happen. So if leadership doesn't spend 20 to 40 percent of their time on understanding how, what they need to do system wise, they're To make AI happen is not going to happen, right? So it's a governance challenge within organizations.

And then of course, within countries and society. And I'd add one more layer onto that, which is an old problem, but a thing that I think is new, you know, in, in the past when we had much more hierarchical organizations, right. There was a human development. portion that came along with the HR systems, which is, you know, when you first got promoted to be this level, you got enrolled in this program and you had a cohort all across your company.

And then as you moved sort of up the organization, there was training at every level and you had your support network. And I see all of that just. Fraying in so many companies. And to me, the, the thing that just symbolizes the end of that era was when General Electric very quietly sold off their Crotonville facility. I mean, this would have been unthinkable even 25 years ago. And so what's happening is now that the demands on leaders and managers have been vastly increased.

The complexity they're dealing with is vastly increased, and the support that they're getting is vastly decreased. And it really should be the other way around. So one of the things I'm exploring is perhaps an alternative structure is to really think about peers advising peers, where, if the company is not going to build the support network for you, maybe there's a way that you can help build it for yourself by really engaging with people who are wrestling with similar problems.

And I think that's in its infancy in terms of a model, but I think we need something, I mean, I talked to a lot of senior leaders and they're lonely, they're anxious, they're scared, they're on the brink of burnout at all times. They're hearing it from their overlords. They're hearing it from their people. They're caught in the middle. It's a really, really tough place to be right now.

The last thing i'll hand over to everybody else to maybe give your final piece of advice but really, what is the idea of the show is to share brilliant people's knowledge that's what this entire show is about because the whole idea of pulling away and as long as i'm ok. Doesn't work as a society. And I don't, I don't mean that in some philosophical way, Aleksandr Solzhenitsyn, and it's in the Gulag Archipelago guy, , he said that "well fed horses don't rampage."

And I always have that in my head. And a guy you'll meet at the reinvention summit, Charles Conn, the Patagonia chairman. He and I have these chats quite often that , you know, we talk about S curves society's at this point at the top of an S curve. And we need to work together in order to be able to navigate the jump otherwise it's gonna be chaos and we actually need people reinventing and thinking differently and rethinking at this point.

More than ever before because of the speed of change so that's why i'm so grateful for you guys coming on the show and sharing your points cuz we need to share this knowledge I thInk AI is a big deal, because it's augmenting a lot of other stuff before. And so I think it should be taken seriously. And then I think in that world, one theme may be on the human dimension and what does that mean for us as consultants? And, I just wrote the word bridge builder.

I think it's building bridges between partners and ecosystems. I think it's building bridges. It's well at the systemic level between the haves and have nots, and to make sure we don't make that gap even wider. And I think it's bridge builder between the disciplines, between the creatives and the business folks, and the commercial folks, and the legal folks, and the technologists, and that we bring people closer together and drop some of the silos and companies.

I think that would be my overarching theme I think we need is more bridges, in the coming weeks, months, and years. yeah, 100 percent with what you said. I want to just build on what Rita said around training, right? And, what people are sent to business school to learn something, but actually create zero change. That's the unfortunate part. So it's more seen today. Oh, I go to this business school. It's more like a vacation. It's a reward. You made it so far.

Why don't you go, , a week to whatever Stanford great intellectual experience? change doesn't happen that way. So I think this shift understanding training doesn't help. I mean, Steve Blank famously says when your innovation department has become your training department, you're doomed.

So I think that the ability to experiment a lot more with new things and AI and gen AI is a big one now, but that goes for any innovation and that's where we really try to push with strategyzers moving away from training because it doesn't create change. Towards a real process of experimentation and change to embrace that because that's how the solutions are going to emerge. That's how you get people to change by actually doing real work. Do they need to learn in the process? You bet.

It's not focused on learning. It's focused on the outcome and you get the outcome by experimenting with these new trends. And if you don't experiment, you can't learn. So it's not short learning is not the goal. The goal is outcomes and change. So I think we just need to shift more towards trying stuff. Analysis is not going to solve anything when it comes to the new, the new stuff can be overthought. You're still not going to decrease risk.

The only thing is trying out and starting, and that's the entrepreneurial discipline. So a lot more companies are going to have to become more entrepreneurial and do stuff, try stuff. where they don't know if it's going to work, but that's how they figure out what works. Yeah, and from my side, I would say I talk about strategic inflection points as something that's a shift in the environment that makes a 10x shift in what's possible happen. So about 10 times faster, cheaper, smarter, whatever.

And we're right on the brink of a major inflection point in how organizations need to be organized. if you think about most of our, especially larger organizations, they're still really organized around a hypothesis about bureaucracy. And we've forgotten now, you know, bureaucracy has kind of become a swear word almost, but we forget that when bureaucracy was first invented, it was an improvement to the previous state of affairs, which was really craftsmen and guilds.

And there wasn't a lot of consistency and bureaucracy was an attempt to impose some science on that. But now we're getting to a stage where, for example, take silos. right? The reason silos work in a bureaucracy is you take all the people who are doing similar work and you clump them all together in one unit. Well, today that's not necessary anymore. And as AI has made all those functional skills readily available to anybody, we need a different center of gravity for organizing.

And I think that's something people have not really understood the implications of. So I'll give you a you know, an everyday example. I work with a lot of companies and pharmaceuticals and banking and stuff. And for many, many years, everybody's career was defined by how far up the hierarchy you went, right? So if I got promoted, it was to the next level.

And now when you've got hierarchies flattening and people, you know, whose value is really determined by what their areas of responsibility are, rather than by what hierarchical title they hold, there's a completely different career logic happening. And I don't think many people are ready for that yet. lots lots of food for thought guys i am so grateful to you so i'm gonna come around and say ryan shanks head of.

innovation for Accenture for EMEA alexander Osterwalder ceo Strategyzer Columbia professor and author reid mcgrath thank you all for joining us. Thank you thank you