Episode Transcript
[00:00:00] Good morning everybody. Today I want to talk about an emotional work related topic, and that is the issue of fear.
[00:00:09] You would imagine that in a work environment we don't really need fear as a tool, but it really is an issue in today's world and it's really always been an issue at work. So I want to give you my perspectives on it based on a lot of research that I've done and some research that small company called Agency 150 just did of about close to a thousand professionals in their discussions about their feelings about AI. So first of all, at a high level, the way companies and organizations and businesses work is the people part of the business is typically used as a way to deliver value and services to customers. So obviously, if you're a nurse or a retail worker, or a software engineer or a marketing professional or an IT person or a security analyst, your work is delivering value. And the company as an organization is making money from your efforts through its business processes, its brand and pricing power and other things. So we are in a sense a part of the product or the service of the company. And of course, the most dramatic example of that is a professional services company, a consulting company, or maybe an accounting firm where every individual person's hours are billed at a rate and that rate is four to five to six times higher than what that person makes. So the company's making a big profit. But of course it's not really that simple because as companies grow, it's hard to define the incremental value of each person because a lot of the jobs that are created are support jobs around the value creation jobs. So is it the accounts receivable department adding revenue value? Well, yes, in a sense that the faster they get people to pay their bills, the better for the company. But a lot of their work is not just focused on speed of payment, it's focused on bureaucracy of payment. And there's, you know, we all have this piece of our work. It's definitely not customer value creating. So if we want to keep our jobs, which most of us do, and we want to add value in our jobs, we have to try to avoid becoming overhead because, you know, an overhead job might seem important, but at the end of the day, when times are tough, those the jobs are going to get cut. By the way, human resources is a good example of this. And we could have a long debate about whether human resources is value creating or administrative, but the reality is it's probably somewhere half and half. And one of the reasons that AI is so important in HR is it gives us the opportunity to be much more value creating, much less administrative. Okay, very simplistic idea, but very important because everybody's in a debate right now about how to eliminate all of this non essential, non value creating work with AI. Now, before I go to the next part of the discussion, let me add a little parenthesis around that idea. Is automation simply a way to eliminate routine work? Well, obviously when you think about all of the other stages of automation over time, that's not true. Most automation is used for value creation. And so the people add value in new ways, not by eliminating routine work. Now, I don't think people understand that yet about AI, but this is true in every other automation cycle. The story that's the most interesting that we'll be writing about in the new book I'm working on is the history of electrification. During the days of steam powered factories, all of the machines in the factory ran from the steam engine and the RPM or speed of the speed engine. The steam engine rather powered everything, so everything had to run in synchronous manner because you couldn't stop the steam engine and restart it or make it go faster and slower without everybody being affected. Because there were all sorts of pulleys and gears using the power of the steam motor, the torque or twisting power. When electric motors came along, people discovered, and this took a decade, by the way, that every electric motor could operate independently at its own speed. So we could create factories that had highly optimized internal operations between the different parts. That wasn't eliminating the routine work of the steam engine that was doing it in a better way. And that's what's going to happen with AI. Of course, once we really get AI iFied, we're going to have highly optimized sub processes in the company operating at a much faster rate of speed or quality or customer service than before. For example, an AI scheduling system in a hospital doesn't just reduce the need for a bunch of people doing it. It allows nurses to get a better schedule and swap their schedules faster and maybe get more flexible schedules and many, many other things that were not possible before. By the way, we're working on a big body of research in frontline work, and within a few months we should be able to produce and show you some amazing things that you need to consider amongst the frontline workers in your company, because we all have frontline workers. Okay, so going back to the original discussion, given that the AI world is relatively new, a lot of the narrative that's coming from C level execs is about cost reduction. And so what they're doing is shifting costs from labor to capital. In other words, they're buying more equipment, meaning IT equipment and software and less humans. Now I did some analysis this week. I really wanted to get my head around these numbers. And it turns out in the United States, if you look at it spending not including the big hyperscaler AI platforms, it's about 23% of payroll. So somewhere in the United States around 87% on average. And it varies by company of human capital related spending goes to humans and about 25, 23% goes to tech. And that's sort of a 4 to 1 ratio. If you tilt that up to more tech, you have less money for humans. And that is what is happening. IT spending not including the hyperscalers is supposed to go up by about 9% this year. The IT AI stuff, the tools by the way, a lot of that's IT services but the IT tools part that are allocated to AI is going up by 60 to 70%. So we've got a budget in our companies where we're buying new things for automation, expecting the automation to reduce the number of people we need or improve the revenue. So we as people are caught in the middle and we're caught in the middle in three ways. Number one, we don't know what our new jobs are. We don't really know how to use AI completely yet we know lots of good things IT can do. Those of us that aren't white collar workers, we're not sure if this is going to be good for us or not. So there's this general consensus amongst the 60 to 70% of people but were surveyed this week that maybe AI is not going to be good for me. Right now nobody knows for sure of course, but this is the way they feel. So that creates fear. The second part of the fear factor is who's responsible for figuring out how to use this stuff? Me or is the company going to tell me? Well, there was a survey that Adeco did of more than 10,000 organizations and almost 75 to 80% of the sea levels believe it's the person's responsibility to for figuring out how to use AI. In other words, it's your job. Well, you know, I've had a lot of time to play around and study it, but the average worker has no time to do that and they're very unlikely to automate their own job to a large degree on their own. Some people will for sure, but that's a very sort of scary idea. So if you don't have a plan and you don't have a strategy and you're not giving people direction, you're creating fear and uncertainty. I won't mention the name of the company. It's a well known company, software company, with about a thousand employees, but very well known. They've been in the press a lot. And I met with the Chro the other day, we had a long talk about this. She said, yeah, we're all over AI, but our CEO is so gaga about AI, he's told everyone to use whatever they can to automate their job as fast as they can, or else we're going to cut their size of their teams. And I know another software company with 11,000 employees going through the same thing. So that's the second issue is this fear of not knowing how to do the work that we've been asked. And then the third fear is your personal skills. If you're a software engineer, I would imagine right now you'd be a little nervous. I actually talked to a very senior exec the other day who has a child going to college and she said to me, she said, I told you, my daughter or son. I forgot if it was a son or daughter. You can study anything you want, but don't study software engineering because those jobs are going to be automated. That's a lot of people. That's 6, 7, 8% of the workforce. Not quite that much, but it's in the 5 to 6%. They should be worried too. And we know that this happens because I remember software engineers that did cobol in the 1980s who got put out of work after the Y2K thing was gone. And many of them never got retrained. So the third fear factor we're dealing with is this fear of personal obsolescence. Now, you know the way fear works is when you're afraid, you actually don't. You might work harder, but you're more frantic, you're more distracted, you're less creative, you're less collaborative, you're probably gonna make more mistakes and you're probably not gonna be healthy. So fear is not a good thing. I know there are CEOs who love the idea of it and lots of teams and companies thrive on it. I'm reading this wonderful book called Apple in China about how the, what the demanding culture is like over there. Meta has a big study just came out from one of the employees at Meta on the culture of the AI group. How much uncertainty and fear and lack of strategy they're suffering with. So you know, a little fear is good because it keeps people on their toes. But fear for a positive way is more of an inspiring fear. It's really more energizing and debilitating. And these three factors I mentioned earlier, eliminating jobs, not knowing what to do and worried about your future as IT person or a worker, are very debilitating trends. Now, I wouldn't be doing this podcast if I didn't have a point. And the point is that this fear factor is very high right now. It's higher than I've ever seen it in the data that I've looked at. And I think there's a couple things going on that are causing this and we have to be aware of them. The first is that the media thrives on fear. So if you look at the headlines of the news stories and the podcasts and the articles and things that you get, at least 3/4 of them are driven by some fear headline to get you to read the article. So when the tech bros talk about elimination of jobs and how rapidly their tools are going to transform work, the natural story is there's not going to be enough jobs. We're going to have high unemployment, young workers can't find works anymore, et cetera. I mean, for example, this last week or so there have been a whole dozens of articles about how young workers can't find jobs. And I've studied this and I've written about it and we're trying to get hold of some of these reporters. That's actually not the problem. There isn't a lack of need for young entry level workers whatsoever. There's a huge need for that. The reason they're not having an easy time finding a job is because the economy's slowing down, companies are spending more money on capital, and it's always hard to find a job anyway when you get outta school. But it's a lot better headline to say something inflammatory like young worker jobs are going away. And that's also being fueled by the tech leaders who are promoting how quickly their AI is replacing people, and the Wall street analysts who are asking CEOs to tell them stories of AI transformation on their quarterly calls, hoping to hear that they're eliminating the number of people. Now, I'm not a Wall street analyst, but I'm a pretty good analyst. And the number of people in your company is not a sign that of whether you're a good company. I mean, if you have too many people, sure.
[00:12:17] And a lot of companies do have too many people. And the reason they have too many people Is because the org design and the org structure and the culture often reward hiring over development and growth. And I've talked about this many times. We need a talent density operating model for companies where we don't just hire more heads to get more work done. Because the model of growth for most companies is linear growth. More people equals more revenue, equals more profit. Well, that's not true when you have superworkers. Superworkers change the equation to one of talent and alignment quality, not quantity. But anyway, so that's number one is all that press. The second reason I think in the United States, but a lot of you probably feel this, that fear is high, is the politics in the United States are just frightening. Now I live in San Francisco Bay area. Yesterday there's a video on Montgomery street, right in San Francisco of a bunch of ICE agents going into the immigration building grabbing somebody. They're all wearing black masks by the way, of course, bulletproof vests and have no markings on their clothes or their cars, grabbing people and dragging them out and putting them into cars. And of course in San Francisco there's a protest and all the protesters are trying to stop it, but they can't. So one of them gets partly run over by a car. And it's all chronicled on video right here near where I live. Whether you're Republican or Democrat or for immigration or not, this country was founded on immigration. The greatest thing about the United States is that we can, you can become a citizen here through birthright citizenship. And that is, you know, going back to Ronald Reagan, one of his most interesting, most inspiring speeches about that, including George Bush and others. So this has been a right wing value for a long time. But we are living in a world in the United States of fear of the government, the federal government. And all you have to do is turn on the TV and you'll see that. And then the third sort of fear is driven by personal work and personal experiences coming out of the pandemic. I think we still have a hangover from the pandemic. A lot of the data that came out from the Agency 150 survey was about remote work, back to work, hybrid work. And most of you know that a lot of employees were basically mandated by their bosses or their companies to get their butts back into the office or show up three days a week or do this or do that because everybody was tired of this remote work, semi disconnected experience. And on that topic, we're going to do more on this, but we believe, and Julia, our lead analyst in this area also believes this, that hybrid work is great and there's nothing to be afraid about it. And if you manage it well, you don't have to force people to show up all the time to have a great experience. But that creates fear. And then we have Doge and the stories of federal layoffs in the middle of floods and hurricanes and fires, and that creates fear. So, you know, there's a lot of things that would make people a little nervous about their jobs and their lives, especially if you're an immigrant worker or maybe you don't have legal status for some reason. So, yes, there is a lot of fear now. So if you think about fear as a continuum from negative or dysfunctional fear to inspiration and passion, we, we have to sort of decide where we want to fall onto that range. And one of the, I think, traps that HR people fall into is let's tell everybody it's going to be okay. Let's tell everybody we love them, let's tell everybody we're going to take care of them. Let's be very nurturing and supportive and let's make people feel good. I mean, that's all great and we all love that as people. But that does not always create a dynamic, high performing company. I think most of you would agree that the right way to build a work culture is a balance between performance expectations and support. I mean, that's what Irresistible Book is all about. And the new book that I'm working on now is going to build on that. In the age of AI and if you buy into this idea of superworkers, we become superworkers or prompt engineering experts, as I talked about last week, or whatever, by feeling a little out of sorts and saying, oh, I got to learn something new here, I got to go back to school, I got to rethink what I'm doing. I need to maybe look introspectively at what I've been doing with my time. And maybe I am wasting a lot of time on something I shouldn't be doing anymore. And there's a little bit of a fear factor there. So don't jump to the conclusion that by being nice to everybody, everything is going to get better. Because some of the companies that have been the biggest failures, I'm not going to mention names on this, are companies where everybody was so nice that nothing, none of the difficult decisions got made. And one of our clients, a large CVG company, who I think they'd probably rather I not mention their name, has a big program going on about speaking difficult truths. And that's Their number one mantra at the moment is encouraging people to speak up in a positive and supportive way, of course, on what's maybe not working and what we need to do about it. And that can be done in a non threatening way, of course. And it's sort of an essential issue. So don't assume that you're going to eliminate all the fear just by being nice. The second sort of solution issue is this uncertainty. And I can't tell you where AI is going to go, but I can tell you one thing, this is a new world. All of the technologies in the past that we've had at work going back to the electric motor took time to play out and they had to experiment with early technologies to figure out later how they could hyper optimize them. So if you wait for this all stuff to shake out, you're going to be way behind. We're in an era of experimentation and that's very different from where we were the last two decades after the Internet was a lot about implementing technology or integrating technologies, not innovation. And in fact, you know, one of the things that I think has changed the most in my career is the way IT departments have become so passive. When I was a young guy at IBM, the IT departments were building all sorts of software systems and applications all the time. I mean, IBM's business was selling mainframes and software tools to help people build their applications. There were very few packaged applications. And then we went into a 20 or 30 year period of everybody buying big packages eventually on the cloud, so we didn't have to build anything. Well, I really do believe very deeply that AI is going to change that a lot. And you're going to be building stuff inside of your company. This idea that transformation is a training problem or an implementation problem. No, it's a creation problem. It's a exploration and discovery problem. It's a problem of rethinking the business processes in your company. And we're really working hard on something you're going to like, which is a new model for business transformation around AI that takes our four level model to the next level. Because when the technology is more of an amazing tool and less of an off the shelf application, now you get to say to yourself, well, how do I use this tool to really make things better around here? And a lot of that's going to be iterative. I mean in the beginning we will do automation stuff and later we will do re engineering stuff. You can listen to the podcast from Josh Newman at wpp, the podcast on standard charter I mean, we've got lots of examples of this now we can share with you. And some of the smart people we talk to are coming up with these ideas. That means that the fear factor should go away because if it's creation problem and not an implementation problem, we want people's ideas, we want people to co design these things. We want to hear from the frontline workers what would make the customer experience better and therefore how should we use AI in the best possible manner. That's the type of work that certainly shouldn't make people afraid, that should make them feel inspired because they're helping to re engineer the customer experience on the company. So you know, this idea that we're going to implement, quote unquote, AI is just not the way this is going. And you know, I'll give you a good example of what not to do. Back in the days when I worked at Sybase, early 2000s, there was a company called Siebel Systems. This was before Salesforce had really come to market. And Siebel Systems was Salesforce Automation. It was not called CRM at the time and it was a big, complicated, clunky thing. And what you would do as a salesperson, you would type all your information into it, who you're calling on, what meetings you're having and all this stuff. We didn't have that much email integration like we do now. And we were at Sybase and the CEO of Sybase was friends with Tom Siebel and Siebel convinced him to implement it. So I was in the sales organization and there was this big massive announcement that we're going to implement Siebel and everybody got all excited and then we had weeks of training on how to use it. We never had any training on why we were using it, just how to use it. This sounds like sort of like a workday implementation. Here's how you use workday, not why do you use workday or why we bought workday or what is it going to do for you to make your job better. But here's how you use it. And you know what salespeople are like, they're pretty impatient. And we sat there through this thing, the training, it was in class, a lot of it. And then we went back to our offices and I would swear that within a week no one used it at all. It was just too hard to use. It didn't really add that much value and the company had to write off of millions of dollars of investment. Back in the days when millions of dollars was a lot McIeble essentially disappeared as a company. By the way, somebody bought them. It might have been Oracle. So this is not that. This is creation, this is co creation. So there's an energizing experience there to overcome fear. And then the third thing about fear is creating a scaffold of trust. And I got a lot of inquiries about this this week. So I want to go back to something I've talked about before, which is trust. Many, many of the engagement survey companies, great place to work. Gallup, Watson, Wyatt Watson, Towers Watson Towers, Willis Watson, all of them. I've done many, many years of study of what engages people at work. And there's a lot of things. We have 24 elements in our irresistible model of different things that contribute to your engagement at work. But when you start looking at engagement as productivity and growth and progression, what you find is it's trust. Do I trust my boss? The company?
[00:22:41] The business, the industry? Do I have a sense or a feeling or a pattern of positive growth in this job, in this career, in this role? And if I do, I'm. I'm hanging around and I'm strapped in. And if I don't, I'm looking around, I'm checking out, I'm quietly quitting, whatever. And trust comes down to three essential things. Number one, the competence of the leadership and competence of the company. Do the leaders know where they're going? Do they know what they're doing? And do I, as an individual believe in them? And that's, you know, problematic because sometimes the leaders don't know what to do. But if they are perceived to be competent, then people trust them. Going back to my career, in my days at IBM in the 80s when I didn't know a heck of a lot about business, we had originally a CEO by the name of John Akers and then Lou Gerstner when they were turning the company around. But for the first, you know, six, seven, eight years I was there, I loved the leadership at IBM. I loved listening to them, I loved learning from them. I trusted them. The technologists at IBM were brilliant. The ideas, the culture, I just adored it. And yeah, they weren't perfect. They made a lot of mistakes, but I trusted them because they appeared to me to be enormously good and competent at their jobs. And they had built a company that was at the time unstoppable. So that's number one. So if your leadership, including you as a manager, are deemed incompetent, people won't trust you. Number two is ethics. And ethics means fairness, it means inclusivity, it means Transparency, it means openness, it means doing the right thing all the time and thinking about the customer and the people first. So if you're Zuckerberg or Meta and people find out that you're surreptitiously monitoring their web browsing, which by the way, Meta has been discovered that they do this, or stealing data from your computer, that's not ethical. It might be a good business practice, but it makes people not trust you, including people in the company. And so some percentage of the people will disengage from that. And there's lots and lots of examples of unethical behavior, including things like not taking care of safety problems and quality issues that are real. And by the way, when I was reading this book about Apple, it's an amazing book, one of the best books I've read in a long time. Business books. The thing you kind of pick up from Apple is throughout the entire history of the company, and it's basically the history of the whole company, they've never lost their focus on the meticulous engineering of their products, the quality. There's very few products from Apple that have been poorly engineered. Some of them are not exactly the perfect product market fit. But the engineering quality is exceptional. And it took them a lot of time and a lot of work and a fascinatingly interesting operating model to do that. And so, you know, if you read that book, you can learn more about it. And then the third part of trust is listening. Do managers and leaders listen? Because companies are complicated. They're messy. Frontline workers see a different experience than back office workers. And managers and leaders don't really know what's going on at the nursing floor or in the hospital room or in the retail store or with a given customer unless they're listening to people. And when you feel that people are listening to you, you trust them. It's relationship science. It's probably behavioral science. So if you want to reduce the fear factor, tweak up the trust factor. Now that's not saying you need to know the answers to all the questions. We don't. I mean, in our company, we're very high performing company at the moment. We thrive on change. We constantly talk about it, we constantly question whether we're doing the right thing. And we constantly move people around into new roles and opportunities and projects to deal with things that we need to do next. And so we engender a sense of safety and trust because change is normal, it's not unusual. So, you know, every company has a different culture of change. And the bigger you get, the less change you tend to do. But if you read our dynamic research, dynamic organization research, research study, and it's in Galileo, you can get all sorts of information from that. There's doz and dozens of factors here. You need to make people feel good about change. And my experience with the thousands of people I've met over the years is that most people actually love change when it's good for them. So part of the change management process is convincing people that the changes that we're trying to do that were, that are very uncertain are going to be in their best interest and that gets back to trust. So going back to the very beginning about fear, there's not much you can do about politics, there's not much you can do about global climate change, there's not much you can do about wars, there's not much you can do about the economy. But all these other factors are under your control. And you know, for those of you that are as work as business partners, as senior leaders, as COE leaders, as practitioners, as HR people, this is a conversation to have with your business counterparts so they're comfortable with these issues. Now hard charging CEOs don't always think about these things until it's too late. But they need to be educated. And you know, you look at the press on all the transformations going on in different companies, every AI transformation is a human capital transformation. Now a year or two from now there will be a lot less uncertainty about all this and we'll have a much clearer perspective on what super worker means to each individual. And there'll be something else that'll come up that I can't predict. But for now just consider the fear factor that probably exists in your own company and maybe these things will help you with it. We are happy to do a speech or presentation or workshop or just talk to you about these issues for your particular company because we do talk to companies about this all the time. And I think one of the biggest solutions to this sense of fear is power, empowerment or agency.
[00:28:42] So giving people access to Galileo, giving people training, giving people, you know, some of the things we do is empowering. And I know that because I see it in your guys eyes as HR people. So that's it for today. Have a great weekend and we'll talk next week.
