Episode Transcript
[00:00:00] Good morning, everyone.
[00:00:01] I am podcasting today from Hong Kong and we've spent a week over here going to Japan and Singapore and Hong Kong for some meetings and observing the various activities in the world of HR and leadership and technology and politics. And I want to give you some perspectives on the super worker story and what's going on in general culture around the world. And this comes from a speech I gave yesterday that seemed to hit home with a lot of people as including the discussion speech I gave at HR Tech. We are in a weird period of time where everything in our lives is changing at the same time. And let me explain what I mean by that. Usually the way the world works is changes take place in stages and there are a few things that happen at once.
[00:00:56] Right now I feel like we're going through an earthquake.
[00:01:00] We just had a big earthquake in my home area at home. I wasn't there, but my wife told me all of our paintings are askew.
[00:01:09] Our kitchen cabinets were open when she woke up, the gas was turned off and the entire house was topsy turvy. And that is exactly what it feels like in the world of work, in the world of business, in our personal lives.
[00:01:26] The political landscape is changing almost every single day. The economic conditions are positive but uncertain.
[00:01:37] We have, in the United States, zero jobs being created, a relatively low amount of economic growth, but almost a trillion dollars of capital is being spent on AI technology, which is weird. When I did the numbers and I look at them every day and they're getting worse or bigger. The capital investment in AI is close to a trillion, which is 3 and a half, 3, 4% of the GDP of the United States.
[00:02:04] Incomes are not keeping up with inflation. I don't know what Trump is going to say about inflation these days, but if you look at the real data, people feel that their wages are falling behind.
[00:02:14] The younger population, at least where I live, and certainly from the data I see, feels increasingly alienated about their careers because at least white collar careers are somewhat stagnant.
[00:02:28] And we're not even sure what college is worth anymore or whether college is of value.
[00:02:33] And of course, we have the American administration attacking colleges for being biased. Then we have national security issues all over the world with two very difficult wars, at least two going on, depending on where you live and how you feel about that. There's that and then there's the cultural issues of what do we admire? Who do we admire? Who do we believe will show us the future? Just to give you some examples, do you love Elon Musk and The technology Bros. Do you admire Microsoft? Do you admire Donald Trump? Do you admire Mark Cuban? Do you admire the Google leaders?
[00:03:18] Do you admire Mark Zuckerberg? Do you admire the financial leaders? Jamie Dimon? You know, for people like me that spend most of our lives in the business world, a lot of our patterning of what we do and our values comes from the people we admire.
[00:03:35] Do you admire John Mackey, the founder of Whole Foods? Do you admire Costco? Do you admire Target? Do you admire Delta Airlines? You know, I admire all of these companies and all of these people and I meet people, senior people that I admire every day virtually.
[00:03:54] But I think for the average person who doesn't have the exposure that I do, it's pretty hard to tell who are the cultural leaders that we follow.
[00:04:04] And you know, it doesn't matter if you're left or right. We all have different ones at the moment. So that's changing.
[00:04:09] Then we have the workforce that's changing.
[00:04:13] We are not having children, we're not getting married. The fertility rate is extraordinarily low. There was an interesting, really interesting analysis in the Economist about this where they concluded that the world isn't going to disappear, we're not going to run out of people. But the benefit of the fertility rate being low is that the aging population will have more savings because older people tend to have more wealth. And those higher savings rates will compound into countrywide wealth which will lower interest rates and help reduce the debt. Now that was a very interesting counterintuitive analysis of that. But that's going on.
[00:04:52] And then there's the question of gender. And what gender are you and are you allowed or should you change your gender? Should you challenge your gender? You know, I'm not going to get into the politics of this, but I live in Oakland, California where there are a lot of transgender people and there's a lot of open minded thinking to this topic. So there's that. I mean, this just goes on and on and on. And I think what's happening for individuals and working people in general is this sense of a lack of stability in all of these things. And I think the earthquake is a good example of it. Because if you've ever been through an earthquake, and you know, I've been through a lot of them, all of a sudden, in an instant, everything around you is unstable.
[00:05:35] Your house is shaking, the trees are shaking, the landscape is shaking, things are falling from above and you don't know when it's going to stop. And that's kind of the way the world feels right now. And by the way, let's add to that AI and you know, AI vendors talking about superintelligence selling chips to China and the Middle east and the swarms of drones running by suit by superintelligence, the use of AI at work, the disruption of our jobs and our personal experiences. So we got this sort of big uncertainty issue going on in the workforce. So let me contrast that to us for, for those of you in HR and business people, the counter to this is having clarity. It's hard to create clarity when your business is being disrupted. But that's our job. That's our job as leaders. That's our job as business people. That's our job as managers and supervisors is deciding what's important and prioritizing investments. Now, normally in most of my career that comes from the top. And the CEO, cfo, other leaders, you know, have a strategy and they embark on that strategy and they acquire companies, they move into new markets, they monitor what's going on, and the rest of us kind of go along for the ride. And it's great because we don't have to make all these decisions. We're more on the implementation and utility of these decisions today though, as I talked about in the Super Manager article I just wrote. And we're going to be publishing more on this in October.
[00:07:11] It's much more bottoms up. And so I think the defining change that's taken place in our work, in our businesses is this empowerment of frontline or individuals. Now we're in mid to late October, we're going to publish a big study on what we call the Super Manager. And the thesis that we're promoting, based on the research we're doing, and we certainly want to debate this with all of you, is that AI is not going to eliminate managers or management at all, but it is going to force managers to be much more creative and experimental and empowering and educational and supportive than before. And there are going to be a breed of managers that are going to thrive in the world of AI. And there's going to be a breed of managers that are going to become irrelevant. And if you as a business don't facilitate the Super Manager so skills, your entire business is going to fall behind because things are changing so fast. Now normally, as I said, when things change fast, you wait for the strategy to come down from on top. In the case of AI, it's coming from the bottom. In other words, you can do a business re engineering project at the C level and you can decide all sorts of, you know, Big things about what you want to do. But most of the changes going on in the business community, in the business climate are at the individual and team level. How is the salesperson doing their job, how's a marketing person doing their job, how's an engineer doing their job, how's a customer service person doing their job, how's a flight attendant doing their job, how's a retail worker doing their job, et cetera.
[00:08:50] And because AI is such a democratizing and approachable technology, and what I mean by that is that when you use AI, you talk to it, you don't have to program it, you don't have to hire an engineer, you don't have to have the IT people involved, you just use it. We all are experiencing opportunities to use it, either on our phones, on our computers, or pretty soon on our glasses to answer questions, solve problems, learn things, get access to data, analyze things, generate content, et cetera, in ways that are very unique to us.
[00:09:25] You know, if you want to build a video, if you want to write an article, if you want to listen to a podcast, if you want to answer your emails, if you want to do a performance appraisal, if you want to create a development plan, if you want to staff a meeting and decide how to operate the meeting, there's AI for all of that. There's either small vendors that provide things or you can just ask the co pilot or Galileo to help you and it'll help you with all of those things and much, much more. And as you use the AI, it becomes more knowledgeable about you as a person. My AI talks to me by name and we're actually building digital twins in our company where I can actually reach out to somebody in our company who's asleep on the other side of the world and I can ask them question and their digital twin will answer me based on the information and knowledge that that person has.
[00:10:13] So this is not only a technology that can be implemented from the top down. I think 80% of the transformations that are going to happen are going to be from the bottom up. So we're in a situation now where given and despite the uncertainties we have generally in our lives, we are all going to be reinventing our lives, our jobs, our roles and our business processes as individuals. Now, you know, I meet a lot of people out there and I talk to a lot of, you know, mid level people and what I see in their eyes is a sense of, I wouldn't say it's fear, but trepidation, like, oh my God, you can do this, you can do that. Well, what if I, you know, don't know how to do it? Or is somebody going to teach me how to do it? Or maybe let me, let me go try that because I want to learn how to do it myself. So there's this interesting situation. It does really remind me of the birth of the IBM PC in 1981, when all of a sudden we all got our own little computers and we never had a computer before, all we had was a dumb terminal. So we've all got these AI tools and we're all being asked to, you know, kind of come up with good ways to improve our personal productivity and growth. And so in the middle of that is management. And the point of the super manager research is to show you that when you have a management philosophy and culture and tools to facilitate this personal re engineering that goes on, you bend the curve of the company up towards productivity. Now in the report that we're launching and in the article I published on LinkedIn, you will see a chart of curves. And it's a very interesting chart because it'll really clarify what's going on here. The rate of change of technology is almost a vertical line. I mean, not quite, but it's happening extraordinarily fast. Try to keep up on all the things going on in AI. You can't. I mean, I try to do it for a living and I'm barely keeping up. But the rate of change of your company is very slow because people have jobs and roles and responsibilities and bosses and systems and things that are just already there. And so what a super manager does is it bends the curve up. A super manager takes calculated risks, prioritizes new ideas, shares innovations with each other, honors individuals who have creative approaches and comes to management and says, you know, I'm running this store or this operation or this marketing team or whatever we're going to do. This that we discovered is an innovation and we want to tell you guys about it because we want you to support us and we think other people in the company should know about it. And this bottoms up, democratization empowered way of driving change is a very, very important part of success going forward. Companies that are good at this and the one that sort of exemplifies it to me, by the way, there's a lot of companies that are good at this. MasterCard, Unilever is beginning to operate this way, Bayer's trying to operate this way. I mean, a lot of companies are trying to do this. It's much harder than it looks because there's a lot of cultural barriers. But if you look at Amazon, I mean, you know, the, the, the methodology and the approach that Jeff Bezos put in place at Amazon, to constantly think about the customer and to write ideas down and share them so people can get behind them, and then to place calculated bets and to try things and experiment with things and invest in things for the long term is going to be kind of important to every single company. You know, Amazon has been extraordinarily successful. They have a lot of capital. They, they also, by the way, Amazon also invented, in a sense, this idea that you don't have to show a profit to build a gigantic company. If you remember the early days of Amazon, nobody wanted to invest in that stock because they were so unprofitable. What they were really doing is building a foundational approach to their market that was almost unassailable by their competitors. And the stock market rewarded them later. So this is what's going on now. In addition to all of these uncertainties and focus on AI, there's the general issue of what do we do about the way human capital processes work? And Dunn, Kathy and I and others here have done a lot of work on systemic hr. And we have an operating model that is very clear and understandable on how to redesign what HR does, because HR is an overhead function. And if you have too many people in hr, you're at risk of essentially being downsized.
[00:14:49] So we need to do this to ourselves just as much as we need to help the rest of the company do it for their operations.
[00:14:56] And what we're learning and going to be doing in systemic HR is we're building an agentic view of systemic hr. It's not done yet. I would say we'll probably get it done in the next month or two.
[00:15:10] And what it is, is it's a way of looking at the HR function systemically and figuring out where and how to apply AI agents to these functions as a whole, not as individual. And the problem I'm beginning to sense in AI is there's so many point solutions, little agents for this, little agents for that.
[00:15:34] You know, workday, SAP, Oracle, many, many, many, many vendors are building point solutions that you're likely to end up with a whole bunch of little AI tools doing pieces of work, each of which seem like they're improving productivity, which they are. But as a whole, they're not working together.
[00:15:53] And it's the synchronicity and the interconnectedness of these AI agents that really is going to matter. I mean, when you go to Amazon and you buy something in Whole Foods or online.
[00:16:08] The amount of interconnectivity between your Amazon experience and is so extraordinarily extraordinary that you can't avoid doing more business with them. This is why Netflix works so well. This is the why YouTube works so well. This is why your customer experience at Delta Airlines works so well. Your customer experience at American Express, your customer experience at Disney. Because these companies have spent a lot of time over many, many years thinking about the integrated customer experience.
[00:16:37] And that's really kind of our job in hr. It's not to optimize a bunch of little things, of course we have to do that, but we also want to optimize the whole. So we're going to share with you our view of the agentic framework. I don't know what to call it yet for systemic hr, because otherwise what's going to happen is you're going to be sort of forced to downsize very sporadically. And I'm not saying that isn't a bad thing to do. It might be necessary, but it's better to do it with a vision of where you're trying to go. And we're going to run by, by this a bunch of chros before we do it. So you'll, you'll get a pretty good validated view of this final thing today as I get ready for the rest of the Asia trip is Galileo. So yesterday we did a two hour training program for a bunch of our clients here. I don't know, it was about a hundred people.
[00:17:30] And we took them through the details of how to use Galileo for a whole bunch of use cases, for recruitment, for selection, for reorganizing the HR team for a variety of vendor things and so forth. We did the same thing at the HR Tech conference in Vegas last week. And this thing is unbelievable. And I'm not just pitching it to get you to buy it, I want you to understand it because Galileo is so integrated in its content and has so much hr, human capital, management related content, including external data from the labor market, salary data, skills data, regulatory compliance data, et cetera. It is getting smarter by the minute. Now I was telling Bill, it's really weird to me and I don't exactly know why this is happening, but Galileo is becoming wise, it's developing a sense of wisdom. And I don't know why this is, but I think it's because it's getting a lot of usage in the same domain. And I think what, what AI does through the inference engine and the neural nets and the algorithms under the covers is because the data set is similar and the interconnectivity between the questions and the tokens that we're asking is, is so related because we're in one domain, the domain of management and leadership in hr. The system develops more intelligent solutions to your questions. And what we're learning and what we're really trying to teach you guys how to do is to not use it as a search engine, get in a dialogue with it, give it a very complex scenario, describe in words, orally, talk to it, tell it what you're trying to do, let it coach you. Because the more open minded your questions are, the more insightful it appears to be.
[00:19:24] So if you haven't tried Galileo, you really, really should. And it's not very expensive. We're keeping the price as low as possible.
[00:19:33] And so, you know, I'm more and more convinced every day that AI is going to be, you know, our friend and assistant in our daily lives. And as we show it to you guys, we're seeing people's eyes light up. Because in reality, if you as an individual or a team, don't use these tools and learn how to use them, you're not going to be able to help your company transform. You're going to be waiting for somebody else to come up with a project or a strategy, or maybe you're going to buy some vendor thing that's barely built and you're just going to be stuck with it. And that's not with the way this technology works. This is a democratizing technology. Okay, a lot of ideas here, but I want to give you where my head's at and get this off my chest today. And I will send you some more information later this week or over the weekend on some of the other things going on over here in Asia. Bye for now.
