Episode Transcript
[00:00:00] Good morning everyone. Today I want to talk about the AI labor shortage. Not the AI job apocalypse, but the fact that we are now entering a period of time where AI has fueled a shortage of labor.
[00:00:17] And that the actual problems we're going to run into in gaining the benefits of this multi trillion dollar investment we're making in AI all have to do with people. Now this is a thesis that is detailed in our book Superpowered, which is launching in October. You can sign up for an excerpt on our website and I look forward to telling you all about it when it comes out and you can read it. And we've been thinking about this for almost two years and it goes back to the super worker thesis. The essential story is that as AI permeates our companies, not only do we redesign the way we do things and improve the productivity of the operations we have, but through more and more autonomous agents and the interconnectedness between these agents, which we'll talk about in a second, but that the individuals don't lose their jobs, they get better jobs. They become superworkers. And those of you who do research work or do writing, or do any kind of creative work, or do recruiting or do data analysis, you know what I'm talking about.
[00:01:21] These AI tools make you a super worker. And if you're a manager, you become what we call a super manager. Now, if you look at the data I published last week from the Bureau of Labor Statistics in the US you can see actually very clearly that the labor shortage has already started.
[00:01:38] Last month, 160,000 jobs or so were created. A lot of them are in construction around the data centers. There's a lot of jobs being created for data scientists. There's going to be a lot of jobs to build IT infrastructure to clean up the data, to feed and fuel our AI tools. And lots of of jobs around many data related things. Even jobs in accounting are increasing because accountants can do more work. Lawyers are not being eliminated. They're able to do more analysis and more research. Our business is going to be exploding. As you know, we're doing all sorts of things to expand the scale of what we do, which allows us to hire more people. And it goes into both white collar and blue collar. Because the infrastructure needed to run and operate these AI data centers is pretty significant. We're building power plants, we're building data centers, we're doing construction, air conditioning, electricity, computers. Somebody has to build the computers, all of the chips that have to be manufactured. So there really is a jobs boom being created. At the same time as I Talked about last week. The birth rate is down, immigration has been pulled back, and the entire labor market is shrinking slightly in the US Is still growing, but in many parts of the world, because we're not having as many children or people are postponing getting married entirely. So one of the constraints you're going to have, and we're going to be talking about this at the frontline Work Summit with workday in a few weeks, is that you're not going to be able to find the people you need. Welcome to the world of the 2000s, when we had a labor shortage in digital workers. And you're going to be training people and you're going to be moving people internally, and we're going to be talking about retention and we're going to be talking, be talking about pay equity, and we're going to be talking about all those employee experience things so that the people you have can do more work and stay with your company and help you grow. And that gets into a very related second topic of how we take advantage of the AI and use it. Now, many of you have heard about HR 2030, and we've introduced quite a bit of research around it. And we actually have a tool which I was showing some clients yesterday. It will show you how HR 2030 works. HR 2030 is a technical architecture, a blueprint that shows you Precisely how about 160 different agents will interoperate in the domain of human resources and human capital management. And the purpose of AI in HR is not to eliminate jobs in the HR call center or to automate away the payroll clerk or some of the scheduling jobs that might exist in hr. Those, those will go away, but rather to enable dynamic growth, to allow the company to reorganize itself, reskill itself, and dynamically hire or redeploy people under a wide variety of conditions more quickly, more accurately and more strategically. Because the next at least five years, maybe 10 years, and we may have a recession in the middle of this. We're going to be redesigning almost everything. We're going to be redesigning the way we build products and services, the way we deliver them, the way we sell, the way we market, the way we do financial operations, the way we run hr. And everything is going to be more systemic. All of these business processes that we studied over the years and you know, this are siloed into functional areas because of the historic nature of the industrial revolution in the early 1900s. Well, now we have technology that can stitch together the business processes that we do in our companies along the lines of products and customers, not along the lines of functional silos. And so everywhere you look there are job titles, job roles and managerial roles that are functional in nature, test engineer, design engineer, QA engineer, et cetera, that don't need to exist anymore. When we redesign those jobs, as we may not even have a job as engineer, it might be called product builder instead of engineer because some of the engineering is done by the AI. And then there will be jobs to train the AI to align the AI to manage the AI. And let me make a point on that, because this came up in a client call yesterday. If you fast forward ahead to where you have these, maybe we call them super intelligent workers as our digital tools and they're doing things that you used to do during your 9 to 5 job. Not only are they doing it with maybe more data and more intelligence about how your company operates, because they're interoperating with other agents to get the data they need, but they're working 24 hours a day. So in some sense they require more management than humans, much more management, because they're going to be making decisions and possibly doing things at a very high rate of speed, as we found out from the jailbreak stuff that came out of OpenAI. So you, as a manager or a trainer of one of these agents, or a curator or owner of one of these agents are going to have to really work hard. So these jobs as AI manager or AI systems administrator or whatever we end up calling them are going to be very, very important jobs. And so all of us that may be thinking we're going to flatten the organization and get rid of management roles, probably the opposite is true. We're going to have as many or more super manager roles because we're going to be managing fleets of very high performing workers. And remember, any AI agent that you buy or build doesn't sit still. It's operating, it's doing things, it's collecting data about your company, it's talking to other agents in the company, it's talking to the core systems which are we're still there. And then as your company evolves, as you go through a merger and acquisition, a new product launch, a new pricing strategy, a new marketing strategy, those agents need to get updated. So our jobs as human trainers and managers of these agents are actually very, very interesting, significant jobs. Now, the thesis that we are advancing for all of you is that we're really redefining what HR's mission is here. HR's mission is not to deliver great service or to improve employee experience or to pay the payroll on time or to take care of compliance issues.
[00:08:01] Yes, it is all of those things, but it is actually something much, much bigger. Our job is to facilitate and enable the company to grow faster and and the individuals to grow faster as well. We call that dynamic enablement for growth. And I would argue that the thesis and the reason to be looking at the HR 2030 blueprint as an HR professional or as a CHRO or a CIO is that you want to see how these agents interoperate with each other so that you can facilitate the organizational transformation that you need to do. Because in most cases the only obstacle you have to improving growth and productivity with AI or not is people. And I was joking about this. I've made this comment many times that every business problem that you will ever encounter is ultimately a people problem. Our products are late, our products are perhaps non competitive, we're not producing enough quality, our supply chain is weak, our sales is unperforming, our marketing's not working, you name it, whatever it is that you think is perhaps a challenge to your company's growth, there's a people issue behind that. There's a deployment, skills, enablement, organizational issue behind that. So what we're going to be able to do with HR 2030 is dynamically reorganize, dynamically reskill, dynamically hire, dynamically schedule, dynamically improve the performance of the humans around the growth strategy that you're trying to embark on. And for those of you that are HR people, I want to bring up something else. We're in the middle of building a new website and talking a lot about our taxonomies.
[00:09:43] And I think that in our conversations with you, we're going to start having a different conversation. We're not just going to ask you what's going on in HR and what are you working on and what are some of the operating HR problems and skills and capabilities you're trying to implement and what are the system strategies you're trying to adapt and implement?
[00:10:03] We're going to ask you something different. We're going to ask you what is your business growth strategy? What are the growth vectors that you're trying to enable? Is it a merger? Is it a divestiture? Is it a product launch? Is it a deployment to a new country? Is it a deployment to a new market?
[00:10:21] Is it a reorganization towards different channels? Is it a capacity to manufacture? Is it a capacity to sell? Is it a capacity to service?
[00:10:30] Is it professional services capacity? What is holding back your company from growth? And I Don't know if all of you think about this all day as HR people, but I think you should. We had a conversation in the last couple of weeks with a very large retailer who's very well known, and the conversation started about hiring and retention of staff members in their retail stores. And as we dug into it with the HR team, I asked the HR team, what is the company's growth vector for the customer? What is the customer experience you're trying to deliver? And we talked about the market basket when somebody comes into their stores, what a customer does and how they buy and how we want them to traverse through the store and find new things and shop for new things and pay for new things and come back next time. And the pleasantness of the experience and the integrated experience that they see and feel in the store. And that affects, of course, the products and the marketing and the merchant merchandising and the supply chain and the layout of the store and the real estate and the location and the parking lot and all sorts of things. But if you think about that now, we think about the hiring issue and we think about how we assess people to be great store employees or store managers. All of a sudden we have a bigger and more strategic context for what we want to do to improve the employee productivity and the employee experience in these stores. Because in the retail environment, for example, which is a very big frontline industry, the behaviors and the experiences of the. And really, in some sense, the cultural values of the employees create the customer experience. I remember this at Dick's Sporting Goods. Dick's Sporting Goods told me when I talked to them a year or two ago that they hire people that are outdoors people because they want to build a really fun, exciting, interesting, meaningful experience for people when they come in the store. Same thing's true at Home Depot.
[00:12:25] So your ability to leverage and redesign and deploy AI around the human capital work that you do should be aligned towards growth. And that means that we are a growth function. Our mission is growth, Growth of the company, growth of the business, growth of the business's strategies and initiatives, not just taking care of people, reducing turnover and reducing the cost of the operating HR function. And what HR 2030 does is it really implements that. And this also means that the cost of HR is no longer an issue because you're a contributor to growth. In other words, if you could convince yourself that your HR function is a growth function, then why wouldn't the company spend more on HR to build better growth strategies, better people strategies, better retention strategies, more strategic hiring, more strategic Development and so forth. And what we've got to do in this Next, you know, five to 10 years of AI is we've got to whittle away the bureaucracy we have in hr, which there's plenty of it, but not just for its own sake. Not just to downsize, but to focus on these growth initiatives. So every initiative you embark on that feels like a productivity or cost cutting initiative should also be a growth initiative on how can we implement systemic HR to better improve the dynamism and skills and capabilities and delivery capabilities of our companies. It's a very big, big topic. And I think the fact that we're entering a labor shortage will help you think it through. Because we're no longer going to have the option of saying let's hire 100 more people and build this manufacturing plant or roll out this new product. We're not going to have them.
[00:14:11] And so our ability to strategically create talent density and improve the capabilities of the organization are going to be, you know, highly valued at the C suite in the organization.
[00:14:23] So that's kind of my little speech for today. We're doing a lot of framing around this and I encourage you to call us if you'd like to see the HR 2030 blueprint and we'll walk it through for you and help. It will help you strategize on how you redesign hr, what agents you build and buy, and over time, the tool set also has 221 business scenarios built into it. So you can literally go through there and say, oh, here's exactly the problem we're trying to solve. What is the agent strategy that will get us from point A to point B? So it's very exciting stuff we're doing.
[00:14:57] Next week we're going to be launching a new release of Galileo that's going to be very, very interesting. We're moving it to an enterprise platform, enterprise product now that's available within the context of all of your existing agents. You don't have to buy the agent from us. And, and you're going to hear a lot about that with a whole new level of quality, a whole new level of accuracy, a lot of new data and a new architecture. So stay tuned for that. That's it for now. Talk to you guys later.
