Episode Transcript
[00:00:04] Good morning, everybody. Today I want to talk about Workday rising and what's going on at Workday. I want to talk about agents and all the activity that's taking place in Agentic AI, and then I want to talk about Boeing. So first of all, on Workday, I spent three days at the Workday rising conference this week. For those of you that went, it was a spectacular event, just first class in the way they put it together. And what they launched, primarily, along with many, many other things, was Workday illuminate. Workday Illuminate is the new name for what was originally called Workday AI. It refers to the AI infrastructure underneath Workday, which is a shared infrastructure that allows Workday to access data from all of the Workday information in your tenant of workday. So you as a Workday client, essentially have an AI platform underneath workday that can look at all the information across all the domains of workday. It's very, very powerful because now you have essentially cross business analysis and cross business generative AI from all the information in financial systems, accounting, payroll, hr, talent, learning, all those systems in one place. So one of the scenarios they showed, which I thought was very impressive, Washington, you know, you're in the finance system. The company's ending the quarter. You're behind budget on the p and L. The company's law, losing or lost a little bit of money compared to where it's supposed to be. The system goes in, looks around through the various parts of workday, and says, well, one of the large contributors to your profit reduction is a whole bunch of overtime over here in this business area. Let's look at the overtime. Who are the managers responsible for the overtime? Let's dive into the overtime team that's going, going through the overtime. Let's reorganize the team. Let's decide if we need to hire more people. Let's decide if we need to shrink the team. Let's decide if we need to change the comp structure. You can sort of see the scenario how that would all work, and a good AI agent essentially could figure that out and then give you a whole series of activities that you could embark on to improve the profit picture of the company. That's actually a very hard problem to solve for the CFO's office and the Chro, who probably wouldn't be involved that much without any system like illuminate it also, by the way, manifested in an improvement to the workday assistant. The workday assistant now looks a little bit more like the Microsoft copilot. And so you can ask it more how to questions and it will find the relevant buttons and pages and interactions and workday and do them for you. It's not quite as advanced as Joule from SAP. SAP Joule is a little more advanced than this, but they're really making a lot of progress. So it was very, very impressive event. And I, I walked away saying, you know, workday is really getting their act together here on AI in a big hurry. And by the way, the second thing that was really big is we announced our partnership with Workday. We are now not just an analyst covering workday, we are now a partner with Workday in Galileo. And we did a big demo of Galileo for a bunch of workday people and showed them how Galileo can do compensation analysis and create behavioral interviews based on job descriptions, understand skills and identify skills of different roles and all sorts of things like that, which I know you guys are going to want to see. And we also talked at the Workday ChrO session about how Galileo will eventually be integrated into the workday corpus and the workday assistant. So we are now starting that work and we'll tell you more about that as it comes along. We have a lot of announcements on Galileo coming, by the way, around October 8. You're going to see a big announcement for us on that. So more to come on that second big topic is agentic AI that I talked about last week. Well, this has really picked up speed and you're going to see next week at the HR tech conference. For those of you that are joining us and also at unleash, I'm sure, a lot of announcements about AI agents. An AI agent is not just a chatbot, but actually an intelligent agent that you can train to do operational tasks, interfacing with other systems, executing transactions, looking things up, sending emails, et cetera. And this week it went nuts. All of the major software companies in the enterprise space started to announce agents. Workday talked about it a little bit, not a lot, but Salesforce really talked about it. And I really had to laugh at Mark Benioff, who I find very entertaining, joking around that the Microsoft copilot is really nothing more than Clippy. And then if you really want to have agentic AI, you have to use the Salesforce platform.
[00:05:01] And Salesforce has not only launched something called Agent Force with a bunch of tools to build agents, but they're also charging $2 per conversation for the agents, which I don't think is going to sell, even though that may be the cost structure of executing these things. I think the vendors are going to have to eat that cost structure in other ways. But that's where this has gone in the last one week since I talked to you guys about it last week. Now there's agents that are going to be launched by. UKG has a really exciting agent strategy based on a technology they called Bright. B r y t e. I'm going to talk about that at the conference.
[00:05:43] The new service now Xanadu release has agents all over it. And I'll talk about that. And I know you're going to hear more from them. They're very much ahead of the curve on this. Saps Joule is in a gentech AI system already, so SAP is well along on this path. And I think almost every piece of software you use is going to have an agent with it in it from it. We happen to use HubSpot, for example, and we don't use the HubSpot chatbot, but we could, and if we use the HubSpot chatbot in the front page of our website, I would imagine you could chat with it and it could look at our corpus and it could sort of, you know, tell you what's going on at the Burson company. Now I want to get back to Microsoft for a minute. Microsoft, not to be outdone by Salesforce, also announced a whole bunch of upgrades to the copilot studio, which is designed to help you build agents. And I actually went through a lot of the Microsoft stuff over the week when I had time and I think it's quite sophisticated. So I, I think that Microsoft Copilot might be getting a little bit of a bad name from people like Mark Benioff, but it has the potential to do a lot. So don't count Microsoft out on this. A lot of IT departments are Microsoft shops and they will be able to turn these Microsoft Teams and Office integrated copilots into much more sophisticated agents also. So as happens in software, as soon as a new idea comes out and people want to buy it, there's a war for attention and there's a war for consumption by the big vendors and they all want to be in there first. By the way, Oracle, not to be undone, also announced 50 agents in their suite. Now, you know, I don't know how good any of these agents are, how sophisticated they are. The ones that come from companies like UKG or ServiceNow that are built into known application areas are going to be much more likely to be well built out than the supposed agents from others that are probably more like journey tools. But these things are going to get more sophisticated over time. Very quickly. And in our conversations with Microsoft and others, the agents will talk to each other. So if one agent is intelligent on customer service and another agent is intelligent on it, security, and somebody asks a question of the customer service agent about security issue, it may communicate to the security agent behind the scenes and come back and answer your question for you. It's really an exciting new world. And what it opens up the door to is two big issues in HR. First, there will be job loss or job decomposition from these agents. Because if the agent can take the process work that you do in your job, and something like 70, 80% of business execution work is process related, then you can do the more creative design work and the agent can take the process work off your plate. Now, if you're a call center agent, of course quite a bit of your work is processed. But if it's repeatable questions you're getting over and over again, that will be handled by an agent, and that changes the number of people you need in those jobs, which means you're going to have people that are going to be redeployed or retrained to do other things. It changes the nature of the work they do. They're not just doing process wrote step by step work anymore. Now, the human agent that used to be answering the same question over and over is watching the chatbot and training it, or perhaps working on more sophisticated agentic rules to put in the chatbot about things that it doesn't know how to do yet. So we are really going to upskill a lot of operational jobs with these agents and eliminate a lot of jobs, too. Now, I don't mean that they're going to be eliminated. I think they're going to move to other places. I was at a, you know, a big bank a couple of weeks ago, or maybe more like a month ago, and we were talking about this because banks have a lot of back office jobs that are, you know, perfect for agentic AI. And they had that. This particular bank had already estimated that there were about 20,000 people in their call centers that were going to need new roles. So there's a redesign of the work going on in the call center itself to get the agents to take over the work that probably is too repeatable for people. And then there's the job of redeploying and redeveloping the people that are not needed to do other jobs in the bank. And she said, we're not planning on letting those people go. We need them, but we're going to find them other things to do. We're going to give them more interesting assignments. There is a lot of work going on. We're actually working with draw, a technology data company that we know and we like very well on a big report that they're writing that will show you the type of tasks by job family, by job title that are likely to be eliminated or greatly reduced through agentic AI. There have been other studies done on this for AI in general, but now that we know kind of what the agents do, you can look task by task and make a decision almost directly which of the tasks these people are doing we can just put into these AI agents. I personally don't believe Salesforce is going to be the big player here. I think the big player here is going to be the core it providers that the IT organization already uses. Salesforce will be part of that. But I think Microsoft will be big. I think Google will be big, I think others. And there's going to be a lot of tools like this, just like there's a lot of chatbots now that can access LLMs that will be part of this new world. And we're looking at, you know, bringing Galileo into this world too. We actually have some really interesting, what we call super prompts in Galileo that light it on fire to start asking you questions instead of you asking it questions so we can interrogate you to help you make a better decision about some HR problem you're trying to solve. We also prototyped and demonstrated last week the addition of compensation data into Galileo. So in addition to the skills data that's in there from Litecast, sometime in the next couple of months, we'll be putting comp data in there. So you'll be able to use Galileo to do comp analysis and identify target salaries for people in different cities, for job postings, things like that. And we're looking at putting in some really interesting new data as well now that the platform's getting out there and a lot of people are using it. So that's a little bit about what's going on with agents. There's another sort of conversation about agentic Aih, which is, what does this do to enterprise software in general? And when I talked about Klarna last week, you know, it does really beg the question if the business logic in the agent is a working, a workflow process, do we need that workflow embedded in the core system at all? And, you know, I don't know if Mark Benioff has realized this, maybe he does that you know, most of what Salesforce does is not that complicated. It's relatively simple to map out. And if what Salesforce does is mapped into an agent, the amount of functionality you need in that ERP system is less. I'm not saying they're going to replace it, but they're going to certainly eat away in it. And so that's why it's really important from the standpoint of these companies revenues that these companies build agents of their own so that the business logic doesn't go to the Microsoft copilot. That's the reason that Benioff was slamming Microsoft in his comments. So lots of interesting things happening here. Now, changing gears for a minute. The third thing I want to talk about is the strike at Boeing and what it implies about the labor market and HR. Now, my experience with Boeing was a long, long time ago when I was getting out of college, and I actually visited them and interviewed and had a job offer there. And it was a very impressive company as an engineering company, and I was an engineer. So I really admired the company for a long time. And obviously all of us put our lives in their hands every time we get on an airplane. Somehow in the last decade, through the acquisition of McDonnell Douglas and moving the company to Chicago and all sorts of other things, the company became very financially focused, obviously had the quality issues with the 737 Max, the 737 bolts, the 787, and has really suffered its reputation tremendously. But then this strike comes along, and if you listen to and read up on the strike, people don't go on strike unless they're really unhappy because they lose money when they go on strike. It's expensive for the workers, not just for the company. Well, you know, not only did the Boeing workers go on strike, but if you listen to some of the comments they made, they feel like they've been under treated, underpaid and not listened to for a long, long time. What goes through my mind is, how did Boeing get to this point over the 30 or 40 years since I met with them, and they were the most revered employer in Seattle? Boeing made Seattle in some sense. I mean, before Microsoft was founded, Seattle was a Boeing town, and people were really proud to work there, and they were really proud of the company. It goes back to sort of a phenomenon that I'm really frustrated about in the business climate that maybe will never change. But I want to mention it anyway because it's been bothering me for some reason, every company in the world that's invested in by others or publicly traded always wants to grow. There is a Neverland ending quest to get bigger and bigger and bigger. Bigger is always better. Profitability, of course, is part of getting bigger. But most companies at this point in time, because the way the stock market values companies will sacrifice profitability for growth. And what that tends to do when you look at growth as a strategy is you buy companies, you expand into new areas that you're not as competitive as you were in your core. You build products and services that may not be completely finished because you want to get them into the market faster. You buy competitors or peers that may not be good fits with you because they amp your revenue. And it used to be when I was a young man that companies were valued on profit and long term price to earnings ratios were about 13 to 15. Now they're much, much higher and much more valued on the growth. Amazon was the company that kind of changed the stock market on this because Amazon was the first company to tell the stock market, stop asking me for profits, you'll get them later. I'm going to focus on growth. And people finally got that and invested in it. And so Boeing and every other major company that's either. By the way, if you're a private company, you don't have to do this, but I'm talking about companies that have investors. So you enter onto this growth path. By the way, a good example of this is Salesforce that's bought, like, I don't know, 20 other software companies in the last few years and has very little, very little organic growth of their own. By the way, the Salesforce platform itself isn't growing, but a lot of these other ones are. And you end up with a company that either becomes very hard to manage, is competing in a lot of markets that you can't maintain your competitive advantage, that might turn into an organization that's uncompetitive in some areas, simply due a lack of management attention and management time, and possibly doesn't pay attention to its employees because as they talked about at workday, which I've talked about a lot in my book, you will never find a company with unhappy employees that has happy customers. It does not exist. And you could argue, and I would argue that this myself to most of you, that taking care of your employees is more important than taking care of your customers or your shareholders, because they are the ones that are taking care of your customers and your shareholders. So you look at Boeing that came from this iconic quality safety engineering centric company that pioneered jet travel in the United States. If you're as old as I am, you remember the Boeing 707 and what an enormous innovation that was in the world to this point, where they might run out of cash or they might run out of. I don't know that they're at that point, but it's really bad situation. And we run into a lot of this in HR, because the HR leaders in big companies are involved in a lot of these growth strategies. So I have to believe that while Boeing was expanding and building new plants and pushing the production lines to go faster and faster and faster, there were HR people somewhere floating around, including the CHRO and others, that were probably aware of the stress and kickback they were getting from the workers. My advice to you as an HR person is one of your jobs is not just to represent management, but it's to push back on management and raise these issues in a collaborative way so that you represent the voice of the workforce, as well as the voice of the company and the voice of the market. Now, will we ever change this mentality of constant growth? I'm not certainly going to be able to do that, but I think there are some significant issues that might take place. We're going through, obviously, a lot of agony around the world about global climate change. The energy industry is being transformed because of the need for energy, for AI, electric cars, people are restarting, about restarting nuclear power plants. These are symptoms of a global economy that is causing problems because of growth. And I think the reason that the birth rate is so low and we're not having children and we're not getting married, and there's a lot of mental health and well being issues in most of the developed economies is because growth isn't the answer. Growth doesn't necessarily make an economy or a population or a citizenship world better. Now, the United States, I know relative to other countries I travel a lot is an economy that thrives on growth. Even Kamala Harris wants to spend a bunch of money on startups and small companies, which is great. But I'm not talking about startups, I'm talking about big companies. I know that from my experience running two companies in my own career and working for three or four others, that in several cases, when the company focused entirely on growth, it lost its perspective on the competition and the market. That was what caused Sybase to eventually become acquired by SAP, where I spent eight years of my life. That was what happened to IBM in the 1980s when they were unwilling to capitulate on the changing technology landscape in computing. Because they had grown so successfully in the mainframe era, they could not make that transformation they didn't see it. They didn't believe it. They were too enamored with their own growth, even though it still is a fantastic company and it has reinvented itself. Even in my own company, the company that I sold to Deloitte, we grew pretty fast. We grew at a 30, 35% rate almost every year that we were in business. And I remember reaching a point where I just felt like everybody was exhausted. And we ended up having, you know, some turnover and some other issues because of the growth rate we had. We didn't have a lot of capital because we were self funded. So.
[00:21:47] So growth is a tricky, tricky strategy. I think the way to avoid these kinds of problems is to focus on your market, on your customers, on your products, on your services, and let growth come. Growth will come if you're a well run company.
[00:22:09] I'm not a business school professor, so I'm not here to teach you a course on this. But the Boeing story is a really significant learning lesson for all of us on how to run a sustainable, what I call enduring company. And if you read my book, irresistible, I think you'll see dozens and dozens of stories there of companies that have been around a long, long time that have grown without sacrificing their values, without sacrificing their product quality, without sacrificing their attention to detail and their focus on their customers, as well as, of course, taking care of their shareholders. Okay, so that's a little bit about what's been going on in my life. Next week is the HR technology conference. We're going to be launching the hrtainous AI trailblazers. Stay tuned for that. On Wednesday, come to my keynote and you'll learn more about what's going on in the market. I have a very long keynote. I'm going to go through a whole bunch of material on what's going on in the HR tech market. And then two weeks later, we'll be doing a big Galileo announcement. And then the week or week after that, we'll be at unleash over in Paris. So I hope to see many of you. Have a great weekend, everybody. Talk to you again soon.
