EP42 A practical approach to harnessing AI as a SMB

In this conversation, Mike discusses the practical implications of AI for small and medium-sized businesses. He emphasises the importance of organising data effectively, integrating AI into business processes, and maintaining originality and emotional intelligence in leadership. Scott highlights the need for businesses to adapt to technological changes while also recognising the enduring human elements that drive engagement and connection.

takeaways

• AI is not just for tech experts; it's for everyone.
• Organizing data is crucial for effective AI implementation.
• Appoint a data champion in your business.
• Design where AI fits in your processes.
• Run experiments to understand AI's impact.
• Creativity should come before AI assistance.
• Emotional intelligence is vital in the digital age.
• One-on-one meetings should focus on connection, not just performance.
• Recognize what will remain constant amidst change.
• Leaders must adapt to both technological and human needs.

Chapters

00:00
Introduction to AI in Business

05:36
The Role of Humans and AI Collaboration

11:38
Emotional Intelligence and Leadership

keywords
AI, small business, data organization, emotional intelligence, originality, business processes, leadership, technology, productivity, change management

Find out more about working with me or about applying to join the ILN. mike@smbmastery.com.au

https://www.linkedin.com/in/mikeadamscott/

https://theintentionalleaders.com/

Transcript

Mike Scott (00:01.55)
Good morning or afternoon wherever you are in the world, guys and girls. So today I wanna share, in let me take it back a step. I was in Cape Town a month or two ago. I gave a keynote at an AI conference, which is interesting because I'm not an AI technical expert by any stretch of imagination. And actually I'm pretty damn confident that I had the lowest IQ out of any other speaker on the stage and was definitely the least technical. Yet what was interesting is I got

literally hundreds of scans of my contact details as a result of this talk. And I think it's because it struck a bit of a chord in terms of what we can practically do about this AI change and evolution in our small and mid-sized businesses. So this talk was aimed at the small and medium-sized business builders rather than technical people. And the entire sort of

point of it was around what you can actually do practically today. So I thought I'd do an episode on sharing the kind of key takeaways from this. So the first thing is that, you know, this promise of AI has been around massive disruption, trading algorithms, displacement of 90 % of your workforce and, you know, enormous productivity gains, which, you know, some of these things are there for sure. Like chatbots have really probably been in my observation, the biggest

like increase in productivity and decrease in cost. Like there are definitely some things and obviously I'm using it every day. Like I'm sure all of you are as well. But really where we need to start is with pretty boring non-technical like organization of our data, right? How we store our files and folders, how we name our files and folders. So there's a buzzword that's thrown around a lot which is context engineering.

And really, this is just a fancy way of saying that we need to give the AIs the best chance of understanding our businesses, understanding the context that they're working with. You know, I said something in the talk, which everyone had a bit of a chuckle at is, you and you probably will too, is that like, does anyone have a document that's named something like shareholders agreement, underscore final, underscore B2, underscore edited, underscore final, underscore use this one, dot doc X, right? That doesn't help the AIs.

Mike Scott (02:24.063)
at all, right? This is confusing for humans, but impossible for AI to understand which one do they use, which one do they access. So, you know, AI can't read your mind yet, and it's not magic yet. And until it is, we need to give it the context that it needs to read the information that we have in our business. And there's a massive opportunity there, right? You've got every year that you've been in business, you've got proposals, you've got quotes, you've got a bunch of information that if referenced can be exceptionally useful.

to run an AI agent over it. So, you know, I think data nerds will be the heroes of the next era and they're gonna deserve every single second of their moment in the sun. You don't need to be a data nerd or data expert to get started, but you do need to get started. you know, the thing is if you don't have a data expert in your business, if you're listening to this and you're a small or mid-sized business, you almost certainly will not have a data expert in your business.

but that means that you need to become one. So what can you do about this next week or this week? You need to appoint a data champion in your business. And the shift there is it's a shift in the culture in your business from we used to create and store data for humans, now we need to do it for the AIs too. So that's something you need to do and you can do today, this week. The next thing you need to do is pick a single folder that holds information that you would love to be able to interact with through an AI agent.

And then just simply decide on exactly how you will name each file in that folder and get to work standardizing every file in that folder and then do the next one and then do the next one. Really boring work, really massive payoff. Buzzword number two that I wanna talk about is the orchestrator. And what I'm talking about here is that we need to become excellent at designing where AI fits in, not just using AI, but where it fits in. We need to know where humans still need to intervene.

or where humans still completely need to drive and take over. And then we need to identify what risks might be introduced as we bring AI into the business. And really the sort of analogy here is, you know, the conductor in the orchestra has got two sets of things there. They've got the humans, which are the humans, and then they've got the instruments, which are the AI tools, right? And in their individual capacities, they generate X, but together, when put together, they generate

Mike Scott (04:49.342)
an exponentially more beautiful complex arrangement. And that's the sort of thing we're going for here is it's not humans versus tools. It's humans engaging with these tools to generate something that is one plus one equals 10. So like, what does this mean? Right? Because this is, this is difficult. This is hard. It's hard because one, we need to get really good at running experiments. And two, we need to carve out budgets.

to be able to find out what works and what doesn't. It's like, need to get good at running experiments, but in small and mid-sized businesses, this is very difficult because the two things that are generally most scarce are time and money. And to run these experiments, we need both. The point I'm trying to get across here is that we don't go and like run and roll out AI in our business. really don't think the way that that's how we should be looking at this. We should be looking at this as what is the experiment that we need to run that we've got the budget for to learn a little bit about

where this might work and where it might not, because remember this is new to everybody. So, you know, there's a slide that's up in front of me now, which you can't see, but here's how we might split it in today's marketing core process. If we take one of our core processes in business, I've just pulled out marketing for this example. If marketing is our core process, it's kind of broken down into a bunch of steps or categories, right? And just bear with me and try to visualize this. So number one, we've got creating the strategy, right? In my opinion,

that's still human driven, assisted by AI. Then we've got creating the brand voice. Again, I think that's still human driven, assisted by AI. Then we've got writing copy. So here it's a bit different. Here I think AI is probably good enough at writing the first draft as long as you fed it in your tone and then proofed and edited by a human. And then we've got automating posting for some of the marketing activities. Well, that's almost purely AI now. Then we've got analyzing the data.

So once we're doing all this stuff, well, I think AI surfaces the insights, but then humans still need to interpret and decide what to do with these insights. And then deciding where to invest or where to pull back, I still think is a human interaction. So you can kind of see, that's a pretty good example of like a core process, where we're using human, where we're using AI and what risks are introduced there. So what can you do about this next week, right? Pick one core process or one standard operating procedure, SOP.

Mike Scott (07:07.998)
and break it down into its core parts and then label them either A, experiment with AI, B, humans still do this best, or C, what risks come with letting AI handle this? There's a phrase that I think is important that's being thrown around, which is AI is not coming for your business. Some humans who are better at orchestrating AI than you maybe are, right? So we need to become excellent at not just managing people anymore, but managing people and the AI tools and more importantly,

where and when to use which ones. Right.

Alright, what's the next one?

Mike Scott (07:49.854)
So the next thing I want to talk about is protecting our originality. There is a very interesting MIT study. It took a bunch of very high performing, very smart AI native students. Now these are people that are used to writing exams, creating original work. They've gotten there by being excellent at what they do, by working hard. So the context is important there. And they a bunch of experiments. And the first part of the experiment was

they got these students to do work using the AIs. The short story of the result of that was that even though they thought they were creating original work, what they were creating pretty much all looked the same, right? When using the AIs. Then they got them to do a bunch of other work where they actually plugged their brains in to be monitored. And what they realized was that when

these people were using AI first and AI to do the work. The parts of the brain that should light up, that should be active, that are there for originality, learning, et cetera, it just wasn't lighting up right. So two things were happening there. One, that's really a fancy way of saying using AI like this literally makes you dumber, right? Because we know that if we're not exercising the parts of our body to the right degree, well, they atrophied, they get weaker. It's like a really nice way of saying we're getting dumber by not using it.

But they continued with the experiment and they found something that I think is even more interesting. They found out that when the kind of creative work or the heavy lifting work was done, let's call it on a blank page, right, without the AIs, and then the AI was introduced to refine as a thinking partner, et cetera, they found in those scenarios, the right parts of the brains that should be lighting up were actually lighting up. So what am I saying here? I'm saying that sequencing really, really matters.

Right, the sequence or the order in which you're using these AI tools really matters. So it's kind of like think first, AI second. Interestingly, just on a personal share, that's how I've intuitively always used these things, which is quite cool. I kind of had the sense that it's like, I need to do the thinking work first, then bring in the AIs as what I call like a thinking partner. And now there's actually evidence to suggest that that is a real thing, right? So what can you do about this next week? Like, why am I sharing this? Well,

Mike Scott (10:13.927)
I think this is about embedding core behaviors in the business. So I think that embedding a core behavior in the business of think first, AI second is very, very important, especially if creativity or originality is a source of competitive advantage in your business. A sort of a side thing to this, if you're a business leader, which most of my audience is, this is not a new thing, but I think this is making a practice that I always urge my clients to do more important than ever, which is embedding periods of

unplugged from technology thinking time into your schedule. Whether it's a day a month, whether it's half day a month, whether it's a day a week, whatever you can kind of afford from a time perspective, it's incredibly important to have periods where you're just thinking and writing, but not being exposed to technology for at least a few hours at a time to develop this creative thought that is so important.

to being a great leader and operator. So think first, AI second. The next thing that I spoke about, which really seemed to hit a note with a lot of people, is that EQ and how we lead and manage and treat people is no longer just a nice to have. I think it was a Gartner report that quoted, emotional connection remains the most powerful driver of employee engagement, loyalty and retention, even in the age of digital transformation. Now, at this point, if you're listening to this,

I will sort of ask you to answer to yourself, you know, who has used AI, ChachiBT, whatever it is, for therapy of some kind, right? The answer is that most people are using it for some form of therapy, whether it's formal or informal. So I use it a lot for CBT therapy and all kinds of Jungian stuff and Freudian stuff. And I just love it. It's amazing. The thing is it's really, really good. You know, my best mate is a GP and you know, he says it's not long.

at all before the role of a GP just drastically changes because of AI. My own GP gives it sort of three years before the current role of a GP is basically redundant because of AI. You know, it's really, really good at therapy. It's changing the way that we deliver healthcare. It's changing and democratizing access to the stuff, which is amazingly good. But there is a little bit of a downside or a dark side to that. And that is that my sort of, I guess, suspicion or observation is that

Mike Scott (12:41.381)
because it's so good, it is driving a subtle wedge between connection. There's sort of this hesitation where it's like, I can go and speak to a human about this thing that is maybe a bit vulnerable or uncomfortable, or I can go and speak to an AI about this thing, which will never judge me, and I can just delete it and no one will ever know. So people are doing a lot of that, which is, it's a difficult thing because it feels really good and it's actually objectively very helpful, but the downside is that we're driving connection in many cases between humans. And...

You couple that with the fact that if AI does deliver on its promise, we're going to need fewer people in our businesses to deliver the same amount, which just means that the people that we do allow in and want to retain in our businesses, it just becomes even more important that we attract and retain the best possible talent. What am I talking about here? Like Maya Angelou has a quote, which I try to live by, which is that people will forget what you say. They will even forget what you do, but they will never forget.

how you make them feel. And our role as leaders in businesses is it's not just about accountability, metrics, delivery results. It's also about how we make people feel in our organizations. It's a key part that I think is going to become incredibly important. My final point that I get to after this really exaggerates this, but this part of it is the softer side of it. So what can we do about this?

I think a very important thing you need to do is you need to increase or implement the one-on-one meeting cadence for everyone in your business. And I can give full agendas and I do give full agendas to people that work with me, but the point is not just focusing on performance here. Performance is important. Clarity is important. Accountability is important. Vision is important. But it's adding in this intentional layer of focus and connection into these one-on-ones, not just performance.

On a side note, you're gonna hear me talking a lot over the next few months and maybe even years around Bloom Growth Operating System, which is like the next evolution of EOS or traction. It's really fantastic. And I'll be talking lot about it because I'm the first growth coach certified for Australia and I'm loving it. And one of the reasons I'm loving it is that there is a big focus on the relationships and the connection and the communication within a business because it is just so incredibly important. So what am I saying you can do about this?

Mike Scott (15:02.352)
Check your one-on-one cadences, check that they're excellent, check that they're not just about performance, but they're also about connection. The last thing I want to talk about is inspired by a book by Morgan Harsall called Same As Ever. And everyone that's talking about AI, me included, and I'm not an expert, but it's about what's changing, what's going to disappear, what's going to become redundant, what's going to become most important. So we're talking about like everything is changing, but...

You know, this phrase that I used when I did this keynote was everything is changing except the stuff that's not. And I actually think a better question to be asking in our businesses is not what's going to change, but what's going to stay the same. You know, so as far as I'm concerned, or as far as I believe, or I have high conviction that no matter how advanced technology gets with AI, we will always be driven by desire and fear. That trust will always draw people in and how we feel will always play a part

in the decisions that we make and that humans will always need to feel heard, seen and valued. And if we adopt this mindset through this crazy change and this exciting change and this terrifying change, and we sort of have a view of being conscious and intentional about thinking about what's gonna change in our business and what do we have to adapt and evolve and focus there and run experiments and measure those experiments.

and have an equal amount of a care about what's not gonna change and what's always gonna stay the same. I think that thinking is gonna really, really serve us as leaders through this time. hopefully that was useful. And if you want access to these slides, I'm actually happy to share them. Just reach out to me and I'll send you a link and you can exchange your contact details for these slides.

And I hope this has been thought provoking because you'll notice I didn't speak almost at all about anything technical because, you know, we, least with my war pattern, we've got plenty of capability and resource for the technical side and helping you through these challenges. But I think from a leadership perspective, it's not so much about the technical elements and it's more about these like practical ways of thinking a little differently that are going to get us through what is a unprecedented time and very exciting and very scary. So as always.

Mike Scott (17:25.113)
Thanks for listening. See you back here in two weeks and reach out if you want to talk about any of stuff with me.