The magentIQ Show Ep. 3 | Horizon Compression: Why the Future Now Arrives in Ninety Minutes

Ian Barkin and Joe Boggio have been comparing notes on innovation since their Capgemini days. They were at one of the first OpenAI hackathons in San Francisco three years ago. The room they sat in turned out to be ground zero for everything that followed. Welcome to Episode 3 of The magentIQ Show.

For four decades, the McKinsey Three Horizons model gave leaders a comfortable distance from the future. Horizon One was the current business. Horizon Two was the set of capabilities worth watching. Horizon Three was the long bet that might mature in a decade. The model worked when the future moved at the speed of strategy. It does not work now. Joe's thesis is that Horizon Three now compresses into Horizon One in roughly ninety minutes, and the executive playbook for navigating change has to be rewritten from scratch.

In this episode, Ian and Joe unpack:

• Why the single variable that decides whether a company transforms is the psychology of the CEO, and why no budget, no model, and no hotline to Jensen will save you if that variable is off
• The Total Soccer theory of the AI-native organization, borrowed from 1970s Dutch football, and why every role in your company now plays offense and defense
• What it actually felt like inside one of the first OpenAI hackathons, where a Harvard graduate called it an existential crisis and a distinguished Meta engineer reacted like Picasso had just been handed color for the first time
• Practical advice every CEO can act on Monday morning: find your top three token users and take them to dinner, hire a reverse mentor in their twenties, and run the red pill exercise of imagining the AI-native competitor designed to put you out of business

Listen now and tell us where you land on the leadership question of the agentic era.

Find us in your favorite streaming service: 

iTunes: https://podcasts.apple.com/us/podcast/the-magentiq-show/id1896570951 

Spotify: https://open.spotify.com/show/033f2oKxnFr5fmcpdSHjSL 

iHeartRadio: https://iheart.com/podcast/333292440

Got a perspective worth sharing? We are always looking for guests. Reach out at info@bemagentiq.com.

Transcript

Cold Open And Total Soccer

Ian Barkin 0:00

I just asked for more fighting sarcasm, but sure. Okay, I get it.

Joe Boggio 0:03

Yeah. Or in Ian Barkin's phone.

Ian Barkin 0:06

That's great. Flippant and rude, impatient.

Joe Boggio 0:10

Um, no, it's it's funny. In the you know, early 70s, this little team out of Holland had a different concept. They didn't have the resources. So they came up with this thing called total soccer. Every player on the field plays offense and defense, and essentially they're pushing intelligence to the player. Today, everybody in security is like, I gotta defend AI, right? I gotta control this state. Well, if you use open club, maybe you're gonna score some more points and get some more offensive agility. And now you're trying to put you know agents on the field.

Ian Barkin 0:48

Most advice for CEOs right now sounds like a LinkedIn carousel. My guest, Joe Boggio, has a different version. He says, Go find the top three token users in your company and take them to dinner. Same three people are probably your highest flight risk. This episode is about what leaders actually do in the agentic era, not the hype version, the walk the halls, prompt your own disruption, find a reverse mentor version. Joe spent a decade at Microsoft and another at Cap Gemini, turning innovation from a buzzword into something clients would pay for. He's the friend I called when I needed an innovation expert and didn't know what that meant. As Joe says, imagine the AI native startup that puts you out of business, then realize you already have most of what it needs. I'm sure you'll enjoy this discussion as much as I did. And now, on with the magentic show.

Meeting Joe And Setting Stakes

Ian Barkin 1:43

Welcome to uh another episode of the magentic show. It's not magic, it is magentic. And uh I could not think of a better person uh to speak to about this agentic era and what's going on in the world. It just so happens that he is a friend of mine. We've been friends for for quite a while. So uh Joe Boggio, welcome to the show.

Joe Boggio 2:03

Thank you, Ian. Good to be here. I'm honored.

Ian Barkin 2:06

It's it's great to have you. Thank you. Um so uh we will do a bit of a uh a history lesson for ourselves because of course the audience knows this already, so we don't need to sum it up for them. Um, but you and I bumped into each other um because you and I were both at Cap Gemini, and um I needed somebody who could talk about innovation. So whatever that meant, I needed an innovation expert, and it was for a massive client because we needed to talk about innovation with them. And uh lo and behold, I was I was said your name. You were the guy, you had come over from Microsoft, and so then we ended up hanging out together in Germany of all places, which was which was very cool. Um how does one become an expert in innovation?

Joe Boggio 2:57

Ooh, yeah, good question. I'll give you the the the skinny on how I became one. I don't know if this is if there's uh too consistent paths to get to this, but let's see, I was an engineer by college training and I knew how to engineer, but not what to engineer. So I ended up going into sales and spent a lot of years in sales and happened to have one client for about a decade. And having one client for a long period of time at Microsoft, I started to realize, you know, that the client that I'm working with doesn't really want to buy any innovation, any innovation from me. And they don't know how to buy innovation from me. We spend Microsoft spent more in RD every year than than my client did. Yeah, but we really had no space in the relationship for innovation. So I started to get a little bit geeked about applying this, you know, engineering love I have and this notion of wait a minute, like there's so much more we could be doing. I was a big technology and digital advocate at the time. And we ended up kind of finding out with this client that one of their biggest competitors could get a company. You know, their biggest competitors could get a car to market in 11 months, and it took them 37 months to get a car to market. And when their competitor got it to market, it was higher quality than theirs was. So it took you longer and you provide lower quality. So my big argument was like, hey, this is not a manufacturing problem, it's not an engineering problem, it's a digital problem. Right? Can we work together in a different way? And can I bring all of this great innovation that Microsoft has? And we look at this problem from a different lens. Yeah, that's like getting Windows to office, you know, in a third of the time, with you know, a third less uh, you know, bugs in the system. And we just bring some of our non-salespeople, our product teams, our RD teams. And that was where I just kind of got the bug for oh, like this is innovation. This is applying emerging technologies and different ways of thinking towards eliciting a very different outcome with a large enterprise client. So, and that was probably around the time that Clay Christensen had authored a lot of his books and Henry Chesberg, like there was starting to be this groundswell of oh, wait, innovation's a thing. Like you can manage innovation, you can create a methodology and an orientation around it. And then that program ended up working really well with that client, and a lot of good things happened from it. And I was very fortunate to then be able to work with Microsoft to say, hey, you know, we we should probably work a little bit differently with some of our other clients and be able to bring our our full weight of our research organization and product teams and really rethink how we co-innovate with clients and things like that. So for me, that was the beyond ramp. And then from there, got enticed to go to Kept Gemini and do that same type of thing, just with a different, you know, with without Microsoft's you know, amazing product line, you can kind of tap all forms of products out there.

Ian Barkin 5:57

So well, and that's and that's and which which I'm glad you did, because then we got uh to meet and so it's right, all downhill from there. Um the yeah, and and the the in that somewhat of a difference is is there's a technology company that has a technology suite where innovation still is is a close orbit to that technology, and then you know, at CAP, we were we were it it was less technology oriented. And in fact, the reason that that you and I met was it was actually uh an outsource deal where it was a thousand people large um uh uh initially. It was people doing work um for the client. Um, we heavily re-engineered the process and looked at make it leaner and more efficient. We did continuous improvement stuff. We were also applying ticketing platforms and other technology, um, but it is just it was a much richer sort of ecosystem at that point because you weren't just trying to to to push on the the technology innovation side of things. Um but you you then went on at CAP to to truly uh revolutionize just how how innovation and the discussions around it were held uh because you you I'll let you tell the story, but but you created uh an exchange um for innovation that um really had a significant impact on on a lot of people.

Innovation Exchange For Ambiguous Change

Joe Boggio 7:25

Yeah, it's it's it's fun to talk about this because the at the time kept Gemini, you know, an amazing company, but when all of that began uh they were in a different era, right? They were a company that had spent you know 40, probably close to 50 years at that point of doing great work in IT and outsourcing and testing and you know traditional IT-related work. The the world was changing. The large consultancies were all buying additional firms, you know, design firms. And my way of articulating it was you had 40 years of working with a buyer who really knew their problem set. And they could write it on a piece of paper. Here's your RFP. I I need to do some outsourcing, you know, BPO kind of work, right? It's a pretty discrete problem. You know what it is. The world was starting to shift because digital technology had evolved so much that the new buyer was someone who really didn't have the ability to describe their problem. It was more ambiguous, right? So you had strategy firms you acquire and design firms you acquire, firms that are really conditioned with navigating ambiguity and helping a client to think through the dimension of change. And for 40 years, you had a client that when I deploy this, it's not going to transform your company. It's going to incrementally improve a process or some domain or give you some new feature set from a packaged app. Increasingly, the the conversation was how do we digitally transform or innovate, right? Same, same kind of thing, right? Large degree of change is required. Uh so it wasn't just me, I had a whole you know organization and team at ACAP Gemini that thought through all this great stuff. And you want me to take credit for it, it's all me. Um we kind of came up with this notion that uh you know there's always gonna be more innovation in the ecosystem than any one company can ever absorb, right? It you know, Amazon's dropping 20 billion a month, something ridiculous like that. And you know, and those numbers look small now compared to the open Eyes and Anthropics of the World and the Nvidia's out there, the just profound amount of money that goes into this ecosystem. So yeah, on one hand, you can invent and do RD, that's a form of innovation. The other is you can apply existing innovation and just learn how to source it and identify it and map it into what your business ambition is. And the other is you know, change and transformation is is never really um singular, right? You need an exchange, you need a dialogue. There's a lot of uh uh ambiguity you're trying to navigate. So the more voices and perspectives you can get in that exchange, right? So we that was kind of the uh ethos of it, and put some methodology and structure around it and uh help our clients to you know think through complex, ambiguous transformation programs.

Why Transformation Often Fails

Joe Boggio 10:22

And yeah, I would say that uh after a lot of years of of wading into those conversations with clients, the the fun I like to poke at it now and you know, no longer being in that world is you know transformation, you know, I think you and I spent a lot of time talking about this, is it often doesn't work, right? When you think of you know, after many years of working in this super interesting space and helping large enterprises think through transformation and innovation, yeah, I think you you you start to have a different relationship with it. And I after all those years, I kind of had this simple ethos that I started to realize, which was that there's one variable and one variable alone that determines if a company is going to innovate or not innovate, transform or not transform. Uh, and it's not your budget, it's not, you know, whether you've got the latest ways of working or you've got you know a big bazillion tokens and a direct phone line to you know Jensen. It's the psychology of the CEO. And yeah, that conversation is often one that uh limits an ability in an organization's ability to transform and innovate. And often there's a tendency with senior leaders to want to buy comfort. And it's often that these consulting experiences, innovation experiences can be theatrical and you know, innovation theater and really intriguing and really insatiating, and you know, we come up with a lot of ideas. But then in the end, the really, really hard part of innovation or transformation is it's real work and there's real risk involved, right? It's this is and often if you're dealing with true transformation and true innovation, it may well be the first time you've done that in a meaningful way in your career because you got to where you are, because you're really good at managing the current business, optimizing the current business. And if you want to transform that, right, that you you by default have to go, you know, against some of the you know the norms of the business and step out of your comfort zone, right? So that you know, to me over the years, it was okay. Technology is really powerful. I love technology still do, right? Digital is such an amazing active ingredient to you know stimulating change all the way through to it's like, okay, this stuff's really, really hard. And the hardest part is not the technology or the process or the stuff that you can buy, right? If you can outsource or delegate it, it's not real innovation, it's not real transformation, right? It's the stuff you can't delegate, the stuff you can't outsource that is the you know, kind of the leader's work to do, right? That so that that's a long, you know, obviously that's something I'm passionate about.

Speaker 1 13:03

Oh, clearly. And and what I what I love about just all the discussions we have is as you said, you you were an engineer who brought his engineering mind just in his way of breaking down a problem and building up frameworks and and approaches to your love of innovation, because you knew that it, I mean, as um it's so often talked about as an art, and you wanted to you want to turn it into more of a science with still the passion of of all of the humanity of it, with exchanges and people sharing. And and the things that you did in the exchange, too. This wasn't just a bunch of vendors that would come together and sort of show off their respective toolkits and say, these are from a combinatorial innovation perspective, you could just use a little bit of our product and a little bit of their product. It was much broader than that, right? I mean, you I mean you were very passionate about just general, as you said, executive coaching and leadership and mindset and and approach for a long time still are. So um I think that's amazing. Now, one of the challenges, though, is the top-down mandate seems to persist, in so much as everybody I've ever talked to for years and years, it's that CEO who you said is so important, tends to come back from a conference and declare what the new flavor of the month is. And it's usually just the loudest, the loudest story. And so it was either from in my time in this space, it was robotic process automation, or now we need to all be looking at um uh chat GPT and then just generally Gen AI, and now like dump gen AI, we need to all be moving over to agentix. And so um, to some degree, they are passionate about some of this, but I don't know that that helps because they they aren't doing the hard work of of understanding what it just means to just sort of chirp the the most recent headline. Is that is that fair, or is that me just be grumpy as

Horizon Compression And Leadership Anxiety

Speaker 1 14:56

CEOs?

Speaker 14:56

I mean, I think it you know the the cycle time has changed, right? Uh it's been a long time since I've I've done the the Kept Gemini work, but we would always use the Horizon model, right? It's um McKinsey model of you know, a senior executive team, you're probably incredibly well versed in Horizon One. I hope you are, right? You know that in in better than anyone else in the world, but Horizon 2 is something you really need to continue to pay attention to. And at the time, you know, Horizon 2 was beginning to be AI and ML and IoT and Sentry, like all this amazing innovation that can apply to your current Horizon 1. And then Horizon 3 is you know really, really transformative stuff. And you know, you leaders should spend more of your time in Horizon 2 and Horizon 3 to build this anticipatory muscle of hey, what's coming to our world and how does that impact our customer and our core processes? And you know, you you gotta kind of get your calculus right and start solving for the you know, new raw materials are going to be made available to you and all your competitors. And how do you make advantage of those things? And but now it's you know, it's as if something goes from horizon three to two to one in in an hour and a half, and you, you know, you no one can keep up with what's going on in the AI landscape. And there's plenty of you know non-AI related innovation that I think has kind of fallen off into the shadows here, that that stuff continues to progress very quickly. And so it does create a different sense of uh, I think anxiety and responsibility and and you know, probably a little uh a little bit stifling and mobilizing to senior leaders because this is very different, right? This is incredibly quick to access your talents using it all over the place, and the amount of money that is being put forward, the the you know, the term war, right? We're at a you know geopolitical AI war, like so there, there's this whole set of consequences to this form of AI, and and probably you know, a real need for senior leaders to to have enough literacy and fluency and know you know who to go to for guidance on it, because there is a lot of hype and a lot of uh uh you know the consultancies themselves, I think, are still figuring out what this means. And there is so much innovation in the ecosystem right now, and it's growing faster, right? The cost of creating a startup now is probably never been lower. And you know, AI is your co-founder. You can do amazing things. So you're seeing an abundance of startups and you're seeing an abundance of the large players come out with this. Like you look at Cursor, right? Cursor, amazing example, you know, coming into uh uh you know, getting acquired or you know, advanced partnering with uh XAI. Cursor didn't come from Google or from Microsoft or you know, any foundational lab. It came from you know young founders, right? I don't think any of them are over 30, right? So there's just these profoundly interesting sources, and the mean time to benefit is so high. So yeah, it it you know, I go back to my logic of hey, you know, in the end, it's the psychology of the CEO that ultimately is a thing that you should work on. Is you know, if you take nothing else from your time, with at least my my philosophy was if you take nothing else from your time in somewhere like Silicon Valley, spending two or three days thinking deeply about your business and the implication of all this new AI and innovation, it's that you know, ultimately, you know, it's your responsibility. You've got to really understand this at a deep, intrinsic level. Don't delegate it, don't outsource it, get into it as much as you possibly can, use the tools, understand it. And the whole idea is like we're trying to frame an intervention, right? If you leave here and you continue status quo of okay, I think we got you know three years before this hits us, we do our job, right? The you know, the real red pill that we're trying to go for is okay, things are different, and I have to lead different in this era. I have to lead different in an AI era than I did in a you know pre-AI era. How I think that rule book's still getting, you know, formulated.

Speaker 1 19:21

Well, that's right. And then just because, as you said, the pace of change is so dizzying. Um, because you didn't learn this in wherever business school or wherever you went to, you really do need to roll your sleeves up in a way that you didn't have to in prior waves, right? You didn't have to, you didn't have to migrate your systems from on-prem to cloud to really get it to be the CEO that spearheaded that transition in your business. Um and uh you meant you mentioned Silicon

Inside The First GenAI Hackathon

Speaker 1 19:46

Valley. I'll just I'll uh weave in a story here, but one of the one of the more recent times I was in Silicon Valley was was thanks to an invite from you. Uh you invited me out uh in March of 2023. So hard to believe it was three plus years ago now, but there was a uh ChatGP3, Chat GPT 3 had just been released, I believe, and there was a hackathon uh that was being hosted right there down by the water in San Francisco, and and we got to watch just just the the the digital native, young, smart, energetic kids who um who filled that room and over the course of 24 or so hours built things with an early iteration of uh of Chat GPT. And it was amazing to just see some of the discussions I had, it still stick with me. Um there was a discussion I had with a kid who who had literally just graduated from Harvard in computer science and used the phrase existential crisis to explain his uh you know processing of um what it could do and whether or not his entire degree was was gonna serve him at all. Um a little uh I think a little hyperbolic because I think his sorts of degrees are more important than ever now to to understand the the frameworks and the approaches of coding. Um but the speed at which people ginned up solutions, um, whatever they were trying to solve, it was it was fascinating to be there early in the earliest uses of of uh a large language model. And uh and I have you to thank for that. And clearly, uh clearly a few things have changed and evolved since then.

Speaker 21:33

Um yeah. Yeah, that was uh a I don't know, a deep transitional 48 hours, right? For me at least, because I remember the couple days preceding it. Yeah, we're at a place called Shack 15 in the ferry building in in San Francisco, which is kind of like ground zero for Virgin AI in a lot of ways, and yeah, random Wednesday and another member of this this. Uh check 15. It's like, hey, are you going to the hackathon this weekend? I'm like, I don't know what you're talking about. And so I end up talking to one of the curators of it, a company called Cerebral Valley, which, if you haven't heard of them, check out Cerebral Valley. Like they're incredible. Like they're probably more in the know of what's going on in this early agentic fit and AI gen AI and AI category than any firm I know of. Um, and they were the ones hosting it. I think it was the first ever open AI hackathon. And the interesting thing for me was like neither of us are hackers, right? We didn't we weren't there like as part of a team building anything, but we're really curious about how work gets done and new technology and pattern breaking kinds of things. So we just like you and I were like journalists there. Like we were anyone who was taking a break from their little, you know, vibe coding sessions who were like, so what do you do when you're coding? And and oh, like, oh, you're a distinguished engineer at Meta. That's that's interesting. This wasn't like 15-year-olds from you know the local high school. These were incredibly seasoned. You had to um win a get get through a gauntlet to get in the room. And and for me, it was you know, on one end, there was the kid who said, Hey, I this is an existential crisis for me, I don't know what to do. On the other end, it was you could talk to one of those distinguished engineers and you could just like hit mute. You didn't even need to hear the words that he or she was saying, and you could tell, right, this is like Picasso just got color for the first time. Like the what I can potentially do with this technology, like you could tell it's like it was very visceral for these people. It wasn't like, okay, this is whatever, the next incremental change. It was you didn't have to be uh too close to the technology to realize the reactions that people are having in this room are really, really powerful. Like this is different. And seeing what they did in two days, you're like, wait a minute, like that would have taken, you know, back at you know, any given consultancy six weeks to you know to do some of these things. They're like ripping it out. And and that was version three, right? So since then, who knows what those you know latest hackathons are like. I haven't been to one in a while.

Speaker 1 24:17

Yeah, we need to get invited to another one. Um Red, you need to invite me to another one. Um, but you're right, it it did feel especially if for speaking for myself, spending years and years effectively being somewhat of a uh pragmatic curmudgeon as it relates to AI over promise. Where anytime I had a discussion with an enterprise, they wanted to just use AI, I'd I'd just uh I'd either try to to counsel them as to you know ask yourself carefully, what is it? What do you mean by it? Is it just and because it it it it struggled to to contribute in an enterprise. I left that weekend just just shaken, right? It just it was it was clearly something was was afoot. Um and um and and it and it keeps being and then as you said at a dizzying pace where every single 15 minutes something new drops. Um a lot of new startups. I I do think I don't I mean I uh I always think it's cool to be a young uh energetic uh entrepreneur who's starting a business, but I also um worry about them because so many of those startups are just put out of business within seconds of each new iteration of each new large language model that I mean, whole swaths of of problems being solved are then instantly um sort of uh rolled into the next wave of capability. So it's it's also it's also pretty uh harrowing, I think, to be an entrepreneur in some cases these uh these days.

Speaker 25:50

Um yeah, it's in it's it's super interesting, right? Because you get such a big span of highly vulnerable startups that you know a new new update from OpenAI or Enthropic can wipe out a whole batch of Y combinator startups, and then you've got the others that are like the cursor again, right? You look at the uh revenue per employee there, it's their current valuation, it's something valuation per employee, something like 400 million per head kind of thing, right? So you've you've got that aspect of AI as well, is you know, the the the impact and generation of these firms is profound against a relatively modest number of employees. And yeah, a lot of the employees are not there doing distribution, right? They're just building the product, and yeah, I didn't have to build an organization to go sell and train consultants. It, you know, I'm sure some of that happens, but it's you didn't need 30,000 people to get to that valuation.

Speaker 1 26:46

No, not anymore. And this the truly and the speed at which you get to that valuation is is astronomic. Um question about so you really have spearheaded so many different discussions around innovation, collaborative efforts. The the design thinking concept was was something I found fascinating too, that um happened to to set up uh incubation and design thinking and and catalyst labs in in my history. Um oftentimes the way that we would explore, I mean, as you said, you gotta think sort of you gotta think about true transformation, think about what the art of the possible is, you gotta challenge convention. And usually we did that with uh with whiteboard markers and uh post-its, got some post-its around here somewhere, uh, and some good facilitation, some good storytelling and and uh real active sort of focus on on just design.

AI As A Sparring Partner

Speaker 1 27:40

Now you do have things like the the vibe coding tools like and and coding tools like cursor. Um is is that a renaissance for that ideation framework and discussion? Do you I mean do you you never pick up a market, you just you just prototype a thing and say it would be really cool if we had a uh app like this for onboarding employees or an app like this for servicing a new customer. Um is that the future of uh you know uh innovation exchanges?

Speaker 28:14

Yeah, I think they definitely augment it, right? I think the if I look back on some of the most powerful red pill moments that I ever had in my tenure of doing that kind of work, it had nothing to do with any technology. And it was pure human, right? We we you host a dinner with the right four or five people, and you put a container around the conversation, and all of a sudden, yeah, you know, it it there is content being shared that's really generative, right? It didn't exist at the beginning of this dinner, and the people at the table are at kind of a level of the cutting edge on their subject matter that the IP's not, you know, in an LLM somewhere, and it's that kind of you know, almost like campfire, you know, human connection and your you know, a lot of free radical thinking there. I on one end. And the other end, I'll tell you a quick little personal story of I have had this idea, and I'm sure everyone can relate to this, right? Relative to these new AI tools. I've had this concept in my head that I couldn't quite grasp a narrative or uh, you know, an analog for. So I had Claude just interview me, and we sparred for a bit, and I just said, okay, this is starting to work. And can you just write a Substack for me based on some of these things that we've we've established here? And you know, I'll just give you the premise of the Substack here. So the the the angle I was looking for is like, you know what, in this era, companies, enterprises are really struggling, I think, to think through how do I adopt AI and agentic AI. And there is no rule book. I was looking for, you know, let's let's study history to think about our current moment we're in. And this analogy that Claude came up with, I can't take credit for this, is pre-1972, I think it is, soccer was played in a pure zone format. So all the recruiting was done. Okay, you're a defense player. I'm gonna recruit you for your physicality and your ability to do four or five things really well. You clear the ball out of the defensive zone, and that's it. You're not gonna leave your little rectangle on the field. And then in the you know, early 70s, this little team out of Holland had a different concept because they didn't have the money, they didn't have the resources, they couldn't compete with the Premier League. So they came up with this thing called total soccer. And total soccer was okay, every player on the field plays offense and defense, and essentially they're pushing intelligence to the player. You need to think about where the ball's at. You need to think about how do you orchestrate as a team and be agile and adaptive and responsive to where the play goes. And then you you're gonna be more uh competitive because you can move with greater agility down the field. And that concept of total soccer, you know, created a whole academy and all the greatest players living today came from that school. So they're not just great physicality and you know, great ball handlers, they're smart, right? So this notion of like, oh, this is such a good, at least a framing, right? Like so today, everybody in security is like, I gotta defend AI, right? I gotta control this space. Like you, you know, you can't go, you know, use open claw, like that's too scary. Well, if you use open claw, maybe you're gonna score some more points and get some more, you know, uh offensive agility on this. And now you're trying to put you know agents on the field. And so anyway, it for me, uh, it it it was this really powerful like, wow, this is this is as good, if not better, in some ways as sitting in one of those dinners, because I can have 20 iterations on this and sorry, that's just not quite landing for me. Can you find another example from history where you went from one modality of competing to another, like from music or sports or theater and you know, the origin of music and how do you like so it it just gives you you know uh you know as many tokens as you're willing to throw at it, it will allow you to keep kind of going back and forth. And you can spin up a website, you can throw a sub stack piece. I'm like, I don't like the the tone of this. Can you write this in you know in a Kevin Kelly format instead of uh uh you know uh uh HBR format, right? So stuff like that.

Speaker 1 32:41

I just asked for more biting sarcasm, but sure, okay, I get it. Yeah. Anyway, that's right. Flippant and rude, impatient. Um no, it's it's funny. I actually uh different, but it's uh related. I I just had a um my my girl's school had a a panel on AI where they were trying to to sort of share with a bunch of parents something about AI. Um and I left thinking about frameworks of how we might continue to to can to continue this dialogue um for the sake of the parents and the students and the teachers and the school overall. And uh and that that behavior that you just exhibited, like that is something we should be teaching kids, not the chat GPT can write your essay, and how do we make sure that you're not having ChatGPT write your essay sort of thing, which which is sort of sort of first this is very simple um uh sort of reckoning with a new tool in their toolkit, but more of the how do you how do you turn learning into sort of the Socratic method where you where you all sit out on some steps and talk and have somebody work you through ideas, you need to to teach people that that's a possibility. I mean you you obviously you knew that and you're having these discussions, but we should all be having um, as long as they don't take us off the in into weird hallucinatory um areas and give us wrong information, so we still have to scrutinize and have a level of of of you know trust with Ferify. But uh how cool to be able to have those discussions.

Speaker 34:23

In college literature learning the word syphilis, and I'm like, okay, when am I ever gonna use this word ever again in my life? And then all of a sudden, here we go. Like these models are like, you know, I Ian, you you want to do a uh you know an RPA startup? Like that's a great idea. I totally think you don't use any AI in it, and it's a wonderful concept. Like you should go to Sandhill Road tomorrow. Like, I don't know if that's really a great idea.

Speaker 1 34:47

It's uh it the it's funny because that word did come up on the panel, and then it came up in some video I was watching on uh anthropic, I think, or on Claude. But yes, the the it feels great. I like being told my ideas are good. I mean, I certainly don't get that from from from you know at home. Um I've got two daughters, man. I just I I want someone to tell me that uh the things I'm saying are um you know Claude has never rolled his eyes at me, and I thank him for that. It makes me feel better about myself. Um but you it in the in the brainstorming realm, it perhaps isn't as useful to have everyone of my ideas.

Speaker 35:28

Yeah, totally. Yeah. Yeah, you I'm sure you can have it play an oppositional role too.

Speaker 1 35:33

And oh you can. Yeah, no, I I have people who've told me about how they how they trained or prompted to just just be just really um quite strong in its um sort of counter counter arguments and just the way that it pushes back at you, which is you know, it's also useful, although I I still like this sycophant sea so I'm okay with that. It can be nice. And it is fun to say. Um there's a few things that have come back. There are there are like laws and rules, like like Jevins and Amara's, and like I think everyone uh watches the same podcast, so we all just keep that.

Speaker 36:12

And uh Bloom's two sigma law, I think that one. So the which one? Bloom's two sigma law. Ooh, no, what is that one? Um so if you have uh speaking at school, right, with your kids, if you have a a child who is given a a tutor from like K through 12, okay, that they they will move two sigma to the right, two standard deviations to the right. So if you're a C student and you've got a tutor that whole time, you're gonna graduate the top of your class kind of thing, then it's the premise that okay, AI is the infinitely patient tutor, right? It doesn't, you don't have to give the answer. You can have AI be an adaptive, you know, like Coursera and Alpha School and things like that. That okay, if every student in the world and every adult for that matter has got access to someone who can help upskill them, right, then that scales really well.

Speaker 1 37:07

Interesting. I did not know that one. Um there's uh there's an there's another one I can't remember. It's like it's uh it's a it's a fence one. I can't remember who the fence was named after, but the idea was don't tear a fence down if you don't know why it was put up in the first place. Which which I think is I I like that one just because it's the everyone sort of racing into organizations to just to just decide they can AIFI things, right? They can automate it, they can apply it, and then like, well, wait, hold on, do you know why it is the way it is currently?

The Rise Of AI Consultancies

Speaker 1 37:37

Um which kind of brings us to so let's talk current events for a moment, because we we right now what's happening is you mentioned lots of money being thrown at things, and right now it seems like a lot of money's being thrown at creating AI consultancies out of ether. Um, usually by obviously acquiring and rolling up uh other consultancies. And the the two primary drivers behind this are open AI and Anthropic with other people's money. Anthropic did it with Blackstone and um Goldman and others, and then I'm I'm talking about this with everybody, uh but it it seems to be the the thing that's the yellow it it it is it's sucking up all the oxygen right now. Um and ultimately it's it's it's that concept tied to the idea of the forward deployed engineer idea um that was popularized by um Palantir, but um is and you're in Silicon Valley House. Are are you saying forward deployed engineer all the time now? Is it required by law that you use that at least once?

Speaker 38:42

Oh yeah, yeah, you gotta use that or services-led growth instead of product-led growth and yeah, way of saying it. Yeah.

Speaker 1 38:49

Right, right. Uh any thoughts? How do you feel about it?

Speaker 38:54

Yeah, I think it's fascinating, right? It's like the that horizon one, two, three compression I mentioned earlier. The it it's it's a really fascinating thing. Like, you know, prior era, you had Bill Gates and Steve Jobs, right? Fighting out for okay, who's gonna own distribution of you know, personal computing? And you saw how that played out. Like you had these two, you know, uh adversaries. It's being played out in such a different scale and velocity, and the constituencies coming into it are unprecedented for me. Like you got some of the greatest capital allocators in in the history of business combined with what's kind of a lab. So you're you're kind of uh I my hunch is that the original thesis of AI was we're not gonna need any consulting. Right. If I I kind of look at it as if you had ERP, a dollar of SAP is ten dollars to consulting, and you had SaaS, right? That ratio is like I don't know, three to five. Right. You had vertical SaaS, right? You know, toast in your local restaurant didn't require any consulting. You know, now we're gonna have Gen AI and agents, and they can just be deployed. Well, I don't think we're finding that to be the reality, right? We and now at that mid-market layer, I can prescribe the technology I'm gonna be using to my entire financial portfolio if I'm a PE and therefore, you know, that psychology of the CEO is taken off the table a lot of okay, we're gonna go do this with this tool base. And if I've I think it's four and a half billion that OpenAI's got in this new JV of some forms, yeah, but and it's not a I think it's unprecedented. How you get the outcome on the other side, I don't know, but I think that my sense is you're probably gonna have these, whatever we call them. We'll say there's a new class of talent that can distribute intelligence inside of the company. That's a forward-deployed engineer, or I've heard the other one kind of an ambidextrious talent, like someone that really knows accounting and really knows AI. You you you need to know both, or you need to know your process domain and you know, probably your vertical and things like that. Yep. But the talent that can ultimately unlock and wield those things with great levels of proficiency and their own mastery of AI, they got to be in the you know, top couple percent of can I really use the AI to amplify myself? Like those those hackers that we met in 2003, when we talked to them, If you remember, they were all kind of saying, like, I'm like five times more productive with these tools. I have no idea what the the you know, the X factor is now. Is it a hundred times, a thousand times more productive? So I definitely think there's a compression there that you're gonna be able to elicit more value, but you know better than anybody that you know you you can't just take world-class technology, no matter how sophisticated it is, and just drop it into you know 1972. You know, you've got ERP, you've got all these back-end systems that are are all over the place. And in the end, you still have you know people and customers. And so I think there's this you know, profound amount of capital, and and then you've got a lot of super strong talent that just got exited out of great technology companies, right? And and odds are you're seeing, I I've had this thesis for a while that if you're really top 1% AI talent, you're not staying in any consultancy. There's no way you're staying in a consultancy, you're gonna get pulled into oh, this open AI thing is not a consultancy, this is a distribution mechanism, and and I'm worth a lot more money if I can get equity in one of these players. And that's like one thesis. My other thesis is that's at the highest end of the market. I feel like you've got the caps and accentures partnering with OpenAI and Anthropic and going in, you know, gonna go do a best effort with that. I have my own ideas on is that are gonna work or not, but those are for the big enterprise. And then this new launch is for kind of I don't I wouldn't call it SMB, but it it kind of you know upper market. What about the small side, right? The that's where I think you get into more verticalized AI. And same thing, right? That transition happens faster if you can verticalize. Yeah, I think AI thrives in a verticalized structure, right? The data, the process knowledge, the distribution. Um, and a lot of that I think is owned by family businesses, right? So I think that that's the third arm that I'm eager to see how that gets landed. Because it's a very different, you know, digital transformation didn't work because of a lot of reasons. Enablement looks like the executive layer being private equity and incredibly well compensated people who have a financial stake in the the whole pie. Uh the motivations look pretty high, right? And I feel like it's interesting that you, you know, you've really got two camps there, right? You got a you know, a mountain of money from camp one and a mountain of money in camp two, and you know, great talent in both both sides. Um, I love that you're gonna be able to kind of A-B test and see which one of those two, you know, moves faster.

Speaker 1 44:34

And man, there's so much to unpick there. I mean, one of the I mean so would love to love to explore again the psychology of the CEO in, especially in those portfolio companies where where it's to some degree taken out of their hands, but they they're being they're gonna be handed a consulting team that uh will come in effectively with a statement that says, I really don't care what your question is, the answer is this particular tool set, whomever is backing us, right? So um the diagnostics are weird when you come in knowing the answer. You I know what I'm going to deploy, now let's go figure out where to deploy it. And to your point earlier in the discussion, um, the underpinnings, the 1970s element of an organization um doesn't magically upscale and and get in a in a better state, get ready just because someone shows up with uh modern technology. And um this is not the first time we've had modern automation technology to emulate work going on in enterprises and uh supposedly make those operations more efficient. And and it's also not the first time that we had hoped we could get rid of consultants. And I mean that was the most recent wave of that was when we went from the the process automation space where all of a sudden process mining and process discovery and task mining um was supposed to put all the consultants out of business because you didn't need them doing opportunity assessments and process modeling um for you, but um, you still very much do. Uh and this this investment, I I do agree, is is their sort of recognition that the the the landscape is harder than they'd anticipated, so they need to brute force this with some some humans. Um and the small and medium is a fascinating space. You're right, that's where that's where so much need is, so much nuance is but also so much um uh there's a huge delta between where they are and where they need to be as far as awareness and education, as far as even resources, um, and again, as far as readiness, those small and medium businesses I bet my life from the fact that they don't have their processes documented or if they order their data in any sort of state that can can actually uh test what's coming.

Speaker 46:50

Yeah.

Rethinking Work With Abundant Intelligence

Speaker 46:51

There's the whole um is two other things that that come up when when you share that is like everybody knows PayPal Mafia, right? The if you trace the origins there, like the some of the most prolific technologists, capital allocators of the current era of tech came from that Genesis. Well, do the same for Palantir, right? So if you look at early talent from Palantir that has since left and created new companies, they they were kind of like my total soccer thing. Like Mesay came from the early days of a new philosophy, like we operate differently on the field. Well, Palantir, yeah, they're you know, they had a different ethos and philosophy from an early days, like this notion of you you don't um just buy the product and conform your process. Like there, there's a need to have a different union there. Um, so many of their early forward-deployed engineers went on to create some of the most iconic company like Hex and Decagon, like these modern era agentic firms that are you know now massive, right? So I on one hand I'm like, okay, I'm I'd be really curious to think through or at least study what they are doing, because they aren't retrofitting a okay, we have to use consulting and AI to go do something. Well, what if the species is you know natively born of both of those? Like they are inseparable. Um, and because I think a big part of it is mindset is scarcity or abundance. Okay, if I'm if I'm deploying, if AI is a utility for intelligence, so intelligence goes up and cost goes down, how do I think about redesigning processes when what would have normally I would have optimized for scarcity? Like I know I can't have 70,000 call center agents.

unknown 48:40

Right.

Speaker 48:40

Okay, what if 70,000 call center agents is is $11, right? I can have as many as I want, right? So I think part of the struggle a lot of these agentic firms and you know, whoever represents the the point of transformation is wait a minute, we got to kind of step back and rethink this whole animal, right? Because it and that's where you're starting to see now at least a couple examples of HR and technology merging into one organizational function. Like we're managing intelligence, yes, human or or you know, digital or some hybrid. Let's just bundle it into one and now start thinking about process domains. And so I think we're gonna have this hangover of all right, we think we're from scarcity, we think about process improvement, we think about you know things in a certain way, um, robotic process automation. Like you just look at the the vernacular we use, I think you're gonna see really fast. I think you're gonna start to see, you know, entire re reimagination of what do these things go do. So very cool.

Speaker 1 49:45

Yeah, no, I I I absolutely agree. I think you rethink what an organization is, you rethink all of the the functions, departments, pillars, towers, and and you need to address then agendas and fiefdoms and everything else that that uh holds an organization up. Um so because IT and HR are coming together is is two very different cultures, um, two owners of two different uh teams who so you need to get over the the human elements of that, but you really can fundamentally we

A Practical CEO Operating System

Speaker 1 50:15

think. Um which brings us back to and I'll I'll maybe we we wrap up here, which is if if if you were to design sort of your your perfect sort of CEO um sort of mindset coaching framework approach, like what is this what is what does a leader need to to do and think and and be these days? Um what that is because you because you're putting I mean I'll go back to just to make my question longer and to talk more myself, because you know, here I go. Um you did mention that sort of that that concept of somebody who is innately good at a particular functional area and also amazing at AI, right? That idea of having people in your organization that are super good at domain and super good at at uh disruption, the technology element of it. We've been saying that for decades. And honestly, sounds amazing, but in practice, I mean it's a unicorn. And how many people are out there? I I it gets my blood pressure, it gets my I don't know, it it it it it it annoys me when I hear people talking to um students and give them the advice that you know coming out of college, what they really need to do is just really know a domain very well and also be really comfortable with technology. Like I came out of college barely knowing how to how to function as an adult, let alone thinking I'd know a domain very well. You you learned domains over a decade of of exposure to said domain. So um so how does a CEO who spent their time working through all the different realms of maybe from the ground up, now they're running operations, now they're thinking big picture and strategy, how do they then get back comfortable in in the weeds of their organization and in their free time go learn about you know skills and and large language models and rags and mcps and everything else to make them versed in that. So I'll leave you with that random question. What do you do if you're in charge?

Speaker 52:15

How do you first thoughts on it are in the end, I think you're you know, you're you still have to be anchored with your company's mission, vision, values, right? That this is a uh a tool set that will help you take more ground on on those than not, right? So get more anchored into a lot more is possible. Like you can serve with more uh in a more powerful way. And the other is there is no better time to be a CEO. This is insanely interesting. You're you're every aspect of your your uh the the playing field is basically flat unless you're an AI startup or an AI native, truly AI building company. Everybody else is like on the same level, right? You're like, okay, wow, you got this new super tool that we all kind of have to think through. Um I would bias towards this super tool is gonna do a lot more good than harm. And yeah, how can I really think about being a leader that um steps back and thinks about, you know, am I thinking big enough? Am I moving fast enough with what's possible here?

unknown 53:27

Right.

Speaker 53:28

That's all you know, kind of hand-wavy, grandiose stuff. But the other is I would I'd go into my own company and I'd look at, you know, ask ask someone in your technology group, find me who the top three token users are in my company. And I want uh to hang out with them for a dinner and just find out what they're doing and why they're and how they're doing it. I would argue it's probably your top three highest risk of attrition. Uh, and they're probably doing more in your company and have more opinions than a lot of you know, consultants would, right? So I go do some forensics, I go walk the halls, right? That's the notion of good leaders, go walk the hall. You go talk to customers, walk the halls, right? And and talk to your people. So start with that. Um, and I would go spend some serious time in Horizon too. Like go to Silicon Valley, start finding a handful of CEOs who are if X and Twitter is great for this. Like Aaron Levy from Box is like, oh my gosh, it's just such good signal that they produce because they're in the middle of having to figure this stuff out, right? And um, and then I'm a big fan of like the YPO forum kind of stuff. Just go talk to other operators, go talk to your counterpart. Um it's a some of it is like you just got to let it permeate you faster. Go use the tools, right? That's the other thing. Just start taking a you know a half day every Saturday and saying, all right, find a reverse mentor, somebody who's in their 20s and is very savvy with these tools and very fluent in them, right? They've got knowledge and literacy in one end of the spectrum, you've got it on the other. And then just try building some stuff. Like, try I was at a really cool event with uh that Ethan Mollock was speaking at, right? He had a great voice. Follow him, right? Subscribe to everything Ethan Mollock produces and people like him. But his one of his key things is like, hey, go use pick your model and sign it up to do the deepest research you can possibly do. And as if you're gonna go hire, you know, BCG or McKinsey or whoever your favorite consultant is, you wouldn't just shoot him a one-line text. You would probably think for an afternoon, you'd write a page to really articulate what it is that you're struggling with. You're you're in some deep tension around a thing. Yeah, really write it and see what it comes back with. It's like his argument was like, that's like 50 grand worth of value you're gonna get. Just start using the tools, right? And and go meet with three or four big identic players and see what doesn't work and see what breaks. And yeah, if you're counseling one of the things I learned with Kept Gemini was if you're a company of any scale or size or you know, consequence, everyone will meet with you, right? Go to some of the prominent VCs, go to you know, open A Anthropic are a little hard to get to, but you know, by and large, you know, go get some good signal as close to you as to to the uh follow the the uh the trail, you know, the the origin trail.

Speaker 1 56:45

Well that's the origin. Oh nice. That's brilliant. Um I like referst mentor too. But uh and then for the I mean for the the lion share of the economy, the small and medium businesses, I think it is the the peer groups, it's it's looking for, hopefully people that you you generally have some degree of trust in who seem like they're experimenting as well. Um I do think you gotta be you have to have healthy skepticism just because so many of the so many of the the sort of the the tech bro TikTok videos that you watch about people building entire organizations of just agents all working all by themselves, in many cases that's I mean, it does it doesn't pan out when you when you when you double click on it. Um but but but to your point as far as being any sort of leader of any sort, the lens through which you now have to look at your organization is is very multicolored as before. Ten years ago it was could I use process automation to do routine mundane transactional? Uh and now now you're asking yourselves much bigger questions and and and looking at your organization differently. You should still, I mean, still I think a lion's share is still in that routine mundane transactional. Still so much of what your business does is just transacting. Um but then once you once you free up your demo experts um and you understand what the art of the possible with your data and with your customers and and with your organization is, um you you really can pull out of your peers if you are being creative.

Prompting Your AI Native Competitor

Speaker 58:14

Yeah, one of the things I just experimented with uh a company I was talking to, that notion of the red pill or the intervention. I think a lot of senior leaders have this quiet anxiety that someday I'm gonna open my laptop to start my day and I'm gonna see the announcement of a new firm that is the one that's gonna do me in, right? You know, what when we can all kind of think of that kind of terrible you know concept. So have AI do that to your business, right? You can prompt it. So I did this for uh a company I was talking to and just said, all right, I'm gonna I'll do the prompting. Imagine an AI native agentic optimized has just raised uh you know a very large amount of venture dollars and is going to be completely monetizing differently, and the talent profile is gonna be you know ex striped and you know, a CTO from here, you know, in their legacy industry, like nothing like that. And the whole idea is when you flip it open, it it should really evoke some level of a panic attack of Yeah, sounds like a fun meeting. You probably have in more abundance than that new company does. So you've got the data, you've got the domain expertise, you've got distribution, you got process knowledge, you just don't right. That that other thing looks like a new species, right? That just you you can't quite relate to how do I move from what I am to that thing. But once you see it, it's like, oh, oh wow, that's really scary. But I kind of know, you know, what what that thing might what it maneuvers like, you know. So that that's another, you know, uh red pilling.

Speaker 1 1:00:03

That's a that's a honestly. I would this is our relationship started with you, you coming in and helping me with a client think differently about what they do and and be and challenge themselves and be creative.

Closing And How To Engage

Speaker 1 1:00:15

You continue to do that. I hope you enjoyed that episode as much as we did. Thanks a million for tuning in. If you'd liked that, please subscribe and follow along. We have so many great episodes planned. We can't wait to share them with you. And if you're feeling particularly generous or inspired, please share this show with your networks on LinkedIn or wherever else you share things, and post about your favorite moments. And finally, if you feel like you have a strong point of view, get in touch. We'd love to have you on the show. Thanks for listening to the Magentic Show.