Keep Your Business Relevant With Generative AI (Guest: Ted Shelton)

Andreas Welsch: 0:21

Today we'll talk about how you can keep your business relevant with generative AI. And who better to talk about it than someone who's been helping business leaders do just that. Ted Shelton. Hey Ted, thank you so much for joining.

Ted Shelton: 0:35

Thanks for having me, Andreas.

Andreas Welsch: 0:36

Awesome. Hey, why don't you tell our audience a little bit about yourself, who you are and what you do?

Ted Shelton: 0:42

Happy to. So Ted Shelton, a partner with Bain and Company. We are a global management consulting firm. I am based in our San Francisco office, and I am focused on the topics of automation, artificial intelligence, and software development on behalf of our clients. My primary role here is I am the global head of our business process redesign capability, a capability that has been regenerated over the last several years under my leadership. to encompass all these technologies. And we serve clients in every industry on these topics. And obviously generative AI being the buzz right now.

Andreas Welsch: 1:16

That's amazing. I've been following your content for quite some time, both about automation, also AI and now generative AI. So I was really curious to get your insights and have you share your insights with the community here. So I know you've seen a lot in that space.

Ted Shelton: 1:30

Glad to be here.

Andreas Welsch: 1:31

Fantastic. So for those of you in the audience, if you're just joining the stream, drop a comment in the chat where you're joining us from. We've had such a global audience over the last couple of episodes, and I'm really curious where you're joining us from today. Ted, to kick things off, should we play a little game? What do you say?

Ted Shelton: 1:47

I've heard about this game. Let's try it.

Andreas Welsch: 1:49

Alright. So this game is called In Your Own Words. And when I hit the buzzer, the wheels will start spinning. When they stop, you see a sentence. And I'd like you to answer with the first thing that comes to mind and why. In your own words. To make it a little more interesting, you only have 60 seconds for your answer. Are you ready for What's the BUZZ?

Ted Shelton: 2:14

Yep, let's do it.

Andreas Welsch: 2:15

Okay, perfect. Let's do it. If AI were a movie, what would it be?

Ted Shelton: 2:21

Love it. Love it, Andreas because this one's easy for me. I've been using for over a year now, the analogy that AI is the movie everything, everywhere, all at once. And so if you haven't seen that movie definitely an amazing Oscar winning production. But I think the things that struck me in the movie, which are the same things that strike me about AI, is the incredible fast pace the fact that every time you turn around something new and crazy is happening and that you have no idea where it's headed. So I love that movie and I love AI. I think it's a perfect metaphor for what we're dealing with as we wake up every morning and look at the news and find out what crazy thing AI can do today.

Andreas Welsch: 3:04

Thank you so much for coming up with that on the fly. I think that's a really great answer. And like you said, it speaks to all the different facets that we're seeing about AI, generative AI and the news that we wake up to in the morning. I'm taking a quick look at the chat just to see. So we have folks joining from Botswana, from the US, from Pakistan, Portugal, Canada, South Africa. So really awesome. Thank you so much for being with us and I know for some of you, it's already late in your day. Now, Ted, you already mentioned it, right? There's such a big buzz around generative AI. Obviously, if you're in the industry yourself, it feels like a whirlwind and a storm of news and information. It's overwhelming, right? And we feel it's the thing right now, the thing to be aware of, the thing to be working on, the thing to move towards. But I also see that obviously it's a lot of tech conversation in many ways. So I'm wondering from your vantage point, working with C levels at the moment, how much of a topic, how big of a topic is generative AI for the C suite at the moment already?

Ted Shelton: 4:16

Yeah something really remarkable has happened since November of last year on November 30th, to be precise when OpenAI released ChatGPT. And as a side note, nobody at OpenAI thought that was going to be the moment of rapid awareness across the economy of the capabilities of generative AI. But the ease of access to generative AI, that a chat based interface provided, allowed people to interact with it and have the capability behind a transformer. And make that mental linkage to the everyday work that they do or that they see their employees doing. And so the takeoff rate has been absolutely amazing. Of course, all the data is out there, 100 million users in 60 days or whatever it was. Fastest growing tech platform ever. And obviously in every single media report. And so if you're a C level executive, you probably have experienced it yourself. You certainly have your board of directors, your your immediate team, your C suite, your employees, probably your spouse and children saying, what are you doing about generative AI? And so it is a tremendously interesting moment in my professional career as a technologist. Because is typically, non-technical business leaders don't actually care very much about the technology itself. They want to know about the outcome. And so for really the first time in my career, I have conversations with C suite executives where they're saying, how does this work? Explain the technology to me, right? It's great to have that intellectual curiosity, but I think also more importantly they are really beginning to focus in on how does this impact our business? Is this going to create a competitive threat or an opportunity? How does it change the way I think about the organizational structure of the product and service value? So it is top of the list. Every single week I am in a conversation with C level executives on this topic.

Andreas Welsch: 6:23

I think especially the part you mentioned around the intellectual curiosity C suite members actively trying it out. And I think that also speaks to the fact that generative AI is so much more accessible now. And obviously, there are so many tools that are coming out on a weekly or daily basis, even. That there's such a plethora of things to try out and try it out at home and then think about how do I apply that in a business context or how could I use that? And to your point, how does it even work? I remember we've had previous guests on the show who've shared how they've worked with their stakeholders, with their senior management, with their executives and C suite. And it was always about don't focus just on the tech, but to your point, what is the outcome? Really exciting to hear how that is shifting and what the opportunities are. And I think especially if you're in tech, having that awareness that, hey from the very top, there's attention on that topic that I am working on or that I do want to work on is fantastic as well to see and make that connection why that is so important. If you in the audience have any questions, feel free to drop them in the chat and we'll pick a few right after this next question. Look the reason I had reached out to you a couple of weeks ago was that I saw you had posted an article that you wrote about something you called strategy decay. And I thought it was a really interesting angle that you presented in that article. Maybe you can share a bit more about what that was all about and why leaders now actually need to revisit their business strategy. Specifically in light of generative AI.

Ted Shelton: 8:04

Sure the basic concept regardless of whether it's about AI or not, is that there is some environmental change environment meaning sort of the environment in which your business operates. There's an environmental change where the logic of how your business operated or the way, the value you provided to the ecosystem you participate in is diminished because of that change. And A non AI example might be that you had a business where you relied upon imports and exports into Russia and then Russia declares war on Ukraine and becomes a pariah state. And the problem is your strategy of building these relationships with Russia now needs to be reconsidered. That's an obvious one. It's less obvious when you talk about technology disruption. But often technology disruptions have caused organizations to have to reconsider their strategy. A great example is the encyclopedia business. So the encyclopedia business first was eroded by CD ROMs, right? I can get a digital version of these paper books. And then, of course, by the internet. And so if you were still Encyclopedia Britannica or World Book trying to produce printed books and you're looking at the internet and you're like, hey, when are you going to wake up and reconsider your strategy? And in my view, AI is one of those moments when a technology comes along and it causes organizations to have to look at how they operate and ask the question, how does this technology change fundamentally the environment in which I provide value? So that's the fundamental idea. And we can talk about specific industries or companies. But I think almost every company has some aspect of their business that they need to question.

Andreas Welsch: 9:58

As I was preparing for the episode, I looked at a few examples. Some of them are better known than others, but like the Blockbuster movie rental stores going out of business or likes of Nokia missing the smartphone trend or Kodak as a leader in photography, not catching on to digital photography. I think those are some of the examples you're alluding to. Is that right?

Ted Shelton: 10:23

Perfect example.

Andreas Welsch: 10:24

Yeah. Do you see that imminent threat to a certain extent to business models because of generative AI at the moment?

Ted Shelton: 10:32

If you look at what are the advantages that generative AI creates for a business? There is the ability to have human level work completed, human level, meaning the thought level work, although we can get into the question about physical robotics as well, because it actually has a huge impact on physical robotics as well. And we'll accelerate that in the market. But starting with the sort of data. White collar work. You have a human level worker that can work for pennies. So as an example in the software industry companies which have historically survived by being in niche markets. What would happen to those small independent vendors that currently have carved out these little niches, right? So every single one of those little companies has to be looking over their shoulder and saying, Hey, wait a minute how are we going to survive in a world in which creating software is actually going to be substantially faster and cheaper? Every software company needs to be thinking what is the threat? What is the opportunity? How do I serve new markets? How do I defend myself? What is my defensible moat as a business? Huge competitive threat.

Andreas Welsch: 11:47

Thanks for sharing that, and I think great illustrative example. I'm looking at the chat and seeing what folks are asking. One question from Matteo, for example, is the hype of technology translating into demand from industries, and is the curiosity translating into action? What are you seeing?

Ted Shelton: 12:07

Yes. So I think any time a new technology is introduced it takes a while for people to connect the dots to understand exactly how to use it. And we certainly are going through that learning curve right now with generative AI. And I think it'll be some time before we really appreciate the depth of the transformation that is possible in business from generative AI. But we do see substantial successful use cases already being deployed by industry. If I can separate out sort of two use cases as early movers I mentioned software development. I think I saw a report now this is self serving because it was from GitHub. But GitHub claims that 92 percent of developers in the U. S. are already using generative AI in their development tasks. And so it might be as simple as word completion. And so as I'm typing my code, it's typing ahead and anticipating what I'm going to type. Or it might be as complex as actually writing sections of code for me. But that's a clear use case where there is tremendous advantage that's already being embraced. And and it's a great example of how generative AI empowers individual productivity. And I think we will see many examples and individual productivity will be much easier for adopt pace of adoption than team adoption for a variety of reasons we can get into. But I think you'll see that in other categories of intellectual work as well that individual productivity will take off. The other category is where massive amounts of information need to be summarized and comprehended more easily by individuals. So I see that those use cases in legal, I see them in pharmaceuticals, in healthcare more generally where there's large amounts of documents that I need to be able to say, what is in this set of documents? Help summarize, help me draw connections between them.

Andreas Welsch: 14:17

I think especially the augmentation, the productivity angle, right? Take what are you doing, do it better, do it faster. Augment what you're doing with help here and there where it makes sense. One of the other questions that I saw in the chat was how do you have that conversation with the C suite, especially about these technical topics? Yes they're trying it out and they're curious. And they have some level of knowledge from how they've used it themselves maybe. But how do you bridge what's the technology with what's the business objective and opportunity?

Ted Shelton: 14:52

So a couple of things. I think, the hands on experience of these tools is actually really informative. These individuals that have been at work for a long time, they've grown up in these work environments. And so showing them that they can have a level of conversation, level of interaction with a machine intelligence, which is arguably as good, at least as a summer intern. And, in some cases substantially better because it's a summer intern. That has instantaneous access to all human knowledge and can process that human knowledge in useful ways despite making the same kinds of other errors that a summer intern might make. That, that is a revelatory experience for an executive. So, that hands-on personal experience of it is super important. But what I find is that the important thing in the workshops that I run for executive teams has been to be able to actually bring concrete examples of how the technology is being used in a particular industry. And so recently, for example, for a healthcare company we had a group of professors from a couple of different universities present research work that they are working on to show how generative AI is transforming the field of medicine. And so having those very concrete examples from trusted in this case professors but trusted independent parties, not some software salesperson that wants to get you to buy their next product. That also then really starts to move the needle in the conversation. And then that then is the launching point for having the strategy to decay conversation, right? To be able to say, okay, so what about the way in which your company makes money, provides value, creates value in your ecosystem? What could be disrupted by this?

Andreas Welsch: 16:38

And I think that the part you mentioned of how you have this conversation, how you lead into this strategy decay and coupling that with the productivity opportunity is a great one. So I would like to explore that a little further. Because obviously there are so many opportunities to increase our own productivity, even in things we do on any given day. But what do you see is the number one opportunity C suite leaders? What do you guys do want to address and what gaps do you see between the aspirations and the reality on the ground, for example?

Ted Shelton: 17:13

So, my standard advice to C suite is that there are three activities that they need to have their company engaged in simultaneously. These are not either or. You don't pick between them. You do all three. The first one is you need to deploy generative AI to your workforce for individual productivity. And there are five things that you need to do in order to successfully do that deployment. Number one is you need to actually create a safe place for your employees to use generative AI, so they aren't going out to a public ChatGPT and putting company information into it. Number two is you need a set of clear policies about acceptable use so that people know what they can and cannot do with this technology. Number three is they need a communication strategy to make sure that all their employees are aware of where that safe place is and what the policies are. But then number four, you need an education program because there are strategies for successfully getting value out of these tools. And you can teach those and, frankly, employees want the education. They are asking, they're begging for that education. And then the fifth element is to add an incentive reward recognition program so that you can identify people in the organization that are doing great things with this technology and show the rest of the organization what good looks like. So that's the first thread because you will then unlock. Individual productivity and improve the overall environment and also change the culture. So that the organization is more receptive to using these technologies as you move on to the second and the third streams. So the second stream is about team productivity. So you need to think through what are the business processes and what are the functions where generative AI can have a big impact. And so we typically create, as consultants do, a two by two and say what's the amount of business impact for a given area? And what's the speed at which we can deploy? And so take those first wave, high impact, fast to deploy use cases and start saying marketing, sales where are the places that we can say they're, we are going to change the way we work right together? Now, team productivity is a lot harder to transform because you have to deal then with a group of people. Like with individual productivity, some people adopt, some people don't adopt, you get the value of the people that adopt. You worry about the people who don't adopt later. With a team, you need everyone to adopt, right? You need everyone to change the way they work. And so you need a function in the business that is analyzing those business processes thinking about how to insert the technology, running a change management cycle, teaching people to work in a different way. So it can be harder and it's very helpful if you do number one to be able to get employees to be more receptive to number two. And then there's the third motion, which also every company should be thinking about, which attaches to the strategy decay point. Which is think through what are the four or five moonshots where you can say, if we were able to do X with generative AI, it would transform our position in the market. It would move us ahead of competitors, move us into new markets. It would change the value proposition of our products or services. So you've got to be able to go and think through and test and learn around. As I say, four or five moonshots.

Andreas Welsch: 20:18

Perfect. I think especially the moonshot part is important because I think a lot of times we talk about what are the quick wins, the low hanging fruit, the little things where we can generate some momentum. But also being that visionary and saying what are the things we need to do to really make a significant move or leap makes perfect sense. And I love having you on the show as a management consulting leader. The clean, concise way you've shared three points, five points to do number one and everything that entails. I think that makes it very tangible and very actionable. So thank you for sharing that. Now, look, we're getting close to the end of the show. And I was wondering if you could summarize the key three takeaways for our audience today.

Ted Shelton: 21:05

Sure, happy to. So the first thing I would say is that the speed of innovation has now far outpaced our speed of adaptability. And so this is a challenge for I think us as individuals and certainly for our organizations that we're going to continue to see a pace of innovation in this field. That is rapidly outpacing how we actually transform our organizations. And so this is not a sit on the couch and watch moment. This is a lean in. Really try to engage with the topic, be learning all the time, be pushing all the time, try to figure out how you are going to help move your own personal productivity and capabilities with these technologies and your organizations. And and the folks that are moving more rapidly will amplify the difference between the success of themselves as individuals and the organizations they serve by the rapid adoption, successful use of these technologies. So that's number one. Number two is that this is a moment when we will see the C suite engaged in making investments and transforming the organization. They do need education from the kind of people that would attend one of your shows. And so everyone out there in your audience should be thinking about. How do I help my executive team actually understand why this is not just a nice to have, not just a wait and see, but actually they need to lean in. How do we help them lean in and make this change happen in the world? And then the last thing I think, and we didn't talk about this, but I do think it's important to leave your audience with is, I do think that there are a set of ethical concerns that we should think about and take into consideration in all of our planning as these technologies, as really any technology is disrupting an industry. What is the impact on individual job opportunities? What are the potentials for bias and misuse? I think one of the unintended consequences of these technologies will be an increasing amount of personalized manipulation that's occurring by bad actors. And that'll affect our political cycles. It'll affect business scams. All sorts of things. So we have to be on our guard for that. And so then ultimately, how do we embrace the best things about this technology to enhance human life and avoid the worst things that will tear us down?

Andreas Welsch: 23:36

Thank you for wrapping that up. I think three really strong and, actionable points that you've just shared. So like I said, we're coming close to the end of the show. Thank you so much for joining us, Ted. It was a pleasure having you on and learning from you. And thanks for sharing your experience with us today.

Ted Shelton: 23:53

My pleasure being here.

Andreas Welsch: 23:54

And thanks to everybody in the audience for being here and staying up late or getting up early.