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Digital Disruption with Geoff Nielson
The Big Lie Behind AI Hype: Tom Goodwin on the Future of Business
00:54:03
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- [00:00]
A
Hey, everyone. I'm so excited to be sitting down with Tom Goodwin, a leading technology futurist, author, and podcast host. What's cool about Tom is he actually hates being labeled as a futurist and prefers Nowist, which is not my favorite piece of marketing. But I love the idea of focusing on emerging technology and innovation to figure out what we need to do right now. He has a reputation as being a challenger of lazy thinking and skeptical of futurist hype. So I want to throw some of the insights I've heard and see what he thinks is noise for versus what's gonna change everything. Let's find out the way I found you. Mostly, we've got bookers on this show who put a list of guests in front of me, and I say, oh, they look good. But with this one, I was actually. I was researching a different guest, and they were on your podcast on my wildest prediction. Okay, that was Tan Lee, I think, talking about brain computer interfaces.
- [00:55]
B
Yeah.
- [00:56]
A
And I saw that conversation, and I saw. She was great on it. But I saw you on it, and I thought, wow, this guy. Actually, you know, I listen to a lot of tech podcasts. This guy actually seems to know what he's talking about. I want to. I want to talk to this guy. So that's kind of how this came about.
- [01:11]
B
It's good to know that, actually. I mean, I always feel like I'm not necessarily someone that knows what I'm talking about. Like. Like, I don't. I don't come to this industry proclaiming to be, like, a deeper expert in any way, but I think I have kind of opinions that are interesting. So I don't know whether you want to sort of get into it and then we can talk about it live or. You know, sometimes there's a risk that you kind of say the good stuff before the session properly starts.
- [01:38]
A
No, I'm fine. You know, if you want to continue down that thread, go for it.
- [01:43]
B
No, we can go wherever you want.
- [01:46]
A
Sure. So, I mean, maybe with that, then tomorrow, you know, one of the things that you, you know, do sort of COVID and you do have some interesting perspectives on is this notion of, you know, what matters in 2025. And I think, you know, one of the things we're seeing is that it seems like the signal, the noise right now is way out of whack. Like, there's just so much noise, you know, so much constant change. So I wanted to, you know, kind of throw that question back at you and get your perspective, like, what. What matters in 20, 25. What do we need to listen to?
- [02:18]
B
I think what matters is taking a step back. I think what matters is seeing change in context. I think what matters is a degree of calmness. I think we've become addicted to this idea that everything that's new is better and that everything is changing faster than ever before. And if you're not doing everything almost immediately, then somehow you're missing this sort of huge trick. You know, I actually think that often we let make life a lot more complicated than it needs to be. You know, let's focus on the people who we are trying to speak to. Let's focus on what it's like to try and buy our products or service. Let's focus on how we can do our jobs better. You know, not every conversation, actually not many conversations should be technology questions. It should be much more about the business context that we're all operating in and what it is to be a human being today.
- [03:12]
A
So with that in mind, I'm curious on your perspective because it feels like there's this nagging pressure that as an organizational leader, you need to stay up to date with all the latest technology, with all the latest market trends. It's easier than ever to stay glued to the news, to be just consuming so much. It sounds like you're saying, well, that's actually the wrong direction. There's comfort and there's value in almost doing the opposite and going back to basics. Is that, Is that fair?
- [03:40]
B
I think, I mean, I'm certainly not advocating that people are ignorant.
- [03:46]
A
Sure.
- [03:46]
B
I'm simply aware that people need to maintain the right altitude on these topics. There is this kind of weird idea that every company needs to be a technology company and that every role is about understanding AI. And I think as a mindset, we all need to be curious and we need to be interested and we need to have enough information. But ultimately we need to delegate responsibility to experts and we also need to know where not to focus. You know, I always thought there was this kind of weird thing that happened in technology where, you know, a CEO might be, you know, waiting for their Delta airlines to take off and they would be reading, you know, the FT or the kind of in Flight magazine, and they'd hear about blockchain, or they'd hear about 5G and they'd be sort of drafting a sort of email on their BlackBerry out to like, their executive teams to go look into this. And the idea would be in three days time, they'd have a presentation all about how 5G was going to change their business or what is the Internet of things. And I think somehow it's become alarming for people to not be seen to be on the vanguard of everything. And actually there are, There are many industries where not everything is changing. You know, if you're in the mining industry, if you're in the education industry, not everything means everything to you. And I think there should be a confidence in learning to know when to not act. There should be a confidence in knowing what isn't important to you. And I think ultimately a lot of these decisions really about finding the right combinations of technology and the right time to make a much more significant and profound move. You know, a lot of business has almost been run in a very agile way where everything is test and learn and everything is sort of make rapid iterations. You know, we now live in an age where our iOS might be updated seven times a year, and you never can really see a difference. You know, what happens if you take a step back and, you know, when the right time to pounce is with something that's significantly different and much more profoundly interesting?
- [05:55]
A
It's a really interesting perspective and I feel like in some ways is counter to a lot of the conventional wisdom right now about you need to be more and more agile, you need to increase the pace of your, you know, decision making to say no, step back, and, you know, pick the right moment, make a big bet. How do you. How do you make sure you're doing that properly when, you know there's so much changing, there's so much at stake? And are there any, you know, organizations or leaders you've seen done this recently that, you know, you can point to is like, they did a good job with this.
- [06:27]
B
There's basically two types of organizations. I think at the moment. There are those that are in denial of the degree of change in their industry. You know, there are many car companies that are completely oblivious to the rate of improvement of Chinese vehicles, and they're completely oblivious to how awful the experience of buying a car is in many countries. So there's basically one whole set of companies that are kind of, you know, things. Things are so difficult for them to understand in their entirety that they're choosing to be ignorant. And then there's almost the whole tranche of companies that are the opposite, where every new technology that comes along is going to be transformative. They've kind of drunk the consultant Kool Aid, you know, where you're either a disruptive startup or you're a kind of a dead incumbent. You know, the reality is if you take a step back, the most large companies are making more money than they've ever made before. They're not facing disruptive threats from small startups. Many of the kind of technology companies end up copying the playbook of bigger companies rather than bigger companies copying the playbook of the smaller ones. So it's actually very, very, very hard to find examples of companies that is doing this right. You know, I think the, the whole industry, and I'm not, I'm not being too rude here, but the whole industry is driven by attention. You know, if you can say something outlandish, you get noticed. It might be an outlandish prediction, it might be some outlandish research report that shows that, you know, 50% of searches will be done by voice, or that, you know, the metaverse is going to be a $9 trillion opportunity. You know, we've got this culture where people need to get noticed, and then we also have a culture where people need to drive fear. So this idea is that unless you have a blockchain strategy, you know, your company may be screwed, or unless you're experimenting with the Apple Vision Pro, you're already vulnerable. And I think people find a lot of comfort in activity. So if people can be really busy and they can be sort of tweaking away, then people feel like there's a degree of safety to their jobs. I tend to take the opposite view, which is technology is really profound. Combinations of technology, like more data, like better sensors, like better connectivity, like elements of artificial intelligence, they all combine together to form this whole new canvas of opportunity. And this canvas of opportunity is so profound and so big, the companies need to look at their entire company vision, their entire sort of reason to exist, their entire business model, and then figure out what their big bet for the future is. You know, how does a car company make money in 2030? How does a pharmaceutical company rethink what its core competency is for 2035? You know, what is the future of banking? And rather than this constant busy tech test and learn agile optimization reorg, instead they just set this kind of bold vision for the future and they take a significant action plan to go through steps to become the business they should have become.
- [09:31]
A
I'm kind of smiling to myself, Tom, because I'm just reflecting on the initial question I asked you, which is what matters. And it feels like that's actually the question that business leaders actually need to ask themselves and ask their customers. That is almost a north star for separating the signal from the north noise.
- [09:50]
B
It's very confusing to me, you know, there, there is this sort of principle I think, which is people are more comfortable talking about really trivial things. So companies would much rather create their AI strategy as an example from sort of tactical executions up. You know, like every, every sort of large customer service based industry is trying to figure out how chatbots can, you know, improve the way their customers are served. Everyone's trying to use sort of predictive analytics in their, you know, their procurement process to figure out how to better procure products. We, we enjoy doing things that are small. We enjoy meetings where no one makes a big decision. We enjoy talking about numbers that are precise. You know, if you give people a sort of Excel spreadsheet with, with five tabs, you know, you've basically got like a seven hour meeting where people can argue about ratios for a long time. At some point someone needs to walk into the meeting and say, are we talking about the things that really matter here? Are we in denial of some of the really significant changes that are going on? Are we a company that actually doesn't need to exist anymore? You know, I often sound like I'm contradicting myself because, you know, I'm talking about companies that need to change and don't and companies that are changing and do, you know, every, every company has a different kind of level of disruptive threats. And some companies are fine and they don't know it and some companies are really screwed and they probably do know it, but they don't want to open up to that fact. You know, if you're a department store, you know, no one would build or invent a department store in 2025. You know, if you are a company that is, I know, offering insurance based on old ways to sell insurance, there are these remarkable opportunities to rethink many of the principles on which your business is created and to create something that's much more bold and much more ambitious and much more not innovative, but much more rooted in an empathetic understanding of people and how they live their lives.
- [11:50]
A
I want to follow that thread for a minute. Tom. You know, you talk about, you mentioned no one would build a company like X anymore, right? And you know, you've talked in the past about what would any given organization look like if it was built today rather than, you know, if it was built in, you know, 1942 or what have you. At the same time, you mentioned that startups are probably not the biggest risk factor here and there's actually, you know, maybe bigger risk from larger organizations. But you know, I'd love to Step back for a second and just get your perspective on, you know, what is the changing, you know, business landscape and who do you see as being the winners and the losers in the next three to five years?
- [12:36]
B
The easiest, and therefore quite a clumsy way to characterize the marketplace now is to understand that in sort of 2000 to 2008, we had this enormous foundational shift in the world, which was the Internet and it was the smartphone. And that created this whole new array of possibilities. And what happened in that time is that some of the most profound and exciting technology types of companies were launched. So whether it's an Airbnb, an Uber, whether it was the popularization of Amazon, we saw this sort of unique moment in time when a whole wave of sort of tech first companies got introduced. And around about 2012, it seemed that those technology based companies would thrive in every sector. You know, there was an assumption that every bank that had a new core banking system would explode in the future, that every legacy company was going to be sort of eaten by a thrusting technology startup. And today the kind of question really in the broad industry is, are companies that were rooted in new technology, technology types of culture, technology types of KPI, are they going to thrive because they are able to understand the category in which they're operating faster than legacy companies who over a period of time have to adapt. So who will win between a NEO bank and a traditional bank? Who will win between an online retailer and an offline retailer? Who will win between a technology platform versus a travel agency? And I think a lot of the disruption that we feel today is actually a kind of tension that started with the kind of digital era. It started because these big companies are kind of held to account to the same metrics that technology companies are measured by. So if you're a large bank, or if you're a large insurance company, or if you're a large retailer, or if you're a traditional combustion engine type of car manufacturer, you're still expected to report quarter on quarter profits, quarter on quarter revenue growth, you're still expected to hit user targets, and you're sort of held to account by these sort of trendy, dynamic, thrusting startups. And actually, fundamentally, still today, most companies that make most of the money are the bigger companies that have got market share, they've got trusted brands, they've got assets. But the question is always, who's going to win? And then now we've got AI on the scene. The question now is, when it comes to adapting around the potential of AI, is it best to be an AI first company that starts in 2025. Is it best to be a digital first company that perhaps started in 2010 or is it best to be a legacy company that in, you know, 1908? So we're in for this really, really interesting ride to see who wins.
- [15:41]
A
Any, any initial predictions on the, the answer to that question?
- [15:47]
B
I, I, I tend to think that, that big companies and, and traditional companies are better than we realize. I, I, I tend to realize that actually as categories mature, the questions generally become category questions rather than technology questions. So if you are trying to make amazing tv, it's probably better to understand how to make amazing TV than it is to understand technology and how that makes tv. It's probably better to understand, you know, human nature and why people consume entertainment. So as a general principle, I think it's larger experience, more traditional companies that generally hold more of the cards. Not, not least because it takes a really long time for technology to really sink in. You know, there's this sort of narrative at the moment that the next unicorn is going to be, you know, two people in a basement and, and sort of AI. You know, the reality is that the world does change quite slowly. That many of the things in, in life are actually about relationships or an understanding of legislature or a lobbying process or regulation. You know, the world is much more change resistant from processes than people realize.
- [17:09]
A
So you're not banking on like a two person AI startup hitting a billion dollars this year.
- [17:17]
B
I mean what will happen is it will be a marketing job on that company. It'll actually be two people in a basement, a law firm that's on retainer, an accountancy firm that normally would have been done in house, that's actually external. It'll be like a couple of salespeople that you know, they deny work for them. You know, there is an enormous ability for companies that are small to grow faster than ever before. AI is a really, really exciting and profound technology that will have significant impacts on our life. But just this idea that you can, you know, be using code to write code. Just this idea that you know your sales can be done by bots and that your customer service can be done by bots and agentic workflow are going to, you know, completely take over everything you do. I don't, I don't subscribe to that, that belief. You know, often if people are going to buy your services, they want to come to your office and they want to see people working there. Often sort of, you know, confidence in the future is actually projected through assets and through physicality and through beautiful design and through a track record. Um, so, so I think in, in most sectors these, these ideas are a bit naive.
- [18:31]
A
You know, I, I don't know if you see the same thing, Tom, but to me there, we've, we've kind of gone through quite a wave of what I'll call AI washing, where we just slap AI as a bell and whistle onto almost every product or service in every industry. And my sense this is not data backed, but my sense is that it actually hasn't gone over that well with customers. Like, customers are not the ones saying, Ooh, AI, I need to have AI. You know, maybe they're using ChatGPT or starting to find ways, but I don't know, like, have we, has that wave crested? Have we gotten over that hype? Has anybody learned their lesson or are we still in the midst of that?
- [19:07]
B
I think, I mean, I completely agree with you. To start with, I mean, no customer cares how things happen. No, no customer cares about anything other than the benefit. You know, no one cares how your pharmaceutical drugs were made or how the GLP1 reuptake transmitter was, was discovered. They just care about if you're going to lose weight or not. Yeah. So I think it's normal. I mean, technology companies in particular are terrible at understanding their audience and they.
- [19:39]
C
Tend to be people who are proud of what they've made happen. So it's very important for them to say that these new AR glasses have AI in them. It's very important for startups right now if they want to get funding, just to say that they're using AI. But generally speaking, the consumer landscape doesn't care at all.
- [19:57]
B
What we tend to see, and this.
- [19:58]
C
Happens with every technological wave, is when.
- [20:02]
B
A new technology arrives, people are very enthusiastic. There's a lot of hype, there's a lot of PR value in sort of.
- [20:10]
C
Jumping on this stuff first.
- [20:12]
B
So people look around their whole organization and they think, one, what are we already doing that we can now claim to be this new thing?
- [20:20]
C
You know, so if we're using predictive analytics and if we're using, you know, we can call that AI now, and if we're doing data modeling, we can now call that a digital twin.
- [20:29]
B
So they find things that they've already been doing and they kind of re. Relabel them as AI and they also just look to places where it's easiest to do. So it's very easy. You know, let's say you're in the.
- [20:40]
C
Business of selling cars.
- [20:42]
B
You know, it's Very hard to completely.
- [20:44]
C
Rethink your whole dealer management software. But it's very easy to just download a plugin and add a chatbot to your website. It's very easy to then do like a press release about how you're using a kind of new AI type chatbot. It's very easy to get AI to sort of fill in the little gaps.
- [20:59]
B
So this is a very normal process.
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C
Where first we apply this new technology to the things that we're already doing.
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B
And then probably sort of four, five, six, seven years later, after we've been with this technology for a while, we'll figure out actually what should we have done with it, like how can we.
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C
Automate this entire department? How can we completely rejig our company structure? How can we make new products and services that we didn't think was possible before? So this is a very normal process.
- [21:25]
A
That makes sense to me. And you know, what naturally comes to mind, and I'm curious if you see it the same way, Tom, is what we saw you mentioned around 2000 with the advent of the Internet. And it felt like in those first few years there was this huge hype around everything related to web and the Internet, but nobody really knew how to monetize it properly, what people actually wanted. And then it took whatever it is five, eight, ten years before we really started to see some of the good use cases there. Are we going to see a period like that again?
- [21:58]
B
Absolutely, absolutely. I mean, I didn't realize that in order to understand digital transformation you actually.
- [22:06]
C
Need to look at the past. And it turns out that the very first use of, you know, of electricity was to power things that we'd already had before. You know, we took existing kind of products and services and we simply added electricity to them.
- [22:22]
B
When we invented plastics, you know, we didn't think, what can we do with this plastic? We thought, what do we already have that's plastic? So we, you know, the first uses.
- [22:32]
C
Of plastics are very boring things like buttons or combs and things that already existed.
- [22:38]
B
So it's very, very normal to go through this two stage process where you.
- [22:41]
C
Apply it to what you've got and then you rethink. What people don't realize is this change happens really slowly.
- [22:48]
B
If you look at the numbers, we're still only about halfway through cloud adoption. Cloud should be a no brainer for almost every business. If you try and do things on your phone, you realize there are lots of products or services or business models.
- [23:03]
C
That have still not really adapted to.
- [23:05]
B
The power of the smartphone. You know, we still have paper forms. You know, it's a, it's a pretty normal process to go to a doctor and to fill in five or 20 different bits of paper printed quite badly on photocopied paper. And you're writing with your, your handwriting, which is quite hard for anyone to read these days. So we always overestimate, sorry, we always underestimate how slowly change happens. We always think we're further into a technology revolution than we actually are. And I think those adoption cycles are speeding up a little bit, but not as much as people think. I mean, it took electricity about 40 years to change the world. I think computers have taken about 30 years to change the world. I think the smartphones probably going to take about 20 years to change the world. So it wouldn't surprise me if AI isn't something that takes us, you know.
- [24:00]
C
10 to 12 years to really figure out.
- [24:02]
A
So, so with that in mind, you know, what, what's your best advice right now for organizational leaders, for tech leaders who are grappling with this and you know, how, how to, you know, kind of rethink their existing business and what role AI and technology play?
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B
The first thing is to be really curious about it. AI is definitely something that you should be experimenting with, you should be curious.
- [24:23]
C
About, you should be listening to experts.
- [24:25]
B
On, you should have people around your business debating. So really get stuck into it. Spend some time looking at your customers, looking at your staff. You know, remove yourself from the technology and try to sort of think more imaginatively and significantly about what this kind of means for what your business is. Take a bit of a step back and figure out, figure out a period of time over which you're trying to make change. Are you trying to do a kind of a yearly plan? Are you trying to do a three year strategy? Are you trying to do like a ten year strategy? I personally would focus on something about eight to ten years out because I think that's the kind of, that's our knowable future, that that's a reasonable horizon to look over and then, you know, have a bit of a walk, you know, take a few days off and think, right? Knowing everything I know now about technology, about people, about the business environment, about the, the world, you know, what, what sort of company would I have set up? You know, how, how would this company make money? What would it make, what would it do better than anyone else? And then based on that, kind of create a sort of strategic vision for your future. And then when you, when you have that, you know, try and, try and Figure out some sort of gateways on that journey. Know if this is an eight year plan, what does the four year mark look like?
- [25:53]
C
What does the two year mark look like?
- [25:55]
B
And when you've done all this, what you'll probably realize is that you don't need to run around in a panic, you know, firing everyone in customer service and you don't need to, you know, fly to Davos and get a speaking gig to, to talk about your company. What you actually need to do is a sort of slow, confident and logical roadmap where you're figuring out your sort of key priorities for now. And it may be that that involves not doing that much action right now.
- [26:24]
C
It might be that you're waiting for.
- [26:25]
B
A better time to implement a big change.
- [26:27]
A
So as silly as that sounds, I feel like that's kind of a controversial opinion like that. That's kind of a hot take in 2025 because there's a lot of, you know, prevailing sentiment of like, you know, the three to five to ten year roadmap is dead. Like nothing can be planned with the pace of change more than six to 12 months out. Forget about all that stuff and you're like you're going full swing in the other direction and say no. You actually like, you have to have that long term vision. What's your pitch for why the prevailing wisdom right now is wrong?
- [26:59]
B
I mean, not that this is that important, but I think the reason why that is the prevailing wisdom is it's more profitable. I mean, it's much easier to get a consulting gig phoning up an oil company and saying, everything is different now. You need me to help you? You. Yeah, you know, it's a much harder sell for me to say, you know, relax and go for a walk. But that doesn't mean it's not right. Yeah, the, the reality is that the future is not as unknowable as we think it is. You know, we, we have this sort of expression like Vuca, you know, volatile in certain context, ambiguous. You know, one has to kind of.
- [27:36]
C
Point to the last three or four days. I mean, we're recording this on April 9th and Trump and tariffs and other absolutely sort of chaotic things are going on. And therefore it's easy to look at that as an example and say, Tom.
- [27:51]
B
You know, this is why we have.
- [27:52]
C
To be agile and this is why.
- [27:54]
B
We have to always on, because everything's changing faster than ever. I actually think that, that times like this show that, you know, hourly news is unhelpful for your business. You know, Hourly news is like the weather, you know, versus the climate. Like companies are built on climate change, not daily weather reports. The the future is not that unknowable. You know, if you look at something like the, I don't know, Internet penetration, it's been a remarkably linear journey. If you look at something like E commerce growth, you know, by 2004, one had already seen a very clear trend line that again was linear of E commerce growth. If you look at almost every change that we see in the world today, it has not come from nowhere. You know, Internet speeds increasing has not come from nowhere. Almost everything that we're surrounded by is actually fairly easy to sort of interpolate. Remarkably few things have happened that you can honestly say are completely chaotic and out of les fields, you know, the pandemic, I think would be one of them. And therefore, you know, it's remarkably simple to be able to sit down and make some assumptions and to clarify some parameters and to create a strategic vision in respect to things that are probably going to happen. And most of the things that you.
- [29:27]
C
Can'T predict probably don't matter as much.
- [29:29]
B
As people think they do.
- [29:31]
A
So you mentioned E commerce, you mentioned a few of the technologies and trends that have taken off over the past 20, 25 years. You mentioned earlier, Tom, just in passing, and I wanted to come back to it, that there's basically a series of technologies that you don't recommend that people and organizations adopt right now. What, what are those?
- [29:54]
B
I mean, you know, the answer to everything in consulting is it depends. So, you know, it's not like there's an official kind of Tom Goodwin pamphlet that says, you know, dream waste of.
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C
Time.
- [30:05]
B
Drones are daft, you know, you know, robots in factories are silly. It's not like that at all. It's the, you know, if you take a step back away from a job and you have a bit of a think, it's useful to go through the process of thinking what, what is, what is very significant and very significant now, what is fairly significant but changing quite quickly and therefore I need to keep my eye on it. What is just not significant to my business. So if you're in the forestry industry, then actually, you know, simultaneous location and mapping and so 3G imaging understanding is unbelievably important. Actually, maybe in the forestry industry, drones are really interesting. Maybe a technology like blockchain is not so interesting to you. If you're in an area like D2C Commerce, then a technology like headerless commerce or predictive analytics or media mix modeling.
- [31:12]
C
Those things Might be quite interesting, actually.
- [31:14]
B
Drones, again, might be quite interesting to direct a. Direct to consumer businesses. But at the same time, other technologies will be, you know, virtual reality is probably less interesting to you. So I think every company can go through a process where they fairly thoughtfully decide what technologies to almost give a.
- [31:33]
C
Green light to, which is to sort.
- [31:35]
B
Of experiment actively what to kind of.
- [31:37]
C
Give like an orange light to, which is a kind of not yet, but keep looking here. And what's just something that is not going to be that helpful for you to become experts in.
- [31:47]
A
And that exercise in your mind doesn't start with, hey, let's get a list of technologies. It starts with, what do our customers want? What's the basis of competition for us? You know, how do we build, you know, products and services that people love? Is that right?
- [32:02]
B
Well, without going into too much sort.
- [32:03]
C
Of precise logistical detail, I mean, I.
- [32:07]
B
Think the process actually starts with listing.
- [32:09]
C
Out almost every single technology there is in the world.
- [32:12]
B
When you do that, you realize that.
- [32:13]
C
Many of them are labeled in such a vague way that you can't really understand what they are. You know, there's ever seen a sort of Gartner hype cycle will see all manner of. Of complicated words as a sort of portmanteau that don't make that much sense.
- [32:26]
B
But the whole point is that you shouldn't do this that often, but you should do it exhaustively and therefore to list out every single technology and then to sort of quite quickly go through.
- [32:36]
C
It and think, what does this mean?
- [32:37]
B
And you have to think, what does.
- [32:38]
C
This mean for every part of our business? You know, what does this mean for procurement? What does this mean for legal? What does this mean for tr? What does this mean for, you know, the way that we're producing products? What does this mean for our logistics, our supply chain?
- [32:52]
B
So go through that in respect to.
- [32:53]
C
Every part of your business. And then we do the second stage, which is to look at people. So whether that's, you know, stakeholders, whether that's our customers, whether that's people that don't buy our products, whether that's our staff, and then try and figure out, you know, what it means for people as well.
- [33:13]
B
And ultimately, most digital transformation is much.
- [33:16]
C
More about people than it is about the technology itself.
- [33:18]
A
So let's talk about that digital transformation for a minute, because I don't think it's controversial at this point to say that organizations track records for digital transformation is somewhere between bad and abysmal. And so I wanted to talk a little bit about why that is. Are there any lessons learned here? And how, like, is this a surmountable problem? And if so, what does that look like?
- [33:45]
B
Why it is is an amazing question, actually. And I think I personally don't have enough understanding of that. I'd like to understand more. It's always a mixture of things. A lot of the time actually comes down to human nature. I mean, if you're someone that knows old systems in a big company is actually not in, in your interest as an individual. And to have a better system, I mean, you know, you know, power comes.
- [34:14]
C
From the knowledge you have and it.
- [34:15]
B
Comes from the budgets you control and.
- [34:17]
C
It comes from the number of people on your team. So actually, for a lot of chief technology offices, this, this idea that you might replace your system built on cobble and actually change it for something based on, you know, a new AI written code, you're actually losing a lot of the leverage you have in your job. So some of this stuff just comes down to human nature. And that doesn't mean these people are bad people. It just means that we should be honest about this stuff.
- [34:42]
B
A lot of things happen because real change takes a long time. I use this example a lot, actually.
- [34:50]
C
I mean, software is basically a bit like an airport. And your average airport around the world looks a little bit like Heathrow or jfk, where as you go through the airport, there's sort of scanners for security that have been put in, in sort of hallways because the airport wasn't built for scanners. And you sort of look outside the gates and you realize you have to get a bus to many of the planes because they didn't build enough gates.
- [35:14]
B
And then you sort of look at these sort of ad hoc sort of.
- [35:16]
C
Porter cabins and temporary buildings that are outside, and you realize that was kind of built because at some point someone said, you know, we need to store the documents. And then somewhere else there'll be like another porter cabin.
- [35:26]
B
And that's where there's more immigration staff.
- [35:28]
C
Because we suddenly realize we need more people to sort of act as border security.
- [35:31]
B
And you get to a point where you see something like Heathrow and you think, no one would ever build this airport today, like, the airport's kind of.
- [35:39]
C
In the wrong place, you know, because the planes have to land over London, which is a bit unsafe. You know, it's only got two runways, and to build a third Runway is going to be very, very expensive.
- [35:50]
B
Digital transformation is to look at that airport and you think, you know, how do we do this? Do we. Do we sort of repaint it, you know, do we accept that this is.
- [35:59]
C
A really sort of ugly airport and it's got a leaky roof and do we sort of put a few, do we redo the guttering and do we kind of repaint some of the hallways and put in nice furniture? Do we build like a whole new terminal but keep the old terminals and just accept that, you know, one in three passengers is going to go through a beautiful airport terminal and the others are going to go through a bad one? Do we try to demolish the terminal, the whole terminals while rebuilding new ones, or do we just move the airport to like another place? And what you tend to find is the way that Capex is run, it's almost impossible to get a business case to build a brand new, you know, $40 billion airport somewhere else.
- [36:43]
B
So instead what you're really dealing with.
- [36:45]
C
Is, you know, how much money can we spend and what's the payback period and what business case can we get approved? And what tends to happen is we are spending a lot of time and.
- [36:56]
B
Energy building things to simply keep up with the level of problems that we have today.
- [37:02]
C
So we're, we're creating an airport which is never broken, but it's never as good as it could have been. And I think that's a really good metaphor for how most business transformation is, where what we're really doing is maintaining.
- [37:14]
B
Systems to kind of be okay as.
- [37:16]
C
Long as it's not a foggy day?
- [37:17]
A
I love that analogy. I was going to say, though, Tom, I mean, you probably know this better than I do, but when you compare it to Heathrow, it's a bit depressing for me. And I'm not an expert on Heathrow by any stretch, but as far as I know, the UK has been trying to make massive scale improvements to heathrow for what, 20 years and, oh, we're going to build a third Runway and there's always some hiccup and you're back to square one and you're back to like painting the building. Is, is that accurate and does that have implications?
- [37:48]
B
It's a sort of oddly, you know, I don't want to claim too much success here, but it's an oddly perfect analogy where everyone's busy, you know, people all day long are thinking about a third Runway. People all day long are testing concrete. People all day long are repainting the, the lobbies. Everyone's doing everything. Everyone's doing everything.
- [38:04]
C
And it's fine.
- [38:05]
B
Like, we can fly to Heathrow, you know, planes are crashing there, it's fine. Is it as good as it could be? Absolutely not.
- [38:12]
C
People doing the best they can? Absolutely.
- [38:15]
B
But it really sort of outlines the degree to which you either change things in a tiny way and you accept that's what you're doing, or you change things in a really significant way and you accept it takes a long time and it's expensive, or you kind of pick your, you pick your level of disappointment. So you can't build a new terminal.
- [38:36]
C
And then be sort of sad that the old terminals still look crap. You have to kind of figure out your plan and stick to your plan. And I think most of the time when digital transformation projects fail is because realistically we didn't level set what the actual output this would be.
- [38:49]
B
We didn't realize that we were improving this part of the process to actually.
- [38:53]
C
Just move the problems onto another part of the process. You know, the people need to be more honest about what's actually going to.
- [38:59]
B
Happen with this stuff.
- [39:00]
C
And I think one of the big.
- [39:01]
B
Promises of technology like AI is that.
- [39:04]
C
Actually now we probably can be more ambitious.
- [39:07]
B
So effectively we've got a way to build a brand new Heathrow that's a bit. Which is cheaper and better and more simple and faster. And therefore AI could actually be a very useful ingredient when it comes to.
- [39:22]
C
Companies doing a full scale, deep rooted existential change.
- [39:27]
A
Right. And that's kind of where my head goes too, is that, you know, if you're Heathrow, and obviously this is an imperfect example because it's a, it's a physical airport, but if you're, if you run Heathrow and then, you know, now there's the technology available that you can just spin up another airport, you know, on the opposite side of London and suddenly people say, hey, you know, we don't need Heathrow anymore. We've got this new airport and it's, you know, it's got three runways, it's got six runways, you know, are you, you know, are you really in big trouble as Heathrow or do you have enough of a moat because, you know, you're Heathrow, dammit. And so, you know, it's too tough for people to move over.
- [40:07]
B
It's a very useful way to, to frame that question because you end up thinking, well, you know, is it really building a better Heathrow or actually is it just like a picture of Heathrow and it might not a picture of a new airport? It might not be real actually, you know, how, how much does it cost to publicize that, that new airport? You know, to what extent you need to build new infrastructure to get to that new airport as well. So it's not, it's not the perfect analogy when it comes to transformative leap or the competitive threat or moats, but it does act as a sort of.
- [40:41]
C
Good proxy for many of those questions.
- [40:43]
B
You know, are we satisfying an existing need state or, you know, actually maybe new technology will mean that the hyperloop becomes the thing that people should be building for. Right. In a weird way, physical infrastructure is quite often a very good sort of mental model for software and, you know, written architecture.
- [41:05]
A
Right. I'm again just chuckling to myself. I never planned to spend this much of the conversation talking about, you know, Heathrow Airport of all places. So maybe coming back to the software and the technology piece. Tom, we talked earlier about the people and how people can be a barrier and people have sometimes perverse incentives here. We talked about the CTOs and maybe CIOs who are protecting their fiefdom here. One of the things that concerns me, I guess, and in some ways I'm representing the technology folks, is, is we tried this before. We've tried this all along with new technologies. And one of the trends I think we've seen over the past at least 10 years is they're winning the battle but losing the war, so to speak. And what I mean by that is you've got CIOs and CTOs saying, no, we're going to do it our way, we're not going to cede control. But what we've seen is when a lot of these new technologies come into place and you can think about technologies like, you know, analytics, like social, like some of the new, you know, industry fit for purpose technologies, actually roles like the CMO in marketing or other business, you know, unit leaders have been able to grow these themselves. And now a lot of the exciting, fun stuff sits outside of traditional it. And that to me is kind of a sad story for, you know, ctos. Is that something you're seeing? And is there kind of a lesson learned here? Like what, what role do they need to be playing in the next five, 10 years?
- [42:41]
C
It's a very good question.
- [42:44]
B
And again, I, I might be being naive here and, and sometimes it's quite good to be naive because you ask more interesting questions. I think if you look at the history of the cto, it depends on the business. But by and large, technology was a support function, you know, for, for most businesses and most offices for most of.
- [43:09]
C
The last 40 years, you know, the technology people kind of kept the lights running, right? They were sort of Tasked with doing the stuff that people didn't understand that allowed you to operate. They were. They were kind of a cost center.
- [43:23]
B
It sounds a bit odd, but if you actually look at where CTOs sit.
- [43:26]
C
In the building, quite often they're in.
- [43:27]
B
The basement, or quite often they're next.
- [43:29]
C
To the kind of server racks. For a long time, the technology people were the people that you took your computer to when it was broken. The technology people were people who. You'd ask them if you could use the latest version of Windows, and they'd say no, because they haven't tested it. Technology has not been a very glamorous function.
- [43:49]
B
If you fast forward to today, you know, technology people should sit on the board.
- [43:55]
C
Like, technology people should be representing the kind of entire future of the business.
- [44:00]
B
You know, if you're in any industry.
- [44:03]
C
As part of your quarterly business planning process, there should be someone who is saying, you know, we can now completely rethink how we do recruitment.
- [44:12]
B
We now can completely rethink what we.
- [44:15]
C
Need to do and what can be outsourced. We now can completely rethink what products we can make. We can now completely reorchestrate what customer service is. We can now test products on the marketplace to see if people are interested in them before we even make them.
- [44:33]
B
There should be a voice where the CTO is essentially, you know, one of the top three people in the business.
- [44:41]
C
And people kind of representing their views should sit in a lot of meetings. And I think most categories of business are nowhere near that. I think some are.
- [44:52]
B
You know, a technology business will be.
- [44:54]
C
Thinking about that all the time, but.
- [44:56]
B
I think there is a huge job.
- [44:58]
C
To be done in sort of elevating the status of a CTO and understanding that actually their job is much broader and much more. More future focused and much closer to kind of product delivery than it is to kind of maintenance. And I think, therefore, the way around most of these challenges in transformation is to be much more optimistic about what this really means. Like what we're.
- [45:23]
B
What we're really doing is empowering the.
- [45:25]
C
Future of this business to be abundant because we're able to change what we do around the power of. Of all these new possibilities.
- [45:32]
A
I love that. And it aligns very directly with, you know, kind of my thinking on it. The challenge I hear about is talking to CTOs, CIOs, who say, absolutely, I should be on the board. I would love to be, but then what? Right? They can't will it into existence. How do you get from here to there? How do you raise Your profile, is it starting to bring. Is it doing the homework yourself and bringing it upward to the board? How would you get started on that?
- [46:04]
B
I mean, it fascinates me. I mean, I've been writing books about.
- [46:07]
C
Digital transformation for years and talking about it. And when it comes to places where CTOs have a voice, there's.
- [46:14]
B
There's almost no trade media about it.
- [46:17]
C
There's always no.
- [46:18]
B
There's no sort of columns in the.
- [46:19]
C
FT where there's a, you know, the voice from the, from the CTO or the CDO or the Chief Data Officer.
- [46:26]
B
So I think there's ample opportunity for, for people to, to raise their profile.
- [46:30]
C
Because there's not that much being said. Um, I think a lot of these.
- [46:33]
B
Things come down to characteristics, and I think the. The majority of people in these roles, you know, that they're sort of driven by fixing things and solving problems and making sure that things run.
- [46:45]
C
I think they're less driven by standing on a stage with a sort of microphone making bold proclamations.
- [46:52]
B
So I think people need to do.
- [46:53]
C
A bit of soul searching and figure out if. If they are the sort of character, the ones that get noticed. And then I think there's ample opportunity for them to be heard, because I think there's a dearth of people voicing these opinions.
- [47:04]
B
I think one does need to recognize that a lot of this is much less about the technology, and it's much more about a kind of creative use of technology. Like, actually what we're thinking about is quite different sorts of things. This isn't about security protocols. This isn't about maintaining uptime. You know, this is about, you know, new things and new processes and new workflows and new cultures. Sounds like a very boring example, but someone told me the other day that.
- [47:36]
C
I should buy a dash cam. You know, I live in Miami, where everyone drives quite randomly. And I started looking into dash cams, and I was amazed that all the dash cams were exactly the same. And then I looked into insurance companies because I thought maybe if I get a dash cam, you know, my insurance premium will come down. And then I looked into car companies to figure out which cars actually had inbuilt dash cams.
- [48:01]
B
And it struck me that actually, you know, this camera technology and these batteries have been around for a long time. And there's. There's no insurance company that changes their rates. There's no car company that's really excited about integrating them. There's.
- [48:14]
C
There's remarkably few electronics companies that I.
- [48:17]
B
Recognize, you know, like Sony or lg. Or Samsung or Huawei that make these things. And then I think, you know, whose job would that be? You know, who, who should go into Stellantis and say, what are we doing about dash cams?
- [48:29]
A
Yeah.
- [48:29]
B
Who should go to Farmers or Geico or Prudential and say, you know, how can we create a new business model for, you know, people that share more data with us? I think those are the sort of conversations that CTOs could be championing. And I think it's a very exciting thing to realize that you can create enormous amounts of business growth rather than merely being someone that maintains and allows companies to be a bit more efficient.
- [49:02]
A
Right. But the DNA, it sounds like, of those roles has to change a little bit. Whether it's people rewiring themselves or leadership saying that recognizing this is an important role and we need to make sure we have someone who's more product, customer, marketing minded.
- [49:17]
B
It's an interesting conversation. I mean, a lot of these things are quite chicken and egg. It's quite easy for someone to not have this role and say, well, that's because they don't invite me into meetings or to not have this role and say, well, that's because they don't trust me. You know, you, you can't change the.
- [49:32]
C
World, but you can change yourself. And I think rather than waiting to be invited, rather than waiting for the moment where people are asking these things, it's much better to just start performing this way and to be the person that changes the status quo.
- [49:47]
A
I think that's a great answer. I love that. Trying to think about anything else we wanted to talk about. We didn't really talk about your book. You've got a book out, Digital Darwinism. Do you want to talk about that for a minute? Tom?
- [50:02]
B
Yes.
- [50:02]
A
I wrote a book.
- [50:05]
B
I've written two books that got the same title, but ones are kind of an updated version. But the first time I wrote the book, it was a kind of philosophical journey into what technology means for the way that we live our lives. So, you know, powers technology changed many of the parameters of business. You know, for a long time, to be a successful business meant operating at scale. I mean, owning assets, I mean, having deep expertise. And the first kind of book looked at the, the kind of questions that we were facing at this moment in time. What sort of companies are going to thrive, what sort of cultures are going to thrive, what processes should we follow, what new technologies are interesting. And then I did a second version of the book about three years ago where I was effectively saying, here is a process to change your business. You know, how, how do you go through the process of figuring out what the business model should be?
- [50:57]
C
How do you go through the process of re orchestrating and reimagining your company?
- [51:01]
B
What new questions does that kind of raise? So the books are both written about digital transformation. There is a, you know, if I was that way inclined, I should be doing a third version of the book, which is to effectively change it because of AI. But as it happens, I think I.
- [51:20]
C
Could reasonably go through the book and do like find and replace on my keyboard.
- [51:25]
B
And every time I said digital transformation.
- [51:27]
C
I could just say sort of, AI, AI.
- [51:30]
B
Yeah. And then it would be the same and then all of the questions would still make sense, all of the processes.
- [51:35]
C
Would still make sense.
- [51:36]
B
And then I realized, you know what.
- [51:37]
C
Probably in three years time, we're probably going to stop talking about AI transformation and we'll just talk about digital transformation again.
- [51:44]
B
Because when a technology is really with us, we don't think about it, you know, we don't, we don't sort of wind down the, our car windows and.
- [51:50]
C
Think, oh, wow, like an electrical motor did that. You know, we don't move our seat in our car and think, oh, wow, that was a motor that did that.
- [51:57]
B
We, we, we focus much less on, on the technology itself.
- [52:01]
C
And we think about the, the benefit that we get and what it is to, to be driving, what it is to be watching tv, what it is to be downloading stuff from the Internet.
- [52:10]
A
I love that. And I'm, I'm honestly personally so excited for that stage where we can stop calling it an AI, PC or, you know, whatever it is now with AI and actually talk about like, no, what is that actually? Like, how does that benefit people?
- [52:25]
B
I think, I mean, there's a vagueness to AI which I think is extraordinary. You know, people will very happily talk about the value of AI being 25 trillion by 2032. You know, maybe I'm a bit strange with how I think, but I think, what does that mean? I mean, are robots AI? I mean, they kind of are. I mean, like, you know, technically some.
- [52:46]
C
Some robots are and some aren't.
- [52:48]
B
You know, does this mean computer vision?
- [52:50]
C
Does this mean predictive analytics? Does this mean automation? You know, what we're really dealing with is a kind of bucket of about five or six different strands of technology. And some people, when they hear AI.
- [53:05]
B
Will be talking about generative AI and.
- [53:07]
C
Some people will be thinking about, you know, things that make movies for us. And I think it's, it's really important to be a bit more precise with the kind of conversations that we're having. And I think this era of kind of hype and this, this era where people are trying to get noticed and this, this era where people are very excited, it. It tends to make these discussions much more vague to some extent. Like, it, like, it would almost be useful to think of AI as something more, more specific, like, you know, RPA or automation or something like that.
- [53:41]
A
Yeah. No, I think that's really well said, Tom. I think we're at time here today, but I wanted to say a big thank you for joining. This has been a really interesting and really insightful conversation.
- [53:51]
B
My pleasure. It's been great. Thanks for having me on.