Escaping the Drift with John Gafford

Episode: Innovative Paths with Michael Ruckman on AI and Business

Date: September 2, 2025
Guest: Michael Ruckman, Founder & CEO of Senteo

Episode Overview

In this intellectually rich and engaging episode, John Gafford sits down with international business consultant Michael Ruckman for a deep dive into the intersection of AI, business transformation, and the critical necessity of genuine human relationships in modern organizational contexts. Drawing on decades of experience across 40+ countries—and rich anecdotes from Russia, Spain, and beyond—Ruckman unpacks why most companies approach innovation and AI entirely wrong, and what it truly takes to foster change in an organization, adapt business models, and stay relevant in a rapidly shifting world.

Key Discussion Points & Insights

1. Michael Ruckman’s Global Perspective & Stories

• Background:
  • Started with aspirations for medical school in California; moved to Spain, then Czech Republic, then Russia—spanning a consulting and innovation career over 40 countries, multiple languages.
    • “I spent most of my career outside of the US...worked in probably, oh, let’s say over 40 different countries. I speak four languages...” (02:35)
• Early Consulting Work in Russia:
  • Tasked with modernizing a “1970s-era” Russian banking industry; describes the unique blend of opportunity, danger, and wild unpredictability facing expats and businesses in early 2000s Russia, including stories of “gypsy cabs” before Uber.

2. The Nature of Change in Organizations

• Human Nature & Change

  • Most resistance to change is rooted in human decision-making, primarily dominated by primitive and emotional, not rational thinking.
    • “Most decisions are made in that primitive or emotional reasoning state... not made by rational.” (07:16)
  • Change is often less about pushing out the recalcitrant or “laggards,” and more about creating an environment conducive to adaptation.
    • “You can't walk into a company and say, I need all the innovators because we're going to drive change.” (10:15)
    • People are not strictly innovators or laggards—it’s context-dependent.

• Diffusion of Innovation (08:01–09:06):

  • Cites Geoffrey Moore’s law:
    • 2.5% Innovators
    • 13.5% Early Adopters
    • 36% Early Majority
    • 36% Late Majority
    • The rest are “laggards.”
  • Early majority, late majority, laggards—each play roles; some are detractors or outright saboteurs for change initiatives.

• External Consultants as Change Agents

  • “Once people inside are too comfortable with you, you lose your power as a change agent.” (16:09)
  • Most companies are built for stability, not fluid change—necessitating outsiders to shake things up.

3. Organizational Models Are Outdated

• Most businesses still depend on “classical management theory” (early 20th-century thinking), which prioritizes stability—suiting mass production, not the rapid adaptability required today.

  • “I’ll take a guess, but I’m going to guess that 90% of businesses operate based on the principles of classical management theory today.” (17:09)

• Product-cycles and business development, once measured in decades, now change in months:

  • “Now if you're not coming up with something new every six to 12 months... you're irrelevant in your customer's eyes.” (18:02)

4. AI in Business: What Almost Everyone Gets Wrong

• AI as Cost Cutting vs. Relationship Enhancement

  • Companies focus on AI as a way to slash costs, not enhance quality—especially customer experience.
    • “Right now, most corporations are so focused on cost savings... they're eliminating those low-hanging jobs. But unfortunately... those are the ones where you get a chance to impact the customer experience the greatest.” (21:24)

• AI Application & Human End-Users

  • Two essential factors:
    1. Humans are still the end users
    2. Humans still make the decisions
  • Implementation of AI must “fit how we create value as a business.” (20:59–21:24)

• Predicts next decade will be “organizational transformation” rather than digital or AI transformation.

  • “If the last 20 years was about digital transformation, then the next, let’s say at least 8 to 10 years... is going to be about organizational transformation because companies are not ready for the things that are happening now.” (22:43)

• Data & Customer Relationship Examples

  • Businesses are “stupid” about relationships because they measure the wrong things—exemplified by Ruckman’s ADT story:
    • “For $561, they're going to ruin the relationship with me and I'm still a customer of the company and they won’t resolve the issue.” (27:09)
  • Quotes from Ritz Carlton: empower employees to “make it right” up to $2k per guest, no questions asked—a stark contrast to cost-first philosophies.

5. Evolving Business Models: Product- vs. Customer- vs. Relationship-Centric

• Ruckman explains the historical evolution:

  • Balance Sheet Centric: Pre-1950s, mainly production-based, measured as whole-organization profit/loss.
  • Product Centric: Focused on sales/service of categories; P&Ls per product.
  • Customer Centric: Recognizes customer may use several products, but still focuses on events (buying car/home).
  • Relationship Centric: Focused on maximizing customer lifetime value—not just once-off events.
    • “If I'm looking at it from a relationship-centric standpoint, the most valuable thing I can possibly have is contact and dialogue with my customer.” (37:40)

• Quote:

  • “We spend so much time in business in a back room somewhere trying to figure out when all we really have to do is have contact and dialogue with our customers.” (40:02)

6. CRM, Data-Driven Customer Experience & The Limits of Prediction

• Case study: BNP Paribas' algorithm to predict when a customer wants a new car loan—achieves 29% hit rate (exceptional), but could be close to 100% just by asking customers directly.

  • “Have you ever thought about asking your customer when they plan on buying their next car because you’ll likely get 100% right.” (39:57)

• AI in Real Estate:

  • New CRMs summarize calls, build to-do lists, and help agents focus on listening and serving the client.
    • “When you’re on the phone you can really listen because you’re not scribbling... It’s just doing it.” (48:42)

7. Where AI Fails and Where It Shines

• Empathy & Context:

  • AI struggles with emotional nuance, social context, and empathy—crucial to customer service and loyalty.
    • “AI is developing from the rational. And it struggles. It struggles with social context, it struggles with emotional reasoning, it struggles with nuance—all those things important to us as a human end user.” (45:18)
  • Replacement of call centers with AI agents is often a mistake; customers want empathy, not efficiency alone.

• Best AI Applications:

  • Support for human employees: research, summaries, predictions that free up humans to deliver personal value and connection.
    • “How does AI make humans more efficient? Especially in dealing with the end user who's a human.” (49:38)

8. The Four Major Organizational Barriers to Progress

1. Organizational Models Are Obsolete:
   • Hierarchies and measurement systems built for another era are too rigid.
2. Corporate Culture Must Shift:
   • Move from directive, siloed, and competitive to collaborative and networked teams (e.g., Facebook’s network vs. Microsoft’s hierarchy).
3. Leadership Needs Reinvention:
   • Most “leaders” are managers; need more coaches and mentors who guide and inspire.
4. Approach to Change:
   • “The more you try to manage change, the less manageable it becomes.” (59:58)

9. The “Old Potato” Analogy for Change

• Some change happens best quietly, as with an old potato sprouting in the dark—successful pilots grow unnoticed, failures are quietly dropped.
  • “Some of the most successful [projects] were ones that started as a little nubbin in a potato... that were successful and they grew and we fed them and they went out.” (64:11)
  • Both grand announcements and subtle pilots are needed, but organic, under-the-radar change often finds the fastest adoption.

Notable Quotes & Memorable Moments

• On Acting on Principles Over Relationship:

  • “The prize for winning an argument with a client is losing a client.” — John Gafford (29:20)

• On Human-Customer Retention:

  • “If they had the right measures, then nobody would ever make those kind of decisions. If they said, hey, this guy's going to continue paying us for potentially the rest of his life, why would we screw him for $500 right now?” — Michael Ruckman (27:13)

• On AI & Human Empathy:

  • “The people in the Philippines or India are not bad people... but because of the rules, they might as well be a robot.” — Michael Ruckman (46:28)

• On Leadership & Inspiration:

  • “We need to move from the person that's an authoritarian, directive-type person... to an inspirational guide.” — Michael Ruckman (57:50)

• On the Limits of Top-Down Change:

  • “The more you try to manage change, the less manageable it becomes.” — Michael Ruckman (59:58)

Important Timestamps

• Guest Introduction & Global Career: 00:46–03:54
• Change Management & Human Behavior: 06:29–12:26
• The False Promise of Firing Detractors: 11:52–12:52
• Large-Scale Organizational Change Obstacles: 13:17–17:09
• Evolution of Business Models: 31:03–33:10
• AI Misapplications & Relationship Currency: 19:57–21:28, 43:09–51:04
• Case Studies: ADT, Real Estate, BNP Paribas: 25:00–41:07
• Barriers to Transformation & New Leadership Models: 53:24–58:02
• The Old Potato Analogy: 62:05–64:24

Key Takeaways

• Adaptability and Empathy in Business are Now Essential—Old models and cost-cutting strategies, especially for AI deployment, are quickly becoming liabilities.
• AI should empower—not replace—human value at the customer interface; empathy, personal connection, and human judgment remain irreplaceable.
• Change is best fostered by supporting organic pilots and building coalitions with natural innovators and early adopters, while recognizing that laggards and detractors need time and space.
• Relationship currency—the long-term, trust-based relationship with customers—is the most valuable asset businesses possess and is now the key differentiator in a world where anyone can automate a transaction.

For more from Michael Ruckman, visit LinkedIn or check out his company, Senteo at senteo.net
For more episode info or John’s book, visit thejohngafford.com