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#279: Eric Kutcher, Senior Partner, McKinsey & Company – AI is about growth, not just productivity
01:17:28
Listen to this leadership podcast with Eric Kutcher, Chair of McKinsey North America, and discover how every leader should be thinking about AI right now.
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- [00:00]
Podcast Host
Hello, everyone, and welcome to another episode of How Leaders Lead with David Novak. Today's guest is Eric Kutcher. He's a senior partner and chair of North America at McKinsey Company, which as most of you know, is one of the largest consulting firms in the world. Eric's a renowned expert in AI and he talks a lot about how this is the most transformative moment our generation will get to lead through. He spent over 28 years coaching the world's top companies through massive change. And in today's episode, you'll get his coaching and expertise around how you should be utilizing AI not just for productivity, but for new revenue generation and growth. Enjoy this conversation between David and Eric, and I will see you at the deep booth.
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David Novak
Now, I understand that you've broken quite a few bones over the years. What's the total?
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Eric Kutcher
Up to this point, I don't even know. I think I stopped counting a long time ago. So I was in nine short arm casts. I broke my nose six times, collarbone twice, fingers didn't count. Two thumb surgeries, one knee surgery. I don't even. I think that's as much as I can remember. But I am quite, quite convinced that if I grew up today and had a file like I did, the Department of Family Services would sure come knocking on our door. And every one of those was playing a different sport or doing something stupid as a kid.
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David Novak
Which, which bone has the. Which broken bone has the best story behind it?
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Eric Kutcher
Which one has the best. So here's, here's one that's kind of more speaks to me and who I am and a little bit of my irreverence. But I was a pretty decent baseball player back in the day. There was a man on third base. It was a summer. It was a summer league. The man on third base. And for those that know if the ball is hit to the left side of the infield, the runner is not supposed to go. And the runner went on contact. And it was a close game, kind of middle to late part of the game. And the third baseman froze and like pumped three times. And by the time he got me the ball, I caught it. And as I went to put my throwing hand, my non glove hand in to hold the ball so I could take the hit, the kid's cleat got in my glove and broke my thumb in 17 spots. And I was really pissed cause I dropped the ball and the runner was safe. And so I went to pick up the ball and I called timeout and walked it back out to the pitcher's mound and my thumb was just absolutely in agony. And so I went back behind home plate and coach said, can you play? I said, I don't know if I can play, but we're going to try. And sure enough, I caught the first pitch, went to throw it, and the ball came right out of my hand. And he goes, all right, you're pulling you out. I sat in the dugout, we had a double header, and I just started yanking on my thumb because it looked like it was dislocated. But it turns out it wasn't dislocated, it was broken. So I didn't play the double header. And again, in kind of who I am, when I got out of surgery, I made them mold the cast to the bench so I could continue to work out that summer when I couldn't play any more ball.
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David Novak
That says quite a bit about your leadership, I imagine.
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Eric Kutcher
I don't know about my leadership, but about my own stupidity, maybe.
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David Novak
It says you don't really give up. There's really so much that I want to discuss about your time at McKinsey and the past 28 years you've spent at that phenomenal firm. And, and to kick things off, you know, I know that you're a renowned expert in artificial intelligence. I mean, you know, you would never tell me that, but a lot of people have told me that. And, and every leader today is really trying to figure, figure it out right now. When you strip away all the hype of AI and everybody's talking about it, you know, what should leaders really understand about AI?
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Eric Kutcher
So I am definitely not an expert and I, and I appreciate the praise, but I am not. There are people that really understand this. What I have is a lens from talking many, many, many clients and seeing at this moment kind of where we are. I think this is, and I've talked about this, the most transformative moment that this generation will get to lead through. Right. I think this is a once in a generation type technology transition. You know, as someone else pointed out to me, it's probably the fourth great industrial revolution. The first one goes all the way back to the invention of steam. And that was the first time we saw a transoceanic transport. You then follow that up with the internal combustion engine. That led to whether it was trains or whether it led to the automobile kind of trans within the continent, if you will. And then the third was the invention of the semiconductor, which put all this amazing technology and every one of Those had a 40 to 50 year period of massive change. Some of that comes with the industrial revolution. You see levels of productivity. I don't think we've seen this since the, the invention of the semiconductor. And what we are now about to witness is this generation's opportunity to think about. So I believe in this moment, I often call it the reimagine moment. And the reason why is it is an opportunity for every CEO and I do think it is more the CEO moment than most, to really reimagine what their business looks like out five and 10 years. And I'm sure David, you would say having been one of the great operators, great CEOs, no one can look out five to 10 years. But I do think in this moment you have to ask yourself, what could I, if I built this company, AI first look like 5 to 10 years from now? Because I think that's the length of the journey. And I think it's one of those moments that the CEOs that are not doing that frankly are going to get left behind and their companies are going to be in trouble. And the ones that are really out there looking and what is looking look like, I'll come back to in just a moment. I think they are going to have an opportunity to, if you will pass in the rain or pass the cars that are, that are kind of standing there and not moving as quickly. When I think about this moment, I tend to think about it in three different buckets. Bucket number one is there is pure productivity. And by the way, most CEOs get relatively unexcited. I find this is much more the CFO world where, you know, you can paint a picture that doesn't take very much. It says my GNA cost as a percentage of revenue could be down by 50%. Right. Because you could imagine really reimagining all of the core processes, whether it's hr, whether it's finance, and what's super interesting about those and create a much better experience. I don't know what your experience has been like mine. It's very frustrating. Like I have to go scour my Internet to go figure out or intranet, I should say, to figure out what HR policy this is or that is or what benefit I have. That should never be the case again. That should be something where I am chatting with something, whether by voice or whether by text. And the answer is very much in situ. And that if you do it well, I think we'll have many fewer people. We looked at this for a client on marketing, which you could argue is a function that is much more on the revenue generating Side, not even the more traditional G and A. And we found a way. And this now gets into bucket number two.
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David Novak
But before you get in that one, this whole thing on the productivity, and it reduces the number of people. You know, how do leaders. How should leaders really communicate that? I mean, you know, I mean, people worry about losing their job. There's this big fear of what. What can happen. How do you. How do you handle that as a leader, whether you're a CEO or leading a team that might be impacted by it?
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Eric Kutcher
Yeah, so it's. It's super interesting. The first, I can't tell you, couple dozen conversations I had around AI was a lot around this question of productivity. And I think most leaders realize it's super hard to move the organization to get excited about a world where they have fewer employees. And I think most organizations have a recognition that there will be some, but much more. What I have found is most want to figure out how do I do this to enable growth? And so one level of that is I can do all kinds of things with AI to drive growth in the core business, and I can do that without adding more heads. This is a marketing example that I'll come to. The other is I can start all kinds of new businesses and I can rebalance from places where I can take labor out and move towards areas investment that I wouldn't be able to do before. And so what I think most organizations are now pivoting to. And about two thirds of the CEOs I talk to say I really want to orient the story of AI towards a growth story and not towards a productivity story. We will get the productivity, but we'll do it as an enabler of kind of what we get out of the growth side. And so I think most senior executives, I think they've struggled with the. I'm going to use this as a real source of, you know, as I said, the GNA at 50% and much more. How do I think about getting the resources to the places that will make the biggest difference to allow that level of growth that we've been unable to do in the past. And frankly, we have limited the growth because we don't have the investment capacity to go take the resources away from here and move them over here.
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David Novak
Got it. So move into that second bucket.
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Eric Kutcher
I'm looking at the marketing example. So this is a. This is a CEO of a company that's worth about $300 billion. Right. Have been on an incredible journey to get there. He really wants to hit a trillion dollars. And that's not. And he wants to do it in the next three to four years. That is, I mean not that many companies. And I realize we've lived in this unique moment where you've seen more, but there have, you know, it's only four or five years ago we talked about maybe we'll see our first trillion dollar company and now we've got, you know, upwards of 5 trillion and there's probably seven or six or seven of them. But that was not a common kind of level of scale. And he said, look, I know I've got about 1,000 customers today and the only way I can get to a trillion is if I can get to 3,000 customers. And I've got to figure out how to do that because I'm not without adding any resource. I've got to figure out how do I go. And by the way to do that I've got to go after very different segments in a very different go to market motion that is much more what they would call product led and much more kind of self discovery and scaling through there before you come. And so how do I target those customers, how do I message those customers and how do I do that? All using kind of an agentic first. Right. And so we really are in the middle of kind of reworking what that organization looks like, right. To enable that 1,000 to 3,000. And the whole reason they haven't gotten there in the past, they haven't able to make the investment. Now some of that investment to get to the 1000 is going to come from places where they absolutely reduce heads but it's going to go to places that allow them to go to from 300 billion to a trillion dollars. And I have to say when we started this conversation I didn't think it was possible. I was like there's no way we're going to get to a trillion dollars in three, four or five years. Pick that time period. And now I think it is right, I actually think you can do that. So but that's a big, that's an example because you could have started that conversation on marketing about how do I go and take out some large percentage of the marketing force. And instead we much more pivoted towards how do I think about going from 1,000 to 3,000. And when you do that the organization goes I want to be on that journey.
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David Novak
How do you, how do you, I know you're going to get to this third book, but how do you create a AI driven culture? You know, I want to be on this journey.
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Eric Kutcher
So in the case I just gave you, you have to start by saying, do we believe? Do we want to get to this place? Whether it's 1,000 to 3,000, it's 300 to a trillion, whatever that mission that you're saying and why. And one of the things I've learned over the years, as someone taught me, is there's different groups, there's some people that are motivated by what's in it for them. Right. You may argue that if I go from 300 to a trillion, look at my bank account, there's another group that says, what does that do for the community around me? There's another group that says, what does it do for my customers? There's another group that says, what does it do for my team? And so you have to figure out how you can create the why that speaks to everyone, that puts everyone in that organization on that same mission, and that every one of the jobs that you are doing is orienting towards that mission to do that today. You can't do these things. You can't dream that big without thinking about, what does it look like? AI first and the hardest part of the. I mean, one of the things that's so magical about AI today is the most democratized technology we've ever seen, right? It's in everyone's hands. It's why everyone talks about. Look at the rate and pace which they got to 100 million users. Everyone is using this whether you're using it to plan your trip, whether you're using it to plan your recipes, whether you're using this to ask it the questions you used to ask Google. Everyone is using this, which means every one of our employees is using AI.
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David Novak
I got to get to this third bucket, but I want to ask you this one because we're on this. It's so fascinating. What skills should leaders be developing in their people if AI is doing so much of their thinking these days?
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Eric Kutcher
Yeah. So I get this question a lot in the context of McKinsey. Right. Because this question comes up is, gosh, what a lot of the work that you guys were doing some period of time ago, the AI can do? And I'm like, absolutely. But if you go back in time and look at what I did when I was first an analyst, What I took six weeks to do, we now call Tuesday between 8:30 and 9. Like, that's just the way it's been. It's been evolving that way. The problems get more complicated. The young adults that are graduating from university that I get to speak to, I say, look, the things that will differentiate you is A, have you learned how to become a great prompt engineer? Do you know how to ask the right questions? And by the way, part of asking the right questions is being incredibly intellectually curious, right? You're going to get a surface level answer in some period of time. It could be three minutes, it could be five minutes, it could be an hour, depending on the complexity of what you ask. But do you understand why you got that answer? Are you willing to challenge that answer? Are you willing to ask it more subsequently questions? Are you willing to ask it a different question to get a different answer, to see what the A's and the B's or the red and the blues? And so you have to get super intellectually curious and you have to be willing to be a good prompt engineer that never accepts the first surface level answer. And so I think today everyone has to start to do this.
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David Novak
How do you teach curiosity? How do you teach that? How do you drive that deep in your organization?
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Eric Kutcher
So I believe that anytime you're trying to make organizational change, there's a lot. I mean, there's an influence model, and one of those is role modeling and the other is questions that you can ask, right? And so people tend. And you know this when you were, you know, if you're asking a question, people are going to start to realize it's important, right? That is one of the, I would say the privileges of leadership. And for me, it's every time I get in with a team, first of all, I ask them how they're using it. Like I asked them, well, what did you do? How'd you come up with this answer, how you use the AI? What questions were you asking it? Did you ask it X? Did you, you know, you have to, you have to be intellectually curious first and foremost if you want them to be intellectually curious. B, they have to see that you're using it, right? You know, what are your own experiences? So I will talk about, like how I used it to do X or do Y. And then, you know, you have to find ways to celebrate, whether it's teams or individuals who do something outstanding, to use a technology which is a little bit of the pulpit that you get to sit on to say, again, I don't know, maybe this is just inside my firm, but inside McKinsey, you will see if someone of leadership celebrates someone else. Everyone starts to say, well, why did they get celebrated? And how do I get celebrated? Next time I want to be the one that gets celebrated. What did they do? And you start to watch people follow, especially if they see the same kind of common thread of what someone in leadership is selling.
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David Novak
Yeah, you understand, obviously, the power of recognition. That's exactly it. That's the building.
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Eric Kutcher
And by the way, I'm not sure it works in every organization, but it sure works in the folks.
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David Novak
I think it works everywhere. I think people want to be recognized. But. So you got this bucket of productivity, you got this bucket of growth.
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Eric Kutcher
What's the third bucket of growth in the core? And then I think the third is how do you use AI to create net new business, which is another form of growth? What are the things that I can do with AI that I might not have been able to do before? I think Yum did something with Byte, which I thought was super interesting. And I don't know how successful it's been yet. I don't know where it is, but this idea that we can create this operating system that allows the franchisees to effectively optimize that I've given them something that isn't, you know, the, the next best offering or product or. But I'm giving them a technology that allows them to, whether it's to market better all of a sudden. And I can now take that and go from my franchisees and now I can go beyond my friend. That to me is a net new business. Right. And so I think what every organization, I start asking, like, what do I do if I. If I have all kinds of really interesting data on what's going on on an aircraft, do I start to use that data to create a business that might do something very. Like, how do I start to take this information that I never realized was so interesting as a new business around AI that I create? And so I always think of those three. It's how do I drive productivity, which is mostly, you know, about rebalancing or reallocating. How do I figure out how to drive the core? This is the one, you know, the 1,000 to 3,000. And how do I create a net new business that never would have been possible but for what I am able to do because I was out in of front front.
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David Novak
What would be the one bit of advice you'd give to every leader that should help them win in this new era that we're in? If you had to just pick one.
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Eric Kutcher
Bit of advice, I would find a way every week to explore some new AI technology in my life, whether it's in my personal life or whether it's in my professional life. Go listen to a podcast, learn about the tech and then go experiment with it and see what it can do. One of the stories I really found quite. I became quite fond of is a friend of mine who's the CEO of a very successful financial services company, not surprisingly, happens to be a big golfer. And he was trying to figure out why they fit him in a certain golf club with a certain shaft, because nothing about that made sense, given his handicap, et cetera. And he went to the various forms of the ChatGPT or Gemini and really kind of got in and asked it a thousand questions to kind of get to the place where it actually did help him understand why they had gotten to. And it's a totally unimportant decision, but it showed his willingness to be open to it and to learn from it and to use it in something that was important to him. So that. I promise you what he's going to do now is he's going to use that technology. And what, you know, he. He's prepping for a meeting with his team. He's going to ask it seven questions that, you know, he wants to be well informed about before he sees the team. It's just going to help him be better at what he does.
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David Novak
That's great, you know, and thanks for going deep on this subject, because everybody is really curious as to how to. How to win in this environment. But I want to shift gears now and move into your leadership at McKinsey and your past, you know, and let's start just with a story from your childhood that shaped the kind of leader you are today.
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Eric Kutcher
We talked about this a little bit of the not giving up. There is no question my parents played a very formative role. I think really my father played a very formative role in kind of the person that I became. Both sort of gave me different attributes, but I think the restlessness has been a large part because of things my father would do with me when I was young. So, like, literally When I was 2 years old, my dad decided that I was gonna be a professional baseball player. That obviously didn't happen. And he taught me to switch hit. And I remember, you know, he'd come to all my games, and even the games that went extraordinary. I remember there's one game it was. It got us into the league championship. I think I was a senior at the time. I went. I had a great game. I mean, I think I went for two for three, and I think I had one rbi and we won two one. And I scored one of the runs and think I threw a guy out at second base. And I really felt like I got in the car, I'm like, I'm on top of the moon. And I remember my father asking me a question that went something like, you know, Eric, I really don't understand, like, why'd you call for that pitch on that count in that part of the game? Right? And it was like, no matter how good it felt in the moment, it's always like, you can be better. You can. You can aspire for greater still. And I think that has been a big part of my leadership, is I just never allowed the status quo or the reason, you know, because we. Something is being done because that's the way we've always done it, as kind of something I'm willing to let sit. And I think it came from all those experiences. A lot of those came from growing up playing sports or growing up and him always pushing, like, what were you thinking in that moment? To really kind of help me think about, well, maybe there was a different way. And that's. I mean, I think my poor teams that have had to suffer with me, they will come forth and say, well, we've done X. And I said, well, I don't understand that. Feels like that's the way we used to do it, but why are we doing it that way? And does that make sense, given the mission that we're on? And inevitably, you can push and you get to a different and better place because you're not willing to accept the past as the marker of the future.
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David Novak
Yeah, the best leaders typically have this healthy dissatisfaction with the status quo. And, you know, speaking of that, your father was a doctor, and I understand you wanted to be an orthopedic surgeon at one one point in time. When was that moment you realized that that wasn't going to be your path?
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Eric Kutcher
So you talked about early, like, how many. How many broken bones that I have. And I said, I stopped counting. But I was in the orthopods office a lot, and I was. I love skiing. And my orthopedic surgeon was the US Ski team doctor. I decided kind of growing up around medicine, that that's what I wanted to do. And I had oriented my entire life around that. And I was literally going to bed the night before. I was taking the MCATs, which, for those that have never thought about medical school, are the entrance exam. But you take the SATs or the ACTs or the GREs for graduate school or the LSATs for law school. And I went to bed that night probably pretty early, you know, probably like 9, 30, 10 o' clock, which is super early if you're in college. Not so super early for me today. And I woke up at like 1:30 in the morning. I was violently ill, like literally, you know, over the toilet, violently ill. I get back in bed, I wake up at like 5:30 and I'm violently ill again. And at this point I said, you know what? I'm just going to get up, I'm going to get showered, I'm going to get dressed, I'm going to go meet my friends. We're all about to have. We're going to get bagels at the bagel place across the street from where we're going to take the MCATs. I had a red Cornell baseball hat and I had a green Patagonia fleece that was up over my nose because I was shivering. I get into the exam, I take my pencil and I open the book and within five minutes I get violently ill and all over the exam and I get excused for being a disruption. And that was like a really big moment. Not because I'd been sick, by the way. I felt fine six hours later. It was because once you missed that window for the mcat, the next window wasn't until, I think, August. And that meant you really had to take another. And I remember that summer I was doing a fellowship and I called my dad and I was very nervous about calling him because I felt like I was going to disappoint. Like, we'd spent my whole life kind of orienting towards this, and he'd been a mentor and he was a doctor and so on. And I said, dad, I don't think I'm going to go to medical school. And he kind of said, why? I said, I've been doing a lot of thinking over this summer and I don't think that's what I want to do. I don't think it's. I said, everything that I've enjoyed doing in school is not what I did in engineering or not what I did in the classes to learn to be a doctor. It's like everything I've done has had an element of leadership and teamwork, and I think I want to do that. And he goes, what does that look like? I go, I don't know. And this is how I ended up at McKinsey. I said, all my friends applied for jobs at McKinsey last year. None of them got it. Maybe I'll apply to that and see if I can get one because they, you know, just as a way to show them. And that was a little bit of how I changed course. And it's funny, he always had this expression or has this expression which is, if you're a skier, it's not how you groom the ski, it's not how you ski the groomers, it's how you ski the bump runs or how do you hit the curve ball that gets thrown at you? And that was a real curveball for me.
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David Novak
Describe the culture that was at McKinsey back then. It was hard to get in, obviously. Was the culture cutthroat, collaborative? What was it like?
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Eric Kutcher
I would say of my 28 plus years at the firm, you know, 90 plus percent of it has been super, super collaborative. And it's only moments and maybe it's 95%. There's a 5% of the window where the firm is not at its best and that you can get a little bit cutthroat. People feel like they're competing. But it's one of the things I've always loved about our firm is we celebrate team, we celebrate collective, we don't celebrate individual. And there's also, it's not like there's one senior partner. It's not like there's, you know, you go to a corporation, there's one CEO, there's, you know, in our case, the managing partner is the first among equals. Right. You know, we're all peers in kind of how we lead. And so that's a very big difference. And so as a result, there's not, there's, you know, we always thought about electing another partner is we have this incredible table where there's 11 of us sitting there and we've created this great feast and. Or is someone else bringing something to the table that is going to be additive and if they are, we want to invite them. And so there's sort of this limitless appetite for inviting more to join the party as long as they are bringing something that makes us better, not just bigger. And I think as a result, I just never felt like I was ever competing with someone inside the firm, but rather I was collaborating. In fact, I have found one of the things I real, and I really put emphasis on this is team based sports. And folks that have learned how to succeed in a team I think do extraordinarily well in what we do, because we are. I mean, every day you're working in a team, that team, you know, you know, someone has to pick up, you make a mistake, it's not that person that made a mistake, it's what do we all do to kind of make that mistake. And it's a lot like when you play on a team sport. It's not any one individual's fault in that moment. It's what. Everything that led up to that moment that got to there. And so I, you know, that expression of you're only as strong as your weakest link, I really believe in. And so it has always been about how do you build the links around you so everyone is better.
- [25:49]
Podcast Host
Hello, everyone. I hope you are loving this episode with David and Eric. As always, stay tuned to the very end of the episode when David and I debrief the conversation that he's having with Eric. We'll give you a few practical, tangible takeaways that you can apply right away to your leadership, to your work, and to your life. So stay tuned to the very end of the episode, and I will see you. See you at the debrief.
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David Novak
So here you are. You, You. You're a collaborator. You believe in collaboration. You also just described a little bit earlier about how competitive you are. I mean, you know, obviously you're competitive. You know, you. You get a special cast. And you. You talked about all this animalistic behavior that you have. How did you manage the. The. The balance between being collaborative and competitive? And how'd you differentiate yourself from others in the firm?
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Eric Kutcher
The first part's easy. The second part of that I'm not sure I have a great answer for. And by the way, I don't know that I always did this. Well, I think some of this has been as I've gotten more and more comfortable on my own skin and more comfortable where I am in life more than anything else. But it's funny, I think leadership and part of this is getting more comfortable in life is as you progress in life. I had this incredible. And you'll know him, Ron Daniel. You'll remember him from.
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David Novak
Yeah, he was on my board.
- [27:07]
Eric Kutcher
Yeah. Okay. So Ron, I think, is an amazing, amazing guy. You have this expression which is, you have to age in the bottle. Right. And one of the most unnatural things that I think sometimes we make people do is they lead before they're ready. They lead before they're comfortable in their own skin. And for me, by the way, I think it takes time. You can't rush it. Like, there's no process to make that wine better in the short term. It just takes time for it to kind of run its process. It's why I think wisdom comes with age, because it comes with experience. And you can be super smart, you can be an incredible leader, but you need time to let Those things happen. And by the way, you have to have lived through failure. I don't think you can become your best self till you've lived through real failure. And it's when you're faced with that failure, you have to decide what you're going to do and are you going to push yourself through that moment of failure? It's why I love athletes. Even the championship team has had failure moments in the course of what they've done, they've had to decide they're going to persevere through. One of the things I often got criticized for is maybe having too much ambition, which is back to your point about being competitive. And it's funny, I never thought of the ambition for myself, but I always thought about for it institutionally or what we were doing as that team, whether that team was an office or a sector. And not everyone always understood that, but I didn't understand why anyone would ever. And by the way, this was part of my own learnings is it doesn't always resonate. Everyone knows. I got asked a question and I had a very. For me, it was a large, sizable leadership role when I was too young to probably be in it or too inexperienced to be in it. And I stood up in front of the group and I said, here's what winning looks like. And one of my partners said, eric, why does winning matter? And I literally think I said something like, I don't understand the question. That doesn't compute. Like, do you want to be. Do you not want. Like, I don't. Because that's just how, like, you always grew up. That's. And the reality is that doesn't speak to everyone. Right? Not everyone kind of orients that way. And so the ambition that I had for us collectively didn't resonate with others. And so therefore, I think got placed on me. And that was a real lesson about how you have to lead to bring others and figure out what it is that motivates them, because what motivates me is not them. And by the way, that's a hard thing to do because you have to be true to yourself as a leader, but you have to recognize that what you're doing is not always going to be the inviting thing to someone else. You know, the failure thing I think is real. And I think as you get more comfortable in your own skin, you're probably more willing to recognize the failure and to take learnings from the failure.
- [29:40]
David Novak
And what was your biggest failure?
- [29:43]
Eric Kutcher
Well, I mean, I've talked about this a lot and this is a Hard one for me because, you know, so before I was in this role, I was the CFO of the firm. And I thought I had. I mean, if you. I didn't. I didn't want to be the CFO of the firm. I was asked to be the CEO of the firm, CFO of the firm. And I did it because I've always been a good soldier. And when, you know, when the leader asks you to do something, you figure it's. It's in the collective best interest, and so you do it. And part of the reason I didn't want to do it is I wasn't excited about the role. But part of the reason is I didn't think I was going to learn a lot in the role. Like, I thought I kind of knew the skills and I built the skills that were required to be successful in that role. And my failure was there's the what you do, but how you change an organization of this size and get them to believe in the why and then the how you bring them along. I failed miserably at that. There are things that I definitely had wrong on the what, but that wasn't the real problem. The problem was the organization didn't believe. My partners didn't believe in what we were doing. They didn't understand it. They didn't. And the result is when it didn't go the right way, I was the one to blame because I hadn't kind of gotten the buy in and gotten.
- [30:47]
David Novak
What were you trying to do?
- [30:48]
Eric Kutcher
There were a lot of things we were trying to do. We were trying to introduce new capabilities to the firm and get them to scale at a pace that they hadn't in the past. We were doing that through elements of M and A that we had not ever really succeeded in the past. And we were. Not that any of them were big, but there were more of them. We probably did more acquisitions in a three or four year period than we'd done in the history of the firm by a factor of three or four. And the firm's 100 years old. So it was a real change. We were trying to do things around new, innovative economic models and how we better align what we're doing with our clients. And by the way, part of that was helping people to understand the why we were trying to do it, which I failed at miserably. It was a super humbling experience I had. I think I went into that role as well liked as anyone. And I came out of that role really in a bad spot for the first time in my 28 years. I felt pretty unwelcomed when I'd show up for a meeting.
- [31:49]
David Novak
How'd you get through that? I mean, as a leader, it was hard.
- [31:52]
Eric Kutcher
I mean, I had friends that really. I had two friends in particular who I think really helped me. They listened a lot. They coached me through, and I had a moment, which I think was the beginning of the healing process with my partners, where our managing partner had just been reelected. It had been a contentious election, to say the least. And the first meeting we had afterwards was in Copenhagen. The managing partner asked me if I would open the meeting to talk about how we're doing. And I was like, you're out of your mind. I'm the cfo. This is a moment for you to stand up and for you to bring everyone together. And, like, no one likes me right now, and I don't have any particularly great news to share. So, like, why would you possibly throw me up there? To set up this meeting, which is going to be down the next three days, and the tone is going to get set in the first 40 minutes. And he goes, eric, I just need you to do it. And whether he was just so much smarter than me or he figured out that I was going to, who the hell knows why? I remember sitting there, and I had this incredible business analyst who worked full time for me at the time, and I said, we have to figure out something. We were working on the charts, and one day we had this epiphany, which is I was gonna walk up on stage, and it went something like this. I literally. We do our meetings in the round, so it doesn't feel quite as large, and it feels like you're kind of immersed with your partners. And so you've got this kind of stadium seating around this circle. And it works well for me because I talk with my hands, as you can see, and I pace a lot. And I have this microphone. I call it my Madonna mic. And the music stops. And I'm now walking out of my seat and up on stage, and I turn to my partners and I say, look, let's just call a spade a spade. This relationship, it ain't been working for a while. So I bought you all a gift. And I said, so I'd like you to all reach underneath your chairs, and there's a gift. And they all pulled out a stress ball, like one of those little blue stress balls that you squeeze. And I said before, you all say, kutcher. Why the hell would you buy me a stress ball? That's not the gift but on the count of three, I want you to all stand up and I want you to throw that ball at me. And I went, one, two. And I said, stop. And I went, and I grabbed my catcher's mask. I put my catcher's mask on. And 3. 3000 balls came pummeling down on stage in this moment where everything started to heal itself again. And I had a lot of people that told me, you can't do that. It sets the wrong tone. But I was just kind of. Me. Right. It was kind of my way of saying to the partners, like, I get it. You need to be able to let it out before we can move forward. And then we can decide if we're going to move forward. But there's no chance we're going to get there unless we do that.
- [34:32]
David Novak
That's a great, great story. And people know McKinsey is a great consulting firm, obviously, but tell me a story that would give everyone a better sense of what McKinsey looks like at its best, from discovery to the final deliverables for a client.
- [34:51]
Eric Kutcher
I think when we're at our best, you can't tell who's McKinsey and who's the client. That when we're on best, we are literally working from the CEO's office all the way down to the front line. That we are collectively as a team, set on a set of objectives, like that man on the moon moment where we've set something that no one thought was possible as an objective and that we are working tirelessly to achieve it. That everyone, from the front line of the client to that senior literally at the end, say, we would never have gotten there but for. And as one client once said to me, it was the first time we'd ever worked together. He goes, I never worked with the firm. And while this effort may be coming to an end, I now understand kind of why what you do is so magical. And I think of this much more as the end of the beginning, because I know we're going to do a lot of great things. It was just. That's what it feels like. And it feels like a selfless team who is willing to do everything to make this organization better that you care about. And one of the things I've always loved about it's hard because when you serve a client, you serve a client, the level of intimacy that we get a chance to do it, often you actually become part of that institution. I root for that organization for decades to come. I often will describe it as we, not as like they. Because I Feel as accountable. And I feel like when things aren't going well, I want to be like, you really get. You really become a part of that fabric in a way that is felt. And it really. I've watched it. I've watched it. When the client doesn't know who's the client and who's McKinsey. Yeah.
- [36:27]
David Novak
You know, I got a confession to make here. You know, I ran marketing at. At. At Pizza Hut, and we had very little, low budget, couldn't really afford consultants. And then I got promoted to be the executive VP of marketing sales for Pepsi Cola Co. And I went in and we had a huge marketing department, obviously. And everywhere I looked, there was a consultant. And I was like, what do you do? Because we had all these consultants running around, you know, doing what I thought was the job of the person that was in the job. Okay. And I got this belief that. That many people who hire consultants are just lazy. They don't do their own own thinking. And so I, you know, then I end up running young brands. And we're also, you know, very frugal. I mean, I had this. I had this phrase, if it looks like a consultant did. Is start over, I had it. I had all this, you know, disdain for consultants. And then, you know, we did end up using consultants a couple of times. I'd be curious as to what your reaction is to that and. And when should you hire a consultant?
- [37:46]
Eric Kutcher
Because I know you're a pretty avid golfer. Do you have a coach?
- [37:51]
David Novak
I have had few coaches.
- [37:55]
Eric Kutcher
I think it's pretty hard to find a great athlete that doesn't have a team around them. Right. And usually that involves there's someone that's helping them from the mental, and there's someone that's helping them train physically, and there's someone that kind of is an expert in. If we take golf, the swing or the short game or the. And we would criticize them only if they don't have that team around them. And I think a big part of what we are is we are that team around the great athletes to help make them better. And part of that is no matter how good you are, you don't see what's going on. And it's little things that make all the difference. Right. It's the way I approach that particular shot, or it's the way I've kind of worked my swing to get. And no matter what, you can't do it, and you need someone by your side. And so I think a lot of what we do is we are the Coach for the great athletes. Because the teams that the clients we work for are great companies and they're doing extraordinarily well most of the time. And you've got incredible leadership teams who are leading some of the most important institutions on earth. Of course, these are some of the most capable people you've ever encountered, but so is, you know, so are the L A Dodgers, or so are, you know, so, you know, pick your favorite college football team. But yet, you know, all those athletes, all those Olympians tend to have people that are helping them perfect their craft. And I think that's a big part of what we end up doing. Certainly as senior members, my experience has always been, and I've had some of my clients, I've served for the majority, if not all of my career. It's very hard to bring someone in that doesn't know the organization, that doesn't know the team, that doesn't for which you have to build trust. Because those things to do that, to take the leaps of faith that we as a firm and we as consultants will push organizations to do is a leap of faith. It is. You have to really have trust in that person that they have your best interest. I don't think that works well transactionally. My philosophy has always been I am extraordinarily long term urgent with my clients. As I said, I've served one client for 28 plus years. And there are times when we're not engaged at all. There were times we were thrown out of the building, but that didn't stop me from meeting with the executives and ensuring that I always kind of knew and provided perspective. And when the time was right, and that time was the organization was ready, that executive was ready, we would really be there to work side by side with them to get to a mission that they didn't think was possible. And when there wasn't, we would still be around, or certain of us would certainly still be around. And I think that's really. It is. You have to build folks around you that you can trust that can be with you through all periods of time, including when you don't need them as much. If you're on a heater, you don't really want to make a lot of change, but that doesn't mean you don't want that team around you, seeing what you're doing and maybe just actually saying, keep going, you're on a heater.
- [40:48]
David Novak
You mentioned long term urgent. Explain.
- [40:51]
Eric Kutcher
So I've had two philosophies in my own career that just kind of, I actually Heard from a Goldman exec when I was a baby at the firm. He had a list of things that they believed in and two of them really resonated with me. One is long term urgency and the second is you run to trouble. And I'll give you first the example of you run to trouble. I had a colleague who was remarkable what she did. And when the CFO of her client got fired, she would go visit that CFO every week at his house for the next nine months. And when the CFO got rehired into another situation, everyone under the sun called and said, hey, I'd like to meet with you. He picked up the phone and called her and he did that because she had been there with him every step along the way, including when no one else wanted to talk to him because he didn't have a position that to me is running into trouble. The long term urgent is I treat every meeting with the utmost importance, never with an expectation that I'm going to do anything on the back end. I remember I had one client who really was important to me and I met him when I was probably a mid tenured partner. And I said, look, what I want to do is I want to go. I'll give you two stories from two different individuals there. I said, I want to meet with you every month. I'm just going to set up an hour every month and every month you're going to give me an assignment of things that you want me to be thinking about on your behalf and I'm going to come back and I'm going to share some perspective and when the time is right, you'll decide if and when you want to work on any of these things. And, and honestly, I betcha we didn't do any work with him for the first 18 months of that. So call it 18 meetings. And we probably didn't do a ton of work until there was a moment that was probably seven or eight years later where he really was. The moment was right for him to do something that was big and transformative, but it took years, years to get there. Or I had another client where he got thrust into a position because his boss got fired overnight and he didn't really want the job. He didn't feel like he was super well prepared for the job. And I said to him, look, I'm just going to, I'm going to take the office right outside of yours and I'm going to be there every day. And there were days where he would have to fly across the country, I'd get on the plane with him and I'd fly with him and we'd talk and do what we had to do. And then I'd get on a red eye back, you know, you know, coach, that same night, I'd literally go from one side of the airport to the other. And that's what I mean by long term urgent. I was never in it for what was going to come our way. I was always treating every moment with the level of urgency as it was the most important moment. But I recognized it would take time until the situation would be right for us to really have the impact that I aspired for us to have. That's what I meant. Those are the two things that have been really important to me.
- [43:44]
David Novak
Now, you also say that you believe that McKinsey's talent is your biggest competitive advantage. Advantage. What, what can you teach us about how to have an eye for great talent? And you know what, what do you really, what? You see people at clients, you see people within the firm. What have you picked up on that front?
- [44:09]
Eric Kutcher
Our talent model is somewhat unique, right? Meaning most of our talent is hired at the entry level. So we hire about 50% of our people right out of undergraduate. We hire the other 50% out of some level of graduate school, or that's probably not right. It's probably 98%, so call it 49 and 49, and there's 2% that will come in later. And so at some level, the eye for talent is more about intrinsics at that stage than it is about any particular skills. And so I've always thought about this kind of in three buckets that you're looking for. One is, we are famous for our case interviews, so we are really testing how you do on a conceptual level from a problem solving, how you do it from an analytical level, how you do from a quantitative level. And it is really a test, it is really a way to examine how you do walking through an example that you might encounter when you show up from a kind of problem solving intrinsics point of view. And a lot of that is how do you structure and how would you go figure out? And that, by the way, I often get frustrated today when all these kids come in and they're super well prepped and they've got all the frameworks. I actually want to see how they think. Not like the way ChatGPT would tell them to answer the question, but you can figure out people that are really think or come up with innovative ways to look at it. That when you're on the other Side of the interview, doing the interview, you're like, gosh, I learned something in that, the way they thought about it, right? So I look for that. I look for. We have these things where you're looking for life experiences and how do they respond in those moments? So we often say, well, give us a moment where you failed, or give us a moment where you were leading. And we only ask questions like, well, what were you thinking? What did you do? Or what did you say? So you can't tell me the story other than kind of through those. And you're constantly asking them, well, what'd you say to the person in that moment? Well, why did you say that? What were you thinking about? Because you're trying to understand how they influence and how they kind of navigate tricky situations. And some ways that's kind of testing the maturity. And are they kind of more mature? Because we're going to throw a lot of these young folks into situations where they are with much more senior, experienced, more seasoned leaders. And so how will they react in those moments? And the third I just look for is kind of, what are their leadership like in the organizations that they've been part of? What difference did they make as leaders? Right. So I often have kids that are in college, and so they're all coming to me with questions, and their friends are coming to me with questions, and they're like, well, does B is part of such and such a club matter? And I'm like, it doesn't because I don't care what things you were affiliated with. I care about what difference you made when you were there. Right. And so I want to hear about the. And so between those three things, you can get a real sense of the person and the potential. And then we shape a lot of it. Right? We shape a lot of it from that point. Which is why I say it's a somewhat unique model. Right. If you're trying to hire. I have to say, I still struggle with. If I'm trying to. If we're trying to hire someone at a very senior level, I don't know that I have yet figured out what are the questions to ask to really understand are they great at what they did? You can ask references, but those are always biased. The beauty of what we do is we really kind of take this raw talent, these diamonds in the rough, and we get them to be this incredible gem by the time they're done.
- [47:25]
David Novak
Yeah, I know when I've interviewed young people and I just get excited, it's like, you meet these people and you Go. God, I can't let this guy out of my office. This woman, we've got to hire her. But they had a way of just exciting the hell out of you.
- [47:42]
Eric Kutcher
Yeah, you do this. Well, you always, every meeting, anyone that ever meets you walks away feeling good and more energized than they did beforehand. And I think that's a big part of, you have to be, some would say, exothermic. You have to kind of deliver this energy that is infectious to people.
- [47:56]
David Novak
Well, I don't know if I do that, but I tell you what, when I would meet the people that had it, I mean, I couldn't wait to hire him. There was no question about that, you know, and you know, you, you, Eric, you really get prepared. You're known for preparation. So, like, if you're going to, if you're going to sit down and have a big meeting with a CEO or a potential client, how do you think through that?
- [48:19]
Eric Kutcher
You know, and again, it all depends on the meeting. I, I find, and you can tell me this is true or not true, that if you're going to meet with a CEO, the first thing I always do is I read the COVID of last year's or the inside, you know, what they wrote to the shareholders. Because I typically find most CEOs spend a lot of time thinking about what messages they want to, and they're very proud of what they've written in there. And so I first just try to understand that with AI, there's some incredible things like NotebookLM, where you can go find every speech they've given in the last three months and every interview they've done and what they've said on analyst meetings. And you can create a short podcast. You can say, I want a five minute podcast, I want a 10 minute that really can synthesize kind of what may be on their mind. I typically will spend real time saying, what are the three, four, five, six things that I really want to make sure I get across? But I would tell you, on an average meeting, I might get one or two of those. And I always go in without paper, which I am sure there's some people I go see, they're like, why is he always coming to that paper? It's not that I didn't prepare the paper. I can't have the conversation with you if I'm staring or taking you through a document. And I can bring someone else to walk through the document if it comes to the point in time where that's the right thing to do. But I really want to Hear what's on your mind. I want to hear what's. And so I learned to ask a lot of questions, but I have done a fair bit of prep, right. So I always listen to the last earnings call. I always want to know what's going on. I always want to know what the questions were. I want to know who answered the questions, why they answered in the way they did. I want to see what the stock reacted to. I want to, you know, I'm constantly trying to understand one of the things I do. Lots of times I go talk to customers, right. Because it's always good to come in with a perspective of what the. Now I don't deal with a lot of consumer businesses personally. I deal with a lot more enterprise related sales. And so what's the customer saying? What's the reputation? What are those CEOs not really hearing from their own teams of what's may be going on. And inevitably, because I've spent so much time in tech, I know we are serving a lot of these other institutions. So I understand what they're thinking and how they're thinking about it, the perception. And I find that super compelling. But what do I know? Because the only compelling part is they haven't thrown me out too often.
- [50:24]
David Novak
It's been so much fun, Eric, and I want to have some more. And I have this lightning round of questions here. So are you ready for this?
- [50:30]
Eric Kutcher
Yeah.
- [50:30]
David Novak
Three words that best describe you.
- [50:32]
Eric Kutcher
Optimistic, energetic and restless.
- [50:35]
David Novak
If you could be one person for a day besides yourself, who would it be?
- [50:39]
Eric Kutcher
Scottie Scheffler.
- [50:41]
David Novak
Your biggest pet peeve?
- [50:43]
Eric Kutcher
Hierarchy.
- [50:44]
David Novak
Who would play you in a movie?
- [50:46]
Eric Kutcher
Tom Cruise.
- [50:48]
David Novak
I thought you'd have to tell me. It's Jerry Seinfeld.
- [50:51]
Eric Kutcher
That's why I didn't go there.
- [50:55]
David Novak
Your favorite place to ski?
- [50:57]
Eric Kutcher
Kirkwood Mountain in Tahoe.
- [50:59]
David Novak
Lowest round of golf?
- [51:01]
Eric Kutcher
67.
- [51:02]
David Novak
When you're teeing it up with your boys on the weekend, who wins?
- [51:07]
Eric Kutcher
My 18 year old has beaten me once and he won't let me live it down. And he made birdie on 18 to do it. He shot 75 that day. We're still at a point where I am beating my kids, but I don't think that's for much longer.
- [51:18]
David Novak
The fastest you've ever driven in your electric car?
- [51:22]
Eric Kutcher
120 miles an hour.
- [51:23]
David Novak
What's something you've been curious about lately that has nothing to do with work?
- [51:28]
Eric Kutcher
The idea is behind longevity.
- [51:31]
David Novak
Have you read that book Outlive?
- [51:32]
Eric Kutcher
I did. I read it over the break.
- [51:34]
David Novak
Yeah, Yeah, I read it too. So I'm going to live for a long time.
- [51:38]
Eric Kutcher
I have no doubt about that.
- [51:40]
David Novak
What's the one thing you do just for you?
- [51:43]
Eric Kutcher
I go to the gym every day.
- [51:45]
David Novak
If I turned on the radio in your car, what would I hear right now?
- [51:48]
Eric Kutcher
You'd find Spotify is the thing that I am using most often. And I've been listening to a couple of different artists lately. I've been listening to Coldplay. I've been listening to the Goo Goo Dolls. I've been listening to Trane.
- [51:59]
David Novak
What's something about you? Few people would know.
- [52:01]
Eric Kutcher
I think most people would think about me more about my head and what's going on in terms of my brain. I actually think what really those that know me well know about my heart.
- [52:14]
David Novak
What's one of your daily rituals besides your workout? Something that you'd never miss?
- [52:18]
Eric Kutcher
My cup of coffee.
- [52:20]
David Novak
All right, there we go. We're out of the lightning round. Good job. All right, just a few more questions here, and we'll. We'll wrap this up. Eric, you have three kids. How have you brought the way that you lead at McKinsey and. And taking it home?
- [52:36]
Eric Kutcher
It was super interesting. I just. I just had about 35 of my partners down at my place in South Carolina, and. Oh, no, this was actually. I apologize. This was 35 of my engagement managers and. And associate partners, or just before folks become partner. And someone asked me the question about, like, as I look back on. As my oldest turns 20 on Sunday, do I feel like I was a good dad or did I miss out on all the things? And did I really kind of orient more towards my career and the firm, which can take a lot of my time? And I had been feeling better as my kids had gotten older, that I had done a lot to influence them and that they actually rely on me more and more, especially as they enter this phase of their career. But when this young pregnant woman asked me this question, I said, you know, I don't want to answer the question, but Instead I just FaceTime my daughter. There's about 40 people in this room, and one of them just asked me a question that I think you're better prepared to answer. And she goes, what's the question? I said, well, was I a good dad? And she paused for a moment, and she goes, absolutely. And she said, well. I said, well, why? And she says, I always knew whenever I needed you, you would be there no matter what. Right? And so that was very meaningful to me as to the presence and the presence of. And I do think about that. From a leadership point of view, I think my colleagues would say no matter where in the world I am, if they need to chat with me that day, they will get me. My response time to call them back is very fast. And it's. I do believe that this is the urgency point. You always have to be there for people's moments of need. They have to know that you will prioritize them and that's part of the trust. And so I think that's been a big part of what I do at work and I think it's a big part of how I've been as a parent.
- [54:29]
David Novak
People talk about work life balance. You just talked about a few minutes ago, red eyes and being away and all the travel. What's your take on work life balance? How do you think about it?
- [54:42]
Eric Kutcher
I honestly don't. I've always thought this a little bit of fictitious. I love what I do and what I do. I wouldn't do what I do every day. I wouldn't travel the way I do. With the exception of about an 18 month period that I talked about as the end of my time as CFO, I've been at the firm 28 plus years. I've run to work every day for all but that 18 month period. That's an amazing, that's an amazing thing. So like I have not chosen to say I'm going to do work here and life here. I rather make them all integrated together. So my kids are part of my work. Like, you know, we do these retreats. I bring the family, like I, they know a lot about the firm and a lot about what I do and it's part of who they are and then vice versa. I bring my, you know, it's. I've just never believed you could ever separate those two things. If you're doing something that you care so much about. And that's been true about my passions too. Like I am a deeply passionate golfer, but I involve that in what I do from a work point of view or I happen to be a die hard Yankee fan and I bring lots of clients to see my. I found a way to make work and life very intertwined so that it never felt like I had to draw lines that were this artificial balance point. And it's why I don't think I've ever like, I've never gone to work. Like not with the exception of that one small period where I was not excited to go that day.
- [56:06]
David Novak
Well, tell me if this is true. I'm sure it is because. But I heard you Said that you've got 10 years left before you retire at 60 years old. You're such a young guy. Why would you retire at 60?
- [56:19]
Eric Kutcher
Yeah, I think the last couple of years have made me change. So the firm has this. The firm, our firm has this real incentive to leave by your 60th birthday. And I think it's an important thing inside the firm to do that because it's how you pass the firm generationally. Right. It's actually an important point. It's a young person's firm. And so I'm now 51. I've got up to nine years that I can stay at the firm as long as I'm being useful and helpful to the firm. I used to think that I would really kind of not want to be tethered to my phone and be able to play golf and not have to worry about the 150 emails that came through. And. And what I've realized over the last probably two years is I'm just not set up well to retire. It's just not who I am personally. And so I think now much more about working really in it, doing something meaningful into my mid-60s, and then after that, doing something where I'm kind of giving back professionally in a different way, but not maybe necessarily at the same speed for another 10 or so years. And at that point, that's 20. That gets me 25 years from now. Who the hell knows how I'll feel in 25 years from now?
- [57:22]
David Novak
So you never retire, Eric. You refire.
- [57:28]
Eric Kutcher
I like that.
- [57:28]
David Novak
The retirement word is a bad word. What do you see, Eric, as your unfinished business, both for McKinsey and you personally?
- [57:42]
Eric Kutcher
So I think the first thing is, as a parent, it's always unfinished. The reality is, when it's all said and done and they finally put it in stone, what I really want them to write is beloved husband, father and friend. And so you have to make sure, no matter what, you are there with your family and with your kids. And I'm at this super interesting time as they're kind of thinking about what they're going to start their careers at. And kind of. They're in college, they're in this incredible moment and to make sure that I'm there. And that part never finishes. If, you know, as my father taught me or my parents taught me, little kids, little problems, big kids, big problems. And so those never go away. And you're always kind of worried about. It's one of the things I think about leadership a lot is you absorb the pain of your kids or of your teens, but you celebrate and live and bask in the glory of their successes. And so that part is not done professionally. It's funny, I talked about this kind of being comfortable. I'm much more centered now than I ever was. And so I don't have a lot more that I have to personally feel like I have to prove. I do a lot of what I do. And especially as I've been leading inside the firm today, as I think a lot about this word stewardship, I think the firm McKinsey turns 100 this year. I don't think any of us know the exact day, but one of the things I've been really struck by is if you think about the word stewardship as opposed to ownership, I think of it as you kind of get a moment in time where you are the caretaker of the institution. And so until, like, you stand on the shoulders of those that came before you and handed you this incredible thing, and then your job is to make it better and hand it to the next generation. And then you've kind of done your job, and I haven't yet been, you know, been asked to give it to the next generation fully. And so until I do, my job is to continue to make the firm better. And I think part of that is continuing to build the culture. And you know, that that attracts what I think is the most amazing talent and gets them to want to stay and do the things we do, which I think is a noble purpose. And then it's probably to help position us for what I think is going to be this greatest moment of transformational change that I've lived through, which is this AI moment. And so how do you get the organization ready to do that in a partnership? And so I think once those things are done, I think the firm will be happy to say goodbye to me.
- [59:56]
David Novak
Last question. What's one piece of advice you'd give to anyone who wants to be a better leader?
- [60:02]
Eric Kutcher
I think great leaders are much more about the team they leave behind than about themselves. And so I think if you are self oriented and are doing this for you, you are doing it for the wrong purpose. Great leaders think about how they make every one of the team members better, and that's their job. They chose that team because they believe collectively that team can do something magical. Their job as the leader is to make every one of those people reach their full potential so that collectively they can achieve that impossible. If they do it because they think that team is leveraged for them, that is selfish and they are A bad leader. And I think that's a really important difference.
- [60:38]
David Novak
You know, Eric, this has been a great conversation. I want to thank you for taking the time. You definitely are smart, there's no question about that. And I've had the privilege of getting to know you. And I think what if there's anybody that doesn't realize that you don't have a heart, they might not have one. Okay. Because I think you have that unique combination of being smart with heart. And I'm sure that's why your clients love you and people love you since you stopped being that asshole cfo. It is true.
- [61:21]
Eric Kutcher
Sometimes it's horses for courses. And I just had to play the role for the moment.
- [61:26]
David Novak
Thank you. I really appreciate it.
- [61:27]
Eric Kutcher
This has been amazing. Thank you.
- [61:34]
Podcast Host
David. I feel a whole lot smarter after listening to that interview between you and Eric.
- [61:39]
David Novak
Well, that's the way I should be. When you talk to a consultant, they should make you a whole lot smarter and give you insights that you wouldn't come up with on their own. So I don't know that you could pay Eric a finer compliment than that.
- [61:51]
Podcast Host
I love this episode, David, and obviously it's very AI forward. And I think people say this all the time, but for some reason in this episode, it held a little more weight when Eric says that this is a once in a generation technology transition. And we all know that AI is a big deal and it's changing everything, but the way that he approaches it and teaches it and encourages other leaders to teach their people about it is so significant. And I love the way that he broke it down and just made it really practical for everybody. And I'm excited, David, to get your take on some of those same concepts that you and Eric talked about in this debrief of your conversation.
- [62:28]
David Novak
Well, what I liked is he pointed out a couple of things. Number one is that obviously everybody knows AI can drive productivity by reducing costs and the typical employee count that you have in your organization, that's something that people readily acknowledge. But what he brings up is the fact that as we get smarter and smarter with AI, we're going to drive huge revenue generation and satisfy customers even more. And I think that's what really has them excited, is the potential that we have to use AI to really grow businesses and drive their sales and profits much more significantly. The other thing that I loved, you were going to go ahead and you were going to say something cool.
- [63:13]
Podcast Host
I was just going to say everybody's manager or boss is trying to figure out how to incorporate AI into their Work stream. But even if you're an individual contributor, I would go back and listen to those three things that Eric says around what he believes AI is going to be most impactful around. Especially pay attention to the third one where he talks about how it's going to allow for much more net new business for any company. So even if you're an individual contributor and not in charge of helping your entire team adopt AI in all these different ways, how can you think through what AI will allow you to do in terms of generating net new business and coming up with these new revenue streams? Because when you take that to your team and to your boss, it'll not only show them that you are an active and avid learner and adopting AI, but it will show that you have a more enterprise view of your organization.
- [64:05]
David Novak
Yeah, great point. And speaking of the enterprise and how the enterprise should build into the culture, I thought he brought up a phenomenal point, which is what leaders are going to need to do now and every leader should be doing for themselves, is learn how to ask AI really great questions. Because the better your questions you ask, the better the input you're going to get from ChatGPT or whoever you go to. So to me, that is a great insight. And when I think about it, the best leaders always have known how to ask great questions. You know, the best leaders ask questions of their people. They ask questions from customers, you know, they ask questions from investors, or you name it. They're very good at driving for insights through being curious. And I think teaching people and teaching yourself how to ask really insightful questions is a great leadership skill. Everybody should. Everybody should really build in. And, you know, people always talk about the importance of listening. That is absolutely true. But it's much better to listen after you ask some really good questions, because that's when you're really going to get the best insights.
- [65:16]
Podcast Host
He talks about being a good prompt engineer. And that was a very good piece of feedback that I've taken from this conversation. And even since I've listened to it and since I've been using Gemini and ChatGPT, I try to stop myself before I hit enter on my chat and I say, okay, is this prompt going to elicit the informed piece of data that I'm really looking for?
- [65:39]
David Novak
Yeah, and the better we all get at really clearly articulating those prompts, I think the more power we're going to get out of AI.
- [65:50]
Podcast Host
Switching gears just a little bit, David. I want to talk about failure. And in the episode, Eric shares this incredibly vulnerable story about failing as a cfo. He lost confidence of his partners, became unwelcome in meetings. He talks about how awkward it was when he walked in the door in meetings after that period of time. But he worked his way back in and rebuilt trust and gained the approval of his team. For someone who needs to repair trust with a team after a pretty significant misstep, what would you tell them to do?
- [66:22]
David Novak
I think the first thing you have to do is go public with the fact that you were accountable, take accountability. Say, hey, this was my job. This was my role, and it didn't work out well. Now, that's one thing. But the most important thing, I think, is, what can we learn from it? What can we learn so that it doesn't happen again? Or what can we learn that we can build into whatever we're working on to make sure that, you know, we have, you know, a much higher success factor? I think taking accountability for it, fessing up to the fact that, hey, you're the. You know, you acknowledge the fact you could have done it better, and then learning from it is great. And then the third thing is get your head out of the sand. Okay? Keep your head high. You know, everybody makes mistakes. You know, still stay positive about your capability and what you can, you can bring to the party. So don't get into a woe is me mode, because that'll just take you further down the tank. You know, people really want to be inspired by people who are vulnerable. They're honest, they take accountability, but they move on because they've learned. And that energy is contagious.
- [67:41]
Podcast Host
It also makes me think about all of the small things that we do to build trust with people. Like, of course, there are the larger things that allow us to build trust with people. You know, we say we're going to accomplish something, and we take our team with us to do it. But when you think about trust on a more almost acute scale, trust is built by doing what you say you're gonna do over time. So I would also add to that, David, you know, if you do need to build trust, in addition to saying, hey, everybody, I made this huge mistake, here's what we can learn from it. I also think that the more you can show up for your team, say you're gonna do something, and follow through on those things, no matter how large the scale those things are, that'll go a really long way in helping you repair what has been broken.
- [68:25]
David Novak
Yeah, if the mistake or whatever you did that didn't work out is more of a one off and not really reflective of your overall performance and that you've built trust over time. I mean, people are much more likely to give you a do over or to follow you in any event. I couldn't agree more. Before we go on, I was just thinking about one of my major league failures. When I was running marketing for Pizza Hut, we had this great idea to team up with Back to the Future 2. So we decided what we were going to do is get all these people in Back to the Future 2 to wear these solar shades, these really modernistic solar shades. And they would be very popular and just be all over the movie and then everybody would want to have them. And once they wanted to have them, the only place that they could get them was guess. Wear a Pizza Hut. So we created these goofy looking, modernistic looking sunglasses. And the problem was is the movie broke in December, okay? And not too many people wear sunglasses in December. And that's when we had the promotion. And the other problem was I'll never forget standing up and make it a big presentation internally and with the franchisees about how we were going to be the largest seller of sunglasses in the world, okay? And guess what? We're going to do it in December. I know that sounds really stupid, but we didn't have total control over the release of the movie. But I'll never forget going to Chicago and talking to this restaurant general manager and asked him, I asked him a question, not necessarily a great insightful question, but I said, hey, you know, what would you like to see? Have us. Have us do, you know, in the marketing world that we're not doing now and could, could help you drive sales. And he says, I think you ought to go fire that asshole that came up with the solar stage for Russia. So anyway, I'm not saying I totally came up with that by myself, but I took 1000% accountability because I believe anything that happens on your watch is your accountability. And I also told the story many, many times. Of all the things that we could have done differently to ensure a better outcome, the other thing was to have an ironclad contract with the studio. Because what happened is I think the solar shades were only in like two or three scenes and you could barely see them. The only people that knew they were there were, was me. So, you know, we, we learned from this. And the other thing that was kind of interesting is that that came on the back of like five or six home run promotions. You know, everything we were doing at that point in time was working. And so when that happens, you Start to start smelling your own perfume, and you start thinking that, you know, you're not going to really make too many mistakes. And I think that's when you're most vulnerable to make your mistakes, is when you, when you, when you, when you think you're you, you're. You're better than you. You really are. And our, our marketing team was. We, we. We thought there was nothing that we couldn't do, and I, I was leading that charge. And once we acknowledged the fact we made mistakes, we, we sold, we bartered off all those sunglasses that we had left, and, and we moved on. But I think the reason why the organization and the franchisees and everybody was so accepting of it was because we had had so many great successes and, and also we were very honest about the fact that we, we could have done a whole lot better.
- [72:06]
Podcast Host
Do you still have warehouses full of those solar shades?
- [72:10]
David Novak
I don't know. But I do have a picture of some people wearing them. And I kind of, I, I kind of keep it around every now and then just to take a look at it, because it definitely will keep you humble.
- [72:22]
Podcast Host
I love it. I love it. Okay, David, the final topic that I want to debrief with you is the idea around consultants. Obviously, Eric is heading up one of the most successful, largest consulting firms in the world. And I love, in the episode, I mean, you just straight up confess to a consultant about how you think consultants are for lazy leaders. And I know you probably don't really mean that, but I'm curious about your thoughts on consultants. Has, has it evolved?
- [72:51]
David Novak
Yeah, well, first of all, I overstated that, you know, and because I think that I guess I'd have to be a lazy leader because I have used consultants in that and in the past. But the point I was trying to make is that too many times leaders use consultants for everything and they become a crutch. And they, the consultants, constantly doing the thinking in the organization versus the leaders. I don't think you outsource your thinking. You don't outsource the accountability for thinking and leading to somebody else. You know, in fact, I had a great consultant help me in an area that I needed. When I first went to kfc, I had this great idea to have a recognition culture and was giving out all kinds of fun wars like floppy chickens. But I would do that when I go on market tours. But I was only one person, and I knew that one person couldn't change a culture. You had to put process and discipline around it. You had to have training. You had to have something, to be a catalyst. And Larry Sin, who was the father of culture, literally was named the father of the word culture and was from Stanford, a great researcher. Somehow he stumbled in my office one day and we met and he helped me develop all the processes we needed to take our culture globally and make recognition the thing that we became famous for. And if I wouldn't have had Larry, I would have been a one man band. But he showed me how to scale it. So he provided tremendous value on that front. And I've used consultants in the past to help us really identify areas to cut costs in particular. I just think consultants can be enormously powerful if they're used selectively and for the right reasons and not a crutch. But I also think that Eric brought up a really good point, is that consultants can be your thought buddy. You know, basically, you know, everybody needs somebody on the outside to give them some independent thinking and to push him where there's no other agenda other than to care about that person and that company. And that's what Eric does, and that's what separates him from the pack. You know, I've talked to many, many people who've had the benefit of working with Eric, and Eric cares about the leader, he cares about the company, he cares about the people in the company. And there's nothing that he won't do to uncover every asset that McKinsey has to help people win. And they feel that and they know that he's in the foxhole with them. And when you can have somebody as smart as Eric in the foxhole with you, you've got a real, real thought buddy and you've got a real action oriented person that's going to help you win in the marketplace. And that's exactly what he does.
- [75:38]
Podcast Host
I love that he says, you know, in our very best engagements, there is no distinction between McKinsey and the client because we're so intertwined and everyone's so on the same page and we're all in this thing together trying to accomplish this goal that nobody knows who's the consultant and who's the employee. And I just love that because it shows exactly what you just said, David. He gets in there and wants nothing but the very best and will use everything available to him to get there.
- [76:04]
David Novak
And we talk about that, the concept of the shadow of the leader often. And you know, when you think about him running, you know, such a huge piece of McKinsey, he's casting a huge shadow that I'm sure drives a client focus in that organization, that's critical. But if you can have people on your team, no matter where they come from, and you all feel as one and you're all unified and you're all working on trying to do the best to move things forward, that's when you've got it made. And to have really, really smart people like they have at McKinsey doing that for you, man, that can be a big advantage. So just let me repeat. Consultants are okay, but they just shouldn't be used as a crutch.
- [76:53]
Podcast Host
Thought buddy.
- [76:54]
David Novak
Thought buddy. I love and I would love to have Eric as my thoughts buddy because he's a lot smarter than me.
- [76:59]
Podcast Host
Ditto.
- [77:00]
David Novak
You don't have to agree with me.
- [77:02]
Podcast Host
No, I want him for as my thought buddy.
- [77:04]
David Novak
Oh, okay. I thought you were saying he's a lot smarter than me. And yes, you're right. But don't agree with me.
- [77:10]
Podcast Host
David, thank you so much for another fantastic episode of How Leaders Lead. And thank you to our listeners for tuning in to another week's episode. We will see you next Thursday.