How Artificial Intelligence is Reshaping Strategy, Consulting, and Business Leadership

Are you ready for the revolution that's already transforming business strategy? In this riveting conversation, Professor Greg Bunch from the University of Chicago Booth School of Business delivers a wake-up call about artificial intelligence that will change how you think about business forever.

TLDR: 

• Domain expertise remains crucial even as AI capabilities expand
• The best value from business education comes from networks and brand, not just knowledge
• AI doesn't replace human judgment but requires it to evaluate output quality
• Relationships still "compound like money" over decades in business
• Knowledge workers must focus on "not urgent but important" learning to stay relevant
• Future competitive advantage comes from combining human expertise with AI capabilities
• The best technologists and managers are already using AI to amplify their skills
• Human-to-human relationships remain irreplaceable in high-level decision making
• Strategy still requires "go and see" - physically understanding customer needs first hand

"Management consultants should be very afraid," warns Bunch, revealing that AI can now produce better market analyses in minutes than top consulting firms deliver in weeks—for $20 a month instead of millions. 

This isn't science fiction; it's happening right now in boardrooms worldwide. But rather than painting a dystopian picture, Bunch offers a practical roadmap for navigating this new landscape.

The secret lies in understanding what machines can't replace. While knowledge has become commoditized, relationships still "compound like money" over decades. 

A coffee at a trade show might lead to a $100 billion deal twenty years later—something no algorithm can replicate. The distinction between domain experts who use AI as a powerful tool versus those who compete against it makes all the difference between thriving and merely surviving.

Particularly fascinating is Bunch's analysis of business education's evolving value proposition. "If you just want knowledge, go to the cheapest business school," he advises, explaining that networks and brand recognition now outweigh information transfer as education's primary value. 

This reframing challenges institutions and individuals alike to reconsider what truly matters in professional development.

Whether you're a C-suite executive, entrepreneur, consultant, or knowledge worker concerned about your future, this episode provides essential insights for making AI your partner rather than your replacement. As William Gibson famously noted, "The future is already here—it's just unevenly distributed." Will you be among those who embrace this transformation and shape the future, or will you be left behind?

The call to action is clear: embrace AI as a partner rather than fearing it as a threat. 

Those who adapt will thrive while those who resist risk obsolescence.

Transcript

Introduction to Professor Greg Bunch

Speaker 1 0:00

Today we have the pleasure of talking with Professor Greg Bunch from the University of Chicago Booth School of Business , and we expect and we know that it will be very interesting and very enlightening regarding all the new developments we have in technology management and the intersection of strategy and technology . You want to introduce yourself , Greg .

Speaker 2 0:28

Arnold , thank you for inviting me to be part of this , and , kieran , it's so good to meet you . I have an appointment in entrepreneurship at the University of Chicago . My class is New Venture Strategy and for executives , I teach courses on growth strategy and mergers and acquisition , so everything I've focused on is growth . It's often technologically related and I look forward to talking with you today about that . It's just my passion .

Speaker 1 0:59

Great , Great . I was going to start with something that we talked the other day and actually made me reflect and think about it for a long time , which is the use of artificial intelligence as a way of I don't want to say replace , but to be your consultant on hand all the time . Consultant on hand all the time and with results similarly to what you could expect from the largest top management consulting firms . We'd like to hear about your experience .

AI Replacing Management Consultants

Speaker 2 1:33

So the headline should be if you're a management consultant , you should be very afraid right now . But let me back up for a minute and say when I teach strategy , I say that the goal of a business is to win . However you define winning , the first rule of a business is don't die , because if you're dead you can't hit your goals . Strategy is how you avoid death , but , more important , how do you grow ? And so I look at all technology as a threat to a business , but also a tremendous opportunity , and I've been studying strategy . I've been studying technology for decades now , and I have never seen anything like what we're experiencing now with generative AI . If you have been alive long enough , you've been through several what are called AI winters . There have been great promises that artificial intelligence would help us and actually , if you remember 2001 , a space odyssey that the computer would kill us . I think we have both of those concerns today . So let me go back to the management consultant or the manager . Today , many of the things that have been the key strength of a good general manager or a management consultant can be done by a computer . The only person who I think who has an advantage over the AI is somebody who is a true expert , who's thinking a lot . So let me give you an example . We often talk about the Michael Porter Five Forces or we talk about the PESTEL acronym for macroeconomic forces understanding what's going on in politics , economics , society , technology , legal , regulatory and environment as ways to analyze our competitive landscape . I am now asking various of the AI platforms because I use several of them to compare them do a deep research for me on a certain company and in minutes , in minutes , it comes back with a far better market analysis that I see from all . But the very best consultants and the best consultants take 10 to 15 weeks to come back with that result . This is coming back in minutes .

Speaker 2 4:08

Now , the reason I say that you still need expertise is you have to judge . Did the AI do a good analysis ? Now , that's also true with your management consultant . Do you know that those management consultants gave you a good analysis ? A good manager has a gut feel for that because she is very involved in her industry . He has spent a lot of time with customers , suppliers , supply chain and they have a gut feel for whether the advice from the consultant is useful .

Speaker 2 4:36

But now , for $20 a month , you get what used to cost a few hundred thousand dollars , sometimes a few million dollars . So I'll pause there . But I , before I pause , I'll say I gave this talk almost a year ago in london about the changes with artificial intelligence and , by the way , the ai chat boxes are exponentially better than when I gave this , there was a partner from one of the most famous management consulting firms and as I was speaking he was turning green , almost becoming physically sick , and in the break he said my job is over . And I said your job , as you've been practicing it , is over . The question is how will you make the AI a partner so that you really add value going forward to your clients ?

Speaker 3 5:33

Great , let's delve into a couple of things there . And I'm a fan of AI .

Speaker 2 5:36

I should say , let me caveat that or explain that phrase in the last way . It's good that you said you're a fan of AI , because it's listening , it's processing everything we're saying . It's deciding which one of us it's going to keep and which it's

Domain Expertise in the AI Era

Speaker 2 5:44

going to kill .

Speaker 3 5:44

It's processing everything we're saying . It's deciding which one of us it's going to keep and which it's going to kill . So hopefully I can influence it a little bit if I sound half sensible . It's interesting because a lot of people their initial reaction is I don't trust it , it makes mistakes , it hallucinates and whatever else . But I love the way you articulated .

Speaker 3 5:58

So do people too , because I've seen a statistic from someone yesterday that said oh my goodness , out of 1,000 times AI or Gen AI gets it wrong 10 times . And I'm thinking that's amazing because I've met many a management consultant in my career and if they only got it wrong 10 times out of 1,000 , then wouldn't all of those businesses have been more successful ? So I suppose two part questions . Businesses have been more successful , so I suppose two part questions . Number one is what are the roles transitioning to of those really good current consultants ? And let's be honest , there's a lot less saddlers in the world than there are software engineers . So how does anybody in consulting actually get started to get to the position where they have the knowledge to know whether chat , gpt , gemini , bing Bard , perplexity or whatever it is , is actually telling them a good story ?

Speaker 2 6:52

So it's a great question , kieran . I have two key verbs for strategy , and they're go and see . It comes out of work that I've done with the Toyota production system and companies that have adopted it . I think there is no substitute for going on the ground , face-to-face with your customer . Don't have focus groups . Watch them work , observe what's happening in their environment , go to the factory floor , go to Gemba as the phrase . Thoroughly immerse yourself in the production of the product , because strategy at the end of the day , is based on how well do we understand ? What does the customer need ? Who is the customer ? Why does she buy ? Who is the customer ? What is his struggling moment ? And then , understanding what makes us great . How can we supply that need really well ? I think that we have to .

Speaker 2 7:55

All of the best strategists I've ever observed got out of their office . They went , they walked around , they got to know the customer , they immersed themselves in technology . They're always learning . So the reason I say that is this is still the truth . I still go out and sit with customers and I don't ask them what do you want from me ? Because they're going to say I want it faster , better , cheaper . You don't need a focus group to ask that . What you have to observe is what are they really struggling with ? What is a day in their life like ? Once you have a gut feel for that , then you can work with the AI and say I want you to understand , I want you to explain to me , I want you to do research for me in a category . So I'll give you a very , almost trivial example .

Speaker 2 8:41

About 20 years ago , I was a partner in a firm called Brand Trust . We did qualitative market research and , as a way to market our work because we were always signing NDAs we did a project on high heel shoes and why women wore high heel shoes . And we interviewed hundreds and hundreds of women about how many high heel shoes they owned , what high heel shoes they had . We just immersed ourselves . We did a deep dive into the category . Now , the reason I say this is now 20 , some years later

Collaborating With AI vs. Relying On It

Speaker 2 9:15

.

Speaker 2 9:16

I ask the AI tell me about women who wear high heel shoes , why do they wear them , what is their emotional driver ? And so I did this six months ago . And then I said and based on this , I want you to make personas and interview the personas and then we'll create a product together . So in about five minutes . It generated the personas and I thought these are exactly like the women we would have recruited . It recruited perfectly the people we wanted . Then it conducted the interviews . The interviews were almost verbatim , the kind of interviews that we had , which had deep emotional depth to them , and then it began to create products around this .

Speaker 2 10:03

So what I'm saying is you have to have a deep domain expertise to be able to work with the AI and to judge it . Now let me tell you one other story . I was asked to be on a panel for the faculty at the University of Chicago , specifically the business school , and there were three other people on the panel . Two of them are AI specialists . They know how to build the algorithms and , to be honest , I don't understand all the math . I have other people work on the math . What does a manager need to know to use AI ? And that's what the university asked me to teach the faculty . So a friend of mine at MIT so , arnold , a shout out to one of your favorite schools , bill Ouellette has developed a software that is like the Holy Grail at this moment for entrepreneurs who want to build a company , and I simply said to the AI I would like to create a business that would sell to business school professors at the most elite business schools , and specifically the University of Chicago Booth School of Business .

Speaker 2 11:13

It created a persona . Now here were the two specific things it said . It said that the age of a University of Chicago Booth School of Business professor is 35 to 65 . Well , to be honest , I'm older than 65 , and so are a lot of our faculty . Very few are under 35 . It also said what professors at Booth make , and it gave a number from X to Y . I can tell you , no professor at the University of Chicago would work for those numbers . We get paid far more than that , but the number is big enough that I think the average person would go oh , that's probably what they make . Um , but having local knowledge of how old professors are and how much professors make , I could then push back against my AI . Because of that collaboration , though , the AI then was able to move forward with me , and we began to create products that I was able to show my colleagues , and they were like , oh , I'd buy that . So maybe I should pause and ask a follow-up . I've actually forgotten what your second question was . Yeah , don't worry .

Speaker 3 12:22

We're going to end up in a place here where do I need as many and I use the word software engineers and saddlers ? I just don't need as many consultants , then , because if I needed an army to get to the same answer in a period of time , what I really need is some very deep , expert domain workers who actually understand whether the AI is telling the truth or not , and then the only bit I need is for them to make sense of it all and when I say make sense of it all , I'm not too sure the exact figure now , greg , but the last time I looked it was there's 189 human biases . So I need an AI that's going to remove the biases . I need a person who understands the deep domain , and I need both of them to work together to remove each of their own biases , to come up with a really amazing answer for an audience buying my service .

Speaker 2 13:13

Yeah , a hundred percent . So let's go to software engineers for a moment . You don't need to know how to write any code , kieran . You simply tell the AI I would like a website , I'd like a web app , I would like a whatever , and in minutes it'll write the code . I am not very good at writing code . I've studied a variety of languages Python , ruby , clojure , which is a Lisp language . I can do some basic programming . I've built websites . I know how to use HTML and CSS and all of those things , but I'm not very good at it .

Speaker 2 13:51

I simply say to the AI I'd like to build a web app , please use Ruby and Ruby on Rails , and it needs to be able to run in a browser , and I describe the parameters . Minutes later , it's written all of the code for me and you'd say well , how do you know it works ? It's very simple . You now try to run it in your browser . If it doesn't run , it'll send you an error code and then you give the error code to the AI and it will literally say oh , I'm sorry , the language has been updated since my last one , or something like that . It fixes the code for you , so you don't actually have to run anything . Then I'll write to it .

Speaker 2 14:31

I have never done this before , even if I have , because I wanted to write it in a very elementary way . I have never done this before , even if I have , because I wanted to write it in a very elementary way . I have never done this before . I need you to take this step by step . How would I launch this to the Web ? What do I need to do ? And it will then begin to teach me , just like an elementary school teacher , how to do it . And I've done this . So I am now watching students of mine . I can think of a student this last term who said to me Professor , you're exactly right when you say that I am sitting down with AI and I'm building a company . I've never taken a course in programming , so it's now a team of one plus the AI . We've got companies that have gotten to 10 million and actually 100 million in

Education and Learning in the AI Age

Speaker 2 15:18

annual recurring revenue , with engineering teams of 5 , 10 , and 20 people . It's unprecedented . So I think the same thing will happen with management consulting . It should have happened right now .

Speaker 2 15:34

I've been telling clients the only reason you should hire my students call the three big consulting firms MBB , because they're all the same to them McKinsey Bain BCG they just refer it to as MBB and I say the only reason you should be hiring MBB today is for the reason you really always hire them an insurance policy , that is . If something goes wrong , you have someone to blame and that's a little bit cynical , but it's not entirely cynical . A good manager actually already knows most of the stuff the consultants will bring to them . They just don't have enough time or have enough people on their bench to do the research . But the real reason they often hire them is to have somebody to blame .

Speaker 2 16:18

So I've sort of joked . I said if MBB charged you $2 million for a project in the past , say to them I'll pay you $200,000 today if you'll sign off on whatever my AI says . And what I'm trying to get to is I really think that a good manager today really should just spend the $20 to $40 for the software and work with it and see that the AI is your best co-manager imagine that most of the top management consulting firms today are really , as you said , turning green because they see this is imminent .

Speaker 1 17:04

It's not . That's going to happen in a couple of years , it happens today and it was happening yesterday . You will have more people , probably like you , that will be very good at creating these prompts and replacing all those consulting teams with the right AI development and then be able to understand it and explain it . Probably this is not gonna replace the whole chain . It will replace the consulting , but you , as the project manager or the responsible person at the company , will be able to explain what are the results . Probably the time it will take you to understand actually the result and then present it . I think that that's gonna happen . I have to also say that I believe that AI and this is something from MIT that in one of the courses that I gave , is that more than 20% of the programmers truly high-notch programmers are using these tools to speed up the development . So this is not . Maybe you , as a casual user of those programming tools , may say , okay , this is great , but I have to say that people who are really top at programming are using them as well .

Speaker 2 18:25

It's actually the very best . People are getting tremendous . What it's doing is it's taking the average person and making them good . It's making the really great people much better , and so the people who are in the greatest danger are those who are not using it . Yes , and in fact , there's a client of mine , and they're one of the largest engineering companies in the world .

Speaker 2 18:52

I won't give their name , but they were hesitant to use the AI tools . This was a year ago and they have a large competitor . You'd also know their competitor and I said well , what if your competitor's using it ? And all of a sudden , they realized remember , the first rule is don't die Well , if your competitor's got an advantage , a tool that's technologically superior to what you're using . So all of a sudden , they put their thousands of engineers beginning to train them to use AI , and you don't even have to be great at prompts anymore . You can actually ask the AI write the best prompt to help me do this , and the AI will write better prompts the best prompt to help me do this and the AI will write better prompts .

Speaker 1 19:38

That is true . That's exactly true . I read that ChatGPT is the best way to write ChatGPT prompts .

Speaker 2 19:43

It is very recursive .

Speaker 1 19:45

You don't need anything . Once he knows , he will do it for you .

Speaker 3 19:50

I think you're right . Just act as a prompt engineer . If all this is true , then we have a very different economic model in front of us . If we're a consulting or engineering firm , traditionally paid on time , now are we looking at value based outcomes , revenue share schemes , are we looking at consultings needing multiple sources of differentiated incomes to stay in the game , or what are we actually looking at now ? What's the repercussions economically and financially ?

Speaker 2 20:21

So human beings are very bad at prediction ? I don't know the answer to that , but what I would say is that I was in a large negotiation recently . It was an RFP and rather than do a classic cost plus kind of time bidding , we did exactly what you said . We let the client determine value and we said would you be willing to give us this percentage of value ? And we're actually waiting to hear back , but I think that they were persuaded because I'll give you in a different way Again a year ago .

Speaker 2 20:57

So things have changed so fast . A year ago a young friend of ours was working for a summer camp and he was supposed to write a policy manual for the archery range . You know the safety and how you would handle the bow and arrow and this kind of thing . And I said to him hey , why don't you just ask AI to research what are the best policy manuals on archery ranges for youth summer camps and have it create a policy manual for you ? And this young man totally believed he could do it . And he says , well , I'm never going to do that . And I said , why not ? And he said I get paid by the hour . And you see his point . And he said if I finish in 15 minutes , my boss will just give me another assignment . And I said , because I really believe in being ethical and telling the truth , well , if your boss doesn't ask you , what your bosses ask you for is the policy manual , don't tell them how long it took you , just produce a great policy manual which is back to getting paid for value rather than time .

Speaker 2 21:59

Yeah , I actually don't think we have any clue what's about to happen to not only business but the human race , and some people see this as very terrifying . And it could be terrifying . You know , when human beings harnessed fire , a lot of people burned their hands , houses burned down . Tragedies happen with fire , but do you want to live in a world without fire ? Same with electricity , same with the wheels , same with . You know , any technology has the ability to hurt and kill us . It also has the ability to help us .

Speaker 3 22:34

I remember when Books for well , I don't remember I wasn't physically there . You'll be delighted to hear when Books for First launched , I think , what Socrates was complaining about losing the art of speech . When the first calculator was created , high school teachers in the US all went on strike . My question , though , I suppose slightly leading on to this , is anybody listening to this now is , I hope , wonderfully terrified . When I say wonderfully terrified , I want them to be wonderfully terrified to take action , to start using the tooling .

Speaker 3 23:04

My fear is , though , we end up and only a caution , because , as I said , I am pro AI is that we have two further forward worries , greg . One is what I call falling asleep at the wheel at work , which is , I believe , absolutely everything that AI tells me , and therefore I rarely question it . There is a learning journey with AI , where you tend to believe it and then you realize there's gaps currently , which will be closed , and the second one is cognitive laziness , which is I'm now stopping thinking in general because the AI is doing it for me , and then all those things that make us uniquely human are valuable the critical analysis you mentioned earlier on , where now our experience comes in and we know to question it and use it as a junk as opposed to a replacement . That happens , so are we in danger of believing at all ? First of all and secondly , are we in danger of handing the reins over to AI , and what are the implications of both ?

Speaker 2 24:05

The answer is that danger exists . So let's go back to GPS . I was raised in a generation where a key skill was reading a map . So before you went on any journey , you'd get the map out . You'd get your compass . Your father would coach you throughout to read the map . You'd get the mental map in your head and even if you got lost , I could see where I was going . I knew where I was going . When GPS first came out in rental cars , I was traveling in California . I plugged in my destination and I arrived at a dead end in the middle of the desert . The GPS was wrong and the map was wrong and I had given over my map thinking to a machine . Today , the GPS is stunningly good . It knows within seconds and minutes when I'll arrive , If you're in any major area at all where you travel .

Speaker 2 24:59

Why would I actually want to have that paper map anymore ? It's just for nostalgia purposes , and . But what is ? What is interesting is I was listening to a neuroscientist say that there's a part of the brain that actually gets smaller when you don't use map reading . It physically changes your brain and if you were walking .

Speaker 2 25:19

I was in London the other day and I was asking somebody where something was . I asked three or four young people . They all looked at their phone and it was across the street and they were from that part of London . They had to look in there . They've lost that skill , but they've got other skills that they didn't have a couple of years ago . So one is yes , we do lose the skill . The second is how do we stay alert ?

Speaker 2 25:44

Well , I'd say two things about that . One is you can actually use the AI to check the AI . So I write contracts . I have the AI write the contract for me . I'm not a lawyer , but I've read a lot of contracts worked with lawyers , so I then run my eye over it and go , it looks about right . Then I take that contract and put it in a different AI platform and sometimes in the same AI platform , say do you see any anomalies , problems , errors ? Who finds them , who doesn't ? And then you'd say , well , maybe you check it two or three times and you don't find it . Have you ever sat with a lawyer in a corporate negotiation and somebody's just totally missed a clause ? Yes , and these are lawyers getting paid a thousand , two thousand dollars an hour , Because I've been there where one lawyer had written a contract and another lawyer whispered to me and said that left something out . Keep your mouth shut . So so , yes , we can lose the skill and and yes , there are ways we need to check it . But notice what I said with with both the map and the legal document , I have a , I have a gut feeling for what the map should be like . I also knew when I arrived at a dead end . It was like very clear , it was literally the end of the road , it was in the middle of the desert and with the contracts I've read enough contracts that I go .

Speaker 2 27:02

There's something odd about this to me and it goes

Knowledge Workers and Value Creation

Speaker 2 27:06

back to I think we still have to , at the end of the day , until we give over all of our decision-making to the computer , we still have to make decisions , decision-making to the computer , we still have to make decisions and decision-making still relies on the manager . Now , you mentioned cognitive bias , so I teach that One of the most important tools that we teach is , first of all , be aware of your cognitive biases , and probably the worst one for managers is confirmation bias . We have to learn to challenge that . We have to actually learn to encourage dissent in our team , but I would say that the least freedom almost anywhere in the world is in the corporate world .

Speaker 2 27:45

People who challenge a strong boss are in great career jeopardy , and many people will not challenge the dominant logic of an organization or the decision of a boss , especially if firmly stated . But as the boss , I know I need somebody to challenge me , and so I put in place processes called pre-mortems , pre-parades , red teaming , all of these things where we try to challenge our assumptions , and what I'm finding is they still . People don't want to do them in life . I do them with my courses , with executives , and they love it . They laugh about it and then I say did you do it when you went back to your office ? No , why not ? It makes people uncomfortable . So what I do now is when I have a major decision , I actually have a prompt that says this is what we're thinking about research at do a premortem . What are all the ways we could fail at this and enumerate them , and what are all the ways we might be missing that we could succeed ? And the reason I say that one is actually without much thinking . We often understand the jeopardy we're in .

Speaker 2 28:50

I think many companies fail to underwrite the upside . Is there an exponential upside if we do this , Because people say , well , there's a downside risk . But what if the downside risk is we lose $100,000 , but the upside opportunity is $10 million ? I want to look at both sides . So , yes , we can lose the skill , yes , we can be in danger , but do I want to rely on a paper map that I unfold today and do I want to pay that lawyer $2,000 an hour to read a contract for me ? Again , chat , GPT or Claude or whichever , we'll do it for $20 a month .

Speaker 3 29:34

So suppose the same thing then , just in , we're talking about lawyers . We're do it for $20 a month , so suppose the same thing than just . And we're talking about lawyers , we're talking about consultants . Let me lean into university professors just for a moment . If we think about how we've been rewarded to date in our careers . I did a degree , whatever it was , 30 years ago . Technically at the time , that knowledge should have lasted me 30 years . You know and you accumulate more knowledge . As you accumulate more knowledge , you accumulate more cash in your work , in your working life . Now , at your $20 figure , we're getting to the stage where knowledge is costing nothing , yep . So therefore , why , why a would I go to university when I can create a one billion one dollar or one billion one person company by using Gemini , chatgpt or perplexity Number one . And the second thing is OK . So what should education look like if I don't have to spend years collecting knowledge when I have it at my fingertips ? Collecting knowledge when I have it at my fingertips ?

Speaker 2 30:35

Yeah . So it's a great question . I think about it a lot . My wife , by the way , says the reason I'm so optimistic about AI is I could retire now If I were 35 , I'd be terrified , she says . I actually don't think that's true . I've always loved learning . I've always loved challenge . I've always you know always given me a tougher challenge . It's fun to me . But let's go back and say you want to learn how to write code .

Speaker 2 31:02

Well , during COVID I wanted to learn how to write Ruby , and specifically Ruby on Rails framework . David Heinemeier Hansen and I crashed my computer trying to install Ruby . I use a Mac and Ruby is the kernel and I wrote him and he helped me a little bit , but basically he was in the middle of doing a major project at his own company and he didn't have time to help me and someone else helped me . But then , when AI came out , I just asked it walk me through step by step . And I then had a tutor who was maybe not as good as DHH David Heinemeyer Hansen , but it was really good and it was totally patient , had infinite time , and I would say I don't understand this . Could you speak to a 10-year-old and it would change it . Everything I want to learn anymore . Almost always I start there and it would change it Everything I wanna learn anymore . Almost always I start there and say teach me .

Speaker 2 32:01

I'm giving my students prompts for negotiation . I'm giving them prompts and what I'm saying to them is you don't even need my prompt . But I give them the prompt that says negotiate a term sheet , negotiate an employment contract . A term sheet , negotiate an employment contract . I'll say to the AI go out and study everything you can find about Arnold and Kieran . I'm about to be in a negotiation with them . Both of you have things all over the internet . You've written things , you've got a presence . It scoops all that in . I'll say now , this is the situation . Run me through scenarios where we negotiate , and run me through scenarios where all of us are using win-win let's use some where people are using brute force or win-lose negotiation . Maximalist is the language we're using today , and so it runs me through these scenarios . And so let me back up for a minute .

Speaker 2 32:55

If you wanted to become good at poker in the old days you know we men anyway , I don't know how many women play poker , but not actually not a lot . Annie Duke is one of them . She's quite famous for it . You'd meet on Friday night , start at nine at night , smoke a cigar , have some beer or scotch and you'd play till one or two in the morning and you'd play three or four times a month . It would take forever to become good at poker . Now a 14-year-old can play multiple games of poker at the same time on their computer and they get good really fast because it's the cycle time , it's not the actual calendar time , and so now , if you wanted to get good at writing code , if you wanted to get good at negotiating , you can run these scenarios really really fast .

Speaker 2 33:45

Now that comes back to . So what's the point of a professor ? I've given my students all of my mind . Why are they taking the class anymore ? I think some of them probably don't . But there's two things . One is hopefully I'm staying ahead of things because I'm paid to stay ahead of this curve , and I'll come back to that in a minute . Can one stay ahead of the curve ? But the other thing is what do you really get from any school ? You get knowledge , network and brand . Now , the knowledge you can get from AI . You can't get the network from AI and you can't get a brand from AI .

Speaker 2 34:27

I've said for years that going to business . So Booth is normally rated one , two , three or four , five in the world as business schools . We're always in the top 10 in every category as far as I know . But if you're in the top 25 schools , if you're in the top 100 schools , you will pay as much money as you would go to Booth . If you go to the next tier down , you'll pay a lot less money . And I've said , if you just want the knowledge , go to the cheapest business school , because accounting is accounting , finance is finance . But if you want a powerful network , you need to go to a school that has a lot of powerful brand associated with it and that brand not only has network . That brand when you say you went to Harvard , you went to IE , you went to INSEAD , you went to London School of Economics , you went to Stanford , you went to Chicago that brand has cachet .

Speaker 2 35:22

Saying I sat with AI has no cachet . So I think that the main value of the business school is still what it always was it's the network and and the brand . But if you're a person who just wants we've seen this for a long time in the technical world I don't care if you went to stanford , a university of illinois or mit , top engineering schools . I don't care . If you went there . Can Can you write code for me , right ? So it didn't matter if the person had gone to school . It mattered what could they do .

Speaker 2 35:56

If you have a job , that's all about performance . It does not matter If you have a job where being able to draw across you know . So one of the things you get at a top school is most of our professors . We know the CEOs of major corporations . We know the major regulators in the industry . We know the major . We know those people . And so when my students call me , I'll say , oh , I want you to connect with so-and-so .

Speaker 2 36:24

By the way , the thing that in the US , we didn't have to know so much for most of my life was the regulators and the legislators . We have moved into a time where the US is going to become exactly like working in many other parts of the world . Who you know will be . It's always important , but who you know is going to be remarkably important .

Speaker 2 36:43

So one of the key things I would tell you about strategy is that you need to know the people . Who know the president , who know the senator , who know those people . Ai doesn't have that ability for you . So that's a little side ramp . But in addition to the change in technology , we're seeing a huge change in how do you influence business . And again , if you were doing business in parts in many parts of the world , knowing the president or the dictator or knowing the legislators was really really important . In the US , I've advised publicly traded companies that the CEO actually just didn't know any legislators because you didn't need to know them . Today , you actually need to know that and AI can't help you with that . I mean , it could tell you the name of the person , but it doesn't have a personal relationship with you . Know , it doesn't have a personal relationship .

Speaker 1 37:38

Yeah , but , following what you said , at the end of the day , what's important today is the kind of relationship that you can have with your own network . Yes , Because one of the reasons that I remember when I was at school is that one of the reasons you are at that top level engineering school is because of the people that you will meet , that once you graduate , they will become CEOs , owners , investors of large organizations . You have a chance to call them on the phone . That's exactly the question . It was are you able to call them on the phone ? Yeah , let me call him . Will he take the phone ? Yes , he will , because he remembered that you used to go out with him or go to parties , or go out to events , and that will still be true . So , as you said , it's something important is that AI would not replace that .

Speaker 1 38:34

AI will probably help you get better relationship , because you don't have to spend too much time learning but you can explore your personal relationship better . But I think that that's very important because usually when you say AI will replace people , that is not true . It will replace certain skills .

Speaker 2 38:55

That's right . It will replace functions . So people often say I have a job , you don't have a job . You have a title with a lot of subroutines . So what you need to analyze is which of my subroutines can the AI help me with and which of the subroutines can only a person help me with ?

Speaker 2 39:14

And , as you and I know , our relationships are one of the most important things we have , and the higher we move in an organization , those relationships become the whole game . That's what it is . I mean , like if I know more than my employee about how to write code , or more than my employee about supply chain , or more than my employee , why do I have the employee ? And ? And so what I become is I'm is truly a general manager , and a general manager knows how to move the whole organization . And so those relationships are not only external , with legislators and analysts and things like that . They're internal . Do I know the foreman on the factory floor ? How well do they trust me ? Do I know my peer ? How well do I influence my boss ? How well do I work with my board ? And back to the point you made about going to MIT Arnold , it was actually an MIT professor who said if all of our faculty went away . If you just put this kind of student together for three or four years , you're going to get a remarkable result . So the dynamic of those humans working together .

Speaker 2 40:22

And then I have a phrase that says relationships compound like money . On the first day you invest $100 , the next day it's worth $100 and a half a cent I don't know what it's worth . And the first day you meet a person the relationship begins to compound . Now that sounds very transactional , but we're business people and that's at the beginning of the day . We're not looking for friendships , we're looking to build our careers and build money . It's ideal when we become friends with people in business . But if you think that person you meet in business school on the first day . If you think , how do I develop that relationship ? In a way that's not too Machiavellian , but I just mean you develop that relationship . It's in your 20th year with them that all of a sudden you're invited to their corporate board . It's in the 20th year that a deal happens .

Speaker 2 41:07

One of the top CEOs in America just retired , is a friend of mine . He's spoken in my class . He's one of the best in the world at mergers and acquisition . It's just an unbelievable track record at M&A and I said to him how long does it take to do an M&A deal ? And he paused for a minute . This was in front of the class . He paused for a minute , he said 15 to 20 years and I knew what he was saying . The students were what . And he said well , first you meet them at a trade show and you're in your 30s and you get to know them . But he said now you're in your 50s and the person comes and says you know , I'm thinking of selling my factory , and you go okay , we could do an open auction and that would be smart for you , but I could do a private deal with you right now and the deal's done . So that relationship that began with a coffee or a beer at a trade show 20 years later turns into , in this case , a $100 billion deal .

Speaker 3 42:06

Exactly , yeah , but let me challenge both of you then , just on that one momentarily , just not for fun , but for fun at the same time . Why do I need general managers ? Focus on the relationship , where you mentioned non-macrovenial of course that our job is to maximize shareholder value . Uber is managing an algorithm thousands and thousands and thousands of workers across the globe . I don't need a manager and I don't need a relationship . I make money and it strikes me when you're doing you know one , then if I purely want

Future of Business and Work

Speaker 3 42:41

to maximize shareholder value , then there has to be a huge reason why I'm investing 20 years in something as opposed to , you know , turning a dime every single day for 20 years and looking at the difference in the transaction fee . Let me stop there and get your thoughts on that , because I do want to follow a follow up question on this , as well , ok , so that's a really philosophical question in some ways .

Speaker 2 43:01

What is the value of a human being ? So there you know , many years ago there was an article written called what Keeps Presidents Awake at Night , back when the word president was the equivalent to CEO , and the answer was people . Like if we could just get rid of the people , I'd have no problems . And there is a fantasy , I think , especially among the technologists , that if we had all dark factories , if everything was run by AI , we'd have no problems . So that's one way to think of that . There's a VC who actually did an experiment on this and he's really brilliant . And he said do you know how many workhorses there were in the United States in 1860 ? I think was the year , I'm not sure on the date there were like 30 million workhorses , you know , plow horses , people rode horses . He said how many workhorses are there in the US today ? Like 30,000 . And he said what if human beings go the way of the workhorse ? And he wasn't joking , like maybe we just don't need that many people and you know , that could be really dark .

Speaker 2 44:09

Another way to look at it is what if we're finally freed up for that utopian world , where ? So I just . I just spent a week in rural england meditating at a monastery . It was so refreshing , it was just wonderful to spend a week just thinking and meditating and having my mind clear . I hardly looked at my phone . You know I'm at a point in my life where I can do that . It would be hard to do that at 35 , raising a family , but what if there was some truly universal basic income and we could spend our life doing art , walking on the beach , meditating ? So you know , that's the utopian , technological fantasy . We no longer have to do all those things that we did .

Speaker 3 44:56

Well , let me ask the second part of the question and if you don't mind , then if we go back to the consulting or business to maximize value , we would have went in , we would have restructured a business and , exactly as you described , we walk into all of the functions across all of the business units and we go there's duplication , there's triplication , let's consolidate , let's rationalize and let's do whatever else . So , assuming AI can do a lot of that , how would you structure a modern business today ? What would it look like ?

Speaker 2 45:24

So it depends on the industry . We don't yet have robots that can build bridges . We don't yet have robots that can do sheet rocking in a repair situation . If you do a prefab house , you can do it . I not jokingly tell upper middle class families today don't send your , consider not sending your child to university . Consider sending them to a trade that will be hard to replace with a robot in the next 20 years , because skilled tradesmen in the US make $250,000 a year . A college graduate in the US with a degree in teaching school or literature makes $45,000 a year and works at Starbucks .

Speaker 2 46:04

So , and all of those this has now become like a , and all of those this has now become like a cliche . But AI is the first technological innovation that doesn't replace the . Robots can come into your house and do the plumbing work in your house . They have job security and they'll command a premium , whereas almost all knowledge workers will become commoditized . So I think , if you were so , the short answer is I think that the knowledge workers are really going to have to come up with a tremendous value demonstration . I think there's a lot of inefficiency in the world . I think if you walk into most companies , you'd go . What in the world did that person do today ? That added value and if you're really serious you'd go not much .

Speaker 1 47:04

I was working at this large bank in Mexico 2,000 employees . It was a very famous answer . People came and say but how many people work here ? And they say about 10% . Right , and it was . I'd say that it was not difficult to reduce and keep reducing the size once you able to look at the processes and maybe eliminate processes that you don't need because you are actually inheriting them from previous years . There was even a guy who had worked for the bank for 20 years . He left . When I was visiting the office I found a desk with lots of papers on top . I said who's here ? Whose desk is this ? I said you know he left . Why do we have this here ? Because nobody has the talent to give him the copy anymore .

Speaker 3 47:55

I suppose , if we draw back a little bit , what are we recommending to businesses and workers everywhere ? Are we recommending you know , they learn this tool to create a bigger pie ? Are we recommending that consultancy companies start to cooperate with AI , maybe cooperate with each other ? What is the future of knowledge workers , or what should it look like ?

Speaker 2 48:18

Yeah , kieran , that's a great question . Again , I just don't know the future . What I know is the past , to some degree , and the present , so history drives strategy . Most business people are amnesiacs . What we need to think about is , when there've been major technological changes , who benefited and how did they benefit ? And what we know is often the people who should have benefited didn't , because of sunk costs and inertia and things like this . The newspapers were some of the earliest adopters of the Internet and yet they were destroyed by the Internet because Craig Newmark with Craigslist and Sergey Brin and Larry Page with Google , et cetera , et cetera , found new business models . It wasn't the technology , it was the business models that they had .

Speaker 2 49:16

So what I would say is you have to play with it , you have to make mistakes with it , you have to take risks , and managers running very large organizations , the risks are so great and career risk is so great that they won't take the risk , which means some startup will eventually take their job from them . And we're also busy . I actually think the number one reason most managers are not more proficient with AI because I'm still finding a lot who've hardly used it or use it to write letters . They're not using it near its capacity . They just don't have time . And I'm teaching tomorrow actually a fabulous corporation and the CEO and I decided we needed to go back and teach the Eisenhower matrix . And you remember the Eisenhower matrix are those things that are urgent and important , not urgent and important . Urgent , not important , not urgent , not important . And I would tell you , I think to this day , the vast number of employees are in those bottom two categories spending their time , and very few people are spending their time in the not urgent but important category . This is where I think , if you want to stay ahead in AI today and stay out just in your job , you have got to carve time out and it will be painful . You've got to carve time out to say how do I learn this tool ? How do I become the world expert on this niche ? Because here's where your advantage . Remember , let's go back to the University of Chicago Somebody who did not know what professors made and the age of professors at University of Chicago . It's a trivial example , but they could not have analyzed the AI . But if you're a domain expert now , you can use the AI . But to become a domain expert , you have to invest time

Making Time for Technology Adaptation

Speaker 2 51:12

and you have to get away from the urgent to invest that time .

Speaker 2 51:16

I've told people for years I have a practice called intentional non-linearity . It's wandering on purpose . It's wandering on purpose without a purpose . It's saying I need to invest a certain amount of time doing things I do not know when they will pay me back and I need to invest some time in things I know will pay me back , but I don't know when they will pay me back .

Speaker 2 51:41

This is a time managers have to do that they have to get rid of , and the way they can do it is they'll always have the urgent and important , but can they delegate the urgent , not important , the things someone else can do , and can they just discipline themselves not to play Tetris on their phone or shop or whatever in the middle of the workday ? We're all human . We all are lazy sometimes , but I think we've got to force ourself into that quadrant where we actually have our I was going to say our fingers on the keyboard playing , but today you just talk to the AI and it does it and then say what do I bring as a professor who has specialized for 20 years in teaching students how to start businesses ? What do I know I do with the AI that justifies my salary and I use that because that's the personal example . What can I do when I go and consult with a corporation that justifies my fee ? If the AI can do it for $20 a month , there is no reason for me .

Speaker 2 52:43

So I think that we have to stay curious , motivated , optimistic . You can measure the area of your opportunity by the circumference of your no questions . We need to keep asking more and more questions and it gives us more and more opportunities to do business , but it requires you to get out of the urgent and out of the time wasting . That's really generic advice . Think more than ever . We have to think what is important but not urgent . That will prepare me to live in an age that I just think is going to be unparalleled .

Speaker 2 53:15

And in addition to the AI I'll just start a whole nother thing the augmentation of human beings . With Neuralink and all of this . What is it going to mean to be a human being ? We can augment our minds . We can augment our bodies . It's like science fiction , and actually the best technologists read hard science fiction because it shows you what's happening . There's a great quote from William Gibson the future is already here , it's just unevenly distributed . So the future is here with AI . It's just unevenly distributed and if my competitor has access to AI that I don't know how to use , my competitor has an advantage over me and I die , but not hopefully I don't die , but my company .

Speaker 2 54:02

But if I have access to this unevenly distributed technology ? The first time this became very real to me I went . The first time I went to Hong Kong was in 1990 . And Americans were not using mobile telephony very much . Ceos were celebrities , were some government people , a few people had mobile telephones . Everyone in Kowloon and Hong Kong Central was jabbering away on a mobile phone and I realized I had seen the future . It was just unevenly distributed and I asked why is it here and not in my country ? It's because putting the cell towers up in Hong Kong you could cover the whole population with a few towers Covering the population of the US . I knew what it would take . It would take 10 years and it was around 2000 that cell phone telephony became pretty much ubiquitous in the US . So right now AI is here . It's unevenly distributed . I think you have to pay attention to the William Gibson quote if you want to have a good future for yourself and your children .

Speaker 3 55:05

Well , we better end there so that everybody leaves . Well , no , it's not optimism . I think it's realism . I think those who embrace AI will win and succeed and those who don't are going to struggle . And I think there's too much military and an economic and competitive advantage not to jump forward on this . And my personal one is if you're not leaning into this technology , that's on you . You know that might sound harsh , but it's a call to action we should be walking away with today .

Speaker 1 55:33

One issue that worries me a lot is that anything that is new , there will be a lot of people pretending to be the experts that something which is new , and so you create an army of charlatans explaining to you what to pay for , army of charlatans explaining to you what AI is for . And , given the enthusiasm that you hear from organizations of all kinds of small , large , everywhere , they are sending the wrong messages and what's going to happen is that there will be a lot of people frustrated by hiring the wrong teachers of what is AI for , what they can do with AI and that will help them . It is exactly what happened with Microsoft and Excel . There is always a quote that you know what percentage of Excel you use . Probably use only 10% , that's all you use . 90% don't even know what's a macro . You don't know anything else . So that's going to happen again with AI .

Speaker 2 56:31

Kevin Kelly has a marvelous future and he says optimists shape the future . The pessimist says we're all going to die . Well , that's true . Well , while I'm alive , what can I do ? So I think I am optimistic . How do we shape the future to be better for ourselves , our children , our neighbors ? Technology has always been dangerous . It's always enabled good human life . Our school's motto is crescat scientia , vita excolatur , and my personal translation of that is what we do , is we create knowledge . Why we do it is human flourishing . So I think , as long as we're focused on building knowledge , building businesses for the benefit of humans , we should be optimistic .