From hype to value

0:06
Hi, I'm Conrad Hyder, partnered Simon Kutcher and partners Chief Operating Officer and also Head of our global Digital and Data team, Simon Kutcher Elevate.

0:13
I'm sitting here with Patricia.

0:15
Hi, I'm Patricia Fowler, I'm a partner in Berlin and I am leading AI lab in Simon Kutcher.

0:23
So Conrad, what do you think is changing in the AI conversation, especially, you know, AI has been has been in place for so many years.

0:32
It started with what is the best AI use case?

0:37
What can AI do for me?

0:39
And now the question is rather, why do I not see the value of AI in my business?

0:44
And it's a much healthier question because the technology becomes a commodity.

0:50
The tools are basically available to everybody.

0:52
So again, the question that makes it sets the companies that are successful apart is why do I not see the value?

1:01
And what do I have to do in order to see the value?

1:04
The use cases, the applications, they were endless.

1:09
Yeah.

1:09
If you sit down with your management team, you can come up with 100 applications that will be valuable throughout your business.

1:17
That value is not generated in workshops.

1:19
The value is not generated on, you know, nice PowerPoint slides.

1:23
The value is generated when your organization adapts, adopts and iterates quickly with the technology and when you're willing to take the harsh and the right decisions to make sure that the outcomes are transferred into your PNL.

1:37
So let's talk less about use cases and the next, next, next sexy agent.

1:41
Let's talk more about how do I get it to be impactful for my profits.

1:46
Yeah.

1:47
And I, I would add to that that many, many companies at the at the beginning, we're just thinking about productivity use cases.

1:55
How can I save time?

1:57
How can I cut costs?

1:59
And then still many companies are thinking about this today.

2:02
How can I cut costs with AII layoff so many people.

2:06
And I'm I'm happy that's, that's my result from very natural response.

2:11
Yeah, exactly.

2:12
I think they should actually think a lot more how to create value with AI.

2:17
And to some degree, this is what Simon Kutcher and we as a company have always been been teaching about, right?

2:23
Because you can cut costs down to zero and then you're basically out of business.

2:28
But growth is infinite, so cost cutting has a natural end.

2:34
Growth does not.

2:35
If you are managed to use the technology to drive growth, to serve customers better, to set better prices, to have a more effective sales team, to evolve your products to a degree that they provide more value to the customers you have, then you unlock growth and then the technology creates value infinitely.

2:55
Do you think companies are moving too fast with AI or too slow?

3:03
I think the answer is neither.

3:08
Most clients and most companies I've been working with and I've been seeing have been actually very good and very well and very fast and adopting different technologies.

3:19
But most have not been able to change the organization in a way that they are able and capable to work with the technologies they have.

3:25
Yeah, I I agree with what you say.

3:28
And for some companies, they also struggle to understand which technology they need to use, how they need to use it in, in, in which direction to go.

3:40
Now the conversation is moving towards, well, we, we don't see the value from from AI, we don't see the impact on P&L.

3:51
So why do you think that's happening?

3:53
Why do you think some companies are actually struggling to generate an impact on the P&L?

3:59
Yeah, I think for for three reasons and reason #1 if you have a broken process, AI will not make the process great.

4:10
You know, So if you are unclear about the best ways of working, if you're taking the wrong decisions, using a technology will not make the decision better or will not improve the ways of working necessarily.

4:24
Secondly, I think most companies are thinking too limited about the application of AI.

4:32
I give a radical example here, right?

4:35
Imagine you have a colleague in your team that knows everything, that has access to every piece of information that works 24/7.

4:42
Yeah, at hyper speed.

4:45
What are you doing with that colleague?

4:47
Are you using that colleague to develop new products or to serve your customers better?

4:53
Or do you give that colleague the mission to take notes in your meetings and summarize nice emails makes you think are you are most enterprises using the technology in the right way?

5:05
So most companies fix the focus on automating what they're doing today.

5:09
They're not using I to rethink the way that they're operating.

5:13
So that's the second reason.

5:14
And then the third reason, you can implement the best agents, you can implement the best tool support, but you will not see the impact in the PNL if you do not change the way you work and if you do not take consequences.

5:31
Consequences in your operating model in regard to the number of people you are working with, the processes that you have, the spend that you have on some of the categories that are impacted by AI and so on and so forth.

5:44
So in summary, if you have broken process today, I will not fix that.

5:49
They're using AI to think not about the future value generation, but just to replicate today's value generation.

5:55
And most companies fall short and actually bringing it into the operating model.

5:59
But I mean, you and I, we both have seen clients and companies have, have done really well.

6:04
What do you think are those companies doing differently?

6:07
I, I think there are multiple things and then one of them you, you touch upon change management, which which is very important.

6:15
And I, I would even go further that companies, leading companies are, are really training people to understand how to use AI responsibly and ethically.

6:27
So instead of blocking AI because they are afraid it's going to break the processes and the systems and the infrastructure, etcetera, they should actually invest in educating people how to use AI responsibly.

6:42
Another point that I would make is also choose where you put your money in AI because AI, we see that is, you know, tokens are expensive.

6:55
Also, be smart about how you consume AI.

6:59
Companies need to leverage their proprietary data.

7:03
They need to choose trusted external data sources as well.

7:08
That's very important because that will actually determine the value of the models they they build.

7:15
And then embedding the right business logic in the models is going to be very important.

7:21
Another point is I really believe AI is an assistant, not the decision maker.

7:29
You're right.

7:29
I mean many, many of the many of the conversations that we are having and what we are seeing is centred around observability of agents, human and the loop decision cycles.

7:37
So obviously making sure that none, no system actually runs fully autonomously.

7:43
It's not the tool landscape and not 10,000 agents, 20,000 agents or five agents.

7:48
It's the speed of adoption and the ability to adapt.

7:51
It's the fastest evolution that we have ever seen in any regard.

7:56
It's a step change when it comes to the way companies create value.

8:00
And now we really have to step change the way that we work with it.

8:04
I think many companies still have a lot of work to to do to really reach the value of the technology.

8:11
Technology is super powerful.

8:13
I I think nobody questions about this.

8:17
It's just how you use it that's, that's very important.

8:21
So.

8:21
So yes, you're right, adoption is the key challenge.

8:25
Yeah.

8:25
So companies will not be able to differentiate just by using LLMS who are tapping into public data sources.

8:32
Yeah, In my view, enterprises have to recognise that every AI tool will become a commodity at some point.

8:41
Having the new copilot or the best agent workflow orchestration platform will not be your differentiator a few years from now.

8:50
This is the base technology.

8:52
It's a commodity.

8:53
What will set you apart as an enterprise is your ability to transport your business processes into these tools, your proprietary workflows, the data that you only have uniquely access to, the knowledge about your customers and the value that your products bring to them.

9:14
So the value comes from you using a commodity technology with what sets you apart as a business.

9:23
So the core question is not do we have AI?

9:26
The core question is how can we make sure that we combine what already makes us successful with this technology to do something better at speed, at scale, and while adopting fast?

9:42
If there's one advice that I would give to leaders today, I would I would say stop asking how can I use AI, but rather ask, if I was to rebuild this business from scratch, how would it look different if I apply AI?

10:00
What would you recommend?

10:01
I would recommend three things.

10:05
One is to rethink the whole business model.

10:11
AI is changing the business models, not just individual processes.

10:18
The second, build an organization that is really embracing AI.

10:27
People who are willing to learn and experiment every single day.

10:31
So change the DNA of the company and and the third one, be smart about how you use AI in order to actually create the value and not just burn cash with that with it.

10:49
Thank you very much, Patricia.

10:51
Yes, it's it's, it's really an exciting time and and it's a topic that is going to keep us awake.

10:57
Yes, it already does.

11:00
Yes, indeed.

11:01
Always a pleasure talking about it.

11:03
Thank you.

11:03
Thank you very much.

11:04
Thank you.