291 The Intelligent Enterprise: How to Future-Proof Your Organization and Take Advantage of the AI Revolution with David DeWolf | Partnering Leadership Global Thought Leader

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[00:00:00] Mahan Tavakoli: Welcome to Partnering Leadership. I'm really excited to welcome back to Partnering Leadership David DeWolf. David And I previously had a conversation when he was the CEO of Three Pillar Global, Episode 215, How to Evolve as a Leader in a Fast Growing Organization. Now he has launched a new venture, KnownWell, where he's focused on helping businesses integrate AI smoothly

david shares insights on how leaders can approach AI transformation and offer strategies to get the most out of AI.

So I really enjoyed the conversation with David. I'm sure you will as well and learn a lot from him. I also love hearing from you. Keep your comments coming. Mahanadmahantavikuly. com. There's a microphone icon on partneringleadership. com. You can leave voice messages for me there. Don't forget to follow the podcast on your favorite app.

And when you get a chance to leave a rating and review that will help more people find and benefit from these conversations. Now here's my conversation with David DeWolf. David DeWolf, welcome to Partnering Leadership. I am thrilled to have you back with me.

[00:01:14] David DeWolf: It's great to be back. Thanks so much for having me. 

[00:01:17] Mahan Tavakoli: David, I really enjoyed our first conversation, which, served as a masterclass on leadership as you talked about growing Three Pillar Global. Now, since then, after about almost 17 years as pre CEO of three pillar, you decided to leave that role? I did. What got you to decide to make that transition, David? 

[00:01:40] David DeWolf: I enjoyed every single moment at Three Pillar and I had the time of my life. I reached a point where I was looking forward to the year 2023, and when I looked forward to 2023, I saw that each one of my eight kids. We're going through some sort of major transition. And most specifically, my two oldest were getting married this year. I had a daughter that was going to be a senior in high school.

I had a daughter who was going to study abroad in Austria. There were just so many things going on. And at the same time I was in the middle of coming navigated COVID.

We more than tripled the business. And I just realized that I was at this point of being consumed by the business and really struggling to live my purpose, which was to be in the world, doing great professional work yet at the same time. Being a great dad, husband and father. When I realized that I wasn't doing a good job of living that reality, which I think I did a pretty good job of living that and setting the example for everybody in the business for 17 years, I thought, you know what?

If not now, when, if I have worked this hard not to be able to take a time out and say, I'm going to refresh, recharge and spend the time with my kids and my family that they deserve, I don't know what I'm doing it for. And so I decided to take a bit of a break and really ended up taking the first half of 23 off.

All the way up through my commitment was not to go back to doing anything full time until after my daughter's wedding. And I did it. I lasted a whole week after her wedding. So 

[00:03:23] Mahan Tavakoli: outstanding, David. Anyone that gets a chance to listen to episode two 15 and your leadership, one of the things I loved about your message on leadership is that it's not what we say.

It's the examples that we set. And that's also you aligning with your values in the example that you're setting. Now, you had an opportunity for six months after decades to be away from the intensive rigor of trying to grow an organization. What did you learn about yourself? David. 

[00:03:58] David DeWolf: In that period, with me. I think I would start with the value of refreshing and recharging. I think as I start this third phase of my career and start to think about this next part of the journey, I will be more intentional about. Enjoying the silence and the quiet.

I spent the first quarter of 2023. So January, February, March, we're all about travel time with friends time with family. And I turned everything off and it was amazing. I really enjoyed those relationships and saw how good they were for me. And coming out of that towards the end of March, my mind became hungry for listening to what was out there and paying attention to trends and those types of things. 

And just naturally I began to digest information and data better and get back to that work that I love so much, but my mind needed that break. And I think that was important. So that was the first thing, in May, I went on a silent retreat and I spent eight days to myself just in prayer and thinking and discerning what was next and that was just another reminder of the importance of getting out of that rat race stepping back and really being deliberate and I was amazed once again how much came to me so that was lesson number one was silence lesson. Number two was how when we're in business, we have blindfolds on. I was surprised as I started to listen to everything else going on out there, how much there was that I hadn't even thought about. There were so many different business models that I was intrigued by so many different industries that were emerging that I was starting to pay attention to.

But for so long, My whole world was digital product development. That was everything. And so it was fascinating to me to experience my mind being opened up. And all of a sudden this world where I thought this was my thing realizing, Oh, it's one of many things. And there's a lot of other really interesting things going on in the world.

So those are two examples. Number one, the value of silence. And then number two, That, that focus that we get when we're in business and how much outside of that, that we miss 

[00:06:19] Mahan Tavakoli: what powerful lessons, including the value of silence that you talk about, David, I love Yuval Harari's work. And one of the things he says about AI, which we're going to talk a little bit about is that he says it does require us as individuals, leaders.

to get to know ourselves better through that silence. Now, he does a month long silent retreat in India. I'm not sure I would survive that. But there is that opportunity that comes from blocking out the noise because we do live in a very noisy world. But you also mentioned... Picking up signals that you wouldn't have picked up otherwise.

And I wonder what were the signals you picked up about what's happening in the world around us? 

[00:07:09] David DeWolf: So I think there were so many on so many different levels of my life, at the base level, as you're starting to just talk about entering the world again, I realized about myself I love what I do in building businesses, and I love the craft of leadership and being with a team.

As I started to get out again, I started to ramp up some board work. I started to ramp up a little bit of consulting, and it was interesting. I had one experience where I facilitated an off site retreat for strategic planning for a business, and after two days of just having such a great time because I was back in the game and I was with this team, I then watched them walk away.

And have to go implement what we talked about and me not be part of that. And I was like, Whoa, I'm not cut out to be a consultant because that was sad for me. All right. I learned something in that moment. And I would say that's the type of signal you start to pay attention to. I think in a world where we're just going, there's always something going on.

I may not have realized that about myself. But I knew for certain at that moment, I'm not a consultant. I have to get back to leading a business. There was another moment. I entertained for a short period of time. Do I want to go into the nonprofit world and have an impact, , on society more than drive business?

I started to realize my interactions on a couple boards and ministries that I participate in. I was actually frustrated because that world is a wildly different world and just the pace at which it's moves and not paying attention to and running a healthy operating machine and paying attention to the financials as much.

That was driving me crazy. And I think I realized really quick, my calling is to be in the world, but not of the world. I want to be doing good work through the businesses that I lead. And that was another moment where one of these signals that I picked up I also started to pay attention to all of the news that we consume all the time, all the media.

And I started to be able to resolve different aspects of what I was hearing. So I'll give you a great example. You mentioned AI before I started paying attention. And this was right at the time where AI was getting bigger and bigger at the beginning of the year, chat GPT was taken off. And I realized there are three conversations about AI going on.

One conversation is about the technology itself, the advancement of the language models. One is about very discrete use cases of how we're using that technology to increase the productivity and efficiency of the work that a human being actually does. And then the third one was different than the other two.

It was all about the fear of how business is going to change, how society is going to change, what is this going to do to our jobs? And as opposed to the first two conversations in that space, there were no solutions. There was only emptiness, uncertainty, and fear. That was the type of signal that I realized, if I was just in the mode of every day crushing it and working hard and not taking time to process and to think through what I was doing, what I was hearing, what I was listening to.

I'm not sure if I would have picked up that nuance and the difference there. And so it's just another example of the types of things you start to tune into those different aspects of both your own internal life, but also what's going on in the world. 

[00:10:34] Mahan Tavakoli:  With that understanding, you then launched known well and AI advisory solution.

Now in my interactions, David, with a lot of business leaders. Both in my own coaching and consulting work and in the community, I see people fall into two buckets. One bucket, there is a tremendous amount of fear. And then there's another bucket where people are somewhat unaware of the potential implications that AI will have on their organizations.

[00:11:04] David DeWolf: Yeah the way I would describe it is that everybody believes that AI will radically transform business yet they're fearful about it. They don't understand it. And they don't know what to do about it. And so we launched known well to be able to really help steward the adoption of AI and to make sure that it is done in a responsible and ethical manner.

 Now, how do you do that in this nebulous world that we live in first and foremost there's a huge educational aspect, when we look at the market, what I would say is there's. Plenty of consultancies and advisory firms and organizations who are serving the CIO, the CTO, maybe the chief digital officer, the chief data officer, in some cases, the chief product officer.

What there's not Is a firm that's dedicated to helping functional business leaders who aren't technologists, who aren't data leaders and helping them to understand this is what this technology means and how it's going to radically disrupt your world. The problem is that organizations are seeing this as a data and a technology problem, and it's not.

It's as fundamental as the advent of the internet. In fact, I would argue even more so just like functional business leaders back way before the internet, couldn't even imagine a world of the digital economy and digital products and what that online world would be. So to functional business leaders today can't imagine what would be.

So we're stepping into that place. We are working with boards and C suite. to help them get their hands around how ready is my organization. We've created a maturity model that helps to assess an organization's readiness to compete in the AI economy, what we're calling the intelligent economy. And then we're helping them with the education and the road mapping of what should they do that about that.

And then the little known secret is we're actually. Developing technology. We're building the product that will ultimately run businesses tomorrow in the background as we do that, because we fundamentally have a very strong hypothesis about what that world will actually look like. And so helping organizations to be ready for that and become prepared to play a brand new game because it's going to change the way we operate our businesses.

[00:13:37] Mahan Tavakoli: And it's an important point that you make, David, a couple of my previous guests, Eric Lamar from McKinsey, co author of Rewired, and Mike Lennox, he is a Darton UVA professor, and actually led the strategy for Darton Business School as a written, a digital strategy book, both said this exact same thing.

your organization is in trouble if this initiative resides with your CTO it's not a digital initiative. It is something that the CEO and the entire organization need to understand and be involved with. Now, you mentioned that you have a framework and a model that you walk organizations through would love to understand what are the steps of that model so that the audience can visualize what process does an organization need to go through?

[00:14:32] David DeWolf: So what we do is we go in and help organizations understand the comprehensive aspect of AI and how to transform their business. And if you start to think it through, I'll give you an example. One of the pillars of that assessment is understanding the culture and the leadership of an organization.

Here's the reality. This is fundamentally a change management process, it is about being able to re imagine and vision what the world is going to be. And then stewarding that change, despite all of the fear, despite the fact that people are paralyzed by it, despite the uncertainty through your organization.

If you don't have a strong and healthy culture, if you don't have strong leadership. You're not going to be able to thrive on the other side. Of this change that's going to ripple through the economy. Another example, people in operations, aI is changing the game in terms of what will the value of an organization be?

And how do we bring value into the world? As machines can do more and automate more and drive more of our business. Identifying what is truly human and making sure that people are doing the highest value things and helping them to navigate their careers to be able to build on top of the tools that are there is really critical.

And so do you have a people strategy? That is embedded into your operations to make sure that you're helping people to embrace this new reality to up their game and to be ready to contribute beyond what they're doing right now. It's another really important aspect. And so we go through a series of five different pillars in this assessment, and we look at it.

One of them, of course, is data and technology. You have to be ready. How mature are you there? But there are many other aspects that you have to be on top of knowledge and strategy is one of the other ones. Do you understand AI? Do you understand? How it may impact your industry and totally change the game.

And if you identified the opportunities and the threats that are going to exist that you need to execute against. So we just go through very systematically. We work with leadership teams to be able to understand their readiness. And then as a result of that, we're able to give them a roadmap of, okay, this is where you are.

And this is what you need to do to take the first step, the second step, the third step. And what that does is it unlocks this paralyzed reality that we're seeing because people actually know what to do first, as opposed to waiting to have the full picture in front of them. 

[00:17:18] Mahan Tavakoli: David, you mentioned that culture and that AI ready culture is one of the most critical, if not the most critical, part of an organization being able to successfully go through this process.

What is your advice for what organizations should do in order to have an AI ready culture? 

[00:17:39] David DeWolf: I think a learning culture is one of the staples of that. Do you have a culture that has a growth mindset that truly believes that people can learn where it is encouraged to grow and evolve where ideas are valued?

The reality is that nobody can tell you exactly what the world's going to look like in 10 years. AI is going to change things so much that it's going to be wildly different. Innovation doesn't come from the top down. It comes from the bottom up. So do you have an organization that is encouraging your employees to learn to grow, that it encourages them to contribute, to speak up, to take risks, those types of things. I think that's the type of culture. And what do we need? And it's a little bit antithetical to what we're going through as an economy right now, people are pulling back. People are scared when people are scared, they don't do these things.

They tend to pull back. Time and time again, we have seen that it is when the economy pulls back, the risk takers thrive seven, eight years later, it just so happens that's hitting at the same time of AI. The value of the market for eight years from now is being created right now. And if you're not stewarding your culture, if you're not making sure you That individuals have the ability to do what only human beings can do in creating the future in, making smart judgments that are different from the patterns that we've used before, those types of things, then you're going to fall behind because there are, whether they're startups or leading really high innovation firms that are making those big bets and saying, now is the time.

That I'm going to be investing in my performance in the future and the growth of the future and really shifting that business. 

[00:19:30] Mahan Tavakoli: DO you see this as transforming and being applicable to all organizations?

There are different studies. Some show certain industries will be impacted more, certain industries less. What are your thoughts with respect to organizations in what industries, what size, or is it across the board that should pay the most attention to this? 

[00:19:53] David DeWolf: So I have a couple of thoughts here. I'll start with this.

If you look at the knowledge work that happens within a business, I break it down very simply this way. We talked about it a little bit before you have manual labor that takes place and robotics for quite some time has been replacing manual labor on top of that, you have knowledge work in the realm of just pure execution.

And we talked about that before it is the discrete use cases, software engineering. Content production, medical research. It's the work that you and I can do. And we can get more productive and efficient with that. That's where all the innovation is happening right now, but here's what's fascinating to me.

If you look at the economic projections of what AI is going to do to our economy over the next seven years, just till 2030. The economists are predicting about 16 trillion of economic value comes from AI. And when you step back and you look at where is that possible? There's not enough manual labor and discreet work to create.

6. 6 trillion worth of economic value, which is the percentage, the amount that at the very least will come from just productivity gains. So you have to step back and say where do people spend their time there? If there's not enough, research shows that the typical knowledge worker.

Spends 85 percent of their time, not on productive work, but on collaboration throughout the business on what I call the operations, not the manual labor, not the execution, but the operations of the business. And when you step back and think of it. It maps with your experience in business, right?

Experience of businesses. What do we get frustrated by? The bureaucracy, the distraction from getting our work done. What I believe AI is going to do. AI is going to automate the running of businesses. It's going to take this world. We're like, here's one of the last industries that hasn't been disrupted by digital.

It's consulting. What does consultants do? They come in and help understand your business and then optimize these operations. You better believe that all of that work is something that I can do. And so in tomorrow's economy, what every business will do differently is https: otter. ai Understanding the business is running the business and in a very fluid, dynamic way, transforming the business to allow us to do what only we can do as opposed to what it can't do.

And the reason I'm convinced this is true is not just because of this theory and what the economists are predicting. Guess what? It's actually what Amazon does right now to run their business. Go look at all the research around their supply chain and their logistics. Why are they such a machine? Because they look at the data and the information and they have AI make decisions in real time, how to run their business, adjust their business, change their process, change their workflow to get rid of the bottleneck before somebody even realizes that it will exist, that will happen.

In every single business, not in a particular industry. Yes. Will there be some industries like, pharmaceutical research that will be able to go faster in the production of the next breakthrough? Of course, but every business will be impacted by operating innovation. Okay. So that's answer number one answer.

Number two is I believe what this is going to do is democratize some really important aspects of mature operations that are not available to mid market firms. Right now. I'll give you a great example of this. The largest enterprises in the world do really well at people operations. They have discipline around job architecture and human resources, practices, and performance management.

And those types of things leading companies do rarely. Do you see a lower middle market firm do that? Go survey. The number of lower middle market firms that have incredible chief people officers or CHROs that are running really mature people operations. Why is it? It's just too expensive. And it's a lot of manual hard labor,

even if you have systems in place, there's still a lot of mental work to be done. When you start to take the operating machine of a business and you start to automate it, it's gonna democratize that. And so I think that on the other side of this horizon is Going to be a resurgence of the middle market company.

And we're going to get away from this world where these large enterprises rule the world because they have economies of scale that nobody can compete with. And we're going to get to a place where the middle market thrives in his back. And I find that exciting because I also think it's what society wants.

It's going to put the power back into the people. And it's going to move us away from monopolies a little bit. So those are my two answers. Number one. Every single business absolutely will benefit, but number two, I think there's going to be a resurgence in the middle market. 

[00:25:22] Mahan Tavakoli: I love your points and want to highlight the first one and challenge the second one , David.

The first one is that I love the example about Amazon and that's a perfect example that the future is already here. It's just not evenly distributed, I think that it's already. being applied. What you're saying is that all organizations will have access to be able to do that and it's going to transform all organizations.

Your second point is that it is going to provide more opportunities for mid market organizations. I've heard some argue In part, because of access to data the largest organizations, the Amazons, Apples you pick that first half dozen to a dozen largest organizations will have so much Data that causes them to actually accelerate and be able to grow a lot faster being a disadvantage for mid market organizations.

So what are your thoughts about that?

[00:26:22] David DeWolf: I think there's some truth to that. There's no doubt about it. What I would say though, is I actually think the economy is going through another shift at the exact same time that AI is arriving. And that is that because of digital disruption for the last over a decade, we have been in a growth at all costs economy where what you just said matters, which is who's growing the fastest, right?

And so organizations have been all about because digital has arrived and all of a sudden we now have unlimited customer base that we can reach. We have infinite distribution, right? We can create a digital product and sell it. A million times without more production costs because of the network effects of a product where we are building products that get more valuable, the more users come in.

People were all about growth. What is an economy where all of a sudden we have to worry about profits a little bit more and true performance excellence. And you say AI coming in. And I think what's going to happen is we're going to actually move from a growth economy to a performance economy. 

Now, that doesn't mean growth doesn't matter, but more smarter growth is going to matter. And I think where organizations in the middle market have struggled more than from a growth perspective, the marketing tools for helping you reach people are already there, we've already really added a lot of innovation there. Where we haven't done it is internally to drive more profits and more profits, fuel, more profits. The more profits you have, the more you can plow back into the business. So is there an advantage to having data? Yes, absolutely. Does it give those large organizations with tons of data, more competitive fodder to be able to grow more, to serve more customers?

Yeah, it does. They can come up with more offerings. However, I think the value of the shift that is going on is disproportionately weighted towards the organizations that haven't actually improved in core operations. And because of that, while those larger companies will continue to grow. I think you're going to see the middle market start to catch up because all of a sudden it won't be, Oh, growth at all costs, it will be growth.

And I'm still more nimble than those organizations. And I still have the value that has allowed the middle market to be okay through this period of time, but now they're going to be operationally excellent and be able to do things that those large competitors could not have done before. And I think that changes the game.

[00:28:56] Mahan Tavakoli: It really does. I love the way you describe it, David, both when talking about knowledge work and the things that knowledge workers are doing that don't necessarily need to do that AI will be able to relieve them from. There are so many friction points for these midsize organizations that have nothing to do with the Core of delivering value to a customer and AI can provide the ability for those things to be done.

So there is more focus on delivering value to the customer. 

[00:29:30] David DeWolf: You just hit the nail on the head and that's exactly right. And where do you want the human brain power going, you want it to do what only humans can do, not the stuff that doesn't matter. That isn't differentiated, right? So spend more time building relationships with customers.

Spend more time doing creative work that serves the customer. Spend more time taking care of your employees and connecting with them. Spend more time making intuitive judgment calls based on having the data at your fingertips. That's what a human can do uniquely that a machine can't. So much of this stuff that we don't have access to in the middle market, you're totally right.

It's not a differentiator. So let's not focus on it. 

[00:30:12] Mahan Tavakoli: So you already started addressing some of this. I have heard concerns about the impact this is going to have on knowledge work.

Automating or replacing work that is done by humans. What you're saying is humans can focus in on the human aspects of it. So from an organizational perspective, what are the ways that AI will augment and automate? And what are the ways that humans will be able to tap into their human potential in organizations?

[00:30:42] David DeWolf: The first thing to do is to reflect on how far we've come. Five years ago, if we were to have this same conversation. What everybody would be afraid of is replacing the manual labor, right? It was about those folks that are the hourly workers and, Oh my goodness, we have to be careful because we have already an economy that's weighted towards the knowledge worker and the wealthy, that's not even part of the conversation.

In fact, the conversation I hear is about. How we need more of the trades and there aren't enough plumbers out there in the world. And that's really interesting to me that here we are. And now it's actually the knowledge worker that we're worried about. So that to me is a data point that makes me then go back and look at history and say, with every single innovation that comes out.

What happens? We have a fear about the loss of jobs. And the brutal reality is there is disruption in the job market. There are people that will lose their jobs, but on a net basis over the long term, it typically leads to more jobs because there's more productivity. So I really believe if you want to ethically navigate this period of time, stop running away from it.

Stop being paralyzed by it. It's going to happen. Nobody's going to pull the plug and stop AI, right? Somebody's going to develop it. So as leaders, let's push into it and let's actually instead prepare people for this change. And at the end of the day, whether it was the printing press, whether it was mechanics whether it was the industrial revolution and electricity.

Every single one of these waves came with job displacement that was replaced by tremendous job growth, and I really think that's what's going to happen. And I think if you look, we've gone through the wave of manual labor. We're scared about that. We're now in knowledge work where it's really going to happen is in management.

It's in the operations aspect. And ultimately it will get to strategy by the way as well, because there's a lot of strategy work that AI can do. So strategy and operations to me is the next frontier. That's what we're building towards. And I think starting to prepare and really encouraging those workers in those spaces to embrace the technology, to push into it and figure out how do we use it for good.

That's what I'm intrigued by. And candidly, that's why I am in this space, right? We have the ability. To let this technology accidentally hit society or we have the ability to steward it and to shepherd it to make sure it has a positive impact. 

[00:33:25] Mahan Tavakoli: As we do that we also have the choice of sticking our head in the sand and pretending this is not happening or taking advantage of the opportunities this provides for a lot of organizations.

Now, one of the other concerns that I hear, David, is about... Ethical and responsible use of AI. A lot of concern has been raised with respect to the impact that the data has on the outcomes that AI produces. As you are working with teams and organizations, how do you guide them on their responsible and ethical approach to 

[00:34:00] David DeWolf: AI use? It is so important. And it's actually one of our pillars and where it boils back down to is the values of an organization, there are absolute truths and there's morals and there's ethics, but there's also, how do you make those come alive in your organization and do you know what you stand for so many organization?

Their values are posters on the wall. They're not something that leaders live day in and day out. They're not something that leaders exemplify day in day out. They're also not something that are institutionalized and rewarded, we really believe that in order to thrive in this area, you have to have good governance.

It's there have to be principles. There have to be policies or have to be things that govern what we do. But more than anything, this actually goes back to the culture. Do we have values that are manifest in the culture that we're living up to? And then do we have the appropriate checks and balances to foster it?

And so really understanding that I think is part of an organization's readiness. And let's be candid. There are a lot of organizations that are avoid when it comes back to those values. And so I think we're going to see a resurgence. Like one of the things I really believe about society as a whole is we're going to receive a resurgence of the humanities, 

we have had such a push for so long on the sciences on the technologies and it's been great. It's been brilliant about a lot of human flourishing, but we have to really re identify with what does it mean to be human and what are the Ethics that are surrounded by that humanity that we want to live. And I think that's going to start in society as a whole.

I think you're going to see more focus on it in education and academic settings. But I also think you're going to see a revival that in business and business leaders who don't look as. Values culture and team building is soft, but realize that's actually the hard part of business is all of that and start to pay more attention to it.

And that in my mind is what is required to instill the type of ethos that's going to foster positive, responsible, Adoption of AI in the enterprise. 

[00:36:09] Mahan Tavakoli: I couldn't agree with you more. And I see AI as a potential for us to tap into our humanity.  So it's helping people tap into their humanity, not turning them into machines or computers.

[00:36:24] David DeWolf: And let me give you a very real example on that. That's going on right now in this space of a I a lot of the conversation around the technological advancement of a I is around what's called alignment. And alignment is all about making sure that the logical deduction that these machines are doing through artificial intelligence is aligned with human intent.

And there's all sorts of research around the technological side of that. But where's the research on what human intent itself is?  So we can build machines that can align to human intent, but if we can articulate human intent and if we can't get back to the classics and get back to the humanities the histories the philosophies the theologies and really understand humanity, we're going to be aligning to what?

We're going to align to Somebody's arbitrary definition of what human intent is. And I don't know about you, but that makes me a little bit uneasy. And so what I want is a whole body of research that equals, the 20 percent of open AI's budget that they're dedicating to alignment. I want that 20 percent budget, which is billions of dollars poured into the advancement of the humanities.

So we actually have something to align to versus Sam Altman's You know, arbitrary definition that he decides is his human intent. 

[00:37:52] Mahan Tavakoli: That's a great way of putting it. We need to clarify our own intentions or humanity's intentions before trying to get AI aligned with that. Now, I love the fact that you have focused a lot on the humanity aspects of it, the cultural elements, the values of the organizations, some of the ethics and responsible use of AI. That said data and tech capabilities also do play, they do matter. They do. It's just not as fun to talk about.

And you are focused initially on the right things in that a lot of organizations and a lot of CEOs.

First jump to the data and the tech, what tech do we need? What data do we need? And that's why sometimes these initiatives, digital transformation initiatives, and now AI initiatives end up failing. So those people, human. Culture, value elements need to be addressed first. But there is an important role for data and tech capabilities.

We'd love to know your thoughts with respect to what are the data and tech capabilities that it takes for organizations to be able to take advantage of AI. 

[00:39:02] David DeWolf:  So I would start with, I think there's a fundamental shift where what we're seeing is the importance of really being data driven more and more every day and understanding what data means.

I actually see this as a weakness in the business community there are absolutely hardcore operators that get data that make decisions off of data that build. Operating machines that relied on data. But I don't know if that has permeated culture the way it needs to be. And when I talk about that, I'm talking about operating metrics, not just reading a balance sheet, 

I think that's going to become even more important in this world where we have more data coming at us, more conclusions coming at us that we're going to want to understand the underlying meaning of them. And so that's one thing that I look at is I think organizations that really foster a culture of data orientation are going to thrive more in this economy.

So that's one that I think is generic and it's more of a mindset, than a specific technology, right? I start there. And then I say, I think what's really important is that a business begins to experiment. So the question for me is not what technology should you adopt, the question for me is what is needed to experiment and try a big mistake we see with new inflection points that come out and I'll use mobile as an example, because people can latch onto this and understand it.

The advent of the iPhone. We saw a lot of people building mobile apps for the sake of building mobile apps. And we saw a lot of silly things made, but that experimentation fostered some tools and some techniques and separate technologies, learnings that we were able to then build upon. I think it's really important not to make the mistake of making the silly app, but to pick a business use case, to find something that you think can be transformed Bye.

Artificial intelligence and to try it and to give it a shot and to learn from that experience. And so instead of saying, Oh, everybody absolutely needs to go do X, Y or Z because nobody knows. None of these technologies are mature enough to play out. I think you've got to get in the game and start experimenting.

And so maybe the second one, in addition to that data orientation mindset, I would say Experimenters. I want people that are early adopters that are willing to roll up their sleeves and go pull chat GPT off the shelf barred off the shelf. Pick your tool and I'm going to keep it simple. I didn't go to the deep ones there.

I went to the simple ones. Just try to use them in your business. Do it in a smart way, be careful about your data and your privacy, all of those things, but just start experimenting. Those 

[00:41:57] Mahan Tavakoli: are two brilliant points, David, both related to AI, but even if you separate the conversation from AI, there are two of the most important points that I've seen would be impactful for a lot of organizations.

First of all, I've been through a lot of strategic planning conversations with leadership teams, and it is shocking at how little data is used in the conversations and in decision making. So while I agree with Roger Martin, when he talks about strategy, he says, strategy is about the future. Data is about the past, so you need to use your judgment.

However, most of the time when I'm sitting around strategic planning conversations, it's 95 percent judgment and 5 percent data. We do need to tap into more of that data. And I love your point about experimentation. This is not one huge AI initiative that's going to take two years of planning and one year or two years of rolling out its ongoing learning through that experimentation.

[00:43:00] David DeWolf: 100 percent absolutely. So we've just started known well up. We've got no baseline. Guess how I have written my initial job descriptions for this first few positions we're opening up. We're using AI. It can do about 85 percent of the work. It's saving me tons of time. Very simple. example, right?

There's no reason why every business can't do that. 

[00:43:23] Mahan Tavakoli: Absolutely. David, as you are providing this advisory to organizations. If we revisit the conversation, Two, three years from now, how would you see AI having impacted organizations?

What will be different in the business environment and the way organizations operate a few years from now than the way they are operating 

[00:43:48] David DeWolf: right now? I think two to three years from now, you'll already see some of that bureaucracy. We were talking about removed from the system. You're going to see machines facilitating the cross collaboration between not only people, but departments and organizations and optimizing the way we interact with each other and driving much more of that off of the data and the information flows that exist in an organization without human intervention.

Let me give you a very simple example of that. One of the really interesting use cases I'm looking at right now is who understands businesses better than anybody else? I would argue that institutional investors, specifically private equity funds, who buy middle market businesses are probably some of the best in the world at truly facilitating a process to understand the health, the future, and how you create value out of an organization that is an example. But when they engage in a diligence process to do that, or when they initiate a brand new relationship with a company they've just purchased, there is a lot of friction that goes into that system. There's a lot of cost. There's a lot of human labor. There is a lot of just frustration because of the distraction.

Go look at the research of what happens to the performance of a business after they are sold to private equity or to any acquirer, actually. Typically it takes a step back, the reason why is because of friction. Talk about orchestrating between two different organizations. We believe AI can remove 80 percent of that friction of that cost of that labor.

That's going into that process to allow. Those private equity funds to do more of what only they as humans can do, which is really work on the value creation of the business to have the insight surface to have the organization diligence than the risk mitigation done like I'll get all that to the side, then work on the creative aspect of how do we actually create value in this investment over time?

That will trickle down to all of a sudden we will be able to and I think it's within 2 to 3 years. Automatically, every PE that comes in buys an organization, you have to revamp your KPIs, you have to report according to how they report, that will all be done by artificial intelligence. There's no ramping up the FP& A team anymore, there's no more consultants and associates coming in from the fund to do that.

All of that stuff should be able to be facilitated with artificial intelligence. And so you're going to see manual operating friction removed from that process. And I think that's a very tangible example that you can see very clearly is one, two, three years away easily.

[00:46:33] Mahan Tavakoli: And that's a great example, as you said, of the types of frictions that will be moved out of organizations, whether individuals collaborating with each other, departments collaborating with each other, or in that case, organizations wanting to acquire or collaborate with each other.

So David, for leaders who are listening to this podcast, would love some of your actionable thoughts on both if you are a CEO of an organization, but also sometimes people write in and say, great. I'll share this with the CEO of my company, but I'm not the CEO. I'm the managing director or I am running a department.

I would love your thoughts on what should leaders at different levels of the organization do in order to be able to take advantage of this AI revolution. 

[00:47:25] David DeWolf: So I think first and foremost, go back to the very first point we made when we were talking about the difference between the functional business leaders and the technology leaders, 

I would say there's plenty of attention on the technology leaders, functional business leaders, educate yourself, knowledge and understanding is critical. Selfish plug here. We've started a podcast called the AI know how. Go check it out. We're talking about how AI is going to revolutionize the business and what are the actionable steps you can take.

If you're not listening to something like that, if you're not reading about AI and really deeply understanding how AI is transforming our world and how that picture is evolving, then I think you're getting behind. And I think that's the first step is to really be astute about staying up to speed. I think the second thing that you need to do is step back and really understand where your organization exists, 

think about all of these different pillars of maturity that we have talked about, are you aware of what's going on? Do you have your knowledge and strategy straight? What is your culture and your leadership picture within your organization? Assess that. Are we ready for transformative change?

Because this is a time of transformation. And if you're not, take action. Start to build that transformative leadership that you need. You can do that whether you're a CEO or you're a division head that's hiring your next senior leader, whatever level of the organization you're at. You can do that intentionally hire for a period of transformative change, 

your people in your operations, do you have a talent plan for this organization? Look very practically, all of those types of things go through those areas we talked about, we talked about the governance and the responsibility that's one of the pillars. Think about how do we live our values?

What are the policies that we have released? What is the maturity of my firm?

How ready are we? And once you have that understanding and you've been deliberate about it, you can then start to map a roadmap. Educate yourself, assess your organization, and then act. Action is critical. Goes back to the experimentation we talked about. Once you understand it a little bit...

Once you know where you stand, start taking action. Prudent experiments really matter. 

[00:49:43] Mahan Tavakoli: One of the challenges I hear David, from a lot of senior leaders is a sense of overwhelm.

And you've been CEO of an organization, you know what that feels like where there is so much to do, so many different priorities. They feel like they are flying a plane through turbulent air. Now I'm telling them, or you were telling them you need to educate yourself on something 

[00:50:06] David DeWolf: drastically different.

[00:50:08] Mahan Tavakoli: God if I had extra hours in the day. How do you Do that yourself. And how do you encourage leaders to prioritize the right things? Because many that I talk to feel overstretched, overburdened, and overstressed. 

[00:50:27] David DeWolf: No doubt. The first thing is a reminder, remember, Netflix.

The internet revolution brought about Netflix with totally disrupted that business and now it doesn't even exist anymore, this is the same order of magnitude change. And that's why we're saying that transformative leadership is essential because you have to spend time on this. And so if you're not making time for it, I think you're in trouble.

Then how do you actually do that? Let's go all the way back to the first thing we started with. You were asking me about my time off at the beginning of the year. What did I say? I learned something about silence. I think you're absolutely right. I've not only heard it. I've been there when there's too much coming at you and you can't seem to get your hands around it and you're consumed by it.

I think my lesson is. The power of silence. How do you make sure that you actually prioritize, remember Steven Covey and putting the rocks in first, you know what? One of those rocks needs to be first. It needs to be silence. Do you spend the time thinking, planning, and deliberately prioritizing? And I guarantee you there are some things on your plate that you're just reacting to that aren't really as urgent as you think they are, and they're definitely not as important as the time you're giving it.

And so think about that and don't be afraid to retreat to silence and really spend the time you need processing, thinking, and planning. 

[00:52:00] Mahan Tavakoli:  That's brilliant advice, David. And I was talking to my girls last night about the fact that over the past couple of decades, I've seen in the business community, , fewer people boast about how little sleep they get as they've recognized there's value to sleep.

It's unhealthy not to get much sleep. And the same thing I find now with. busyness with executives. We have a lot of busyness in our lives and that becomes a status symbol or a source of pride.

We have to find ways to eliminate that busyness to incorporate some of that silence and some of that learning that both energizes us and gives us the opportunity to ride this transformation ahead. Now

how can the audience find out more about known wealth services and your podcast and connect with 

[00:52:51] David DeWolf: you go to knownwell. com and obviously everything about the business is there. And there's a link right there to the podcast. It's called the AI know how you can find it on all the major publishers, Apple podcasts, et cetera.

So would love for folks to come and check it out. 

[00:53:06] Mahan Tavakoli: I really appreciate your insights, David, as I mentioned. Episode 215 is a masterclass on leadership. This one is a masterclass on how we can lead ourselves and our organizations through the AI transformation. Thank you so much for this conversation, David DeWolf.

Oh, I 

[00:53:26] David DeWolf: had so much fun. Thanks for having me.