In this episode of In-Ear Insights, the Trust Insights podcast, Katie and Chris discuss the impact of generative AI on businesses, especially hourly businesses like agencies. They explore the problems with time tracking and utilization rates, and how it breeds inefficiency. Katie shares her experience being forced to innovate on command. Chris talks about the importance of prompting generative AI with creative ideas. They discuss how to better align employee and employer incentives through value-based compensation. Ultimately, they conclude that the key is to leverage generative AI to automate repetitive tasks so people can focus on innovation.
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Machine-Generated Transcript
What follows is an AI-generated transcript. The transcript may contain errors and is not a substitute for listening to the episode.
Christopher Penn 0:00
In this week’s In-Ear Insights, let’s talk about the impact that generative AI is having on businesses.
We know even just from what’s already happened in the last 18 months, that gender of AI obviously impacts, things like content creation, it impacts image creation, if you are running a clipart, or stock photography businesses is obviously a significant problem.
But over the weekend, and last week, I was chatting with some folks about hourly businesses.
And Katie, you and I, we worked at an agency for five ish years, and which is an hourly business with timesheets and time tracking and productivity and utilization and all that fun.
And I wanted to get your perspective on how you see things like generative AI impacting those businesses, because for a lot of C level folks, it’s a, it’s not just a technology thing, it is a this is going to fundamentally change the nature of your organization.
Katie Robbert 1:01
Well, let me take a step back for a second.
So you know, when we worked with the agency, we were definitely billing like that.
And then prior to that, when I worked at the other company, I was responsible for the overall product budget.
And every week when people would submit their timesheets, you know, I was me and the other product owners were chasing people around, trying to get them to reallocate their time, because when, you know, they didn’t know where to build their time, they would bill it to our products just as like, you know, general overhead, which would put all of our product budgets over.
And a lot of times, it was a software development team who were doing, you know, cleaning up technical debt, doing research and development.
But those buckets of time didn’t exist for the company.
So they had to put the time somewhere, even though in talking to the head of software development, they’re like, Well, you know, software developers only work six hours a day.
And this was a whole like part of their Agile methodology.
And like, they have to have the other two hours for meetings and this.
And so it says, tracking time, that way, ends up being a full time job, because you’re trying to remember where your time goes.
And then once you submit it, someone’s chasing you down to fix it because it’s wrong, because they don’t want your time against their budget.
And so that is there’s so much wasted, overhead, just with that task alone, I’m not even talking about the work that you’re actually doing for a client.
And then if you’re over servicing a client, you can’t build them for that.
Because of you know, the contract.
So you could be working 60 hours a week, but they’re only getting billed for 40.
It’s just, it’s a ridiculous thing.
And it’s really frustrating.
So I just wanted to sort of put that out there first, to really truly set the stage.
Now, when you’re working in an industry, you know, and Chris, this was sort of mentioned in your newsletter, when you’re working as a lawyer, or when you’re working as you know, a contractor, like a home contractor or like a physical like a remote contractor.
You do have to track your time, hourly and Bill accordingly.
But then you start to get down into those details of Well, what was I doing? was I working for a full 15 minutes? Or was it like 14 minutes, but now I’m billing for 15 minutes? Or did I work 20 minutes, and now I have to round up to the nearest 30.
And it’s ridiculous.
And so when we start to talk about where generative AI is going to help with that productivity, a lot of that minutia, a lot of that, you know, admin work where your time is spent a lot of paperwork, a lot of research.
That’s where I personally think generative AI is going to be the most powerful.
We spend a lot of time researching before we write a blog post, or we spend a lot of time researching before we do a talk or webinar, that time can be cut down with the assistance of generative AI.
It’s not the same as using just a straight internet search.
Because you can actually interact with the generative AI and say, that wasn’t what I was looking for.
Let’s try it again.
versus trying to do that in an internet search.
You’re very limited in terms of the interaction, like you can say, that wasn’t what I was looking for.
But the internet bar is going to be like, I’m returning an error now.
So good luck with that.
Christopher Penn 4:30
It’s true.
The thing I keep coming back to though is we don’t really for a lot of businesses, we don’t have a way of saying this is what the value of this work is.
And I know certainly as you know, as our company, we don’t really care if it takes you a minute, an hour a day to get a task done as long as it’s done before the deadline for it’s due, and it’s done well.
So, one of the challenges we have to figure out particularly as we all also employ contractors is saying, Okay, this is what this task is worth to us.
Take whatever time you need to do it.
But if it takes you two minutes, it takes you two minutes, we still value the task that is done.
And not How long should you do it.
Because, again, we’ve all worked in industries and in jobs where you’re getting paid by the hour.
And so the incentive is to take as many hours as possible.
So you get paid for it, like I used to bag groceries and stuff at the grocery store.
And I got paid, you know, eight bucks an hour.
And so the, the incentive was to work as little as possible.
So you collect the money, but you don’t have to do as much work, there’s no reward for doing extra work.
You know, the same was true when I worked at the AT and T.
Now as an admin, there was no reward.
And in fact, it was a punishment, if you did more work, because people just gave you more work, right? Okay, here’s more work that you’re gonna do.
That is not, you’re still getting paid eight bucks an hour, whether you write one memo, or 50 memos, or 100 memos, the money is the same.
And so in a knowledge based economy, and particularly now with generative AI, the question everyone, not just hourly based companies, but really everyone has to ask is, what is the value of work that I do? And how do I get paid for the value I provide, rather than the time it takes me to do
Katie Robbert 6:20
it? Well, and it’s interesting that you’re talking about, excuse me doing as little as possible.
And the dollars the same? You know, I think this is where a lot of companies are looking at their employees right now is, you know, we’re paying them this flat fee, or we’re paying them this dollar amount per hour.
What am I getting from this person? Is this something that I could give to someone who’s either at a lower cost, or I could give to generative AI and to the person who’s at a lower cost, and get the same work product? And then maybe even get more? And I think so, you know, just to pick on you a little bit, Chris, people with your attitude of let me do as little as possible and still get paid? Are the people who are probably losing some sleep worrying that their jobs are gonna get cut? Because that’s what people who sit in my seat are looking at right now is, what am I getting? It? Can someone else do this for less money? Can a machine do this for less money? And so if you have that mindset, then you should definitely be concerned.
I mean, granted, Chris, I know what you do all day.
And so you should not be worried you’re fine.
But you understand, like, it’s the, it’s that mentality of let me do as little as possible and keeps showing up.
Like, that’s not going to cut it anymore.
Christopher Penn 7:45
Exactly.
But that’s a double edged sword in the sense that for the employers that I worked for, I despised them, I despised working for those people.
They were toxic managers, they were toxic companies.
And so a big part of and this goes to, you know, the people side of things, heart of motivating people is a, you know, pay is certainly part of it.
But also, you have to provide a reason for them to want to do more than than the bare minimum that’s in the job description.
You know, with Trust Insights, that’s not a problem, not because you know what I do all day, but because you know, I have a strong vested interest in the success of our company.
And as a result, you don’t ever have to question what my motivation is whether you know, am I going to show up today drunk or not? No, the answer’s no.
Katie Robbert 8:43
Not on purpose anyway,
Christopher Penn 8:45
purpose will Nyquil.
But for someone, and this is something that a lot of business motivational folks do do say it’s, you know, no employee is ever going to care as much as the owner does about the business.
And as a result, the pay has to pay and what’s expected of them has to reflect that to some degree.
But I guess my question that we kept coming back to is, how do we measure the value of work? How do you how do you as a CEO, measure the value because like, to your point, you’re saying, What am I getting from my money? And the employer is saying, What am I being asked to do for the little amount of money that I’m being given? If you look at what’s happening with the various strikes going on in the United Auto Workers in the WGA, a lot of those folks are saying, we’re not getting the money that would be commensurate with executive pay, or the productivity of the profits of the company.
So why should we work more to make you richer?
Katie Robbert 9:44
Which is totally a valid question.
That’s the question I always struggled with when I was in different roles in different companies is, I’m the one doing all the work.
What Why am I getting the least amount of money? And I think that, you know, we’re sort of veering into a different topic, but you know, we’ll relate it back in just a second.
But there is a lack of transparency when it comes to that leadership team, the C suite, what are they doing all day? You know, why are they just barking out orders.
And I think that’s the type of environment that breeds that, you know, animosity amongst the different team members where they’re like, I don’t know what you’re doing all day.
But I’m the one doing all the work.
So I’m going to do the bare minimum.
And so having a bit more of that transparency, having maybe even some user stories, to help communicate, as the CEO, I want to gather all the information from what everybody’s doing, so that I can appropriately budget so that I can set the strategy, so on so forth, versus as the account coordinator, I want to understand the vision of the company so that I know where I fit in.
Or I want to have direct access to the CEO so that I can ask questions about the future of my role.
Those are very simple statements, but they actually tell you a lot about what’s going on with the person who’s being asked to do the thing.
And that lack of transparency is when you start to get that attitude of well, I’m going to do the bare minimum, because I don’t know why I’m being asked to do the thing in the first place.
So when you start to introduce a technology like generative AI, that breeds a lot of insecurity, of will AI take my job, if you’re not being transparent about what the technology is going to do, or even that you don’t know yet what it’s going to do, people are going to start leaving, or people are going to start, you know, doing the bare minimum, and it’s going to cost you the leadership team a lot of money, it’s probably going to cost you some clients or customers.
And then it’s going to be really expensive to replace those people when they just up and leave and don’t do a knowledge share with you know, whoever’s taking the job next.
Christopher Penn 11:57
And one of the things that it’s not a it’s not a certainty, but it is a probability is that your best talent tends to leave first.
Katie Robbert 12:09
This is true, because they’re eager, they’re passionate, they want to do good stuff.
But if they’re not being given the room, the space to do that, they get frustrated, and they will go find someone a different company that does value what they bring to the table that does say, you know, what about the firm? Right? Well, you know, a lot of times 100% of the time, we just want to be heard, we just want to be seen, we want to be acknowledged, even if it’s, Hey, this is a really great idea.
I don’t know where it fits, but let me at least talk it through.
So I understand what you’re bringing to the table versus Why are you spending time doing that it’s not billable time.
Those like there’s a there’s two ways to approach it.
One is definitely the let me encourage you.
But let’s work together to put some guardrails around it versus the well that’s not billable.
So don’t do it.
And that’s immediately when people start to decide, okay, let me go find someplace that is going to give me the space to innovate.
Christopher Penn 13:13
And I think that’s a really important, really important perspective.
Because if you think about generative AI, when you’re putting in the role of hey, write these blog posts, right, these press releases, right, these memos draft this template, it’s going to do what it’s told, it’s not going to innovate, it is not going to proactively say hey, by the way, there’s a better way to do this.
Or, hey, maybe we shouldn’t even be doing this at all.
And so a consideration for the folks who are in charge is to say like, yeah, generative AI should definitely be used to reduce the time that individual tasks take.
So that you can free up time for you to to actually do that thinking go, why are we even doing this thing in the first place? This makes no sense whatsoever?
Katie Robbert 13:57
A few weeks ago for our newsletter, and if you don’t subscribe, it is at TrustInsights.ai AI slash newsletter.
I relayed a story about how at one point in my career, I sat on what was called the innovation committee.
And that’s an oxymoron.
I know.
Oh, I know.
Once a week, I would think it was like every Wednesday at two o’clock in the afternoon, we all gathered in a conference room and sat around a table there was about eight of us from all different disciplines around, you know the company because that’s how innovation works is you get all the different voices from the different departments.
And we sat around the table and stared at each other.
And we were charged with coming up with new ideas that we could write research grants on.
And at no point did anyone say out loud, this isn’t how this works like we all knew it.
And so it was such a waste of time and energy.
Because that’s not how that works.
You can’t just like say Take people in a room and go innovate magic, jazz hands like, and it was very the, it’s very the opposite of motivating, which I can’t think of the word right now.
demotivating the motive, basically, because leadership people like where’s my new ideas? What are we going to? What are we going to propose? What are we going to do? And we’re like, I don’t know.
And everything we propose, this is not innovative enough.
And so I think that, you know, sort of, like, if I pull back my rant for a second, to your point, Chris, generative AI isn’t going to solve that problem.
You can’t say to generative AI, okay, now innovate jazz hands, like it’s not going to happen.
It’s going to say, Okay, here’s the definition of innovation.
Okay, you want me to innovate? Turn left, instead of turning right.
Christopher Penn 15:52
Here’s five ideas that have commonly been done.
Katie Robbert 15:54
Yeah, exactly.
It’s not going to be anything revolutionary, it is going to, once you come up with that idea, it is going to help you do the research, it is going to maybe outline a grant proposal for you.
So that that’s going to save you time, but you still have to do the thinking.
Christopher Penn 16:11
Exactly.
the prompting of generative AI is what generates the results.
And you need to have the idea in mind so that you know what to prompted for you.
It’s like saying, I’m hungry.
Let’s let’s make some food.
It’s like, okay, well, what would you like to make I’m hungry, make some food, it’s going to statistically default to Okay, well, here’s the most common foods.
And if you like that, and I want something else, like, you go to an endless loop of boring responses, because you didn’t provide that spark of the idea to begin with.
One of the terms that I think is stupid, but I’m gonna still try to make it popular is the the idea of an idea printer, the the person or people who come up with the best idea.
Katie Robbert 17:01
I hate this word already.
Go ahead, keep going.
But it’s
Christopher Penn 17:05
the people who have the best ideas to to start working with generative AI because those ideas, fuel prompts that are different.
Those ideas, fuel prompts that will generate different and more creative outputs, rather than it’s the difference between someone saying, let’s write a blog post about B2B marketing, which is going to get you the most boring blog posts possible.
And someone saying, let’s read a blog post about B2B marketing with a focus on lead retention, which is a concept that is relatively rare, measured by down funnel engagement over time, using predictive analytics.
Right now, this is a very, very obscure set of concepts all chained together, it’s a set of ideas, that will get you a very different output out of generative AI, because they’re rare concepts.
When you mash them all together, they’re very rare concepts, what’s leftover, that’s going to get you really interesting output, that’s going to get you good output output that has not been seen before any serious capacity, and will get the models to return different output because of that.
And so those people in a in a company who have the ideas, and to your point, at any role from the junior most person on staff to the CC, you know, the coroner’s office, anyone can have those ideas, it’s whether they have the license to pursue them, you know, to your point about organization saying, Oh, that’s not your job, just do your job.
Whether the person themselves is motivated, because they they are or not heard, again, to what you were saying earlier, and then whether they have the tools and capabilities.
So it really unsurprisingly, comes back to the five fees, right? The your ability to look at generative AI, and to transform your business is contingent on all five of these.
Katie Robbert 18:53
It’s interesting, because the way that you’re describing all of these, you know, different unconnected ideas.
Just follow me for a second.
It feels a little bit like Island of Dr.
Moreau.
And so it’s like, Should these things go together? Maybe, probably not.
But I do think that using a tool like generative AI to say, you know, it has the head of a lion and the body of a seal and the legs of a giraffe like, should that be a thing? Does it go against nature? Using generative AI to experiment with that to see is going to be a lot less time consuming? Because it’s almost you’re doing essentially your exploratory analysis to figure out is this even a thing that’s possible before you go down the road of let me put it all together and then find out that it’s a crime against nature and it should never happen.
Christopher Penn 19:52
But going back to what we were what we started with about the transformation of hourly businesses and the value of work, that’s it Exactly right it is, it is taking away the time that people are burning on put on tasks that machines are better suited for.
And in doing so allowing them to be more innovative to give them the room, the time, the space and the tools to be more innovative, when you look at the five fees, you know, people processing platform, general AI is the platform.
If you’re doing it, well, you are then optimizing your processes.
So they take less time, which means you free up your people to be able to do more innovative things.
Katie Robbert 20:34
That’s exactly it.
And these, the platform is going to be the vehicle for that innovation, the more you can get the platform and the process to do the work, the more you’re going to get out of your people, and they’re not going to be stuck doing the same repetitive things over and over and over again.
That’s what breeds burn out.
That’s what’s that’s when people say, but I want to do something different.
Or I have this great idea, you can then say, Okay, if you can get the process on the platform to do the other things that you’re responsible for, then let’s go ahead and talk about these other ideas that you have.
And then you know, because then you’ll have the space to do that because the other work is being handled.
Christopher Penn 21:17
Exactly.
Now, here’s the question, how do we compensate people for this new reality? Can we still? should we still be paying them by hour? should we still be billing people billing clients by the hour? Or should we be looking at a value based model across the board?
Katie Robbert 21:36
I don’t think there’s one answer to that question.
I think it really depends on the job, the task, the role, the industry, the output? And then how who’s deciding the value? Who’s Who’s making the decision to go? Okay, if you do it here, that’s $20,000.
But if this person over here, does it, it’s only $10,000? Is it by experience? Is it by skill is it by, you know, the past clients that they’ve worked with, and they’ve demonstrated that they’re capable of doing this thing? I don’t think one of the things that we know at Trust Insights, you know, and you had said this earlier in the episode, Chris, is that we don’t, we don’t really give two hoots, if it takes 15 minutes, or it takes 15 hours.
Like, obviously, we would care if it was that big of a difference.
But the point being is that the end product is the end product period.
And only we are capable of producing that end product.
And so to the client, they’re paying for a value, they don’t necessarily know or care that 90% of it is automated through machines.
They want to get the collective experience of Chris Penn and Katie robear, who can then look at the output and tell them exactly what to do with it to make something of it, that’s the value.
But if they were just paying for us to push the buttons, then the value would be much lower.
It’s the insight, it’s the deep thinking it’s our collective experience, that creates that value.
Christopher Penn 23:05
Right, and even then, generative AI can help you get a first draft, but it can’t do the final work on that.
Because of the unique weirdness in every single client.
And in every single employee.
There’s always something that is just unique enough that you probably should have, well, you almost always need to have a human being looking at there’s there are almost no circumstances where you just want to hand off machine output directly to do a customer.
It’s just not a good idea.
Well, it’s
Katie Robbert 23:36
funny when you were describing the whole, you know, what do you want to eat conundrum? Like, unless you’re giving it specifics, you’re basically just, you know, in just a different kind of marriage, because it’s like, what do you want to eat? I don’t know, I’m hungry.
Okay, but what do you want? Not that? It’s like, No, you have to, like really do the I mean, it all says, you have to do the work to get the output that you’re after.
And you wouldn’t just say, alright, fine, you don’t know what you want to eat, here’s what I’m gonna make, that’s gonna start a fight.
And then it’s the same thing is true, if you just take the results of generative AI and give it to a client.
Like, that’s not what I wanted, you actually have to do the work to make sure that it’s the right information.
Christopher Penn 24:16
So, in general, if you want to preserve your margins, you want to preserve the value that you provide.
If you are an hourly based billing business where you’re doing those non tangible work, like obviously, a plumber will still need to charge by the hour because you can’t have a machine, just come and fix your plumbing.
Not yet.
But in those cases, you need to strongly be looking at how do we convert from an hourly based or time based billing to value based billing.
And then ideally, you find within your company every possible reasonable application of generative AI you can in every role in every department so that you reduce the time people spend on repetitive tasks and you free them up Up to be idea printers.
Katie Robbert 25:03
Oh my god, I hate that word.
I hate it.
Christopher Penn 25:08
If you are an ideal printer or you want to become one, please join our free slack group.
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Thanks for tuning in.
I will talk to you next time.
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Trust Insights (trustinsights.ai) is one of the world's leading management consulting firms in artificial intelligence/AI, especially in the use of generative AI and AI in marketing. Trust Insights provides custom AI consultation, training, education, implementation, and deployment of classical regression AI, classification AI, and generative AI, especially large language models such as ChatGPT's GPT-4-omni, Google Gemini, and Anthropic Claude. Trust Insights provides analytics consulting, data science consulting, and AI consulting.
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