The Future of AI: Turning Fears into Frontiers

Transcription: 

Sean Riley:

So with all the fancy introductions out of the way, welcome to the podcast, Tom.

Tom Morrison:

Well, I'm glad to be here. Sean, thank you very much for inviting me.

Sean Riley:

Oh, the pleasure is all ours. Your presentation at PMMI's executive leadership conference was AI, Be A Friend or Be Afraid. So I wanted to start off with one of the main fears or what are the main fears that people have with AI? I think you had noted three main ones that you discussed, and I thought that would be a good way to kick off our talk.

Tom Morrison:

Yeah, so the first thing everybody thinks of when they think of artificial intelligence, they think of job loss. And what I keep trying to help people understand is AI is not about job loss, it's about capacity expansion. It's about taking a worker who's doing a thousand widgets a day at his station or her station and helping them do a 1500 units without expanding their workload and stressing them out and burning them out. So AI is going to bring that kind of level of functionality and efficiencies to any workforce running any job that they really try and put that in. So that's the one thing is job loss. The second thing is that AI is dangerous because you got Elon Musk, Bill Gates, Mark Zuckerberg, you got all the biggies out there writing about how AI is this kind of freak show of crazy stuff and in the hands of wrong people can do harm.

Well, I took people back to when the car was developed back in 1903, the car shrunk America, and you could get to places very quickly and see people you never could see before, but it also opened up the realm for bank robbers to have a getaway car. So it doesn't matter what the technology is in the hands of the wrong person or the wrong people, it's going to give them opportunity to do bad. But I'd really encourage people to really focus in on what can AI do for your company? What are your needs? And don't let the bad things that can happen deter you from implementing it into your company. So those are two of the biggies out there that people are really looking at.

Sean Riley:

Right. With the job thing, you then noted later on that I think you said... I have the number here, 47% of jobs will be automated by 2030, [inaudible 00:02:04]. It doesn't echo hand in hand with the job loss that would... So if I'm playing devil's advocate, that would scare me.

Tom Morrison:

Well, the thing is though, is that there's no more people to hire. Right now we currently have 4 million more jobs available than there are qualified people to take them on. And I took people back in the conference, back to when the internet came out in the early '90s. So when the internet came out, everybody was like, "Oh, my gosh, jobs are going to be gone." Call centers, Encyclopedia Britannica, everything that you could think of that was kind of a white collar job was going to be gone. Well, here's the reality. I read a study once years ago that for every job that the internet took away, it added 10 more jobs because there were jobs that we never thought would be around, because things evolved. And AI is going to be the same way.

I've been reading studies all over the place and they say that for every job that is going to be taken away from AI, you're going to have one and a half jobs that are going to come back because you're going to need people to build robots, build machines, train the machines, sustain the machines. You're going to need all these people to do stuff that we don't even know what's going to happen today because AI is just in its infamy. So yeah, I'm a firm believer that AI is going to create... Now here's the other part, in order to take advantage of those jobs, the people in all those jobs are going to go away, if they've got to upskill or re-skill, they got to figure out where do they fit into this new wave economy with AI. But here's the other good thing, Sean, is they're going to pay more. That's the key thing. You upskill, you're going to get paid way more in the job market with AI involved.

Sean Riley:

Interesting. You referenced a Jack Welch quote that you used and it was about... I don't have it off the top of my head. Do you know it off the top of your head?

Tom Morrison:

Yeah. So Jack Welch has this famous quote that he made back in the early '90s when he was CEO of General Electric. That was when the internet was really taken off and change was happening really fast, but not near as fast as it is today. And the quote is, "When the speed of change is happening much faster outside the company than inside the company, that's the beginning of the end because you're going to become eventually irrelevant to your customer because you're not changing fast enough to meet their needs, to serve their needs." And so it's imperative in today's market.

I tell people, companies that I would forget about five and 10 year plans, they don't exist because if you look back 10 years ago, I bet you 90% of companies 10 years ago do not look like today that they said their plan would be. So I get people look in terms of rolling two and three year windows where you're always looking at it every year, three years down the road, and you're looking at how the changes are happening, where they're happening, and how you can use those changes to leverage your company to be good for your customer.

Sean Riley:

Interesting. And I think that you then broke that change down to three parts. And I'm curious how that would apply to AI as a change agent.

Tom Morrison:

Well, and a change agent, I broke it down to your employees on the line. You have to have people that have the technical knowledge to do their job and they have to have a technical knowledge through the lens of working with machines and AI because that's what's going to help them maximize their productivity. Because with no more new employees really to hire, the supply of them are not there, companies are going to have to tap into technology automation and AI in order to expand their companies. So your technical line, people must understand it. And there are other reason to have your people really technically trained on the line is so that their management doesn't have to micromanage them and constantly be in their face. They need to be empowered to do their job because the management needs to be able to be focused on what change is happening that could turn our company downward.

They need to be focusing on working on the business, on their department instead of working in it. And so even management needs to have a level of confidence in the level of AI so they can help empower and engage their employees to do the same. And the last thing is just the culture of slash change and innovation. Everybody in the organization needs to have this urgency that change needs to happen. You may or may not ask the question about it, but one of the things I talked about in the session was we have this seven year window between now and 2030.

The clock is ticking and that clock is ticking down to a major downturn in the early 2030s. That could be about a four-year depression just a deep down because we got a lot of different things, national debt, I'm a baby boomer, I'm checking out in 29, retiring, and we're going to then have all the baby boomers taking out of Medicare and social security, the largest ever. So how do we pay for that? You could see potentially higher taxes to pay for that. Higher taxes and inflation always stall the economy. So there's many things that a group called ITR Economics who PMMI they're partnered with. We are too at our organization, and they're the ones that are predicting this downturn and they're really good at what they do. So I take a lot of credence in it.

So what I tell people is you have a seven-year run where demographics, the economy and at least enough workers and technology around for you to grow as big as possible and get as efficient as possible to prepare for the potential that the downturn does happen because you don't want to get to 2030 shine and all of a sudden go, "Oh, my gosh, they were right." And all of a sudden start doing something about it. You want to start today planning and profiting productivity, growing your team to prepare for that moment. And here's the cool thing. If you prepare for it and it doesn't happen, you're a lean, mean machine with everything you've got and your profits are going to actually grow and you do better things for your employees and your communities. But if it does happen, you're still going to be able to be profitable and productive because you prepared for that event.

Sean Riley:

Interesting. Okay. Well, then that being said, as someone... We're in manufacturing, we're in packaging, we're in processing. What is AI great at and how is it going to help my business?

Tom Morrison:

Well, what AI is really great at is the number of things. One is great at pattern recognition. Big thing is data analysis. AI is all about data. So AI happens through a lens of four things, data, algorithms, training and output. But how they do the algorithms and the output is through data and manufacturing companies through their machines have been collecting data for years. The problem is they haven't really figured out what do we do with it? Well now with AI, you can take that 10 years of data and figure out, do we want to know how fast our customer buys? Do we want to figure out how fast our machines break? You can figure out so many things and do predictive maintenance, predictive customer care, predictive operations and manufacturing.

So many things. So data analysis, once you put the data in and it can look for patterns that can help you predict things with precision, it also can help you do strategic thinking. When you look at that data, you can strategically look at what should we be doing differently in customer service and operations and production. So there's a whole mess of things that it can do. And especially in the world of quality. Quality plays a huge endeavor in most manufacturing plants, AI with sensors and visual recognition can look at pieces of parts that you're manufacturing and it can instantly tell you if it's got a defect or not.

And I mean, I told the story, I was in one of my member plants in Columbus, Ohio, and it had this machine. I kept hearing ching, ching, ching, ching, ching, and these pieces were coming up a belt, it would stop and a picture would be scanned. And then if it met the requirements, it went onto the process. If it didn't, a little puff of air came from the thing to the side and pushed it back into the bin. It went around again and went through the pre-process and no human was involved. And think about that. That thing runs 24/7 and the only human had to be involved was to put the tray of parts in front and then pick up the final parts on the back end. That was it. Everything in between was done by the machine, which is just incredible. That's where everybody's going to have to get to in manufacturing to figure out how can they use that kind of technology to do the work and let the humans be a collaborative effort in that endeavor.

Sean Riley:

Very, very interesting. So you had a great saying about quit trying to plan for a future. You can't predict and create the future that you want. And your point to that was that embracing AI can kind of create that future. So could you speak on that a little bit more?

Tom Morrison:

Yeah. One of the things we do as human beings is we get caught up with all the hype and with all the stuff around us, whether we watch TV, we watch the news, we read the internet, and we get caught up in everything around us that could impact our life. And 9% of it doesn't really play a key role in our life. It just scares us. Most people don't like change. And so that's the quit trying to plan for a future you can't predict because you can't predict it, but what you can do is figure out what are my needs as an organization? What do my employees need and where do we want to go with those needs?

Where do we want to go as a company and what do we need to make that happen? And how does AI play a part in that and go pick the parts of AI that can distinctly fill the gaps that you need in your organization to achieve the success that you want. And I find that people that all of a sudden decide to say, "You know what? We're going to quit listening to all the outside voices that really don't mean anything. And we're going to go decide what do we want, what do we got to do to get there? And then what is the gap?" I remember reading in a book called The E-Myth Revisited by Michael Gerber years ago. Greatest book ever to read as someone running small business. But he basically said he interviewed Tom Watson who was the creator of IBM.

And he asked him, "How did you build what you built in such a ginormous organization in the '70s and '80s?" And he said... Tom Watson gave three things. He said, "We decided what we wanted when we were done. So when the business was finished and really operating well, what did it need to look like? What do we need to do in people and technology to get there? And then we had stopping points where we stopped and looked and said, where are we? Are we on target? If we weren't on target, we had a plan to make up the gap." And I think that's the key to people creating the future they want is have a plan. What do you need to get there? And a stop off point to analyze any gaps. You can make them up if your gaps get too behind the curve, it's really hard to catch up with how fast things move today.

Sean Riley:

Very interesting. Okay. You had six keys to thriving in the future of AI, could you run through them for us?

Tom Morrison:

Sure. So Sean, the number one key that... These are keys that I'm telling people for years, but they really do focus on the key things, the key elements that people need to do AI in. But they need to be good in general with a business like this. But the key number one is know your end user. I know there's like PMMI is in the supply chain where they're kind of a few layers above the consumer and their true customer is the person that they sell the equipment to, the products they manufacture, but what their true user... Their true customer is the end user that uses the product that feeds them.

If you can get ahead of the ballgame and predict what they do, you can get ahead of any changes in the marketplace. So you can make changes way before your customer even sees it in the supply chain, because sometimes that could be eight to nine months before you figure that out. But if you can figure out where the consumer's spending and habits are going, you can get ahead of the ballgame. So know your ultimate end user down the road in your manufacturing supply chain. Key number two is to have a culture. We've talked about this a little bit, but having a culture of constant innovation where every quarter your teams are meeting on how are we meeting our needs of our... Has anything changed in the needs of our customers so that we can really get ahead of the ballgame?

And that culture of innovation boils down to three core things I really tell people about. First thing is determine what is desirable to our users, what do our customers want? And then the second thing is, what's viable in the marketplace? What can we sell them? What are they willing to pay for at some level to get that? And then what is possible with technology because the supply chain of employees is very minimal for the next 10 to 15 years. How can we do this with technology? So that's the culture of innovation. Number three, dynamic work culture. Your people are the number one thing that you have to have. And I heard on a great seminar here recently that if you take care of your people, your people will take care of your customer. But a lot of people, Sean, they're taking care of the customer and they're not taking care of their people and that's why they got high turnover rates.

Sean Riley:

Right.

Tom Morrison:

So what are the three things you got to have to have a dynamic work culture? You got to be connected. And when I say connected, you got to have a digital environment. You got to be flexible. Coming out of COVID, you got a lot of flexibility that people are asking for because they can now work... We proved that we could work remote and be very effective. And then you got to be automated so you can be as efficient as possible. Number four in that line is to be a smart company, connecting your supply chain with your consumers, with logistics, with distribution. I always ask companies, you got smartphones, smart cars, smart homes. Go to your employees, your key management, and ask yourself, when you look at us as a smart company with technology and our efficiencies of meeting our needs and reaching our customers, on a scale of one to 10, how good do you think we are as a smart company?

An owner might or general manager might think, man, we're nine out of 10. We just implemented some great technology. But the guys on the floor, the ladies on the floor might say, you know what, we're actually a three. We're not running as efficiently as we could. So I encourage people to really get to their team members that are working with the customers in the supply chain to ask them, are we as efficient on technology as we can be? Number five is being phenomenal in customer service because customers can. And that really boils down to three things. Be value focused. Don't be a commodity. Be value focused about how you get to charge the premium price? Be fast and fix things. Don't blame when things go south. Don't worry. It's not about who's to blame with the customer. It's about can we fix it to meet the need and keep that customer in our value chain?

And then the last thing, number six, Sean, goes back to that strategic planning process. You need to have a rapid planning process that's happening on an ongoing basis so you can really make the changes to your strategic plan and to your operations to really be up with the marketplace. And it boils down to four things. I always tell people, if you set your goals out in the future and along the way you're not meeting your goals, there's only one of four things that is out of alignment. How you spend your money on the project, the time you're investing in that project, the people involved, and then the choices that you're making surrounding the project. If you're looking at a project and it's not on target, one or more of those four things are out of alignment. You can easily make adjustments to them. So number six was have a rapid planning process.

Sean Riley:

Awesome. And that's a perfect button to put on this little discussion that we had here, those six keys to thriving in the future. Thank you very much, Tom, for taking time out of your day to come on the podcast with us today.

Tom Morrison:

I appreciate it, Sean.