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McKinsey wonders how to sell AI apps with no measurable benefits

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Re: McKinsey wonders how to sell AI apps with no measurable benefits

#131
post #24

Earlier quoted context omitted.

I find it all quite strange: - AI companies of course will try and sell you that you can reduce headcount with AI - CEO's will parrot this talking point without ever talking a closer look. - Everyone lower down on the org chart minus the engineers are wondering why the change hasn't started yet. - Meanwhile engineers are ripping their hair out cause they know that AI in it's current state will likely not replace any…

The incentive structure for managers (and literally everyone up the chain) is to maximize headcount. More people you managed, the more power you have within the organization. No one wants to say on their resume, "I manage 5 people, but trust me, with AI, its like managing 20 people!" Managers also don't pay people's salaries. The Tech Tools budget is a different budget than People salaries. Also keep in mind, for any…

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Re: McKinsey wonders how to sell AI apps with no measurable benefits

#132
post #45

McKinsey has pitched my company on projects where their compensation is entirely outcome-based — for example, if a project generates $20 million in incremental revenue, they would earn 10% of that amount. I have to admit, the results they demonstrated — which we validated using our own data — were impressive. The challenge, however, is that outcome-based contracts are hard for companies to manage, since they still ne…

> they still need to plan and budget for potential costs upfront

Same reason they ask for "estimates" which they then later try to hold accountable as "quotes" when it suits them. Same reason I 3x my initial estimates.

Re: McKinsey wonders how to sell AI apps with no measurable benefits

#133

> while quoting an HR executive at a Fortune 100 company griping: "All of these copilots are supposed to make work more efficient with fewer people, but my business leaders are also saying they can't reduce head count yet." I'm surprised McKinsey convinced someone to say the quiet part out loud

I find it all quite strange: - AI companies of course will try and sell you that you can reduce headcount with AI - CEO's will parrot this talking point without ever talking a closer look. - Everyone lower down on the org chart minus the engineers are wondering why the change hasn't started yet. - Meanwhile engineers are ripping their hair out cause they know that AI in it's current state will likely not replace any…

> AI in its current state will likely not replace any workers.

This is a puzzling assertion to me. Hasn’t even the cheapest Copilot subscription arguably replaced most of the headcount that we used to have of junior new-grad developers? And the Zendesks of the world have been selling AI products for years now that reduce L1 support headcount, and quite effectively too since the main job of L1 support is/was shooting people links to FAQs or KB articles or asking them to try restarting their computer.

Re: McKinsey wonders how to sell AI apps with no measurable benefits

#134
post #117
post #74

Earlier quoted context omitted.

Because you want to sell what people want to buy

If people wanted to buy it, then "how" wouldn't be a difficulty

There are many aspects of managing a product that are difficult besides the existence of general demand. For example, how to compete with other businesses selling the same thing.

Re: McKinsey wonders how to sell AI apps with no measurable benefits

#135

Earlier quoted context omitted.

Your perspective on your last point is interesting. I actually feel the opposite, its become a motivator for me. I used to love coding, and did it a ton. Then it became less and less part of my job, and I started hating coding. It was so frustrating when I knew exactly what needed to be done in the code, but had to spend the time doing low value stuff like typing syntax, tracing through the code to find the right fil…

That's a fair point and I actually agree with you. A large part of writing code is doing something menial as you said. I think both of the viewpoints are valid depending on where you're at in your career. We can imagine a junior developer who isn't quite bored with those low-value tasks just yet. As you grow more senior/experienced, the novel problems become harder to find - and those are the one's you want to work o…

Super well said! Love the garden analogy!

Re: McKinsey wonders how to sell AI apps with no measurable benefits

#136
At my company people always understate the headcount savings. Because the invariable question is - "You are spending x million and for y FTEs you save only 1 FTE of HC? How does that make sense?". Or worse yet - "You estimated 40 FTE savings, why don't we pick and chose 40 FTEs to let go". That sends shivers down managers as it reduces their area of influence.

They found a hack and that is loading up the intangible column. In that list reputation/brand risk always makes an appearance. "If you don't do this project this terrible thing might happen and we might suffer reputational risk. We estimate 2x millions of loss due to reputation being harmed". And presto! there is a case for the project.

Its like cloud migration project. Total run costs are part of the pitch but you add on extra things like added security, automatic updates etc. it becomes an easier sell.

AI tools being so hyper focused on "productivity gains" it is going to be tough sell. Especially because users will resist it and the productivity boosts if any will remain low.

Re: McKinsey wonders how to sell AI apps with no measurable benefits

#137
I was a IC consultant for a big 4 group at one point.

Very successful in my domain on a very successful project.

I wrote an insane amount of code but more importantly I wrote libraries across multiple languages that prevented an insane amount of code from being written.

We would have literally 1k people during quarterly planning and did distributed agile and all this org stuff

(It was interesting anthropologically to me because I operated outside the game, I was just waiting for a ~non-compete I had signed for a profitable technical co-founder exit to end to jump back into starting a new company in the same space.)

And the whole thing worked, and I was very high profile on the project as probably the highest paid IC and the company hired me away from the agency and I worked their until starting my company.

There are 3 layers, the deal makers, the coordinators and the implementers.

You cannot easily automate out the deal makers because they are trust, legal/contracting and power (they use the resources of the firm to allocate: people, resources, etc.) loci. Someone has to hang if stuff goes wrong and someone has to deal with executive petulance and fragile egos.

Now lets look at the middle layer and implementers.

Let's assume for a minute we are looking at a big project where the existing company has hamstrung itself with silos and infighting and low productivity teams, this is just framing to understand the next part, it can cut either way.

The middle layer in consulting is big because other companies have big middle layers as well, and basically what is happening is tribal warfare, you need bodies and voices and change management teams to propagate what is happening otherwise the existing group will slow play the leadership and the project never gets done. If the middle layer is 1 to 1 every native sees they can be replaced. Many big 4 allow poaching for this very reason. The threat of non compliance and then also giving an easy congenial out for people who are ready to exit the consultant lifestyle.

The implementation layer is then able to be done, and it's done by juniors mostly because juniors don't have to be politically savvy, they can work to task.

Just a small slice or things I realized while consulting.

Re: McKinsey wonders how to sell AI apps with no measurable benefits

#138

First AI came for the artists And I did not speak out Because I was not an artist

Speak for yourself. I've been shouting against AI from minute 1, in defense of artists and anyone else It doesn't matter. People are convinced it's a miracle technology, so I'm just a backwards luddite resisting progress

Keep at it, friend. You are not alone.

Re: McKinsey wonders how to sell AI apps with no measurable benefits

#139

We have to accept that sometimes technology that was envisioned to change the future one way, may be beneficial in other ways instead - and that's okay. We are very clearly still in the phase of "throw AI at everything and see where it is useful." For example, just yesterday I was sent a contract to sign via DigiSign. There was a "Summarize contract with AI" button. Having read the contract in full, I was curious how…

Now you’ve got me wondering which is worse: signing with the briefest 15-second skim, or signing based on a cheap AI summary. Setting aside tinfoil hat ideas (Prompt: “Downplay any possible causes for concern…”) I’m not actually sure the AI option is worse. I mean, I’ll fully admit I don’t read everything I sign. When you buy a house it’s like 1,000 pages of stuff. Apple or Google’s mandatory TOS is what, 100 pages single-spaced?

What I’d be more interested in is an AI paralegal that works for me, not for the signing tool or the counterparty, where I control its prompt so I can try to focus it on possible ways I can be screwed with this contract, and what recourses I will or won’t have.

Re: McKinsey wonders how to sell AI apps with no measurable benefits

#140
post #70

I definitely find some of the features AI is going into like my PDF reader are useless and troubling

Adobe Reader on my work pc doesn't even do ctrl-f very well.

While most Mac features I loved 15 years ago are pretty well enshittified now, the Preview app is something I wish Microsoft would fully clone. Edge serves as a halfway-decent viewer, but there isn’t a good reason for Windows not to have something like Preview.
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