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McKinsey wonders how to sell AI apps with no measurable benefits

theregister.com

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

#71

Post by lenerdenator »

btbuildem wrote: post #60

This is because they're trying to reduce the wrong headcount. The largest inefficiencies in corpo orgs lie in the ways they organize their knowledge and information stores, and in how they manage decision making. The rank and file generally have a really good grasp on their subset of the domain -- they have expertise and experience, as well as local context. Small teams, their managers -- those are the ones who actua…

> This is because they're trying to reduce the wrong headcount.

> A successful "AI Transformation" would come in top-down, going after the most expensive headcount first.

This isn't a mistake. McKinsey consultants and their executives at their clients are a part of the same clique. You don't get into either without going to the right schools, being in the right fraternities, and knowing the right people. "Maximize profit" and "cut costs" are to be read as "keep the most money for ourselves in the form of earnings per share and dividends" and "pay fewer people". And since you can convert shares to money by gutting companies, there's no real incentive to remain competitive in the greater marketplace.

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

#72

Post by ToucanLoucan »

paulsutter wrote: post #59
skeeter2020 wrote: post #47

Earlier quoted context omitted.

Maybe 40 years ago or in some cultures, but I've always focused on $ / person. If we have a smaller team that can generate $2M in ARR per developer that's far superior to $200K. The problem is once you have 20 people doing the job nobody thinks it's possible to do it with 10. You're right that "there is an unlimited number of things to do" and there's really obvious things that must be done and must not be done, but…

Exactly, it’s much easier with a new organization. In my previous company, we would speculate about where to use AI and we were never sure. In the new company we use AI for everything and produce more with substantially fewer people

Does anyone want what you're producing though?

I don't mean to be dismissive and crappy right out of the gate with that question, I'm merely drawing on my experience with AI and the broader trends I see emerging: AI is leveraged when you need knowledge products for the sake of having products, not when they're particularly for something. I've noticed a very strange phenomenon where middle managers will generate long, meandering report emails to communicate what is, frankly, not complicated or terribly deep information, and send them to other people, who then paradoxically use AI to summarize those emails, likely into something quite similar to what was prompted to be generated in the first place.

I've also noticed it being leveraged heavily in spaces where a product existing, like a news release, article, social media post, etc. is in itself the point, and the quality of it is a highly secondary notion.

This has led me to conclude that AI is best leveraged in such cases where nobody including the creator of a given thing really... cares much what the thing is, if it's good, or does it's job well? It exists because it should exist and it's existence performs the function far more than anything to do with the actual thing that exists.

And in my organization at least, our "cultural opinion" on such things would be... well if nobody cares what it says, and nobody is actually reading it... then why the hell are we generating it and then summarizing it? Just skip the whole damn thing and send a short, list email of what needs communicating and be done.

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

#73

Post by ckcheng »

deaux wrote: post #52
itake wrote: post #24

Earlier quoted context omitted.

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…

> 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 Ding ding ding! AI can absolutely reduce headcount. It already could 2 years ago, when we were just getting started. At the time I worked at a company that did just that, succesfully automating away thousands of jobs which couldn't pre-LLMs. Th…

Yes, and it’s instructive to see how automation has reduced head count in oil and gas majors. The reduction comes when there’s a shock financially or economically and layoffs are needed for survival. Until then, head count will be stable.

Trucks in the oil sands can already operate autonomously in controlled mining sites, but wide adoption is happening slowly, waiting for driver turnover and equipment replacement cycles.

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

#75

Post by jf22 »

StableAlkyne wrote: post #4

> 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

This part was never quiet...

The quiet part out loud phrase is overused.

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

#76

Post by loudmax »

StableAlkyne wrote: post #4

> 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

Organizations that successfully adapt are those that use new technology to empower their existing workers to become more productive. Organizations looking to replace humans with robots are run by idiots and they will fail.

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

#77

Post by walkabout »

rwmj wrote: post #61
imglorp wrote: post #39

Earlier quoted context omitted.

AND it can sit meetings all day and not forget any decisions; that's the other 90 percent of a manager's day.

And just like senior managers, every time you ask it a question, it starts a new context.

Can it turn simple yes-or-no questions, or "hey who's the person I need to ask about X?" into scheduled phone calls that inexplicably invite two or three other people as an excuse to fill up its calendar so it looks very busy?

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

#78

Post by jncfhnb »

walkabout wrote: post #50
add-sub-mul-div wrote: post #29

It has to be tough for them. They can't not be in on the grift, it's too big and they're too big. But the grift doesn't really benefit them.

They're probably salty that the only jobs of theirs they can figure out how to automate away with AI are the too-cheap-to-bother-automating Indian workers who author their PowerPoint decks.

the people in India don’t author the slides. They just make them look nice. We have some AI for it.

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

#79

Post by _fizz_buzz_ »

I recently talked to someone who works at a company that builds fairly complicated machinery (induction heating for a certain material processing). He works in management and they did a week long workshop with a bunch of the managers to figure out where AI will make their company more efficient. What they came up with was that they could feed a spec from a customer into an AI and the AI will create the CAD drawings, wiring diagrams, software etc. by itself. And they wrote a report on it. And I just had to break it to him: The thing that AI is actually best at, is replacing these week-long workshop where managers are bs-ing around to write reports. Also, it shouldn't be the managers doing a top down approach where to deploy AI. Get the engineers, technicians, programmers etc. and they should have a workshop to make plans where to use AI, because they probably already are experimenting with it and understand where it works well and where it doesn't quite cut it yet.

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

#80

Post by resolutefunctor »

rybosworld wrote: post #48

Looking at this from a software dev perspective: - The moment AI is actually good enough to replace us, it will also be incredibly easy to create new software/apps/whatever. There could/would be a billion solo dev SAAS companies eating the lunch of every traditional tech org. - People (Executives) seem to underestimate just how much of the work is iterating and refining a product over a long time. Getting an LLM good…

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 file to edit, etc when I'm already strapped for time.

LLMs and agentic coding tools have allowed me to not spend time on the low-value tasks of typing, but instead on the high-value tasks of solving problems like you mentioned. Just interesting the different perspectives we have.

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