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From process debt to AI divide: Phil Fersht in conversation with Tiger Tyagarajan
157 Plays6 days ago
There will be AI winners and AI losers. There will be no middle ground.
In this candid and wide-ranging episode of From the Horse’s Mouth, Phil Fersht is joined by Tiger Tyagarajan to unpack why 2025 was the beginning of the services industry finally moving beyond AI talk to AI action.
If you’re an AI ‘fast follower’, this is one you don’t want to miss.
What you’ll hear in 30 minutes:
- Why 2025 was the beginning of a great separation between AI winners and losers
- Why process debt is one of the top blockers to enterprise success
- Why the fast-follower approach doesn’t work in the AI world
- The end of “mess for less” and what replaces it
- Why culture is the competitive advantage today
- What leadership looks like once AI slices through layers of management
- How AI is enabling smaller, faster, founder-led enterprises
Guest Snapshots
Tiger Tyagarajan is a global business leader, best known for his 13-year stint as the CEO of Genpact, where he helped the company evolve from its 2005 GE spinout into one of the top IT and Business services players today. Since stepping down as CEO, Tiger keeps himself busy advising global enterprises, private equity firms, and venture investors on all things AI adoption and transformation. He does this through advisory roles at BCG, Bain Capital, Brighton Park Capital, and many others.
Timestamps
0:00 – Welcome and intro to Tiger Tyagarajan
0:26 – Tiger’s career journey and advisory roles
2:26 – Genpact’s evolution and the problem of process debt
3:31 – 2025 outlook: AI winners vs. losers
5:39 – Why there’s no “fast follower” strategy in AI
6:44 – What Tiger sees at BCG and global markets
7:08 – Middle East leapfrogging with AI investment
9:01 – Competing as a smaller, nimbler firm
10:08 – Headcount reduction and the next service disruption
11:21 – Culture as the #1 differentiator in AI
12:14 – Faster, iterative transformation cycles
13:08 – The new operating model: people, agents, and AI budgets
14:30 – Emerging challengers vs. Wall Street incumbents
15:03 – Why services are becoming a dirty word
16:07 – Cannibalizing revenue to scale IP and margins
17:35 – New job roles and changing talent models
18:32 – The future of work: AI + human skills
21:01 – How GenAI reshapes management work
22:28 – Leadership in the AI era: trust and adoption
24:09 – AI exploits, humans explore
25:21 – McKinsey layoffs: reality vs. messaging
28:18 – Big firms shrink, SMBs grow
28:59 – Capital-light business models at a global scale
31:45 – 2026 as the “year of how.”
32:13 – Winning in the last mile
33:22 – Final thoughts and wrap-up
Explore More
- Phil Fersht on LinkedIn: https://www.linkedin.com/in/philipfersht
- HFS Research Website: https://www.hfsresearch.com/
- Tiger Tyagarajan on LinkedIn: https://www.linkedin.com/in/tigertyagarajan/?originalSubdomain=pt
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Transcript
00:00:00
Speaker
Okay.
Introduction to Tiger Tiaranja's Career
00:00:00
Speaker
Well, welcome to the latest episode of the From the Horses Now podcast. I'm your host, Philip Thurjt. And with me today is a man who doesn't need too much introduction, Tiger Tiaranja, who I'm going get to introduce himself because he's got an incredible career and i'd love him to explain in his own words. what he's achieved and what are you doing today? Over you, Tiger.
Transition from CEO to Advisor
00:00:25
Speaker
Yeah, I think the latter is easier. What I've achieved, I'd leave it to others to to decide that. I was a CEO of Genpact until February of 2024, was basically in the company when we were part of GE in the late 90s and then became the CEO in 2011, 13 years as a CEO and then retired.
00:00:44
Speaker
So Phil, you and I go back to the first few days of becoming an independent company in 2005, when you and I got together on one phone call in those days, and I ended the call saying, there's one person in the world who understands our kind of a business.
00:01:01
Speaker
appreciate um And then since February of 2024, post my stepping down as a CEO and handing over to BK, I've taken on ah what I call a portfolio of stuff.
00:01:13
Speaker
I hate the word retirement. So I'm a senior advisor for BCG. kind of gives me the front row seat in some of the transformation agendas that everyone is driving across the globe in large enterprises.
00:01:24
Speaker
And then I'm a senior advisor to Bain Capital that gets me into the investor side of the house. um And then Brighton Park Capital, this is the old Mark Jagger from Jital Atlantic.
00:01:36
Speaker
And then Avolt Capital, which is a smaller home office of Mark Nunnally, ex-Bain Capital. And then InnoSpark Capital, which is a venture capital fund. So I'm a senior advisor to a bunch of them.
00:01:47
Speaker
And through them, I'm on a bunch of private boards, tech services in France, Spain, and Portugal, data analytics in New York and Bangalore, health tech company in Boston.
00:02:01
Speaker
And then I'm on the board of one public company, which is Jabil. And then I'm an advisor. I'm on your advisory board, which I thought was a pretty cool thing you pulled together with some really amazing luminaries.
00:02:13
Speaker
So delighted to have got invited to the board and I am delighted to be part of that board. Thank you very much, Tiger. Pleasure to have you.
AI Challenges and Opportunities
00:02:20
Speaker
it was great catching up with you as well on New York recently and hearing some of your emerging views, which have shaped a lot since you've moved on from Genpact.
00:02:29
Speaker
And from those of you who might not be too familiar with Tiger, um when Genpact was originally called Jekis and it was spun out of GE as a big FNA supply chain provider.
00:02:42
Speaker
Tiger and his team around him um kind of invented the first big virtual captive model originally, the the first big thinking around how to offshore this process. What's fascinating today is the number one issue that is compounding companies' journeys towards AI has been fragmented, broken process. And the process debt we see as the number one impediment that needs to be evaporated for companies to be successful. So it's been fantastic watching the
00:03:18
Speaker
the gen-packed journey throughout the years and then this continuation after your time as well. I think VK has done a fantastic job taking it forward. So so let's get on to where we are today as an industry tiger. How would you describe 2025 and what you've experienced and maybe think a little bit about what we can expect to see happening next year?
00:03:43
Speaker
i think I think one interesting way to describe 2025, by the way, it's the first time I'm answering that question. No one has asked me specifically, now that we're coming close to the end of 25, only what, 14 days left.
00:03:56
Speaker
um What will one look back in January and look at 2025 as? And I'm just speaking straight off the cuff here. I think 2025 is gonna be the beginning of a bifurcation between the winners and the losers.
00:04:13
Speaker
And I'm actually going one level higher in every industry. Because in every industry, I believe there are going to be firms that are going to embrace all these new technologies, even though it's not all done and dusted. It's not very clear exactly what's going to work. But the fact is that a number of these technologies have to be leveraged, all this AI, Gen AI, predictive AI, et cetera.
00:04:36
Speaker
And two, they have to address process debt, data debt, all of those debts, and drive change in the organization, which we know is actually the single biggest challenge.
00:04:46
Speaker
Those who manage to do all of those things are going to thrive in this pretty significantly different changing world with AI. And those who don't,
00:04:59
Speaker
I think unlike all other technology changes in the past, they're gonna suffer badly.
Service as Software and Economic Opportunities
00:05:04
Speaker
And that's going to happen in our industry. I think in our industry, there's going to be real winners and there's going to be some real losers as compared to, I think in the past, many, many waves.
00:05:16
Speaker
There have been people who've said, hey, I'll jump onto the cloud a little later. i don't want to do it right now. I'll be a fast follower. and I'm really scared of those companies who say I'm going to be a fast follower on ai I can leverage it later.
00:05:27
Speaker
Well, your competitor has leveraged it and has become super intelligent. You've missed the boat. That's it. You can't, there's no such thing as leapfrogging in AI. It's much different, much more difficult Yeah, no, I think you're right. And it's like some of the jobs that are being eliminated today, they're not being recreated, some of these, they're they're gone forever, right? And we are witnessing a game changer that is putting, think, people on their tenterhooks. We've seen people develop their own personal capabilities in AI, actually quite impressively in the last year in particular. It's become part of everyone's lives now.
00:06:04
Speaker
yeah And then we go to work and it's a different bag when it comes to how enterprises are adopting it. so But I do buy what you're saying around you've got big winners and big losers coming. America has made a huge bet on AI.
00:06:19
Speaker
We have, I think President Trump is trying to deregulate AI as much as possible through federal execution, federal executive order as well. So we are going into uncharted territory, right? And so we start to see what's happening and advising companies like BCG, who's I think the highest growth of the consulting firms in 2025.
00:06:40
Speaker
What do you see them doing?
00:06:44
Speaker
I'm not that different, Phil, from, for example, what you and your team are doing. When I was at your conference, I was really pleasantly surprised and delighted to see some of the work that your team was doing.
00:06:54
Speaker
Your invention of the phrase that is now becoming kind of lingua franca, everyone is using it, service as software. I just came back from a trip to the Middle East.
00:07:05
Speaker
I got back yesterday evening.
Competitive Strategies for Smaller Firms
00:07:07
Speaker
And it's my first trip to Dubai 16 years. The reason I was there and I decided to go when I got an invitation, whereas in the past I've declined invitations, was because I think the Middle East is moving and it's changing. And I saw your announcement in HFS opening up the Middle East office, and I said, makes sense.
00:07:27
Speaker
The conversation there that I had at some forums were all around how can an economy like the UAE or Saudi Arabia, grab all of this and leapfrog when actually they are behind on a bunch of other things?
00:07:43
Speaker
And the answer is they can, um but they are jumping now. And i was delighted to see government, oil companies, banking, insurance, you know infrastructure companies, data center, the amount of investment is going to be high. And I think that's going to happen in many businesses and it's going to happen in many economies.
00:08:06
Speaker
And you talked about the US and Trump. Similarly, there are other economies that are grabbing and others who are not. And those who are those are going to suffer. Yeah. And the speed of change is phenomenal. Like, um um It's interesting where I think just about a few months ago, India was America's enemy.
00:08:26
Speaker
And now they're trying to be friends again. And then nobody's turning around and saying, Well, hang on a sec, we're growing at 8%. I'm going to pick and choose who I want to work with now. So wait in time, guys.
00:08:37
Speaker
So So yeah, um but yeah, you're absolutely right about the global, globalized nature of AI, even though, in a weird way, we've gone away from globalism.
00:08:49
Speaker
In some ways, it's opening up opportunities for many regions. And for a company like HFS, we're fairly small, but we can compete with giants like Gartner and co. We can do it because c clients no longer care about boots on the ground. They care about how much you impact, how much you advise, how much you influence, and how can you connect people?
Cultural Traits for Business Success
00:09:11
Speaker
I'm smiling, Phil, because your statement, you are small and you're competing with giants, reminds me of the way we always felt, I always felt, and my team always felt about our position in the industry coming out in those days and competing with the giants of the industry. And we actually said, we like the fact that we are small and nimble and agile, and we're so close to the client, and we know their stuff, we know their inside, and we fall in love with them.
00:09:43
Speaker
which is kind of what you have tended to do. And I think that was the hallmark of our journey and success, competing with really great large firms. But, yeah when you know, when you're that large and you have 50-year history, things happen to you.
00:09:59
Speaker
Yeah. But the nature of these engagements is changing so dramatically. It's almost playing into a whole different type of provider as we're getting on that path. I'm seeing...
00:10:10
Speaker
sort of BPO, BPM, whatever we want to call it, these deals, I've seen some clients wanting to take up to 80% headcount removal on an engagement now. I saw one deal which is going from 6,000 to 1,000 over three years, all because of a Jantec.
00:10:27
Speaker
yeah And my take is, how the hell are you going to do it without destroying the culture in your company, creating panic? And I started to think back to the 90s when we did the first...
00:10:39
Speaker
sort of complicated kind of shared service transition deals, PwC and consulting. And it was almost like, we used to call it your mess for less, but it was almost like, take this stuff and you go figure it out.
00:10:53
Speaker
And so are we facing something similar for that again? And is it going to shift back to advantage to the s smart service provider winners who can do this for clients?
00:11:04
Speaker
Or is something else going to happen? No, I think it is going to, as I said, it's a seminal moment of separation. Rising tide lifts everyone, world is finished. Now it's a question of, can you grab this? And what is most interesting, Phil, is that if you ask me, what will determine success,
Transformation of the US Services Industry
00:11:23
Speaker
And if I were to think about the characteristics of a firm and of an individual who will be more successful in this journey over the next two to three years, I would put my finger on one word, which is culture.
00:11:37
Speaker
A culture of adaptability, a culture of fearlessness, a culture of experimentation, a culture of putting the client first, come what may.
00:11:49
Speaker
A culture of having the guts to cannibalize yourself. I mean, those cultural traits in a team and in a business, I think are going to make a huge difference. Do you have the technical skills? Of course, it's important, but you'll get it.
00:12:06
Speaker
And you'll attract the people if you actually have that culture because you'll start winning and then you can attract the people. And one of the most interesting things about this journey, and I'd love to get your reaction, is that unlike the your mess for less journey, this one, the...
00:12:23
Speaker
iterative nature of implement this technology, get some benefit, then implement it, keep improving, and do that in cycles of 60 days, 90 days, and you compound at the rate of, let's say, 4%, 5% every time,
00:12:39
Speaker
you can get to the answer pretty quickly. Versus in the past, some of those journeys were over the next three to five years, we will get there. and Who the hell knows where people are in three to five years?
00:12:50
Speaker
People have forgotten, leaders have changed, the mess remains, it's and it's not anymore the same. And then the leader comes and says, but I want something else. So this journey seems faster and more iterative.
00:13:03
Speaker
And I actually therefore have more optimism in those who grab it to be more successful.
00:13:11
Speaker
Yeah, no it's it's about the nature of work changing. yeah And the conversation has to shift. Because if you have 5,000 employees, you're reduced to 1,000 employees, whatever, you're not going to then pay for 4,000 agents.
00:13:28
Speaker
Now on an FTE model, your business has been replaced by a lot of software to do what was needed before and a much more automated personalized predictive approach. And then the people who remain are the ones who can apply more context and intelligence and customer facing capability, blah, blah. blah But it's a big change. And I do think it's going to be driven by clients who are just going to work and say, look, we don't want to we don't need this many people to operate. We need to be more nimble. We need to be operating at a different volume.
00:14:03
Speaker
And this is where I think the smart providers are going to come into play with we can help you do this. This is how we're going to start. so We're going to have to invest in you. We're going to build out energetic systems, figure out, are we going to run this on Amazon or Microsoft or Google? or What platforms are we going to use? And are we going to phase the approach?
00:14:24
Speaker
We're seeing some start to do that, but it's not your usual suspects. I'm actually starting to see emerging firms who might be half a billion in size. They're willing to take on these deals at lower cost. They can afford to be the risky ones. And it's the great big quarterly,
00:14:41
Speaker
Wall Street's enslaved incumbents who are really struggling. Like how do we keep the current business clunking along at three, 4% and then build out that disruptive model of the same time.
00:14:55
Speaker
Another thing that's happening, Tiger, which is really interesting is in the US, the services industry has become a bit of a dirty word. It's getting a little like telecom 20 years ago where investors don't like it, margins are too small,
00:15:11
Speaker
the growth is not big enough to get them excited. So starting to see some of the service providers build software businesses. So I think HCL has $2 billion dollars of software that they've spun out.
00:15:25
Speaker
I think very smart, they bought Domino and a bunch of stuff. um I think Cognizant have about $2.5 billion dollars worth of software. They're probably going to platformize that out as well. Those software businesses are going to be worth more than the services businesses in probably a couple of years. And this is where we're starting to see the shifts happening and happening fairly quickly.
00:15:47
Speaker
Yeah, and actually, apart from the fact that those software businesses incubated inside or acquired and then grown inside, the way I approach that also is when you when you have that capability inside, it allows
Evolving Job Market and Skillsets
00:16:02
Speaker
you to then use that capability to the other 80% of the business so that you can agentify whole bunch of things that you are doing for your clients.
00:16:12
Speaker
It requires guts, as I said, because you have to stand up and say to a client that we have a $40 million dollars relationship on some topic.
00:16:24
Speaker
I'm going to take you down the path of identification. I need your help in ABC. And here's what I'm going to do. At the end of that journey, you you and I are both going to forget the number of people that are there because it's going to be dramatically lower.
00:16:39
Speaker
Your bill will no longer be 40 million. It'll probably be 25 million. right I am going to make more margin. Guarantee. right But my revenue is going to go down.
00:16:51
Speaker
Now, I need to have the confidence and the guts to make three assumptions. apart from the fact that I'll be able to execute.
00:17:02
Speaker
Assumption number one is if I can execute, then I'll make more margin. Assumption number two is when 40 becomes 25, I'm gonna be able to convince you to give me another 40. And assumption number three is that I'm gonna take that use case and apply to 20 other people, and I'm gonna all take new markets that have not yet been captured or take away share from others who are not as gutsy as I am.
00:17:26
Speaker
End of story, winners and losers separated. That's what's gonna happen. Yeah, and I think you're absolutely right. And it's changing the nature of roles themselves, which I'd love to get onto your next as you're a father and you worry about the futures of your kids as they grow up and what they're going to do.
00:17:45
Speaker
um And it's it's almost like there's a profession shift happening, there's a job shift happening. One thing that started to get me interested is I looked at all the open AI jobs um and there was another company as well doing this.
00:18:01
Speaker
I'll forget for a second. But there's about tons of open AI people who just call themselves go to market. Right. now It is going to market and they're calling you up and it's saying, Hey, um and that they're basically.
00:18:13
Speaker
Mixing marketing influence and sales of customer service into one role now. And it's just like to see the AI companies are sort of taking the lead with creating these types of roles.
00:18:24
Speaker
Anthropics another one doing something similar, like they're creating different types of positions for the young people. Yeah, and actually Phil, that further reinforces the fact that you and I will find it very difficult, and I think the world finds it very difficult to predict what kind of new jobs are going to get created.
00:18:40
Speaker
I'm a fundamental believer that new jobs will get created. And one of the interesting views I have is that those new jobs, and I've had this view for quite some time, those new jobs are not necessarily the jobs which require deep AI skills, I'm not asking you to write the next GPT and large language model breakthrough. No, I want you to be very comfortable using them.
00:19:03
Speaker
I want you to be very comfortable in figuring out how to use them to build solutions. Most importantly, i actually want you to understand your problem, the client's problem, the business situation, understand how the economics work.
00:19:17
Speaker
How does customer delight work? How do people actually adopt all this new stuff? You might be excited, but are you going to get 100 other people excited to adopt them? Because however git glitzy a toy is, if others don't adopt it, it's not going to work.
00:19:32
Speaker
How are you going to convince them to adopt it? Or is it going to be viral? Because if it's viral, you don't need to do much. It'll just spread. um I think some of those skills, interestingly, are social skills, are liberal arts skills, are, you know, do you understand how people interact with each other, how they communicate with each other, how do you drive change, what are motivations, what is empathy?
00:19:56
Speaker
The importance of that is going to rise because Technology is gonna be available to everyone, so everyone is gonna kind of get the same answer.
AI in Management and Efficiency Experiments
00:20:05
Speaker
so I actually don't care if it's OpenAI or Cloud or whatever.
00:20:09
Speaker
you know One is 98%, the other is 99%. Someone else will become a 98% the next day or 100% the next day. You keep moving. But all these other human skills are gonna become more scarce.
00:20:21
Speaker
So if someone comes and asks me, what do you think I should do as I go through college? My reaction is, you can be a deep AI researcher. That's possible.
00:20:33
Speaker
I think there'll still be enough to do there if you are that kind made that way. But you don't need to. As long as you're comfortable with AI and you use it and you know how to use it and you keep up to speed with all these new things, you actually spend time on liberal arts,
00:20:49
Speaker
And my view is that those are going to be amazing jobs. One of the other things in terms of experiments, and you would love to hear this, I'm involved in an experiment that I've got pulled into um where a reasonably large enterprise that has, pick a number, 10,000 people with middle level managers managing teams of 10, 20 people in and in two layers,
00:21:13
Speaker
ah And the question that is being, ah the the study that is being done, it's already been done, is exactly how much time in terms of minutes do they spend doing what, the managers?
00:21:27
Speaker
Having done that study, the conclusion that has been reached is 52% of all the work that is done by those people, which is consolidate all the meetings that I have, set up the agenda for the meeting, synthesize the meeting, create action plan, follow up, do reviews.
00:21:46
Speaker
All of that can now be done by Gen.AI tools. One of the experiments is, can I have 100 tools that are listening to 100 meetings a day in the company?
00:22:00
Speaker
Within a month, I have all the meeting data available for 3,000 meetings in the company. And I can extract whatever insights I want from that.
00:22:12
Speaker
Another company is actually taking all the information available in the 100,000 calls they're doing every day and using that to train people the next day morning. So think about training cycles collapsing and everyone becoming better every day. It's crazy.
00:22:28
Speaker
Yeah, sir it's a whole different shift to leadership in these businesses. And we talk about people debt, process debt, data debt, et cetera. The one debt I think is very important within the people area is leadership.
00:22:43
Speaker
And I've had a look at leadership traits and they haven't changed. If anything, what's happened now is they're becoming more important. Like the ability to listen, the ability to create psychological safety amongst your staff. So how do you create a safe space where everyone can experiment together and say, we're all using AI.
00:23:04
Speaker
So let's stop doing this individually and start to work. as a team and sharing what we're doing. It's like I was telling my research team the other day, i worry that the first collaborator you go to now is ChatGPT.
00:23:18
Speaker
You need to turn to your fellow analysts to collaborate.
Balancing AI and Human Collaboration
00:23:21
Speaker
And then once you've come up with some really good ideas, then you can go to ChatGPT to see if it has some other context to add and maybe synthesize it a bit better.
00:23:31
Speaker
I think driving the human collaboration With AI as the augmenter, it's the way to go. What don't want is ever everyone just going off, becoming completely addicted to whatever AI tool they're using um and working in a silo.
00:23:45
Speaker
And I think that's where companies need to really figure this out is listen, help everybody learn, learn together, create a safe environment, be a great communicator and a great motivator for your team.
00:23:58
Speaker
And that's where I think we go as a business. And that's when jobs get created as people want to work in those environments. yeah And this technology is just making us great at what we do.
00:24:09
Speaker
Actually, Phil, you just teased out a very interesting nuanced point there, which is one path that people can take in this world of AI and GPTs is go deeper down the rabbit hole of I am going to put my head down and bury myself there and keep doing that.
00:24:30
Speaker
The other path you can take is, hey, I now have access to all these machines that will help me. So it actually has given me 40% more time to spend time with people and talk to them and get into their brain and head. What do they think?
00:24:47
Speaker
Each of you are buried in your rabbit hole for some time, and then you come out and then talk to each other. And you might come up with very interesting exploratory ideas. This whole notion of AI exploits the human explores and the combination of explore and exploit has been the human journey for whatever, 200,000 years and human civilization. Without exploration, exploitation dies in the end because there's only so much you can exploit.
00:25:15
Speaker
sorry Exploration is needed to go to new territory that no one has ever gone. I can't do that. That's right.
AI's Impact on Workforce and Public Perception
00:25:25
Speaker
So what do you think about, I'll take i use the latest one, McKinsey announcing they're going to lay off something like 10% of their staff because of AI.
00:25:35
Speaker
Do you buy that?
00:25:40
Speaker
Look, i'm I'm a senior advisor to BCG, so one part of me says, ha, they're not growing as much, right? Who knows? I don't know. Two, they're a great firm. So three is, you know, they're doing what everyone should do, which is constantly lean out, right? And if you're leaning out today, why wouldn't you say exactly what they said?
00:26:05
Speaker
Who cares whether that's the real reason or not? You have to say, which is, I'm now bringing in AI and I'm going to lead my team out. um Look, everyone went through a curve in the pandemic of hiring too many.
00:26:18
Speaker
All kinds of businesses did that. Amazon did that. McKinsey did that. BCG, everyone did that. Then they started plateauing, and then now they are shedding. Is that finished?
00:26:29
Speaker
It should have by now, but maybe in some cases it hasn't. and Maybe this is the rem you know remnants of that. Maybe AI is beginning to have quote unquote an impact, but if I were the smart leaders in these firms, I would get ahead of that and say,
00:26:46
Speaker
I'm actually going to lean out and I'm going to bring AI and we'll see how to make it work. Because if I wait for it to work fully, it'll take too long. So I'm actually going to lean forth and then bring the tools in.
00:26:59
Speaker
That's right. And yeah, it's almost like they should say, look, we're too big. We need to reduce size a little bit. And then we can also explore AI so we feel we can operate even more brilliantly.
00:27:13
Speaker
Think about client conversations. If McKinsey was you know serving me as a client, the next day morning when I meet the partner who's serving me, i'm going to say, hey, John, you announced this thing. What are you doing?
00:27:27
Speaker
I want to know what you're doing because I want some of that myself. yeah It's a pretty cool marketing. right well I mean, but i thought I thought the Amazon one was best, where they literally she said that we're we're going to not hire anybody for the next five years and double on top of our revenues and become twice as profitable.
00:27:46
Speaker
But that was a better way looking at it. Whereas what's happening with McKinsey, we'll pick on that for a time, they're driving fear into the workplace to make everybody scared of AI. And all I'm hearing right now is America doesn't like AI.
00:28:01
Speaker
because they think it's a job taker. And next year, you've got these midterms coming up. I think it's going to become very political rather than practical a situation on people investing in AI to cut jobs. And I think the two being aligned together is it's not where we want to go with this. And I actually think that the way this is going to play out longer term is Some of these Fortune
Empowering Entrepreneurial Ventures
00:28:25
Speaker
2000 mega companies are going to get smaller. A lot of them are going to get smaller. they know They're not going to need as many people.
00:28:30
Speaker
You're just going to need as many people. But you're going to lot of small to medium businesses proliferating. There's going to be tons more of them. It's already happening in our own industry. Like I see it all the time, small tech, small businesses.
00:28:42
Speaker
I was meeting with a $100 million firm today who's doing amazing things. with a company because they're big enough already to do agentic work with their clients. And my most people are going to want to work for smaller companies.
00:28:55
Speaker
Yeah. It's also one one of the the two other interesting things that i happened. It happened in the case of consumer goods some years ago when when I was in Unilever in the first job in my career from 1985 1992.
00:29:12
Speaker
It was very clear to me that the strength of a P&G or a Unilever or a Colgate-Palmolive, the big brands, was the fact that their brand name was very well known, the fact that they had sales and distribution down to the little village in 185 countries in the world.
00:29:33
Speaker
That was their strength. And then I said, therefore, it's very difficult for anyone to start a new product in a shampoo or a chocolate or whatever. Come Amazon and a bunch of other things and that has changed. In the last 10 years, the number of people who woke up one morning and said, I wanna launch a new cracker, tea cracker business or a chocolate business.
00:30:00
Speaker
And I will have two people in my team I'm the brain and two people. I'm gonna have a bunch of advisors advising me on nutrition and sustainability and so on.
00:30:11
Speaker
I'm gonna get a marketing advisor, the best in the world, to spend 10% of her time with me or his time with me. I'm gonna sign up with Amazon ah for distribution. I'm gonna do social media digital marketing.
00:30:25
Speaker
And I'm going to do contract manufacturing with the best manufacturing plants in the world. Everything is no CapEx, capital light, and pay by the drink.
00:30:37
Speaker
And my product gets made in Ohio. And a month later, someone in New Zealand is buying it. Literally. I mean, this is a true story, by the way, a friend of mine. That has now become reality for the last 10 years because of what Amazon and digital marketing and all of those things have done.
00:30:54
Speaker
I think the same thing is going to happen with other firms where it is possible for one of our kids to actually stand up and say, tomorrow morning, I'm launching my own company. I don't need a finance team.
00:31:05
Speaker
I don't need a procurement. I don't need anything. I can buy everything on a pay-by-drink basis to put my idea together. And that's it. And my team will be in some number of years, $100 million dollar revenue and will be five people. That's it.
00:31:20
Speaker
I do think if smart universities get their act together, teaching entrepreneurialism, entrepreneurship is real entrepreneurship, which is what you described.
Leadership in Technological Advancement
00:31:29
Speaker
Yeah. I became an entrepreneur, but only because I fell into it. It wasn't because I you know really wanted to be one. I just became one. But it's a great thing to be in a skill to have and an independence. And I see more and more of this happening all the time. And, you know, I think we're figuring it out.
00:31:44
Speaker
I really do. I think I've never seen people get so hands on when we do our round tables with our clients. You can tell they're actually, most of them are actually getting their hands dirty for the first time in years.
00:31:57
Speaker
They've stopped talking. They've started acting, actions are happening. And we see 2026 the year of how to. not be aware why and what. Yeah, that by the way, that's another great leadership quality to have, which is all the battles are going to be fought in the last mile.
00:32:16
Speaker
The large language model base foundation is available. The basic tools on top of that are going to be available. The problem is always going to be the last mile. The last mile is where the process is crap.
00:32:27
Speaker
The data is is corrupted. you know The people are not ready to change. That's where all the problems are and that's where all the value is. So yeah solve the last mile problem.
00:32:38
Speaker
Leaders must spend time in the last mile. If I was, and I've heard Doug McFillin at Walmart talk about this, he spends time in the store. I used to spend time in operations consistently, meaning material time. I used to go spend time with the team saying, what are you doing? Show me what you're doing. Because i want to understand it.
00:32:58
Speaker
Because then I can think as to what else can we do. Those who understand the last mile consistently, as leaders are going to have real credibility and two, they'll be able to know how to use these tools in my last mile because I know my last mile now.
00:33:11
Speaker
Otherwise, they are sitting and up in the ivory tower and they don't know anything. no So I'm sure we know a few of them.
00:33:20
Speaker
We won't name them here. but well We won't name them here. Maybe next time. Tiger, ah I think we've done It's been a great, always great catching up with you. Always refreshing and great to meaddle around some top subjects of the day. And i look forward to catching up in 2026.
00:33:41
Speaker
Thanks for tuning in to From the Horse's Mouth, intrepid conversations with Phil First. Remember to follow Phil on LinkedIn and subscribe and like on YouTube, Apple Podcasts, Spotify, or your favorite platform for no-nonsense takes on the intricate dance between technology, business, and ideological systems.
00:34:00
Speaker
Got something to add to the discussion? Let's have it. Drop us a line at fromthehorsesmouth at hfsresearch.com or connect with Phil on LinkedIn.