Escaping the Drift with John Gafford - Innovative Paths with Michael Ruckman on AI and Business

Episode Date: September 2, 2025

Michael Ruckman, founder and CEO of Senteo, takes us on a fascinating journey from aspiring medical student to influential global consultant with experience in over 40 countries. Join us as Michael shares his unique insights on the transformative power of AI in reshaping the business landscape, highlighting the concept of relationship currency. We explore his intriguing experiences, from navigating the Russian banking sector as an American expatriate to the nuances of living abroad, all peppered with Michael's signature humor and wisdom.   As businesses face the challenges of adapting to change, we dissect the roles people play in fostering innovation, from early adopters to laggards. Drawing from humor and everyday observations, such as the quirks of our personal habits like organizing gummy bears, we delve into the complexities of leadership and change management. The discussion transitions to remote work's impact, revealing the importance of understanding employee dynamics and the necessity of onstage versus offstage support in organizational transformations.   The conversation further explores the role of AI in customer interactions, stressing the importance of genuine empathy that AI often lacks. We highlight the evolution of business models from product-centric to customer-centric approaches and the significance of prioritizing customer relationships for long-term success. Through compelling case studies, we examine how companies can better utilize AI to enhance human interactions rather than replace them, fostering a future where technology meets the nuanced needs of human experiences. Prepare to be inspired as we navigate the ever-evolving world of business, AI, and the critical role of leadership in guiding impactful change.   CHAPTERS    (00:00) - Escape the Drift (09:28) - Navigating Change Leadership in Organizations (20:07) - AI Application in Business Context (23:52) - Customer Relationships in Business Strategy (31:08) - The Evolution of Business Models (39:08) - Customer-Centric Strategies and AI Development (43:39) - AI's Role in Human Experience (52:07) - Leadership and Change in Business (58:54) - Effective Leadership and Change Strategies   💬 Did you enjoy this podcast episode? Tell us all about it in the comment section below!    ☑️  If you liked this video, consider subscribing to Escaping The Drift with John Gafford  ************* 💯 About John Gafford: After appearing on NBC's "The Apprentice", John relocated to the Las Vegas Valley and founded several successful companies in the real estate space.   ➡️ The Gafford Group at Simply Vegas, top 1% of all REALTORS nationwide in terms of production. Simply Vegas, a 500 agent brokerage with billions in annual sales Clear Title, a 7-figure full-service title and escrow company.   *************   ✅ Follow John Gafford on social media:   Instagram ▶️ / thejohngafford   Facebook ▶️ / gafford2   🎧 Stream The Escaping The Drift Podcast with John Gafford Episode here: Listen On Spotify: https://open.spotify.com/show/7cWN80gtZ4m4wl3DqQoJmK?si=2d60fd72329d44a9 Listen On Apple: https://podcasts.apple.com/us/podcast/escaping-the-drift-with-john-gafford/id1582927283    *************   #escapingthedrift #michaelruckman #ai #business #changeleadership #relationshipcurrency #remotework #customerinteractions #customerrelationships #businessmodels #customercentric #humanexperience #leadership #changemanagement #organizationaltransformation #customerlifetimevalue #digitaltransformation #customerneeds #empathy #interpersonalskills #situationalleadership #innovation

Hey, it's John Gafford from the Escaping the Drift podcast. And big news, my new book, Escaping the Drift is coming out. November the 11th, you can pre-order it right now at thejongafford.com. There are tons of bonuses, tons of giveaways. Get the book. If you are somebody that feels like you might be drifting along, this is for you. If you know somebody that feels like they might be drifting along, this is for you. Available everywhere, all bookstores, everywhere, Amazon, Barnes & Noble's, the whole nine yards.

but pick your copy up right now at the john gaffer.com and get a bunch of the awesome bonuses I've thrown out because I promise you I put my heart and soul into this thing I want it to help you change your life. Pick it up everywhere. This is the wrap up. Here we're going to bring it home.

Bring it back. Look at that, man. We're coming back. This dude's been on stage before you can tell. That's a wrap up. And now escaping the drift, the show designed to get you from where you are to where you want to be.

I'm John Gafford and I have a knack for getting extraordinary achievers to drop their secrets to help you on a path to greatness. So stop drifting along, escape the drift, and it's time to start right now. Back again, back again for another episode of the podcast. Like it says in the opening man gets you from where you are to where you want to be. And today, live in the studio, man, this is going to be some brain power. You might need a thesaurus for this one, a dictionary. I don't know, you're going to need a textbook, some graphs, some charts in the studio today.

We have the founder and CEO of Centaio. He is one of the finest international business consultants on earth. And we are lucky to hear from him today how AI is going to affect businesses going forward and the value of the relationship, currency, and how you need to place some value on it. Guys, welcome to the studio. This is Michael Ruckman. Michael. Hi.

How are you, buddy? I'm doing pretty good. Thanks for coming out. It is hot outside. It is hot outside. A little bit of a sidebar. Michael's one of my favorite clients. So we're glad to have him here in the studio.

He was nice. We've been talking about doing this for years, and I finally coerced him into coming over to the studio, which is great. So Michael's like an, for those, you're going to get to know him today. Hopefully as goes as I do, he's like an international man of mystery. I love this. It's great. So he has done some amazingly cool things.

And when we started talking about, we were playing golf, and we started talking about AI and how companies are just implementing it all wrong, I was so fascinated by it. I was like, dude, you got to come on. We got to talk about this. So first of all, let's talk about what gives you the credentials to even have an opinion on this. Let's talk about who you are a little bit that way. Okay, okay.

Well, I started my career. I wanted to go to medical school and ended up being told that that wasn't going to happen because as a white middle class male in California, there weren't enough spaces for people like me. So I went to Spain to learn Spanish and never came back, spent most of my career outside of the U.S. I've spent most of my life outside of the U.S. I've worked in probably, let's say, over 40 different countries. I speak four languages, three of them fluently. One of them kind of advanced.

I struggle through Czech, but there wasn't really a great reason to continue learning check. So it's kind of funny. I learned Spanish and I thought, you know, okay, there's, you know, roughly 500 million people that speak Spanish in the world. I'm going to use this. Very useful, right? And especially, you know, here with anybody that's doing any work anywhere,

you can speak Spanish. And then, you know, I moved to the Czech Republic, the company that I was working for, Pricewater Ours Cooper's moved me to the Czech Republic. And I thought, God, I'm learning this language. There's only like 10 million people that speak this language. It's a waste of time. And if I leave, I'm not coming back.

The weather's brutal. But then I moved to Russia, and it turns out Czech is a Slavic-based language. Russian's a Slavic-based language. So it actually was very useful in learning Russian. So I'm fluent in English, Spanish, and Russian. And I kind of have made a career out of working. in those countries.

You know, it was fascinating because when we first met, you would just come back from an extended stay in Russia, working there in the banking industry because you were essentially trying to catch their 1970s banking industry up to the standards that we have today, which I thought was fascinating. What was it like, I mean, before we can get into this stuff, like, what was it really like being an American living in Russia at that time? At the time, it was great. I mean, let me break that into a couple different categories.

So one of them could be, like, quality of life as an expat in Russia. so I mean there were things that were just unbelievable the things that you would you would go like wow this is awesome you know like for a little bit of money you could do things that you would never do in other countries but there was also I mean at that time in the early 2000s in Russia they consider the 90s like the Wild East yeah and in the early 2000s things were calming down a bit but still you can pretty much be killed any day not not because somebody was going to kill you right because you might fall into like an open manhole or you know an icicle might fall off the roof of a building and, you know, stab you and kill you or something like that. It was just like random shit that could possibly kill you. KGB and their magic icicles falling off of buildings. Or you got in a gypsy cab and the gypsy cab got in a wreck, you know. So at that point, there were no taxi companies in Russia.

So it was just like paid hitchhiking. You would stick your arm out. Any random person would stop to give you a ride. You negotiate a price. You get in the car and you go. So I got rides from like dump trucks, fire truck, army trucks. like so i mean it was it was interesting to be there because it was like it was like uber before it was like they were ahead of their time they were ahead of their time just no app right so it was it was an interesting

time to be there i got moved there to essentially modernize the the banking system um and i had been doing most of my career up until then was large skill program and and change management so project management change management large changes in large organizations and you start learning things about organizational behavior and corporate culture and things like that, the minute you try to change anything in a big company. So I became kind of skilled in this strategic or let's say tactical planning of how you guide change in organizations. There are a lot of people, most people like myself, who've spent careers involved in change, large scale change in companies will tell you that the more you try to manage change, the less manageable it becomes.

It's about creating the environment that's conducive to change. So you start, dealing with a lot of human nature, human decisioning, things like that. And that is largely what I would segue into artificial intelligence. Okay, well, hang on a second. Let's back up because that's, that's interesting to me. So fostering an environment that is conducive to change. So I just, for some reason, I'm figure, I'm just thinking about margin accounting that's just done it this way, her whole life. And this is just how I do it. And I don't care about the new software and stupid. And this is just what we do. How do you walk in, especially as a consultant, you're not there you're one of the bobs how do you how do you walk in and turn that around just march just

go or is there a well a way to reprogram march okay that's a so okay there's a couple of things to understand here one of them is the human nature right and human decisioning so there there's been years and years and years probably the last hundred years or so of of studying the let's say the mathematics behind how humans take decisions largely how our brains work hasn't changed that much in terms of human decisioning for the last 50,000 years, maybe 100,000 years, depending on which, you know, theory you want to believe. But our brains developed from the primitive, how do we survive, to emotional reasoning, which is, you know, how do we feel, how do we, how do we react to things? Do we have empathy or not? And so on. And then rational thinking. And so most decisions are

made in that primitive or emotional reasoning state. They're not made by rational. I mean, there's a guillian examples. You know, we know we shouldn't buy the shoes because we have a budget, but God, those shoes look so good, you know, and then we feel bad. Or we know we shouldn't eat the chocolate cake because we're on a diet and only X number of calories today. But, man, I had a rough day, so I deserve it. I deserve the cake. Eat your feelings, Michael. You eat your feelings. Totally, totally. I'm an emotional eater. It's your feelings. Stress eater right here. But, yeah, so that kind of thing is interesting. So to understand that, you also look at things like Jeffrey Moore, the law of diffusion of innovation.

So there's 2.5% of the population that are innovators, people that see the world not the way it is, but the way it should be. And they're willing to initiate some change. There's about 13.5% of people that are early adopters. Those are people that are people that are, that are ready to follow some new idea, even without proof that it would be successful. Just because they like the shiny new thing. Yeah. Then you get 18 and a half percent of people that are, that are, I'm sorry, 36 and a half percent of people that are. I'm checking these stats. Yeah. You better, you better come correct. It doesn't add up at the end. That's 147% of people. Like a percentage or something, but it's like 36% roughly of people that are the early majority, 36% that are the late majority, and then the rest are called laggards. So, you know, Simon Seneca uses the example also where he talks about, you know, the first ones are the ones that are waiting outside the Apple store overnight to get the new iPhone, right? The early adopters are the ones that get it before the end of the year.

The early majority are getting them, you know, first half of next year. The late majority are the ones that have an iPhone 14 when there's an iPhone. phone 16 out and the laggards are the ones that are still flipping their Motorola razor or whatever bringing the green text bubble to the text change exactly so so those are those are the things so when you're looking at change in a company margin accounting you know she could be an innovator and we don't know it but she could be an innovator in some different part of her life right so I'm an innovator when it comes to technology I love it right I love whatever the newest, shiniest, brightest thing is out there but if you look at other areas of my

I'm fairly conservative. So I might be a laggard somewhere else. So it's difficult to identify these people. And if you're driving change. So you're not necessarily pigeonholed as one person. No, you can't. There's different areas of your life. So you might be an innovator when it comes to technology. And when it comes to religion, you might be massively conservative or something like that or when it comes to family values or something like that. So people are different in different ways. And the only way you can really find this. So you can't walk into a company and say, I need all the innovators because we're going to drive change, right? You know, the innovators are great because they help you to detail your concepts, right? The early majority are great for pilot projects, right? The, the early adopters

are great for pilot projects. The early majority are great for rolling things out. Then you have the other 50% of people in your company that are just, you just need them out of the way because they're just going to cause problems. The late majority, they're the doubters. Like, oh, I don't know, our company. I don't know. Our city, it's not going to work. I don't know. Is this the right time or whatever and they'll just doubt and doubt and doubt. Debbie Downer. Yeah. And then the laggards are the ones that'll sabotage. So if margin accounting is a laggard, she will do everything possible to block that change. And as humans, we don't love change, right? So we don't go out seeking change. Those are weird people, right? We like things to be very kind of normal and, you know, consistent and

predictable and so on. That's great for us. I have my evening routine with sugar-free gummy bears where I arrange them by color and by odd and even. I have a little bit of OCDs. I don't think that's okay. I had a Brent come over recently and he came out and I had my gummy bears out on the counter and he was like, what is going on here? You're like, no, they have to point due north, do north. Yeah, we like things that are predictable in life.

Okay. All right. I feel like we should go play blackjack after this. I feel like you'd be just ruthless. I'm pretty good at blackjack. I feel like you would be. no black king there's a black king blacking blacking all right so

margin accounting let's say she's a saboteur in a company what do we just get rid of her is a way to counsel her off or is that just who she is she might be valuable so she might be great not involved in some change project i mean there's always room for people in companies so i mean and it's not it's it was very rare for me in any change project to walk in and say we need to fire a bunch of people it was always like you know let's let's get the people that are into this

and let's figure out and So there's a lot of, there's the textbook, you know, kind of change project where you, you build a case for change and you promote it and you do a road show in the company and you figure out who you drop the new logo that looks exactly the same, but it's $2 million worth of dev on it. Exactly, exactly. So you figure out who's on board and you bring them on to detail and pilot things and you show your successes and you roll out and whatever and you avoid the people that are going

to be your detractors and your saboteurs. but in general you go with you know who's on board and you move with who's on who's on board it's difficult to do that in in any company where you just are going to walk in and say we're going to fire people because you don't know if you're firing the right people yeah and I also think now with especially after COVID where there's a lot of remote people like it must be incredibly difficult to move some of that stuff because you have no idea who you're dealing with and you don't know what they're saying in the DMs no you just don't know that the there's no there's no like look across the cubicles and look at the coffee machine and you see like that probably

is a good conversation that looks like it's not going my way you know it must be incredibly hard to do that now yeah there's also there's a professor in at a university in holland who is this he's he always talks about the on stage off stage of driving change so he'll say like you know there's the leader that's out there going like we're going north you know and everybody's like yeah north and then you know when they're around the cool or, you know, having a cigarette somewhere or whatever, they're like, I don't know, North is then? Yeah. Are we northwest? Are we more east? Like, what are we doing? And so there's always this kind of, you know, onstage support, especially if you're, if you have an authoritarian leader that,

you know, nobody's going to stand up in front of everyone and go, I don't know, if North is the right way, you know. What qualities, if you're, if you're a change leader, not a consultant, obviously, you're a leader of a company, what makes a good leader through times of change? Well, I'll give you a little... And what makes it badly? I'll give you a little story around that. So I had a project a few years ago where the CEO was a friend. And it turns out I had worked in that company.

I won't mention the name of the company. But I had worked in that company before. And the CEO was on my team. And then he grew up and I left the company. He grew up and became the CEO. And he said, you know, we need like massive change here. Can you come in and be the change leader? And I said, you know, it's great.

But you have to understand. that you know the CEO is essentially the change leader you know you can't just hide your office you can outsource that to me but you need to make sure that you're supporting you know so I'll come to you and I'll say you know hey we're going to do this we're going to do that and you need to make sure that you're going to stand behind every single thing otherwise you render me useless in that role it's like what was it Michael Scott when he sent Dwight out to get the new insurance plan done you do it you do it yeah so in in essence you know if the CEO is not the change leader and he's going to outsources to somebody. He needs to trust that person enough to say, hey, you know, that what he says

goes. I had another project a number of years ago in Ukraine, of all places. And it was a CEO of a bank, and he got the whole management team together. And he said, hey, listen, if Michael says we're doing something, we're doing it. That's it. You can trust that he's already come to me. He's already cleared it. And he has my, you know, okay that we're doing this stuff. And I literally went to the guy every morning and said, these are the things I'm going to talk to people about today. And I went and talk to people in about the first three or four months, they would all go behind the scenes and go behind and go, Michael told us,

we're going to do this. And he's like, hey, I told you that if it comes from Michael, it's coming from me. And after that, everything was smooth. But it changes like a weird,

a weird thing. Well, how challenging was it for you to walk into these companies as the unknown and have people like, listen to that. Like, okay, this dude is all sudden here telling us what was going to happen and how it's

going to go. How tough was that? of a role for you and what what makes you built that makes you able to do that it's almost easier uh to be the person from the outside uh and once once people inside are too comfortable with you you lose your power as a change agent so it's it's a bizarre there's like a little conundrum there little fear yeah you cross a you cross a barrier and you're no longer as effective so most companies are poor at change uh so most companies aren't designed for change is Is that my companies bring in consultants to do this stuff instead of just trying to do internally?

And most companies would be better off bringing in external coordination of change versus trying to do it internally. If it's not in the DNA of the corporate culture. So if you look at and there's still, I have a friend whose son is in business school right now in Barcelona. And about seven, eight months ago, I said, dude, please send me what they're, you know, teaching you because I just want to, you know, check stuff out. they're still teaching classical management theory. You know, classical management theory was 120 years ago. Yeah, roughly 120 years ago. Yeah.

You know, there's three fathers of classical management theory, and they all had different, slightly different approaches. One of them was top down, you know, you govern, like, you govern business the same way you govern government. You have laws, you patrol, you punish those that don't, that don't abide by the standards or the rules or whatever. You have Frederick Winslow Taylor, who was bottom up. You know, he believed that you could find

best process for anything and then build upwards to build controls and quality quality features into a business. And then you had Henri Faiola Frenchman who was, he was the first one that came up with the concept of team spirit. You know, it was like number 16 or 18 on his list of priorities. But at least he had something in there. We care if you're happy. I mean, not really. 16 we care if you look at when they were thinking up classical management theory, it was the early 1900s. They were dealing with the issues. Industrial revolution. Well, they were dealing with the issues of how do we manage mass production

and what classical management theory is largely about. And I would say I'll take a guess, but I'm going to guess that 90% of businesses operate based on the principles of classical management theory today. But it was designed for stability in production environments. And it was designed for people

the production lines where people are doing really monotonous, redundant things all day long. And they had to keep people motivated. Well, that's very different today. Like humans aren't putting stuff together anymore. It's, you know, machines and robots and so on. And so business is very different. The other thing, you know, 120 years ago, a typical business development cycle or a typical period of time that was enough for customers to change their needs, preferences, and behavior could have been 10, 20, 30 years. Well, now,

if you're not coming up with something new every six to 12 months, you're stagnant. You're irrelevant in your customer's eyes. Because needs, preference. preferences and behavior are changing so fast today. So these business cycles where business was designed for stability, well, now we need business to be adaptive. Well, we need business to be responsive to changes and needs, preferences, and behavior. Yeah, that's the current, that is the only currency that's respected is innovation. That's it.

What are we doing tomorrow? Well, I mean, if Apple didn't come out with a new iPhone every year, or if Samsung didn't come out with a new television every year, I mean, their market share of sales would just plummet. Yeah. It would be insane, you know. And then sometimes they're regurgitating, you know, they're thinking up new words for the same crap.

But this one's titanium. Really, yeah. And I needed that. Yes, because it felt so heavy in my pocket the other way. Oh, couldn't live without it. Could live without it. It's titanium. Well, it's so interesting you say that because as we move to the new economy, not only,

this is what we call segue in the podcast business. It's a hard segue. Because you're talking about, so as you talk about manufacture, we're no longer manufacturing on the lines, you know, more and more work is now being done by, AI and robots that's a second right so this is kind of what you've really spent the last two three years leaning into is this I haven't so what's funny is I talk a lot about AI I'm talking about it constantly I'm writing articles on it constantly but I'm a bit of a strange one because

I'm writing on AI not from the standpoint of the technology but the application of the technology into business context and how do businesses extract the value from AI and there's a lot lot of really strange things happening, right? So you look around the world where they're going to replace, you know, X hundreds of thousands of employees with AI agents. Well, brilliant. Okay, but how you do that, it needs to be represented in the change that's in the business environment. And unfortunately, there's two big factors that are influencing that. One, the end user is still human. And that's likely to be for a long period of time. Hopefully, Like, hopefully AI doesn't, you know, decide that we're useless and get rid of us.

But, you know, for the foreseeable future, the end users will still be humans, right? And the people making the decisions, the people managing businesses and the shareholders of businesses are still humans, right? So AI isn't, it's not like it's just going to, you know, randomly change everything by itself. It needs to be implemented into the context of how we create value as a business. And I think that's something that a lot of businesses are missing. They're just overlooking it. I think right now they're looking at as a cost cutting instead of a quality improvement. Yeah, yeah.

It's a, well, I think it's certain things. Now, it's a toss-up. Would I rather talk to an AI customer service rep that I can clearly understand, even though there's that weird drop-off? Got it. I mean, okay. Yeah. Because I can understand the, got it.

I didn't get that. Right. Would I rather talk to that or would I rather talk to the person that I can't understand it all on the other side of the earth? Yeah. Right. So I think right now, there, most corporate. or companies are so focused on on cost savings how do we use AI2 cost saves they're

eliminating those low-hanging jobs but unfortunately like you just said those low-hanging jobs are the ones where that's where that's where you get a chance to impact the customer experience the greatest yeah you know I think look at the grocery store right yes you don't want a super chatty cashier but I'd much rather have somebody bring up my groceries and smile at me and then have somebody bag them and ask them me if they can push it out, then me walk over and have to scan everything and deal with those bags and oh, this thing jammed or whatever else. But I don't come here to work.

I don't want to work, right? I don't want to do that, right? So, but I think, you know, that's a very small example of that. And I think you're seeing that at great scale in big companies. Yeah. Let me take one step back. Yeah. If you look at the, there's a kind of prediction that I made about a year ago where I was

doing an interview and somebody asked me, you know, if the last. 20 years was about digital transformation, what do you think the next 20 years is? Is it about AI transformation or is it AI taking over things? And I said, no, my prediction would be that if the last 20 years was about digital transformation and digitizing business, then the next, let's say, at least 8 to 10 years at a minimum, is going to be about organizational transformation because companies are not ready for the things that are happening. Now, I wrote an article a few years ago.

They were asking me, it was a Middle East Council of Shopping Centers, and they were asking me to talk about digital and retail. And I said, you know, the majority of applications of digitizing business happened in the beginning along the lines of how do we create more efficiency, how do we lower cost? And unfortunately, there's a small window of opportunity there. It gets to a point where you can't make things any faster or any cheaper and so on. And so you've got this kind of limit, limit of benefit there.

And when companies started looking at digital as how do I use digital solutions then to enhance customer experiences to improve the quality of customer relationships, to improve the quality of dialogue with customers, understanding customers, needs, preferences, and behavior, then all of a sudden it unlocks an almost endless opportunity area. Yeah, because you're looking, well, you're using data, you're making data-driven decisions. To improve relationships. To improve relationships, right? To improve not only individual experiences, but to improve ongoing relationships.

And this is something where businesses are also struggling, right? Businesses are designed for sales and service. They're not designed for quality of relationships. So when you think about that, like what measures are there in terms of, you know, sales and service, great. We know how to measure that in business? How do we measure revenue per customer per year or customer lifetime value? How do we measure customer lifetime value where we say it costs me X to acquire a customer,

and I can earn this much per year with that customer for the duration of a relationship? So there's customer lifetime value involved. Sure. Right. If I look at that, then maybe I'm going to take a loss on something because I know that that customer is going to stay with me for 25 years, right? I've got this thing going on with ADT, the insurance or the security company right now. I love. I love this. I'm going to preface this story, which Michael asked me if it was okay to bash this company before we started this over something incredibly petty. And I'm thinking to myself, you're talking to a guy who's been at war with. Chili's restaurants for three years over towing my car. So, yeah. So number one, suck at Chili's, and number two, you have the floor. Feel free to take ADT to task. So, well, John knows very well. I bought a house a couple of months ago. Yes, you did. And when I moved back from your question, he didn't buy a house. You stole house. I've been known to do that. Well, you have excellent

representation. Exactly, exactly. Excellent representation. So, so I bought a house. But when I had an apartment for a few months because I wanted time to look for a house and figure out where I was going to live and so on. So I had ADT put the alarm in the apartment. And I said, just FYI, I'll sign the contract, but I'm moving in like anywhere from three to six months. No problem, no problem. We'll take everything with you. No problem. So by the house, they come out and they said, well, you can't use the same system for this house because it requires a partition and you can't do that with the old system.

But don't worry. We'll take everything back. and you won't have to pay for that old system because we're putting the new system in, more expensive, blah, blah, blah. I said, great, no problem then, right? So now they're trying to charge me for the old system and the new system. And I said, you can't do that. You know, A, a verbal commitment is legal in the state of Nevada.

B, I have like endless emails, text messages, and voicemails saying that you guys are going to, you know, resolve this and you're not going to charge me for this debt and so on. And, you know, they came out to the apartment and uninstalled. and took the old system with them. So I no longer have the old system. Oh, the old Griswold. You know, Griswold crushed the old car and then bring it around. So you got to take the trucks to remove.

And yet they will not, they will not agree to, to forget about the debt of the old system. So for $561, they're going to ruin the relationship with me. And I'm still a customer of the company. And they won't resolve the issue. And I hope every podcast you ever go on, you tell the story. Unfortunately, that's only one of the story. only one of these situations where businesses are just stupid. So I wrote an article several years ago and the title was, our business is stupid when it comes to customer relationships. And the

reality is it's not that people are stupid. It's that the way they measure performance in the business isn't designed to measure the quality of customer relationships. If they had the right measures, then nobody would ever make those kind of decisions. If they said, hey, this guy's going to continue paying us for potentially the rest of his life, why would we, why would we screw him? for $500 right now. And I guarantee their cost of acquisition of a new customer is probably somewhere between $300 to $600. Well, I think the difference is, I think the difference is, is you look at certain

hospitality companies. I believe, I think it's, I think it's a Waldover-Storia or Ritz, one of them, Ritz has a standard deal where any employee in the house, I think it's like $2,000, any problem under $2,000 they can solve. There's no questions. There's no run up the ladders. If it's going to be less than $2,000, it makes me happy they just fix it. Yeah, I've had that number of times.

They're all empowered to make that happen. And I think, two things. I think, number one, other companies have not gotten on the hospitality bandbagon of understanding that your clients, you need to treat them in a hospitable way. But I think there's also this weird thing that's happened because of social media. I think if you look in the, like, I think before the rise of social media, if you go back to like 2005, right, when it was just MySpace and everybody was just worried about being somebody's top eight, that was it.

But now everybody has an opinion. opinion on everything and then you see that people are just it's just everybody fights about nothing online and this and that and this value that people now place on being right has just gotten to be so ridiculous and you know there's times in our business when like an agent that works for will call and be like well there's this and blah blah blah you know it's the principal thing I'm like there is no value in the don't this is business there's not principle don't it's not principal don't it's business. Number one. Number two, the prize for winning an argument with a client is losing a client. You're losing the relationship. You lose the relationship. And I don't understand why people

don't see that. And I think you're going to see these companies that are in non, as you would see, service businesses, like the ADTs of the world where it's like, dude, we're just installing a security system. We're not looking at this as a long-term relationship. You're not going to have a magic moment or a personal touch. I think, These companies have got to start, you know, adopting principles like, what is it, unreasonable hospitality, if you've ever read that book, which is amazing, right? You've got to start adopting those principles and looking for places within your business that you can excel.

Yeah. You know, I think one of the things we just talked about, it's funny, I literally was just, I was watching for, you know, like sometimes you're looking for something on, especially on your computer and that mass of files and you find something else that's actually better. You're like, oh my God, I forgot about this. This is better, right? So I found a speech that I gave seven years ago.

Seven years ago I was talking about this on a stage and I was talking about challenging people for like planning their business like you have a financial plan. You might have a marketing plan. How many of you guys have a customer success plan that? Like where you lay out exactly what an elite customer experience is. How many guys had that? And I was like, holy crap. That was seven years ago. And literally is an exercise this week. I did it with my real estate team. I did it with our real estate staff here. But what creates that experience for agents? I did it with our title company, the sales guys. What creates? an elite experience for the agency's, them, our escrow staff, all of that across the board. And we really just came up with a standard of what the bare minimum experience that we're going to tolerate for our clients. And it's really high. Like, excellence is our standard. That's it. And why don't more companies think like this?

Like, is it just not hit them yet? Have they not realized it? There's a particular, so this is, I have a number of articles that I wrote on this as well. There's an evolution of business models that's happened over the last, you know, however many years. You know, if you look at, if you go back, you know, 100 years in time, most companies were what you would call balance sheet-centric. So they're in, they were largely production-based companies. So you're focused on your P&L of the organization as a whole. And in the business is largely reactive.

In the, let's say, 50s, 60s, 70s, 80s, 90s, you know, you were getting into these refined product-centric business models where you're largely focused on sales and service of different product categories. and you measure success based on product PNLs, not necessarily based on a customer. So in businesses that have multiple products, you might have a customer that has, you know, for example, I did a lot of work in the banking industry. So you might have a mortgage with a bank

and an auto loan with a bank and a credit card and deposits and all these different things. But most banks were still measuring, and a lot of banks had completely different systems and different databases. Like they didn't even know that a customer that had a mortgage also had an auto loan.

Oh. So, you know, there's no cross-selling products. No, no, nothing, right? And so, you know, when banks were largely product-centric, that was how they measured performance. Then you get into this customer-centric wave of development where they said, hey, we have a customer. And a customer might go across multiple product categories. And we need to start looking at the customer as a whole.

How do we deal with customer needs, preferences, and behavior? But largely, the customer-centric world is about event-based activities, right? Buying a car. Buying a home. They don't look at the fact that, hey, a person is going to buy a car, probably every, let's say four to seven years for the rest of their life. So I don't want to sell a person just one car or one car loan. I want to sell them all their car loans for the rest of their life, right?

And that's a relationship-centric mindset. And it requires everything to change in business, everything from the organizational structure to the way they develop products, the way they measure performance, the way they motivate their staff, and so on. If you took a client team and said, hey, I'm going to measure you based on long-term performance of customer lifetime value, right? then they wouldn't be screwing me over like one alarm system, right? They would say, this guy is potentially going to pay us for the rest of his life.

And if we do a good job, his kids will also pay us and his neighbors and his friends and everybody else because he's going to tell people. But I think companies do do that, but only at the critical moments. I think you get transferred to that. I want to cancel. Yeah. Okay, cool. We're going to transfer you over to our lost person.

Exactly. That is the only person getting graded because you're already a foot out the door. Yeah. And they're like, can we, can we keep you for walking out? There's another one. So there's the quiet walk away that they don't do anything about. Yeah. All the big consultancies for years were promoting this thing called a save desk.

Yeah. So, and they would run these large data models and say, okay, you know, based on changes in customer behavior, this is the cohort that we believe is going to leave you in the next period of time, you know. And they would say, okay, if it's within two months, we need to take action. What I found when we started looking at all of these models, is companies spend a massive amount of money cannibalizing their own customers because these models are often wrong. They're predictive models and they say these are the customers that are going to leave you.

And so what do do companies do, they go, oh my God, they're going to leave us. Let's offer them two months for free or let's give them six months for free. Thanks. Or let's do this or let's do that. And the outlier that wasn't perfectly happy anyway. So the predictive models were largely unprofitable because the customers weren't necessarily with one foot out the door, but they were trying to kind of preempt and save the customer before they left. The ones that already were leaving, it's hard to, it's hard to turn them around

at that point. So some of them at the save desk, they might save them, but because they weren't able to identify and change the root causes why the person was leaving in the first place, they're leaving anyway. Usually, they give them a month or two for free and they hung around and they still left in two, three or four months, right? And so all they did was really spend a bunch of money for nothing. And they still ended up with the same result. So what we've started doing was saying, okay, let's map a customer life cycle and let's figure out where are these changes in customer behavior. You know, if somebody's interacting with your company in particular way and that starts changing,

well, you need to have dialogue. You don't need, you know, some random, like, hey, we'll give you two months for free. You need to say, hey, what's going on? John, I noticed that your behavior changed, right? We had a, we did it, it was an online supermarket in Eastern Europe. And they had this thing where they were like, okay, if people don't place an order from us, within five weeks, then we know that they're out the door and they're gone. So we should send them all these things.

Well, it turned out they were sending all these offers of like 30% off, 40% off, like save offers to people that were on vacation. You know, they went on vacation. They didn't place any online orders for that period of time. And then they come back and they're like, oh, yeah, yippee. We got like 30% off of our next order. Oh, my gosh. Crazy, crazy stuff.

And what does that cost? So what can companies do? Like, for example, like real estate, we are the worst offenders. I mean, not personally. Our company does a good job. My team does a great job. I've had good experience. But what I'm saying is this industry, I think it's something like less than 15% of people use the same realtor twice.

Like it's just, they just, less than 15%. Which is insane if you think. Well, it's horrible. It's horrible. I think the industry is getting better with some of the tech that's been. built to hopefully keep people in touch with their clients. I know we we've just implemented a brand new really really slick CRM designed to help our our agents do that same thing systematically and using AI same way like hey you need to like here's your call us for today and it's not like leads

these are your clients yeah these are people in your sphere you need to call on touch base with them yeah and and I think that's smart and I think that's just I think that kind of gets to your end point of how to use AI and how it should be being exactly but you know what can companies do what should they be doing better right now where like this like just you're like just banging her head against the wall like this is so obvious what do you uh okay so if if a product-centric business is focused on all of its product indicators and and the the measure of success would be you know let's say new customers buying my product replacing customers that are lost in attrition and keeping a particular product a base of customers in my product that would be like a product-centric

business a customer-centric business i'm trying to identify a particular life events uh for a customer and say, okay, how can I provide a more complex holistic solution for this particular life event, right? So somebody that's buying a home isn't just going to deal with the purchase contract, right? They're dealing with all kinds of stuff because they need to move and they need to buy any furniture and they need to, you know, choose all this thing, choose a school and, you know, all these different things. So if you're looking at it as an event and providing a more holistic complex solution, that would be another one. If I'm looking at it from a relationship-centric standpoint, point, the most valuable thing that I can possibly have is contact and dialogue with my customer, right?

So years ago, I did a project with B&P Party Buy. It's one of the top 10 banks in the world. And we were with their management team for largely the large part of Europe, right? And one of the ladies that was in there was the head of their CRM systems for the European Bank, which is the most of European Union. And, you know, she came up and she said, oh, you know, I want to talk to you when you know when we have a break because we have this algorithm that we've been working on and i'd like your opinion like okay i said all right great you know let's do let's do this right so on a break we sat down and we started talking about it and she said you know our thing is we want to we want to attack this idea that people will buy a car and keep it until they finish paying off their car loan

because not everybody waits until they're done with their car loan no buy their next car and i was like oh genius right yeah so she said our job is to figure out you you know, when we can start offering people a new car, a new car loan and all this stuff, because they don't always wait until the end. No. So we don't always know. And she says, so we've been working for a year and a half on this algorithm. And we've looked at, you know, behavior of different income segments, like urban and rural.

We've looked at different education levels. We've looked at different price points. We've looked at all these different things. And we've come up with an algorithm that we've had about a 29% hit rate on people that are interested when we initiate contact. Pretty good. And I said, 29% in CRM circles. It's amazing.

It's like side note, you know, most CRM campaigns, if you're getting one and a half to two percent, you're a god, right? Especially cold outreach like that. Yeah, which means that you're bombarding 98% of your audience with things that are irrelevant and not useful and potentially disturbing. And they love that. But hey, that one and a half to two percent, you're a god if you've gotten that level of conversion. So when she said 29%, I was like, you guys are rocking.

Yeah. However, have you ever thought about asking your customer when they plan on buying their next car? Because you'll likely get 100%. Right. And it comes down to this concept. You know, we spend so much time in business in a backroom somewhere trying to figure shit out when all we really have to do is have contact and dialogue with our customers. So if I look at the real estate industry, I would say, okay, how many of those realtors

have regular contact and dialogue? with their customers and if they're doing it with you know a day runner from the 90s yeah yeah they might was a day minder they i thought was day minder or day run was a day runner was a day runner i don't know what was the day runner was the day planners or the day run I think it was dayrunner wasn't it i thought was day might be wrong agree to disagree yeah well no this is our maybe day runner you might be right 50 something mine memories here yeah back in aught four remember the 90s Yeah, there was. No, I don't really.

So there you go. Oh, the other day I had somebody ask me to send them a fax. And I would be like, well, sure, I'll get right on that. If it was the 90s, like I don't happen to have a fax machine later. Let me jump in my tie machine. Exactly. Really sent you? Where were the country were they calling from?

Yeah, it's the, it's the medical system here. Like you can't get a referral from one doctor to another unless they receive the facts. That's just so. That's just so. Can you, can you, can you fax that to us? That's so insane. Sorry. So is so insane.

That's so. I could drive it over to you easier than I could fax it to you at this Yeah, exactly. That's so insane. Yeah. So going back to one thing. So I mentioned that thing about digital, you know, the digital transformation and saying that companies started out by looking at the efficiencies and cost cutting side of it. And then they finally started saying, okay, now how do we use this to improve the quality of customer contacts, the quality of customer experiences, and the quality of customer relationships? And that's where they found they unlocked this, you know, unlimited potential. Not all companies have done this, but the ones that have,

are enjoying. Well, I can tell, we have in a big way. Well, and the ones they have are enjoying it, right? I get, a lot of times I get companies that are like, oh, so I did a thing for one of the universities here, and it was a strategic planning session, and they, I'm management, they were great. And they were like, well, we are so relationship-centric. And I was like, okay, let me ask you a question.

How do you plan your budget? How do you plan your budget? And they were like, oh, shit. Their budget is like purely product-centric. It's based on like the education. lines and everything. Yeah. And so, you know, a lot of times in business, we believe, and there's a huge lag between management and shareholders, right? So your management and shareholder, you want to believe that your organization is customer-centric, relationship-centric, and so on. But when it gets down to the people that are doing all the work, they're largely, in most companies, they're managed by product-centric or even balance-sheet-centric indicators, right? They're following that old budget and so on. So why do we think that they're going to find, you know, an empathetic response to a customer that's having an issue? when their bonus comes from, you know, I used to say in banks, I could be the most customer-centric person in a bank branch, but if I get my bonus based on the number of credit

cards sold, every person walking through that door is a potential cardholder, right? You know, so what I want to segue with in, if we're following the lingo. That's it, segue. From the digital transformation thing to the AI space, companies are making the same mistake, right? They're saying like, how do I use AI to reduce costs? And what they should be saying is, if my end user is a human, how do I use AI to improve the quality of customer contacts, customer experiences, and customer relationships? And largely, that's not going to happen with an AI agent interacting directly with the customer. Because AI struggles with it. So if we look at the way that our brains developed as humans, and if we look at human decisioning, our brains developed

from the primitive to the emotional to the rational. And most of human decisioning happened. Some of them did. Yeah, yeah. Some of them didn't get there, right? Some of them not quite all the way through that. But largely human decisioning is dominated in the primitive and the emotional, right? So does it satisfy my emotional needs? Am I going to feel good about this? Does it represent a threat to me? Do I feel threatened? I mean, we've all had that feeling when you're going to buy something, you know, at Best Buy or somewhere,

and you're like, I don't know, I don't believe this guy. I don't trust this guy, right? That's like gut feeling. That's the primitive brain going like, no, this is risky. Don't trust this guy, right? So that's human decisioning is largely dominated by the primitive and the emotional, not the rational. um because we can find a million rational reasons to trust that guy sure but if i got that gut feeling you let you laugh i won't i got i'm gonna point now where i am well part of it's my choice and

part of it's i promised i wouldn't do it again i'm not allowed to do business with people unless my wife gets a look at oh nice yeah i've had i've had two deals in my life go south to the tune of seven figures right seven figures are north of that that went south and both times my wife was like do not do this like got just got a vibe off then and was like don't do it it's amazing how accurate yeah two times and both times she was right and I was like so from now on it's like anybody I want to do anything with yeah I'm like you got to meet my wife yeah exactly she just she's why she's got to get a look at you we can tell ourselves a great story and you can use the rational to convince yourself in all kinds of different ways but you still won't feel good about it because your primitive reigns still going like

I don't know I don't like this guy yeah you know something about it so if we look at the way that AI is developing. AI is developing from the rational and it struggles. It struggles with social context. It struggles with emotional reasoning. It struggles with nuance. All of those things that are important to us as a human end user, right? So if I'm online and I'm dealing with, well, how often do we get what we want, you know, when you're talking to a bot somewhere, right? And how often are we just like agent, live agent, representative, representative, representative. Oh, I'm sorry. Can you tell me representative what you need i need to talk to a human because you're not a human yeah and and that's where we go because we don't who has time for that no right we don't it's not our job to train the models

it's not there it's not there so and the problem is it's not it's not that i mean AI is not going to take over anything in the next little bit right so it's but it struggles with context nuance and emotional reasoning and unfortunately as end users that are human we need an empathetic response yeah we need somebody that's going to go like oh god i'm sorry that happened happened. You know, let me see what I can do. Yeah. Right. Yeah. And unfortunately, a lot of now, so a lot of the cost-cutting stuff has driven things to be moved offshore, right? So this has been happening for years. Well, when we get to that agent in the Philippines or in India or somewhere else that we're talking to, yeah, we don't understand them. But also, they're so

dominated by the rules that have been created for them that they might as well be a robot. They're unable to be empathetic. They're unable to say, hey, listen, I'm sorry, that happened to you. Give me a minute. I'm going to see what I can do. Yeah. Nope. It's our policy is X. Yeah. And even Amazon now, you know, you get on their chat thing. It's useless. You know, and some of them have gotten away from even having anything. So I, so, uh, meta. Yeah. Yeah. So I was doing, you know, we're doing, we're doing, we're doing good luck talking to a human. No, no, no, no, no, no, no. There's no talking to nobody. So met, listen to this. So you're telling me how mad you are. So meta, whatever, we spent a lot of money on ads with meta, whatever. And I realized that, oops, we load.

an incorrect account, an older account, right, with $985. So I went through and trying to transfer that $985 or something else. And I'll send the account just goes, it disappears into ether. There's no phone number. There's no email. There's no, there's no nothing. If you can't find them there a little help thing, there's no tickets. There's just gone.

Yeah. So after fighting and fighting and finding, I'd have to charge it back through Chase. I'm like, have you talked to anybody? There's no way to talk to anybody. Please help. It doesn't exist. I'm talking to you. You can tell me who to talk to.

Yeah, I tell you, if you get somebody over there, you let me know. Because I can't get anybody. Yep. And it's wild. But I think that, I think certain industries, like ours, I will say this, is they're doing a really good job of implementing AI to help us increase the customer experience. Well, there's the, there's the secret. Yeah. Because the CRM that like we're using, for example, if you get on with a client, it's recording the call.

And before you can hang up, like you hang up the call and the CRR. has popped up an email that it's crafted that summarizes the call you just had it builds to do if there's any to-dos you need to do it puts me your to-do list if there's an appointment they got scheduled it puts it in your calendar if anything needs to happen it's there and you can send the follow-up and i found in the agents that we have that are using the system is when you're on the phone you can really listen yep because you're not scribbling you're not you're not okay uh-huh uh-huh and what and what what with one hand over here because it's just doing it and And then, you know, with me, especially in the sales process, I've always told people

be impossible to understand. And why I love this is something I have done for years is if there's any time I have ever with a client, I probably did it with you, if there's ever a deal point that changes or something that's happening with what we're doing that's changing, as soon as I get off the phone, there's a text message or an email that comes behind it. Hey, just to clarify what we just talked about, this is what happened. And the reason I do that is because in three months, I don't want a phone call. Like, no, that's always said.

oh no no no no no go back to this text on march 27th buddy it's right there and it just diffuses things very quickly it's good form and it just it just it just there's no argument it just oh yep you're right and you move on there's no like that i know he didn't say that i know that's how i said for three days as they stew over it so being the clarity of conversation is really helping our industry a lot yeah that's the well that's the the space that businesses should be exploring so how does AI make humans more efficient, especially in dealing with the end user who's a human, right? So how can we make things more efficient in that sense? How can we reduce back office work? How can we speed up things? Like, hey, I need to research this for you. You know, if you're a lawyer and you need to go research

something, if you have a human doing that, that's going to take hours and hours or days and days, whereas AI can do it in a couple minutes, right? We used to build a lot of these predictive models, not necessarily for the save desk stuff that I was talking about, but in building what we call behavioral turning points, right? So if you have a significant change in behavior and you can map these things out, then we need to have like responses, the potential responses.

Well, we would have 17 data scientists digging deep in data for months to come up. Now you have a pattern recognition in 15 seconds on a giant data set. Exactly, right? And it's more accurate. Yeah, way more. And you don't have to deal with personalities and egos and stuff like that. So how can we make the humans on the front line more efficient,

where what businesses are trying to do is say, oh, I'm going to replace this entire call center with AI agents. Well, that's a mistake, right? Because you're never going to have customers on the end going like, thank you, thank you for that AI agent who goes, got it. Can you tell me, got it. Got it.

Yeah. I'm sorry. Weird pause. I didn't get that. Got it. No, it's just not, it's not, you know, maybe in 10 years. Maybe it'll be like that. But because AI is developing in that progression from rational to emotional,

and our brains develop in a very different way. And human decisioning is dominated by the primitive and emotional. At some point, they were intersect in a meaningful way, but we ain't there yet. But right now, an AI agent is not going to replace a human that can provide an empathetic and understanding response and say, hey, you know, that happened to me one time, you know, let me see what I can do. right and until we redesign the processes so they're not so rigid that the guy in the Philippines are India and they're not bad people no you know they have feelings too and they

have the capacity to be empathetic yeah I gotta tell you I do feel sorry for a lot of the outsourcers we used to get I get hit up every day from at least one of them like hey sir do you have any work and it was like no because what we used to wait for you through upwork to do for three days is now getting done in 10 seconds by you know one of our GBTs that we have program to do what we need to do. So I, you know, it's, I think it's definitely going to hit the third world harder than it'll hit America. But I mean, it's definitely coming. I don't know what, yeah, I tell my kids, you know, I think that I think the biggest commodity skill you're going to see out of somebody is the ability to look across the table and connect one on one with another

human being. Yep. And move them in a way that makes them feel seen and heard. Yep. Because I think if you look at this generation of kids, they're all head down on the phone. So I'm like, so many of them are not going to have that skill. Oh, yeah. And if you have that skill, you're going to be able to write your ticket. I mean, hopefully he's going to Harvard, so that'll help too. But yeah, if you, if you have that skill where you can connect with people, I think it's going to be. Yeah. That's going to be invaluable. Yeah. So I had a lunch with my banker a couple weeks ago. And she said, you know, I have a new analyst. He's, you know, just graduated USC and would you mind if he comes to lunch with us? I said, yeah, sure, whatever. So we ended up having lunch. Great kid. Great kid. Wasn't a in his phone for a second, the entire lunch, made valuable conversation, connected, and everything. Afterwards, I said, he's going to go far. Yeah. He's going to go really far. He's going to be a star. He's not in his phone. He's not nervous. He's not socially awkward. You know, he's going to be, he's going to do fantastic. Well, let's throw our, let's throw our, uh, our tinfoil hats on,

what should we be worried about. Well, I think the, the, the biggest issue, and this is what I'm writing a, uh, a book on right now is the, the biggest issue for business is going to be their ability to adapt. And there's actually four key components of that that businesses are struggling with largely. You know, if you look at all of the major problems of business adopting or extracting some of the benefits of AI or technology or whatever, it largely comes down to their inability to guide change at a speed that's consistent with the speed of changing the needs, preferences, and behavior of customers, right? So now we'll throw into it the speed of development of AI and all these new opportunities. coming up. Businesses can't keep up, and they can't keep up in these four categories. So one of them is the organizational models don't work, right? So the organizational model, which an organizational model is

the structure, so how a company, how teams are structured in an organization, the management model, how decisions are taken and how resources are allocated, whether it's money or people or whatever. And the third component of an organizational model is how we measure performance, right? So the model itself is broken. The model itself is designed on classical management theory, which is from a hundred years ago. And the world, unfortunately, has changed a little bit. We're no longer building. Standard oil is no longer canning those products on the line. Forward as long, you know, Henry's going to long gone. So, you know, the ideas that were very relevant and valid during that development period are no longer relevant for today.

Yeah. And it's largely, they're not relevant because of the speed required of change. So what was designed for stability in production environments is now rigidity in a business environment today because we need business to be responsive and adaptive. So that's, first category then is organizational models, how businesses are organized, how performance is measured, how decisions are taken, and so on. And that's a problem. The second area is corporate culture. So if you look at that evolution of business models, the balance sheet-centric organizations were largely authoritarian. They were largely hierarchical and directive. Sure. And decisions, you know, trickled down from the top and nobody took initiative because I don't want to do

something that's going to make the boss man mad, you know, or whatever. Product-centric organizations became more matrix-type organizations, multiple reporting lines, you know, the official and the unofficial reporting and so on. Customer-centric organizations become more like satellites, right? You have these little event-driven hubs where people are trying to create value and they're more value driven in terms of how do we enhance value in in these customer events and so on relationship-centric organizations are like a network of teams so if you look at the way facebook is organized as opposed to say Microsoft like you know Microsoft is an adapted hierarchy where there's lots of scandal and conflict and competition in the organization where

Facebook is a network of teams largely where people are trying to understand like you know how how is what I do going to affect another team over there and how can we benefit from each other so that, you know, we're not duplicating things and creating inefficient scenarios and so on. You walk into, I mean, I've walked into pretty much, I don't know, let me be bold and say, you know, largely two-thirds of the companies that I walked into as a consultant had just massive amounts of duplicated efforts where you've got teams doing. And they had no idea. Teams doing the exact same thing. And you're like, hey, guys, you know, did you realize that you're doing 70% the same thing that this team over here is doing? No, ours is different. Ours is

better, right? Because they're designed for conflict. Yeah. And they're designed for competition. They're not designed to be a collaborative environment. So the second kind of major zone of corporate culture is this shift from working in directive environments to collaborative environments. We need people to share and benefit from each other if they want to move quickly. You can't, you can't change an organization quickly if you have people competing with each other and, oh, that guy did something stupid. Well, you want to throw him under the bus because, you know, he did something stupid. You want to go fast you go alone you want to go far you go together exactly so that's the second one the third one um and you know everybody gets mad at me when i start talking about this but the third one is leadership

you know unfortunately the majority of people that are in leadership positions are not leaders they're they could be good managers but they're managing with power and authority they're not managing with example and guidance and motivation and inspiring yeah and they're not inspiring right yeah so if you took if you were going to create a portrait of a leader you know we need to move from the person that's an authoritarian directive type person telling people what to do and we need to move to an inspirational guide right somebody that's saying like hey you can do this somebody that's grouping people together and saying like go guys you know let's go isn't it funny how like the world thinks Steve's Steve Jobs was a super inspirational dude he was just an absolute he was an

Just an absolute tyrant. However, there's one thing that, and I don't know if this is true or not, but they, you know, they would, I heard people saying he was an asshole, but as soon as somebody was on track, he let him go, right? He let them roll. He let them roll and do their thing. And so that's something that, you know, one of the things I always talk about is there's this, in this leadership kind of range of styles. There's the ones that are largely authoritarian that lead like a government, right? So there's rules and standards and I need to patrol and punish and so on. And there's people that are more like a religious leader where it's inspirational guidance

and I need to get people to behave because they want to behave that way and they're going to group together because they want to group together and so on. Well, if there's a fire, you can't be an inspirational guide. You need to sit down and say, yeah, get the hose. We're going over there, right? And so a leader needs to have the full range of abilities and the skill set. but you need to know when to use it as well. There's an old, it's called situational leadership

where they talk about using different skill sets based on different situations and the different audience that you have and so on. But largely, you know, people that are in leadership positions today, they're largely managers. They're not necessarily coaches and mentors and people that are guiding things and so on. And when we move from a hierarchical directive structure

to a network of teams, there's no longer that authority and power to manage with. You can't just walk in and threaten to fire a whole team because you don't have that, right? You don't have it. And that team is probably a vital piece of what's happening in that network of teams. Otherwise, they wouldn't exist. Yeah. So that's the third one is the approach to leadership.

And then the fourth one is the approach to change, which is the more you try to manage change, the less manageable it becomes. So unfortunately, the businesses need to look at how do we create an environment that's conducive to change. And in most cases, and I'll use an old Russian phrase, initiative, right? It means that we punish initiative, right? So that was an old Soviet rule, right? We don't want your initiative. No, follow the rules, keep your head down, do your job.

Don't create any ripples in the, you know, in our reality or whatever. So initiative, not casuum, it was like the whole idea of like, just don't make it shut up. Like, don't bring that up. Because if you bring it up, somebody's going to tell you to do it. And if it fails, you're going to get. And now we're all working and so on.

So that kind of culture doesn't work anymore. We need a culture where people don't feel threatened. They can bring up an idea. Somebody says, hey, you know what? That's a good idea. Go try it out. And if they fail, they fail quickly and efficiently. And we wipe it under the table.

So you asked me about Marge in accounting. Yeah. This is the wrap up. Here we're going to bring it home. Bring it back. Look at that. Man. We're coming back.

This dude's been on stage before you can tell. That's a wrap up. Ask me about margin accounting. So there's probably a lot of marges in accountings around most companies. It's a very accounting type name. Yeah. And there's the official way to guide change in an organization. And the official way is you go through all these, John Cotter, who is a well-known strategist,

they still teach him in business school and so on. You've got these eight steps of guiding change in an organization. You're building your case and you're promoting and you're identifying the people that are on board and building your coalition and piloting things and celebrating your successes and driving things to a scale and so on and that works great. However, humans don't like change.

So we're going to resist things and there's going to be large portions of organizations that resist change. And so when that happens, we need a different approach. And this is where we come to Michael Ruckman's old potato, right? So this is the thing that I thought of and it just... It's weird. I used to be in a college

band called that that same name. Ruckman's old potato. That was the name of our band. It was really weird. It's funny because I never put two and two together till right now. I still have not come up with a better way to explain this. But I think about this. You got a potato and you forgot about it in your cupboard. And you come back to it in like a month. What do you find? It's fine. It's grown. It's growing. There's some little stuff growing on it, little white things. Maybe one of them sprouted out a little bit. But you can still kind of pick them out and it's still a potato. You could still eat it if you cut enough off of it, right? Let's take the same potato and say that you've forgot about it for like six months and you come back nobody paid attention to it now what do you find i've never had a six-month potato it's not a potato anymore like it is transformed and it's something completely different and and you can't you're not going to eat it you're not going to cut stuff out of it you know whatever so what happens is a lot of change happens organically and a lot of change if it goes unnoticed we'll we'll find the things that are successful and we'll make them more successful and we'll find the things that are unsuccessful and then we can just pick them out and get rid of them

before anybody notices about it. So what I often say is in change projects, you've got the public project, you know, the thing that you've publicized in the organization and promoted, like we're going north and everybody's on board, right? And everybody's on board publicly,

but there's a lot of people resisting and even sabotaging behind the scenes. And then you've got other things that you're doing where you're launching some little pilot projects and nobody really notices that they're happening. And the ones that are unsuccessful, we pick them out and bury them. And nobody even knows it.

And the ones that are successful, like, hey, this is maybe working over here. We add to them, give them more budget, give them more people, give them more, whatever. And when it's a success that nobody can dispute anymore, then all of a sudden there's no resistance because nobody can argue with it, right? It's already generating money. So the big grand announcement is the wrong way to go. It's a little. Well, you need both, unfortunately. Yeah, okay.

Because you look over here so you don't see what's going on over here. Yeah. So you need people, they're like, let them go resist over there, you know, and so on. But I'll tell you, out of all the projects I've had in my career, some of the most successful ones were ones that started as a little nubbin in a potato. They were successful and they grew and we fed them and they went out. And a lot of those are the ones that don't require a lot of investment. There was a project that I did with a bank in Russia and we said, they said, we went in and they said, we've got the most advanced CRM system in Eastern Europe. And I said, great, you guys are awesome.

It's great. So we went in and didn't audit of the system. They had 16 different databases and 42 different front ins, and none of them were integrated. And we said, I said, boy, how could you call this a CRM system? It's a park, it's like a parking lot of different systems. And so we went through this exercise of, it's called master data management, and you take a section of the data from different databases and combine it, and so on. And there were 16 different versions of me, and some of them I was rich and other ones I was poor

and some of I was an employee and other ones I wasn't an employee and you know and so on so I was 16 different people according to their CRM system and it was wild and so in the end they said okay it's going to cost us $35 million to integrate everything and there's nobody that's willing to sign off on that budget so we're done and at that point I had a development budget that the CEO had given me and I said okay listen I'm going to find a team so we found a team there were eight people and I gave him $50,000 and I negotiated with a company to give them a free license for a year. And I said, you guys have a year to create value. Salaries are paid for. You got $50,000 to spend. You got a free license. You have a year to create value. Go get it. They went out in three months and created enough value. And they decided

that they were going to work in three months cycles. They were working in what they call sprints. So they had two weeks sprints. And they were working in three months cycles. So within three months they needed to have return on investment. They worked for five years. They spent over 50 million dollars, but they were, they were only in the red for the first 50,000 that I gave them. And that was after that. They were completely self-financing. And they were driven by that. They were driven by we create value and that value finances our next stage of development. Because that was the mission statement. Because that was the mission. Well, dude. Well, when's the book going to come out? Hopefully I'll be done with the writing by the end of the year. And then you know how it goes.

If it's on a big publisher, we'll see this in eight to 12 years. Exactly. Now, you know how it goes. It's another six to eight months after that to get published. A little longer than that, depending on the season of which they want to drop it. Exactly. It depends. So anyway, we can talk about it up there.

Well, guys, thank you, Michael. If they want to find you, how do they find you? I'm pretty easy to find. LinkedIn, LinkedIn is easy. I'm always on LinkedIn, Facebook, Instagram. Michael Ruckman. Michael Ruckman. The company's called Senteo, senteo.net.

Okay. And that's it. Well, thanks for coming in. Perfect. Well, guys, if you're listening to that today, man, I would just say this. If you work at a company, be the person that is open to helping drive change because it is coming, whether you like it or not. If you're somebody that out there that is your own boss, whether you are in real estate or

insurance or mortgage or whatever it might be, if you're selling something your own boss to that level, focus on relationships. There are the new currency. We'll see you next week. Hey, it's John Gafford from the Escaping the Drift podcast. And big news, my new book, Escaping the Drift. coming out, November the 11th. You can pre-order it right now

at thejohn-gaffer.com. There are tons of bonuses, tons of giveaways. Get the book. If you are somebody that feels like you might be drifting along, this is for you. If you know somebody

that feels like they might be drifting along, this is for you. Available everywhere, all bookstores, everywhere, Amazon, Barnes & Nobles, the whole nine yards, but pick your copy up right now at the johngaffer.com

and get a bunch of the awesome bonuses I've thrown out because I promise. you. I put my heart and soul into this thing. I want it to help you change your life. Pick it up everywhere. What's up, everybody? Thanks for joining us for another episode of Escaping the Drift. Hope you got a bunch out of it, or at least as much as I did out of it. Anyway, if you want to learn more about the show, you can always go over to escaping the drift.com. You can join our mailing list. But do me a

favor. If you wouldn't mind, throw up that five-star review. Give us a share. Do something, man. We're here for you, hopefully you'll be here for us. But anyway, in the meantime, we will see you at the next episode.