AU's B-School Turns to AI

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1:55Michigan, pure opportunity. Seize your opportunity at michiganbusiness.org. Bloomberg Audio Studios, podcasts, radio, news. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Well, we're thinking a lot about the Fed this week. It's dual mandate. That's intention right now as we start to see cracks in the labor market, but inflation remains sticky in some places. And of course, the effect that AI, Carol, is going to have on the labor market, that's going to make the Fed's job even more tricky and perhaps our job even more tricky, too. We have a great guest to talk about AI and the labor force and preparing the next generations of labor workers in terms of getting ready for the impact AI will have.

2:40David Marchek is watching all of this closely. He's dean of the Kogod School of Business at American University. Three years ago, he set out to become the first AI, first business school in the country. He joins us here in our Bloomberg Interactive Brokers studio. David, great to have you here with us. Thanks for having me. Tell us, take us back three years and what happened, because we've been kind of assumed now, is it two and a half years with AI? But tell us what happened three years ago. So I'm not a techie person, but we had the president of Google, Kent Walker, who basically said that AI was going to be as profound as fire or electricity.

3:15And I said, well, that seems like a strong statement. But even if it's 0.1 % true, it's big. Then we had a fellow named Brett Wilson, who's a CEO of an AI venture capital firm. And a student raised his hand and said, am I going to be replaced by AI? And Brett said, you likely won't be replaced by AI, but you could be replaced by someone who knows AI if you don't. So at that moment, I said, we need to infuse AI into everything we do to prepare our students for an AI workforce. And we've done that over the last three years. So what does that actually look like in the classroom? So when you start at Kogod School of Business, if you're an 18-year-old, the first day of orientation, undergrad and grad, the first day of orientation, we tell you, you're going to use AI every day.

4:03Most students were prohibited from using AI in high school, but they did it anyway. So we want to teach students how to use it properly. We actually start by teaching what's wrong with AI before we teach them what's right with AI. And then over the four years, or if you're getting an MBA, we want them to learn how to underwrite an investment, how to do fundamental research, how to develop a marketing plan, how to learn to negotiate all using AI, because they'll be expected to use AI in the workforce. That's what we keep hearing increasingly is the people who know and understand how to use it as a tool will really do well going forward.

4:44Okay, so talk to us a little bit more, though, about, because I think one of the things that we're playing around with, David, is that we use it, too. And then it's like, okay, but then we kind of check it out, because we just don't totally trust all of it. So tell us how you guys teach that aspect of it, like what to trust, what not to. How do you fact check some of this information that comes across still? So we have a professor, Ed Wassel, who teaches advanced data management, data analytics. His whole class is used to show how AI comes up with wrong answers, incorrect information. So he has students analyze data sets, come up with predictive analytics, and he shows that AI makes mistakes all the time.

5:25That's as valuable as learning what's right with AI. So AI can be a powerful tool, but you need to be skeptical. You need to test it. You need to probe and you need to be able to shape it to produce the right answers. You know, I want to talk about your background a little bit and then talk more about AI and perhaps why you approach it this way. You have a really interesting background, a lawyer. You served in the Clinton and Biden administrations in very different capacities. You did more than a dozen years as a managing director and member of the management committee at Carlisle. You've written a book, co-authored a book on presidential transition transitions.

6:00You don't have the traditional background of a dean, like traditional academic background of a dean. I also had poor grades and was not the best student. That wasn't in the bio that I read. But I'm glad you're bringing us that color. How does that perhaps make you think differently about the workforce and what they need to be prepared to do once they leave the academic world? So I had the best boss ever who actually hosts a show at Bloomberg, David Rubenstein. David also was probably the least likely person to run a private equity firm. He had no private equity background. What I learned from David is surround yourself with people that are better and smarter than you in each of their areas and empower them and you can do anything.

6:44So what we're basically focused on is ensuring that our students are prepared for the AI workforce, the AI economy, which is changing rapidly. Stanford just put out a study that shows that AI exposed jobs for 22 to 25 year olds are shrinking between 13 and 20 percent. It's terrifying. It's a very hard time. My daughter graduated last year. It was very hard for her to get a job. We see it every day. And so what we're trying to do is make sure that our students have a leg up when they apply for jobs, which means you need to have the fundamentals of a business education, marketing, accounting, management, finance, et cetera, plus know how to use AI in everything you do.

7:29and we're also doubling down on what used to be considered soft skills, communication, teamwork, the ability to think on your feet. Those skills are more important today than in an AI economy. Look at your jobs. You have to think on your feet every day, react to news. Sometimes it works, sometimes it doesn't. But having an entrepreneurial mindset and being able to think and create is essential for today's economy. How do you, as an educator, but also somebody from the business world, think about how important it is, though, when somebody, their first couple of jobs or their first job out, they're learning so much.

8:07The learning curve is so much, but it teaches their brain to think in maybe different ways that they maybe didn't get when they were at university or at college. And so I'm just wondering, like, are we are we cutting that out of younger generations, that ability to mess up, learn? I learned so much from mistakes I made in kind of my first couple of jobs. And I'm just wondering, are we getting rid of that? So I think we are getting rid of that in some ways because AI will replace some jobs. In my view, it's incumbent on universities and educational institutions to be able to foresee that and to give students the skills that you may have learned in your first job.

8:47We're trying to give them those skills at the university through in-classroom and out-of-classroom experiences. So we have a lot of competitions for students to learn how to pitch where they have to answer questions on their feet. We have investment clubs where students are investing actual money and they need to present and defend and investment ideas. The ability to give a pitch, to communicate orally, to work in teams is as important as ever. How do you have to think about the admissions process differently as a result of what happens now or what you want to have happen in a school right now?

9:24Traditionally, and maybe this is why I wasn't a great student, a teacher stands in front of a classroom and communicates, disseminates information, which a student absorbs. And then the student is assessed on how good they are by how much they can retain and regurgitate. AI replaces all that. You can get any piece of information at your fingertips. So now the best students are going to be ones that are most curious, that have an entrepreneurial mindset. They're going to be able to take risk. they're going to figure out stuff on their own and so we're looking for that in the admissions process you know it's it's funny carol and i talk about this a lot because one of the things that we found these llms are so good at is if you prompt it properly it can essentially write you a paper to answer a question and that a teacher i mean i'm not giving anyone any news here that they don't already know who and students are way ahead of us students are way ahead of us here i mean for me as somebody who graduated from what like 20 ish years ago this is like kind of crazy but I think back to my own experience in college.

10:24I went to a liberal arts school and some of those aha moments that occurred for me were like late at night when I was trying to write a term paper or trying to write some sort of analysis of a book I read. And those are the moments that stuck with me. Those are the moments where I learned how to make those connections. Do we lose the ability to make those connections because of this technology? I don't think so. I think it actually aids you. So you were probably a better student than I was, but when I was writing an essay, I had a hard time figuring out topic sentences, structuring an essay, structuring an argument.

10:55AI can help you do that. It's a collaborator. And so those aha moments are still there. They're just different. Also, the ability to work in teams is going to be much more important today than it was when we were growing up. And I have students come to me all the time and say, boy, this teamwork is hard. This one student is a show off. This one doesn't do their work. this one has views that I can't understand and they don't change. And I'm like, welcome to the real world. I have that every day in my job and I've had it every day in my job for the last 40 years. So teaching students, not only the fundamental basic skills that you learn, reading, writing, reasoning, plus AI skills and these soft skills, which I call power skills, that's the future of education in my view um but are we also losing though the ability of people kind of struggling david through something and like maybe having to work a little bit hard and understanding the idea that okay maybe spend a little bit more time with it dig a little bit deeper i don't know look at some different sources and like figure something out versus going like i'm blown away by some of the stuff that you get off of chat gpt and other other um chatbots, if you will.

12:09And I'm just kind of wondering, are we losing something maybe? They're still struggling. But let's say I were a 22-year-old and I wanted to be your research assistant. You would expect me to be able to find any piece of information at my fingertips any day and deliver it to you. You'd expect me to have much more advanced skills today than if I were applying 20 years ago, or in my case, 40 years ago. So it's just a different type of struggle. And the students today need to learn how to do the stuff that's required in the AI economy. Can I ask you about teachers? How they've had to rethink how they teach?

12:46Because that's something you guys have had to deal with as well. That is a great question. Faculty traditionally are very resistant to change. We have faculty that have taught the same thing over and over again. We've actually created a very entrepreneurial culture among our faculty where we started with a few early adopters then we had some others that we dragged along today 90 of our faculty are infusing ai in the classroom at the end of the spring semester it was 50. so over the summer there was just a cultural change where everybody said the parade's leaving either need to get in front of it or i'm going to be left behind we're speaking right now with david marchek he's the dean of the Kogod School of Business at American University.

13:27He's also formerly of the Carlyle Group and served in the Clinton and Biden administrations. Just a headline crossing the Bloomberg terminal, Carol, as you mentioned, President Trump said the U.S. struck a second vessel ferrying drugs from Venezuela, showing his determination to proceed with an aggressive strategy that's ratcheted up tensions with the country and prompted questions about its legality. We're monitoring this story for developments. We'll let you know if President Trump makes any comments on it. So what do you think, David, is constructive for we as communicators and having guests?

13:59And we're talking about AI. I feel like every conversation somehow, you know, all roads lead back to AI. Are you trying to get him to give us advice about how we AI-proof ourselves? No, no. Because I would be open to that, too. I'm just thinking about the smart way to deal with it, because I think it's really easy to get caught up in the exuberance around it. There's so much spending that's going on. And we're trying to, like we even today, did kind of a reality check about where we are in AI. It's kind of a wild world where we're talking about$200 million salaries for people who are poached and brought to meta platforms for a specific technology.

14:28Just trying to understand, what do you think is constructive based on kind of the experience you have had reorienting your approaches there? So I think what we're seeing is a technology revolution in a much more abbreviated version than we've seen it before. It's the fastest technology ever to be adopted. So ChatGPT has acquired the same number of users, five times as fast as Netflix or Amazon, 20 times as fast as Facebook. So when the mobile revolution took place, which we all lived through, it took 30 years for us to really use the phone for everything. AI is changing that in a matter of months.

15:09So I do think this is a transformational change that we're seeing. it's going to change everything in the economy faster than any technology change that ever has happened. Do you think we know if yet it's good for the economy? I don't think we know. I think there's big pluses and I think there's big minuses. My view is that there will be winners and losers. And my focus is taking care of the students that are at my school to help them prepare. Well, let's talk a little bit about the outcomes that you've seen thus far. You're really still early into this experiment three years ago as carol mentioned was when you set out to become the first ai first business school in the country what can you tell us about graduates who are finding full-time employment on the undergrad side then also on the mba side it's helping them it's helping them have a leg up in me more be more competitive one of the things i'm most excited about this year is we're offering an ai minor to non-business schools so let's say you're a student that wants to go to med school, you've done what traditionally a student does, taken a bio degree, you have some labs, you're applying to med school.

16:10If you have an AI minor, you're going to be much more attractive because AI is going to transform healthcare more than perhaps any other field. If you want to be a policy major and go work for a United States senator, and that senator or the chief of staff says, okay, you're a policy major from a good school and you have an AI minor, I know you're going to be able to do research for me, for any hearing, for any questions, for anything I need to know much faster. And you're going to be able to analyze data much better than others. So I think it's a huge leg up for both business students and non-business students.

16:46Do you ever envision a class where it's just someone talking to you like ChatGPT or whatever version might ultimately come out? Like you just think about the, like we always talk about a great conversation, how much we can learn. I think to ask the right questions. But I think about that back and forth. I think Duolingo CEO has said that AI could replace teachers. AI could disintermediate the whole education system. Okay. And we're experimenting. I'll give you an example. We have a professor named Tommy White. He runs our entrepreneurship program. He's incredible. One of those popular professors.

17:19He created a class this year using all AI to create the class. It has no books, no reading. The only assignments are prompts. Prompts plus teamwork. We'll see how it goes. Will it work? I don't know, but we're trying. So maybe. So maybe. I mean, we're experimenting and that's one of the things that we've done to create this AI first culture is we've told our faculty it's okay to fail because nobody really knows what's going on or what we're doing because it's so new. So try something. If it doesn't work, Try something else. Really interesting stuff. Hopefully you'll find some time to come back to us and continue this conversation.

17:58Love, love, love. Maybe we talk to some students at some point. That'd be great. We have some incredible students. Yeah, I think that would be a lot of fun. Can we get on the road, go to D.C.? I'm happy to do that. All right. Come teach a class. We can try that. Good stuff. Thank you, David. Thanks for having me. I really appreciate it. David Marchek. He is the dean of the Kogod School of Business at American University. Really fascinating conversation. If you missed any of it, please be sure to check out our podcast. You can download it a little bit later on.

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20:08So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling.

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23:14Be smart. Get wise. T's and C's apply. Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person, how you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com.