Rishad Tobaccowala | A Futurist Talks About What's Next for Marketers and Agencies

0:00Rishad Tobaccowala:The CMO Confidential podcast is a proud member of the I Hear Everything podcast network. Looking to launch or scale your podcast? I Hear Everything delivers podcast production, growth, and monetization solutions that transform your words into profit. Ready to give your brand a voice? Then visit IHearEverything.com. Welcome to CMO Confidential, the podcast that takes you inside the drama, decisions, and choices that go with being the head of marketing. Hosted by five-time CMO, Mike Linton. Typeface has completely changed the process of large campaign executions. Everyone knows AI can help with images and headlines, but the real impact is making the leap from a creative brief to a live multi-channel large campaign at speed.

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1:40CMO Confidential is a program that takes you inside the drama, the decisions, and the politics that go with being the head of marketing at any company in what is one of the most scrutinized jobs in the executive suite. I'm Mike Linton, the former Chief Marketing Officer of Best Buy, eBay, Farmers Insurance, and Ancestry.com, here today with my guest, Rashad Tabakawala. Today's topic, a futurist talks about what's next for marketers and agencies. Now, Rashad served as Chairman of Digitas and Razorfish, Chief Strategist and Chief Growth Officer of Publicis. He's also a best-selling author, in-demand speaker, and the host of What Next?

2:21a podcast that provides a wide-ranging look at the future. He also recently published a book titled Rethinking Work. We may touch on that a little bit today. He has been on the show multiple times, and it's great to see him again. Welcome back, Rashad. Thank you, Michael. It's great to be back again on the show. Thank you again. Of course. You're always provocative and insightful, So I know you won't let us down. First question, just tell us your view of what's happening in the marketplace writ large. Publicists just recently celebrated their 100th birthday. Omnicom and IPG finalized their merger.

3:02And AI, of course, is in the news everywhere. What's happening in the overall marketing ecosystem from your perspective? So I would basically start broadly and then go a little bit more narrowly. So broadly, I believe that the marketing ecosystem is understanding that the future is about marketing and it's not about advertising or communication or sales or promotion or CRM. And the reason is an AI agent does not understand those divisions. An AI agent does not understand those departments. An AI agent basically works across all of them to drive an outcome. And one of the most amazing things now that companies are beginning to realize is they've been organized in silos in a world where agentic workforces don't understand silos.

4:02They just understand outcomes. So in effect, we are going to actually have marketers have to decide whether they're in the marketing business or they're in the advertising, communication, promotion, sales, PR. I want to go back to this because a bunch of those people will say, I am driving an outcome. I'm on the efficient frontier. Yeah, you're on the efficient frontier. But why do you have all those divisions? You don't need all those divisions anymore. Yeah, tell me how the models are ripping those apart. Because the models basically are looking at, they are transverse. They eat all information and all data across the board.

4:43And then they basically say, what is the outcome? The outcome tends to usually be make a sale, create a relationship, increase something. And then they go and pick from everywhere. So they don't basically say, well, most people say, here is how CRM contributed to this. Here is the sales thing. Go into any organization and sales fights with marketing, fights with CRM, fights with whatever. So the reality of it, this thing doesn't recognize it. So I believe it's going to be, for that reason, I think people are going to increasingly understand that it's marketing, which is, I think, a great industry.

5:19Second is I believe marketing is going to be the industry that's going to thrive, primarily because it's one of the only big areas of expertise that is a combination of mathematics and the messiness of people, right? I call that it's a business that is a little bit data and lots of noise and emotion. And we're trying to make it all a data business, which it is not. Okay. It's basically a data and emotion business. And interestingly, because of the messiness of both emotion and people, it's a business where humans will still be needed much more than a pure accounting business or a pure finance business or a pure coding business.

6:04So the more your business is completely math driven, it more will be algorithmized in AI away. The more your business is a combination of the two, you'll actually benefit through AI because you're basically able to combine that machine part of it with the sort of magic part of not just creativity, but ideas and connecting with people. So I think one of the things that, you know, just for all our listeners that might not be marketers, when you say marketing, it's sometimes hard for people to understand what that actually means. Like sales, I know what it means. Finance, I know what it means. When you say marketing in your head, what are you telling people that aren't in marketing, that marketing is about?

6:49I believe that marketing is about understanding and meeting customer requirements in a way that drives financial results for the company that does so. Got it. So it basically starts with a customer, consumer, person, understand their requirements, meet them, and do it in a way that makes money for the company that is understanding and meeting them. And so those measures to me sound like I'm going to drive sales profitably and retain those customers. So the financial health of the company is really great in the long run. And I'm going to use every tool available to me to do that. Including, by the way, the way to drive sales might be to completely create new products and services.

7:34Yeah. Right. And to also, in effect, truly reimagine my business. Because the reality is of the top businesses in the world tend to reimagine businesses. And the big thing with marketing is it reimagines. You can't reimagine accounting. You could go to jail if you reimagine accounting. People have tried. They've tried. You can't reimagine accounting. You can't reimagine the laws of physics. You can reimagine marketing. Got it. So since we're talking about AI, the CEO of Anthropic published an article focused on the AI risks. Give us the cliff notes and tell us what the average company should be thinking about when they think about those risks.

8:22So right now, you know, there are lots of people who have published the three big things have published on risk. The CEO of Anthropic has published. Then somebody from, I think, Citrini Research did a science fiction 2028 looking. Yeah, that calls this Sasspocalypse. Yeah. And then another gentleman whose name I forgot wrote a very interesting blog post called Something Big is Happening. Right. And I'm going to actually take all those three because all those three need to be looked at at one time versus sort of separately. And I think the big thing that I truly believe that is happening is that we are living in a world of humans, along with aliens, along with replicants.

9:13And no one has learned how to learn to work that way. What do I mean by that? Humans are humans. That's you and me. I call artificial intelligence alien intelligence. and the reason I call it alien intelligence is the top three customer or consumer uses of AI is not to God I make some Taylor Swift sitting on Barack Obama's lap at the All-Star Game and putting it on Meta so you can get your engagement up. Meta is basically a bunch of AI bullshit. If you don't click on friends, everything else is totally AI bullshit. That's not what most human beings do. That's like losers. What real human beings are doing is they're basically using it for healthcare information.

10:00They're using it for therapy. They're using it for relationship information. So they actually believe that this alien, that this thing is not a machine. They talk to it like a human. But it's not a human. So I call it an alien. So it's alien. Similarly, agents are basically, they take something that a human does or a task we do, and it finds a way to do it the same way, but better. So I call them replicants. Okay. Okay. So we're living in a business world of humans, agents, and replicants, or humans, aliens, and replicants. And so from a business perspective, the first thing to think about, if you're a business person or even a marketer is how do you basically run a marketing department or run a company which will have these three types of people in it when you've actually been only talking to humans how do you also then market where you'll have all these three people in it you know when we were segmenting we were only segmenting humans right and that was hard enough that was hard So now you've got human segments.

11:16You've got alien segments, which include, for instance, the rise of answer engines, which is what I call ChatGPT or Chlord or Gemini versus search engines. And then you have these replicants, which are agents. And you might say, what are you talking about? Right. So let's look at McKinsey. McKinsey today used to have 45 ,000 employees. Today it has about 39 ,000 employees and it has 15 ,000 agents. And the managing partner of McKinsey says in the next couple of years, they left 30 ,000 employees and 30 ,000 agents. okay so this is for real so in effect the first big thing is your workforce is changing and the people that you are quote-unquote marketing to you've got two new species that you're marketing to and you got two new species in your workforce right so one of the things i find really fun when i go to some of these organizations to speak they say don't talk about the future of work where you're questioning why people are forcing everybody back to the office.

12:27It's something that we are very sensitive about. I said, okay, be sensitive about it. But I said, going back to 2019 and then saying you want to be AI friendly is the biggest bullshit I've heard in your corporation. Fastest growing companies are talent everywhere, AI first, and you guys are going back to 2019 and thinking it's cool. Okay. And so to a great extent, what AI is doing is it's forcing a company to rethink three things. A, its workforce. B, who it's marketing to. But most importantly, what business is it in? And those are the three very big things that are happening now. And if you get that wrong, you could blow up your business.

13:14You could blow up your business. And what I'm finding, and one of the reasons I'm on planes is because now I'm talking to people and they say, how come no one told us this? I said, because what I'm about to tell you, I don't have the answers for, so I have nothing to sell you. So usually people only tell you stuff where they already have something to sell you, right? I don't have anything to sell you, right? Now you can buy my book, I'll get$3. But I'll give you a way to think about it that will make you realize that you have to think differently. I don't have the answer. I'm not smart enough to have the answer.

13:42But I'll give you sort of the example I give. the example i give in i'm going to give it from two other eras because i don't have a current example because this era just started yeah there's no playbook and there's no playbooks but i said let's look at analogies from previous eras so the first era was which which began about 50 years ago was when a little bit more than that maybe when there was the invention of the container So you might say, what do you mean the container? So until the container, which is the way things get shipped now, they ship those containers, people basically would ship random size packages.

14:23Like just whatever. Here's lots of tomatoes. Here's a truck. Here's a whatever, right? And that required a lot of time, but it also required an incredible amount of labor. And as a result, people that had lots of cheap labor did very well. And so Liverpool became a huge shipping center. When the container was formed, you needed things like cranes and other kinds of stuff. And that's why Singapore overtook Liverpool. Okay, but once you had the container, something else happened. People said, why is the container only on the ship? so the railroad rides and the truck lines got together yeah decided to make the intermodal container when the intermodal container everybody was in the go down and storage business they went out of business because things was moving fast you didn't need to all the storage yeah you just unload them with the crane under the railroad track or the truck for the truck it goes to wherever it goes right similarly people like toyota said why we have all this inventory we can now do things much faster.

15:28So they created just-in-time inventory, which basically cleaned the clocks of Detroit companies. And then it gave rise to global shipping and the globalization. So a simple thing like the container changed everything. So if you only began by saying the container helps me save labor, which is what people are now doing about efficiency and effectiveness, you didn't realize that entire supply chains would be done, entire business models would be undone. So now let's go to 2010, 2011. Internet's become big. Internet's been around since 1993. Broadband's taken off. It's about 18, 20 years. And a lot of magazines and newspapers are in trouble, are starting to both look at what's happening.

16:19Almost every newspaper company is now trying to figure out how to use the Internet to sell newspapers, how to use the internet to make their printing presses work faster, their truck lines, you know, digital technology to make their trucks work better. And a little company called the New York Times has a thing called the Innovation Project over a couple of years. And they basically come up and decide, even though they've got a lot of trauma, a lot of drama, a lot of, I was part of the Innovation Project. They basically decide that maybe what this is is not about how do we make the trucks faster, the printing press faster, and how do we sell more newspapers, it might be that the future of the New York Times is not a newspaper.

17:03Right. That the future of the New York Times is not news. The future of New York Times is not New York City. So today, out of 12.5 million subscribers, 11.5 million are digital. No print. Right. It was one of the few success stories. But why? Because they got out of their business. I'm with you. The New York Times is basically a lifestyle business with some news. Yes, the brand carried through, but they redid the whole model. And what are people doing? How do we make what we currently do more efficient and effective? Which is okay, that's great, but it's not a competitive advantage because it's like basically saying, I'm going to use electricity to be more competitive than my competitor.

17:47Your competitor is using electricity too, fools. There you go. We had Tom Goodwin talk about this too, which is design the plan around electricity. Don't make the machines work faster because of electricity. Yeah, exactly. And so what basically happens is that is basically that's that. And then the other thing, you know, to a great extent is the challenge that's currently happening is I've always basically believed that up to now, every technology expanded and extended the human brain. Okay. Right. Sophia allowed us to cook our food so our brains got better. Wheels allowed us to see more. Right.

18:29Printing press allowed us to print and learn more. The Internet allowed us to share more. All that nonsense. Right. Right. I believe AI is no longer about extending the human brain. I believe the AI is a new brain. We are taking a short break from this show for a word from our sponsor, Typeface.

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19:48now back to our discussion wow okay it's so ai is a new brain and i feel like i'm about to take off on the enterprise yeah and it's a new brain that in intelligence far surpasses the human brain so i don't even call hi human intelligence it's bullshit it's broken it's gone okay just look at our current any leadership and you understand the human intelligence about where the action is. Okay. So what tends to basically happen is it's going to be about human imagination, human intuition, human interaction. Let's talk about that because I wish you had some passion on this, by the way. You wrote a post, what it is to be human in the age of AI.

20:33Tell us about it while we're on this topic of AI, humanness, all this other stuff. Yes. So what basically it is, is that if you assume that these alien things are doing the following three things, they will be far more intelligent, far more knowledge processing, far more data crunching than anybody that we know. That's number one. Second is that they are going to increase in capability. And this is the big insight I had. Not insight. It's not insight. It's just an observation. That Moore's law used to have doubling of capacity every 18 months. When I wrote my book, the AI was doubling capability every 11 months.

21:29By the time my book came out, it was doubling every seven months. Then there was the launch of a Gentic. and agentic is doubling its capability every seven weeks. Okay. So the first interesting thing is right now, technology is moving much faster than human or organizational or government capacity to catch up. And that's where there'll be a lot of space for humans, because we are humans who are living in this world. We are not basically as some people in Silicon Valley believe, you know, Silicon Valley believes that humans are a silly phase intelligence is going through, that we're not necessary, that intelligence is what we have to optimize for and not humans.

22:13If that's true, then we shouldn't be existing. Right, we can just let the Terminator run everything. Right, but that's not what it is. But what basically happens is there are three big differences between machines and humans. The first is machines tend to basically think in zeros and ones. human beings never think in zeros and ones human beings think in the following answer if i ask my daughters a question never rarely will i get yes or no what i'll get is maybe could be depends on my mood or they avoid the question altogether okay that's what we humans tend to basically do Machines don't do that.

22:56Second is human beings make most of their decisions using things like storytelling, desire, envy, comparison, history, and fear. If that wasn't true, there'd be no marketing. If that wasn't true, no one would have children. The ROI financially on children doesn't make sense. It's terrible. We know it's terrible. So in effect, humans first are basically not computing engines. Humans do not make decisions on zeros and ones. And third is humans to a very, very great extent, and this is the other thing to sort of recognize, are resurrection engines. So people have given up humans, like all these things.

23:48Everybody says machines will do this. And humans are just going to sit around and like, what? We're going to watch TV? What are you talking about? Every day, and I remind people, every day you wake up, it's a new day. We are resurrection engines. Everybody has careers where they have Good Fridays, where they think they've been crucified, and then they have Easter Sundays where they arise. So human beings are going to adapt, and they're going to complement, and they're going to embrace these engines. They're not just going to be taken over by these engines. And so there's going to be an itch. And the way they're going to complement them is they're going to say, okay, human intelligence, we can't do against these things, but human intuition, human interaction, human imagination, you know, that we will do.

24:31And as long as there are humans that we're marketing to, that will be important. If it's all going to be about machine to machine marketing, right, then it won't be important, but it won't even be machine to machine marketing. I'll tell you why. Why? You put an agent out there. Like, I mean, when people tell me my whole thing is like, are you all thinking or are you just reading the latest like BuzzFeed post and telling me what's going on? Like, will you think for a second? Think of your own, the way you live. Okay, here's the stuff. You unleash an agent to go basically make a decision on getting you a cheap flight to Las Vegas.

25:11Okay. Okay. It'll come launching back with a cheap flight to Las Vegas on Spirit Airlines at 5 a.m. Yeah. And you'll say, I hate that. I hate that. Okay. But so you'll then say, I actually don't want to go at 5 a.m. I want to go to 8 a.m. 8 a.m. or later, 8 a.m. to 5 p.m. I do not want to go on Spirit. I want to go on United or Delta or American. Okay. And please make sure that I get an aisle seat. And it goes and does that. Now, explain to me, is that an agent doing it or is it you telling the agent exactly what you want? And you are being completely illogical. And the agent is taking your illogic and just making it pretend it's logical.

25:54It accepts your logic as truth. Yeah. And so my thing is that's the way the world works. Right. And if, for instance, my job at United and American is to basically prove that I'm better than Sprint, right? But Spirit Airlines did not pay anything. Or Spirit Airlines to basically say why getting up at five o 'clock in the morning is good for your health or something like that, right? But it all becomes that. And the reason why I find this really amusing is everybody basically believes that human beings are going to go to sleep and going to accept anything that anybody tells them. It's never true.

26:35And this is one of the other things why people like the machines versus the humans. You talk to the machine. The machine basically is very sycophantic. It basically makes you believe you're very cool. Yeah. And actually, sometimes it says that's a great question. It's a great question. You're so cool. Now, if I go to talk to my wife and daughters, they say, why are you asking such stupid questions? You're an idiot. Go away. Right. The other thing that they do, besides telling me I'm stupid, they say, by the way, go and do this for me. The machine doesn't say, go do this for me. right? The machine does not have needs.

27:08You can't have a relationship with somebody who basically thinks you're cool and they don't have any needs. That's not a relationship. That's basically you're looking at a mirror. All right. So I hear the human thing. Yeah. You've also written an article called The Future is Determined by Folks Over 65, which I was gladden to read. Tell us about it. Sure. So right now, I'll give you three numbers that are, and I wrote a piece that had some of this. So right now, globally, first, I'll give you a reference. Globally, if you exclude the continent of Africa, the world's population is starting to decline fast.

27:56Yeah. Okay. People aren't having kids anymore. In fact, right now, there are only seven countries in the world whose population is going up. The big four are in Africa, and then I think it's Indonesia, Bangladesh, and one of those in Asia. It takes 2.1 children to keep the population the same per woman. That number in the United States is 1.6. The number in EU is 1.3. The number in China is 1.1. The number in Korea is 0.8. Okay. So first is for most marketers, they always thought the addressable population was growing because population was growing, including the US not happening. That's one. But now here's the other one.

28:41The only group of people who are growing are people who are over 60 or 65. So in the United States, 11 ,000 plus people turn 65 every day. So in a world of declining population, the population that's growing is over 65. Already, for instance, in a country like Japan, 30 % of the population is over 65. Okay. Now, but here's the reason why I think 65 is going to run the world or older people are going to run the world. I'm hopeful. Yeah. The reason they're going to run the world, and I ran this, is older people always tend to have more money than younger people. But in 1980, the ratio of wealth held by people over 65 compared to the wealth held by people under 35 was 10 to 1.

29:32So people over 65 had 10 times the wealth versus those under 30. In 2023, that 10 to 1 has become 47 to 1. Okay. So all the money is with older people. They have all the real estate. They have all the money. Now, here's what basically happens is because they have money, they also get world-class healthcare. And again, I'm talking broadly. There's obviously - No, and that means they're going to live even longer. And they're going to live much longer. So this whole idea, the money is going to come down to Gen Z, long time waiting. And the other thing is when it comes down, it's also going to come down through a very silly phase.