Your next manager could be powered by AI, with Katherine von Jan

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0:36Today, Raz's success is proof that with passion and the right support, it's possible to make your dreams a reality. Learn more at CapitalOne.com slash business cards. Picture the best manager you've had to date. The one who gave you the perfect advice, challenged you to be better, maybe even helped you jumpstart your career. It's a rare thing to have a manager who can also be a mentor and champion of your personal and professional growth. On the other end of the spectrum, we've all had a bad manager. Those that micromanage, parachute in and out, or lack communication skills. And it's no slight to the individual.

1:17Managing is often a thankless, difficult job, which makes it a role ripe for improvement. AI could help. I have seen some recent study that 41 % of Gen Z trust AI more than their manager. So I think one misconception is that people don't really want to use it or don't trust it. I think actually they do and they're using it whether you like it or not. Catherine von Jan is watching this trend closely. She's co-founder and CEO of Tough Day, a company she started after decades working in people management at big tech companies, including Salesforce. She's building AI managers to help professionals thrive.

2:02Her advice? Try new AI tools right now at every level. People are in sort of analysis paralysis over what we should do with AI. And I would say start using AI. Thinking through unintended consequences in advance as best you can and prepare for those is great. And you do that alongside the team that is actually trying to make the solution work. Today, Catherine and I are digging into questions around the future of work and AI. We talk about the concept of unbossing, approaches to DEI work at this critical moment in time, and how AI could be a solution to how we work moving forward. I'm Rana El-Khalyubi, and this is Pioneers of AI, A podcast taking you behind the scenes of the AI revolution.

3:04Hi, Catherine. Welcome to Pioneers of AI. Hi, Rana. I'm excited to be here. Thank you for having me. Catherine has been in management at tech companies for decades. And in all those years, she gained some valuable insight on how technology can improve our work lives. A couple of years ago, she saw an opportunity, which eventually led her to co-founding her company, Tough Day. So I wanted to know more about her background and the aha moment that led her to founding her company. I started my career at Lotus back in the 90s, working on collaborative technology at a time when the Internet was brand new for business and trying to figure out how that technology would empower people to work better and smarter and create value and all of those things.

3:50So, you know, I've rode the tech waves, mobile, social, AI. I've been working in AI since 2012. So I guess, you know, the last 10 years before starting Tough Day, I was at Salesforce and I was leading innovation projects there internally and externally with customers and partners and serving our ELT over that time. And the leadership team. ELT, leadership team. And along the way, one of the projects that we did internally was how to improve belonging and inclusion inside using tech. And of course, that work starts by deeply understanding and researching what the challenges are for folks internally, not only inside Salesforce, but in the world.

4:34And that research was fascinating. We learned a lot about what happens when people struggle and where they turn. So there are two kind of common paths in that. One is that they go to some kind of reporting system internally. And actually, that's quite rare. Only about half the people will ever report something that actually needs to be reported. And there's a lot more that happens before then. So that solution typically means we're going into investigation. And that is scary for everybody. And then the other place that people go are colleagues and often friends and family at home. That's what we hear the most even today.

5:17So when you go to friends and family at home, you're not necessarily getting great advice. You're not necessarily talking to someone who knows HR or knows management best practices or employment law or any of those things. So the big insight was that we need something before you actually talk to someone in HR about a problem, a place where people can go. And we created that there in something called the Warm Line. A warm line instead of, you know, a hotline. A place for people to call when something felt off but hadn't reached any kind of critical stage. So when we built this warm line and staffed it with amazing humans who were really smart on the topic of DEI and lots of other things, HR and management, they were able to handle a small population.

6:13The initial cohort got the answers that they needed. They got guidance. They got help. They got empathy. They were able to go back to work very quickly. Their performance improved. It was a magical story. And unfortunately, that solution doesn't scale. It doesn't scale because the warm line needed to be staffed by humans with the right skill set. Catherine and her team simply could not find and train enough people with the right mix of skills and experience to serve every person at the company. So we know that everyone in the organization has these moments where they need help. And the only way to scale the solution so that everyone gets the help they need is to use AI.

6:58And here was the opportunity. Imagine an AI people manager that could help employees express their personal challenges and concerns and jump in on problems so they didn't need to escalate. That's what Catherine set out to build. It was just at the time when ChatGPT was born, and I knew that that technology could be used to do things differently and support workers. And I did a couple experimental projects on my own, got a couple teams together. And what we learned in that is that actually we could get great content from HR, management, employment law, and create this experience with AI and be able to serve everyone even more safely and consistently and expertly than most humans can.

7:47So let's get into exactly what Tough Day does. Walk us through how an experience would look like for a person using Tough Day. Yeah, so first we have created both generative and agentic AI to support workers, and it is a B2B sale. So we're selling to organizations and essentially the core product has already been fine tuned on great management, HR, employment law and other kinds of content. And then in addition to that, we're ingesting the company's information. So their employee handbooks, their strategy, their values, their organizational wisdom, learning and development, anything that the organization would use to onboard an employee, we would say use that to onboard our AI.

8:34And over the course of a week, that AI gets really smart about that organization. The point is that once it's really honed to the organization, then they invite their people to engage with our AI, which we call Tuffy, and that was named by users. So an employee will get an email that says, hey, we'd like to offer you the opportunity to talk with Tuffy. Click here, go set up an account. They sign up, though, with their personal email and their personal phone number, their personal device, and we tell them, and the organization tells them, please do this so that you have complete control over all of your own data.

9:13This is a safe place where you can go have a conversation about anything and not worry about saying things the wrong way or asking a dumb question. It's really very much a place where they can feel comfortable with whatever is going on. I think this is really important because trust is at the center of this. We're going to come back to trust a little later on. But if I have any inkling that the company might get access to my conversation with Tuffy, I'm just not going to go to it. So I think it's really smart that you did that outside of the company, you know, that you could do this just kind of on your own personal device.

9:56Yeah, absolutely. And we're really providing the trust to both the employer and the employee. So first of all, a lot of people in the organization would never say anything. We know that people don't necessarily tell the truth on employee surveys, and they're afraid to say what's really going on. And if they did any of this on the company's devices, they would have access to that data, whether they were looking at it or not, which just creates an era of concern. Let's just call it that. And for the organization, they want to be able to understand what's going on, but they don't want to have the whole mess exposed to them either.

10:35That's a danger to the organization. It's a risk. So for them, having a bit of a barrier and saying, go here and have the conversations you need to have is actually very helpful for the organization. Can you share some of your key learnings? Like how are people using Tuffy? What are they going to it for? So first, I will say about a third of the challenges are really policy related. You know, explain how FMLA works, or I don't understand how to get my corporate card. All the kind of operational things. Do I get a lactation break? Things like that. It can get more complicated. You know, what are the gender rules now, especially with a new administration?

11:23What are the bathroom rules? So there's a lot of interesting change happening where each organization can define how do they want to address those issues. And the one example I use often is nepotism. So in a family-owned business, nepotism is expected and positive, and that kind of organization would want to potentially explain that. And in other organizations, it's frowned upon or against policy. So there's a customization there. And I think a lot of employees have questions about things and what is ethical, what is allowed, all of that. We can answer those questions very well, very quickly. The other two-thirds of the issue are the really, you know, the sticky and interesting things.

12:10So you could think about a manager relationship and all the different types of managers, maybe a micromanager, maybe there's some toxic behavior, maybe there's favoritism, maybe someone just has poor communication style and choices. And I'll just say, you know, the alternative there often is an employee calling a manager and saying, hey, can I have five minutes of your time? Can we have a quick coffee? I'm confused. Of course, that would normally happen. But think about the hours and hours of time that it ultimately takes for managers to have all of those conversations. We're just saying Tuffy plays the role of being the first point of contact.

12:50When you're confused or you're struggling, come to Tuffy first so that when you go talk to your manager or you go talk to someone else in the organization, you're fully prepared and you're focused on the right things. How does Tough Day deal with issues that have legal repercussions? So for example, a sexual assault, like what would it say? Yeah, so we are a communication platform and not a reporting platform. So I think this also provides the workforce a safe place to go to talk about what's going on. And if people do come in and there's something egregious, someone was assaulted, the AI will be very, very curious and ask for more context, collect more information, ultimately diagnose the situation as something that should be reported.

13:45but we are providing the agency to the individual employee. So we want to build their competence and their confidence and help them understand why it should be reported, why the company really wants them to report it, how they should report it, and what to expect in the process. So as an example, a lot of people will worry, you know, if I report this, will the other person be alerted? Well, the reality is like, yeah, they're going to be part of an investigation, But there's a lot of ways that you can engage with the employee and support them in the process so that they feel comfortable with that.

14:21And ultimately, they'll make that decision. So we can see the benefit for employees. Why would a company be incentivized to do this? Is it mostly like cost effectiveness and just cutting costs? Or is there, yeah, like when you sell Tough Day, what is the value proposition to an organization? Well, there is a lot of efficiency. So going back to that use case of the manager spending a lot of time having a lot of conversations, and you could probably spend 150 % of your time answering questions or taking the coffees and having some coaching sessions, mentoring sessions. a lot of what is discussed can probably be handled by the AI.

15:07So if you can cut back 80 % of those questions, that's a big savings. And that's really the value prop. The other value prop is retention. So if you have these challenges sort of festering and people are not getting their problems resolved, even if they're small, they tend to quiet quit or take PTO. So what's quiet quit, by the way? Oh, quiet quitting is when you are doing the very minimum in your job so that you don't get fired, but you're not very productive. And it also results in regrettable attrition. And often organizations don't know until it's too late, often in the exit interview that something was going on.

15:50So this is an opportunity to serve people better, listen and learn from what's going on. We provide anonymized data to the organization so that they use that like a weather vane to know where are the problems in my organization that they can go address. And as they do, they improve the employee experience, ultimately improve retention. And the cost of replacing someone who attrits is two times their salary. So you can think of losing one good employee that might be making$100 ,000 a year costs$200 ,000 a year. After a short break, we talk about the trend towards conscious unbossing, popular with younger professionals.

16:33And this new concept might just change the workplace as we know it. Stay with us.

16:52If you've spent any time building AI products or leading technical teams, you know this. Transformation doesn't fail because of ideas. It fails because teams can't move together. Enter Atlassian's Teamwork Collection. It has planning in JIRA, documentation in Confluence, video updates in Loom, and now AI agents in Rovo, which connects the dots across your work so nothing gets lost. It's one AI-powered teamwork platform designed for how modern teams actually build. Learn more at atlassian.com slash team changer. That's A-T-L-A-S-S-I-A-N dot com slash team changer. So I want to zoom out. Tough Day is coming out at this really interesting moment when it comes to the future of work.

17:46So I want to kind of dissect some of the current trends that you're seeing around the future of work and how, I guess, Tough Day is helping address some of these concerns or some of these opportunities that these trends are creating. So the first is this whole idea of conscious unbossing. Yes. Which I only recently heard about. And it's basically a trend where young professionals, like my daughter, she's about to graduate from college, essentially don't want traditional managerial roles and they don't also want to have managers? Tell us more about that. Exactly. Yes. 72 % of Gen Z says that they are consciously unbossing.

18:22And to your point, they do not want to have a manager. Okay. And they do not want to be a manager. And the reason is if you dissected what has been modeled for them by their managers is burnout, stress, a not very enjoyable job, number one, but also no matter how hard they try, a lot of them still get fired. Their employee reviews are bad. They're just like, why would I even want to do that? And the truth of the matter is most people who become people managers didn't do it because they want to become people managers. They did it because it was the next sort of rung on the ladder. It's like what you have to do to get promoted or what you have to do to make more money.

19:07So 82 % of people are what they call accidental managers, and they just don't have the capabilities or frankly, many of them not the interest. So Gen Z is saying, you know, I'm happy to manage myself. I can get the information that I need. I know how to network. I am very open to feedback and I can get feedback from anyone. Why does there have to be this formal structure? And I have to say, just as we make our way in the world with Tufte, in one-on-one conversations and behind closed doors, everyone agrees. The role of the manager is kind of outdated. And great managers do exist. And the problem with the great managers is they don't scale.

19:54And so if we could give them a way to augment themselves and create their sort of digital replica so that they have got a partner, they can spend their quality time having those coaching conversations and great conversations that they should be having with their team and then offset the rest of it with an AI. That will help improve the experience for everyone. The other side of the coin is the bad managers and or the mediocre managers who are actually costing the company time, talent, and money. Yeah, we're just going to use Tuffy instead. So the second kind of interesting trend that is also very related to what Tough Day is doing is this idea of the great flattening.

20:36Yes. So tell us what that is. Yes. So organizations are flattening out the middle layers. And Gartner actually has some research recently that says 20 % of companies are getting rid of 50 % of middle management in the next two years. And I think part of that is because we've spent so much money trying to train managers to be good managers, and we're not showing a return on that learning, and organizations are looking for other answers. So I think, you know, it might be a little bit challenging right now, but actually, if you think about the real role of the manager, a lot of those things can be outsourced to AI.

21:22So there's another shift happening specifically in the HR landscape. A LinkedIn survey found that HR had the highest turnover rate out of jobs that they tracked. Why do you think that is the case? And does that kind of solidify the opportunity for a tough day? I will say in terms of HR, we're seeing a few different things. One is, you know, everyone who goes into HR goes in, I think they're people people, right? Initially, you think like, I'm going to do a good thing, I'm going into this field. And as you get into it, it may or may not be your cup of tea, it is largely about protecting the organization.

22:04And that's great, we need people to design employee experiences and deliver services and measure all of that. it may or may not have been why you got into HR in the first place. So I think there's some of that. I think there's so much stress and pressure on HR. The typical first point of contact for an employee is their manager. And if that piece is broken, one of the next calls is HR. So they're getting bombarded with all of these challenges that are really hard and emotionally draining. So I think there's some burnout there. And then in terms of all the solutions, how do you solve for all of this?

22:47It's hard work. HR business partners are the heroes of an organization. They're doing lots of great work. But I think depending on the state of the organization, what resources they have available, what their benefits are, every organization has to figure out what's the right recipe for their culture and organization. And that might be part of it. Now, we're also kind of in this moment of time where we're seeing top-down pushback on diversity, equity, and inclusion efforts. We're seeing this at the federal level, of course, where President Trump is seeking to end government support for programs promoting DAI.

23:25We've already seen, you know, a lot of references to DAI taken offline on kind of federal websites. And this is all being contested in the courts, of course. We'll see what happens. But we have seen a ripple effect already at companies like Meta and Google where they've rolled back some of these efforts. I would imagine that a lot of the concerns that show up in the workplace are related to equity at work and inclusion. What do you think of all of that? And again, how can Tough Day help? On the topic of DEI, when an organization works with Tough Day, we're tracking what is happening in the federal government and we're tracking those trends.

24:06And this is an area where every organization has to do a bit of their own wayfinding. At the federal level, there are things going on, but then also at the state level. So state by state, there's new AI law. There's also new DEI-related regulations. So right now we're at a point where organizations have to navigate a lot of that on their own. And you see companies like Costco and Apple and Microsoft doubling down on DEI and saying, you know, this is super valuable for our organization. It's just part of our values. And we have to invite diversity into the organization to be a strong, resilient organization and to serve our customers best.

24:51And then on the other end of the spectrum, you have organizations saying, you know what, I just don't want to fight this machine. Like some are saying we don't have to call it DEI. Like we love the diversity and what have you, but maybe we've moved beyond this language. So I think there's some of that where they're kind of in the middle. And then you have organizations just saying like, it's all out the window. So when we work with companies, we ask them, how do you want to handle things? like bathroom issues. And we're customizing the experience and the answer for each organization. Even though a lot of the inspiration for Tough Day came from looking at underrepresented groups and their challenges, we continue to see that none of these issues are just about one population.

25:43And it just doesn't matter who the person is. I think it matters how you handle the situation. And ultimately, we want to help people have better communications and interpersonal relationships and working relationships. And that's the point. But to do this, Tough Day needs to train Tuffy with each company's values and cultural norms. So how do they do that? And how are they any different than, say, Microsoft's co-pilot? We get to that after a short break.

26:18Meet Nicole Nicholas, Capital One business customer and co-owner of Ansett Uncles, a plant-based restaurant and community space in Brooklyn, New York, that got its start from a need for unity. The inspiration, it was born from the desire to create a space that felt like home, where we can connect community culture, good food, and come together with family and friends. That's how we birthed aunts and uncles. Nicole and her husband, Mike, were fulfilling their dream of bringing people together out of their home kitchen. But they soon learned that the demand for community was greater than they knew.

26:49It became overwhelming and we were like, we need home, but not in our actual home. We realized that there was also a need in our community for something bigger in our neighborhood. So we had to find a place. Moving from a home operation into a storefront was a huge next step. But Nicole and Mike were able to take it on with the help of Capital One Business. It's not for the weak. As a small business, finding resources is super important because that's the way you'll be able to manage and scale. We would have never done that without having Capital One to be able to help us along the way. The cashback rewards are very helpful.

27:25You know, it just gave us that runway to be able to breathe a little bit. Then you get to focus on the cooking of the food and making the experience great. To learn more, go to CapitalOne.com slash business cards. Let's go behind the scenes and kind of geek out for a bit about how you've built Tuffy. So the first question I have is, why can't just a company, you know, take, I don't know, say a Microsoft co-pilot and feed it its own policies and employment law and just basically replicate what you guys have done? So talk to us a little bit about the technology behind the scenes and what is your competitive mode and differentiator against, say, a Microsoft co-pilot.

28:08Yeah, so number one, I do think coming back to the issue of trust, it's really hard to have any of these conversations internally and know that your organization can see the data. You just can't have that level of trust with an employee on the stickiest, trickiest kinds of challenges. So I don't think Microsoft CoPilot is going to be able to have that level of relationship and trust. So that's one. Number two, we have partnerships with a lot of content partners that have gated content. They will not allow the big LLMs, including OpenAI or perplexity or, you know, with CoPilot. They just don't have the content.