AI Won't Replace Leaders - Barry O’Reilly

0:00Hey, welcome to the CMO Whisper Show. I'm your host, Steve Olenski. Part marketing practitioner, part ad agency veteran, part journalist, I was a writer for Forbes for 10 years. I've had so many insightful conversations over the years with business leaders, to athletes, to celebrities, to of course, CMOs. The only difference now is instead of sharing those insights through written form, I'm doing it this way. My guest today is Barry O 'Reilly, an entrepreneur, executive advisor, and best-selling author who spends his time helping leaders rethink how organizations actually work in a world that seems to reinvent itself every five minutes.

0:41I may be five seconds at this point. He's the co-founder of Nobody Studios, a global top 10 AI venture studio with a pretty ambitious goal of building 100 companies in five years. He's also the author of Lean Enterprise, Unlearn, and Artificial Organizations, where he explores what it takes for companies and leaders to adapt, evolve, and avoid getting trapped. Barry advises boards and executive teams around the world on enterprise transformation in the age of AI. And today we're going to get into what leadership looks like when the rules are changing in real time. Interesting. Barry, welcome to the show.

1:20Yeah, thanks for having me. Absolutely, my friend. And I am very, very much looking forward to this. We had an incredible conversation off air and I'm looking forward to just picking it up. So let's just jump right into that two letter word. I mean, two letter acronym. Everybody's talking AI. And if you're not, there's probably something wrong at this point. But what's the difference or is there a difference between talking AI and actually changing the way organizations work? And what are leaders still getting wrong?

1:46Barry O'Reilly:Yeah, I think the biggest thing leaders are getting wrong is they're starting with the tools first. Most transformations fail because leaders think of transformation as a tool transformation or an AI adoption as adopting the tools. But that's actually the biggest mistake. I think like 83 % of transformations fail start when people start with the tools. Now, the real point is behavior change. So what you're looking for is people to redesign the way they work. And that is probably the leading indicator for whether your company, your startup, your business is going to have any success trying to accelerate its ability to move faster, to make better decisions, to leverage these technologies in any meaningful way is you have to start with thinking about how you're going to redesign how you work, not whether I should be using Claude Code or should I be using ChatGVT.

2:37Barry O'Reilly:And sadly, you know, that's where most people start. And they end up sort of playing with tools. They're not sure what the purpose of the tool is. They're not clear on the task that that tool could be designed for, that they even want to use it for. And more fundamental, they're not even honest with themselves about how they do their best work. So they go about it the wrong way. What you need to do is think about how do I do my best work? What are my natural human traits where I get the best of my abilities out into the world? And then what are the tasks that I create outsized amount of value or my highest leverage?

3:11Barry O'Reilly:And then once I understand how I do my best work, what are the most important moments of the tasks that I do that work? Then I can start experimenting with the tools that will help me accelerate that. And a simple example, I would say, is for me, like I'm dyslexic. So, you know, nicely shouted out that I've written three books. I think my English literature teacher would fall off their chair if they thought that I had done that. But, you know, one of the sort of notions that I had is that writers write, you know, that they sit at their desk. They're sort of wearing a purple velvet jacket and turning out pages by a roaring fire and glasses of wine.

3:48Barry O'Reilly:And that's that's what writers do, you know. And believe me, I drank lots of wine and I sat by fires, but I did not turn out any writing. So I was like, there's something wrong with me. But then actually the reframe for me was asking myself, actually, how do I create my best content? Because that was the task, I was creating content. And there's lots of ways to create content. For me, talking is actually much more of a natural trait for me to innovate, get better when I have Socratic conversations with teams and we're ideating around business ideas. I like the energy of back and forth conversations with people.

4:23Barry O'Reilly:So when I knew my trait was talking, a task necessarily was creating content. The tool was pretty obvious that I just needed a transcription service to capture my words. So I hired a journalist. They interviewed me and I was turning out a chapter every 40 minutes. I would have like 10 ,000 words in 40 minutes from just talking it out. And then they would refine the transcript and send it back to me an hour later. and I suddenly had a chapter that I was iterating an improvement. So I went from staring at blank pages for a week to literally like generating chapters in 45 minutes. So it felt like I was almost cheating how much acceleration I was getting, both in terms of the output, but the outcome.

5:05Barry O'Reilly:I was creating high quality content as well. And that's really sort of how I get people to try and think a little bit about what and how you should be thinking about leveraging these tools. The last place you start is the tools. The first place you start is with yourself, how you do your best work, and then what are the tasks that you create value from, and then that's how you start figuring out what tools you might need. I could not agree more. By the way, you left out one small detail when you were sitting by the fire and drinking. You forgot about the pipe, right? We got to have those big, long.

5:35Barry O'Reilly:Yeah. Who doesn't like a nice cigar these days? I'm living my best midlife sort of dream right now. my wife keeps making fun of me because i'm like scoping out whiskey and cigars all over the world every time i'm traveling just playing more than a stereotype you know that because i'm a writer too so we they people think you just sit around and drink cognac and buy a roaring fire anyway i'd love love love that message of start with we put the tool last and you're right there's this knee jerk and i get it to an extent of the pressure people are on to just start diving into that deep end without even learning how to swim kind of thing but there's a lot of inherent dangers in it so i really really love that advice that you give about start with yourself and then your team or whatever but what is it you and your team do best and work back from that yeah and like it's you know this is very natural right like anthropic open ai they have billions of dollars to spend on marketing and all the marketing messages are fear marketing as well right you're going to be replaced you're falling behind you're not you're not you're already going to be out of date the machine's going to take your jobs so it's all this sort of attack on the nervous system and anxiety of people which again just increases this sort of idea that i need to do something i'm not doing i'm falling behind yeah and nothing could be further from the truth like less than i think it's 0.08 percent of the world's population have even used some of these LLMs in their day-to-day work.

7:08Barry O'Reilly:I go into startups right through to Fortune 500s, and there's companies that have not given licenses to people in these massive organizations because they know they won't be leveraged, right? It's $30 a month for 100 ,000 employees. That bill runs up pretty quickly, pretty fast. And you see people paying for these licenses, but the token usage is not going up. Because folks are in fear, right? And this is probably, again, one of the things I learned, not only just at a contributor level, it's at the executive level too as well. Senior leaders feel like they should know more about this technology, but they're kind of embarrassed that they don't and they feel incompetent about it.

7:50Barry O'Reilly:So it's one of these difficult things to talk about, like that I don't know how to use that in my day-to-day job yet often because they're in back-to-back meetings and they've no time to focus on it and I'd ran a survey I so I built up a massive mailing list over the last number of years I think we've got 12 ,000 executives on it and in the summer of July 25 I sent out a survey to them all and over 5 ,000 of them replied about 25 were CEOs 25 5 % C-suite and about 50 at director VP level. And when I asked them, how do you want to learn AI? 30 or 43 % said they wanted to do it in a small group, like less than three.

8:31Barry O'Reilly:34 % said they wanted to learn it one-on-one. That is crazy. Like normally when you reach out to people about how they want to learn anything, they'll often say groups. I want to learn in groups. I want to learn peers. I want to, but everybody wanted to learn on their own or maybe with one or two buddies that they trusted. again because this fear of incompetence and you know the thing that's fascinating about it is like these are super smart people but they've just never had the time and the focus and maybe a coach or dedication to help them get started so literally you know i just started doing this for a couple of my friends you know three or four sort of one hour sessions and showing them how i've been using these tools in our venture studio for the last six years and instantly they're just off and running right it the unlock is actually relatively small and simple once you have a key first principles down but you need dedication time and focus to get started that is fascinating those those results are fascinating but unsurprising at the same time which i kind of sound like i'm talking out of both sides of my mouth but yeah you know i talk to leaders all the time and and the off-air off the record conversations are a lot of i think i should be doing more i think i I feel like I'm falling behind and I basically say the same things you are like you're not even the least of your worries right just take your time.

9:49Yeah no it is scary you know like you have

9:51Barry O'Reilly:to remember like you're a marketer right you know this like you open your Instagram feed your LinkedIn feed it's just full of people going I built 7 ,000 agents on the weekend and launched the website and but you know one of the big tells is that all those people are just speaking about activity. They're just talking about stuff that they created. None of them talk about the outcomes. Like, great, you've built 7 ,000 agents. You know, have you reduced the operating cost of your business by 25 % as a result? So it's very easy. I call it the productivity flex. It's very easy with AI to produce output.

10:29Barry O'Reilly:Like I could sit here, you know, even having our conversation and generate 25 sales decks for, you know, customer interview scripts all while we're doing this podcast and go, hey, look, look how much stuff I've created, Steve. But it's all half of it's junk, you know, half of it's just like stuff, you know. And, you know, this is sort of the thing to remember is that the people who are really powering ahead with this is they're getting the best of both human and machine intelligence. So in the book, Artificial Organizations, there's a reason that I said build better judgment with human and machine intelligence is because the last bastion of human innovation is our judgment.

11:10Barry O'Reilly:It's our ability to look at information and make creative problem-solving decisions. But the best leaders are bringing that innate skill and they're pairing it with machine learning, machine data. So they have an advantage of their instinct, but they're pairing it with machine insight to make better decisions. The sort of fly by knife, like cowboy of, oh, I just do everything with my gut. Well, sure, you might get, you know, two out of 100 decisions right. But if you play the probabilities over the long term, the folks who make better decisions consistently are the ones who have the best data and then, you know, build up that human judgment capability.

11:51Barry O'Reilly:And that's really, I think, you know, what people should be thinking about. Not is AI going to steal my job as the best Excel formula writer in the company, because yes, it will. But you need to start thinking higher up in terms of the level and magnitude of work. Your job, if you're an analyst, is not to create spreadsheets anymore. It's to interrogate and analyze the data and make decisions. If you're a project manager, you're not typing tasks into a task management system and making sure everyone knows what the tasks are. You're solving problems to get the project done. So you have to start elevating the class of work, if you will, about what your focus is for, again, your highest leverage traits and tasks, because the machine will automate most of the low level administration.

12:39Barry O'Reilly:And if you're holding on to that sort of work and defining your identity by it, you're going to struggle. Yeah. Now, I know you spent years helping organizations kind of unlearn old habits and rethink how they operate. And is AI exposing weaknesses are already there or creating new ones or both? Yeah, so the way I describe it is that AI isn't replacing leaders, it's just exposing their leadership systems. Most leaders have decision-making systems that they use, whether you're aware of it or not. There's a process, I'm sure, Steve, you go through, whether you're deciding who's going to be on your podcast or not, right through to how you do a go-to-market strategy for a company, right?

13:22Barry O'Reilly:Everybody has their internal systems and processes that they use. And the power of these tools is it can sort of start to differentiate the folks who have really robust systems that challenge their thinking, that ask difficult questions, the pressure test their thinking, that look for blind spots versus the person who just talks to a machine and says, tell me the answer. I'm just going to take that answer and use it. So anyone who does the latter is instantly giving up all of their agency in any situation that they're in. The more, and this is sadly what a lot of people are starting to do with these machines is they're asking it for the answer.

14:01Barry O'Reilly:Summarize this document, right? So the minute you do that, you're deferring to a machine to take and extrapolate the intent out of a document. And then if you take that as, if you will, gospel, that that's the truth, you've instantly given up all your ability to do any judgment. The folks who are really good at this will put documents or information in front of them and say, what are some of the blind spots about this document? What are some of the assumptions that are implicit that are being made about it? If I had to look at three different scenarios to make a decision about what the purpose of this document is, what could they be?

14:37Barry O'Reilly:give me pros and cons of each, show me potential scenario plans and impacts if certain factors are changed or not. That's a totally different leadership system, right? And that's really what these tools are doing. The people who have very robust leadership or judgment systems and then put into place judgment infrastructure like telemetry and data so they can gather information are just powering ahead when they're up against people that are running on instinct or even worse, They're just deferring to the machine for an answer. And that's really what's separating people. And it's only going to separate people more and more between folks who might be naive in a domain, but they've great systems to make decisions can actually start outperforming people that have been in a domain for 10 years and are running on gut.

15:24Without question. Yeah. Let me pivot to, I get asked this, or a lot of people have this question of metrics, meaning what do you say to, okay, Barry, this is great. And I know my problem and I know myself and I picked the tool. I'm three, six, nine months into using XYZ tool. What kind of metrics should I be looking at? How do I know if the AI is actually working?

15:44Barry O'Reilly:Yeah. So in the book, there's a couple of key metrics that I define right from the beginning. And the first one is decision velocity. So this ability, am I making decisions sooner? Am I showing up to meetings and making decisions in meetings because we're more prepared, because we're clear on what we're trying to achieve? Like, are we making decisions? The next one is decision advantage. And this is the quality of information that you have to support those decisions. So again, when you show up at high stakes moments like meetings, do you feel prepared? Do you feel like you've been able to access all the information that you need to make a quality decision quickly with confidence?

16:24Barry O'Reilly:And then the other is the reversal rate. So when you make decisions, how often do you have to reverse them because they're the wrong decision? Or are you moving on to the next problem in front of you having made that decision? And, you know, Now, this is sort of how it changed really for me. So again, like I said, one of the things, the highest leverage task for me is meetings. And I think most people, the average in the US is people spend 23 hours a week in meetings. If they're lucky, 32 % of meetings have an agenda. Most people show up and make no decisions in meetings. They just sort of flap around and talk.

16:59Barry O'Reilly:They're the biggest waste of time potentially in the global economy. Versus when you meet with me, I have a meeting co-pilot everywhere I go. So that means both in the meeting that I'm in, we're capturing every conversation and turning it into a data asset. And it means when I show up for the meeting, I'm using all my data assets to prepare and say, right, Steve, we're going to make a decision on what new market we launched this podcast in and the sponsors that we're going to target. Here's all the market information that we need. Here's the top five sponsors in the categories that we're focused on.

17:31Barry O'Reilly:Let's meet now and make a decision. Right. And so those meetings are fundamentally different than rocking up with just meeting, meet Steve. Hey, Steve, why am I here? We're going to talk about what? I don't have the information. I don't even know the decision we're here to make. Let's talk about it and meet next week and make it another decision. Let's meet about the meeting. You know what I mean? Like you've lived this. I do. This is the kind of stuff when you talk about performance and people that are separating themselves, it happens in these micro moments. It happens in the way people show up.

18:03Barry O'Reilly:And it's what I call the real sort of pyramid of, if you will, success for leaders is one, productivity is just table stakes. It's just your ability to send emails 5 % faster or whatever. Performance is this ability to show up and make better decisions because you've better information to do that. But the real gift is executive presence. it's actually a calm mind even in the face of uncertainty because you know you have information you can access to support yourself to make high stakes decisions when you're under pressure in the face of uncertainty and that is sort of like a gift right that that is the best way to make difficult decisions not when you're running from meeting to meeting to meeting and your head is full and you're overwhelmed and you're processing last meeting you're trying to make the next that's the worst time to make a tough decision absolutely look we all go back we're of a certain age and in our 20s like you would go to meetings because your boss would call them and okay it was an hour you took an hour but the best leaders are the ones if you got done in 20 minutes the meeting was over kind of thing yeah you're out of there right you're but you're back to execution mode right just coordination and execution exactly but in your 20s thinking who cares i'm getting paid what do i care it's it's an interesting dynamic you get older look at the stick figures i drew drew in this meeting they're pretty good right i'm pretty happy with that my stick figure game is like on the rise right you sit around for those extra 40 minutes and just bs or and like in your 20s this is great yeah meanwhile as you look back at least i do get get reflective of going the best leaders are ones okay we're done back to work okay and that's that's literally what the best companies do right like meetings are decision engines they're they're not like time places to spend time you don't want to be in them it's literally coordination problem solving decision making and move right and like that that is sort of one of the problems is we've we've cultivated this sort of behavior that it's like the law of expanding gases however long the meeting is booked for is how long people will spend on it and again that's not necessary the goal is to make choices and move so with ai of course there's and there's an inherent of speed everything's done faster right?

20:14And in the context of decisions, that can sometimes make bad decisions faster. So how should leaders think about balancing the speed and judgment?

20:22Barry O'Reilly:Yeah, no, it's a great question. So one of the things that I think people have also forgotten, you know, thinking is an activity. And most people don't have much time to think because they're in meetings from back to back. They're going from one thing to another. And often when you think about productivity gains, Say you could save 5%, 10 % a week from using AI tools just to write emails faster, just to, you know, create documents a little bit quicker. When most people think, well, what are you going to do with that 5 % or 10 % of your time back? You know, people have such a dogmatic view. They're like, oh, management are going to give me more work to do and I'm going to have to do more activity.

21:02Barry O'Reilly:But actually, what you should be thinking about is if I'm able to automate and accelerate my administrative work, that's creating more capacity for my problem solving work. You know, the real nitty gritty problems, the things that you just sort of everybody actually loves most about their work. Those hard, interesting problems that you wish you could work more on, but you're stuck in the admin world too much. So the gift, I would argue, with these tools is that it gives you more capacity back for this creative problem solving. And really what you should be thinking about is not that I'm going to fill up that time necessarily with more output creation.

21:41Barry O'Reilly:Some of it should be spending time to think deeply about these problems that you're actually will really move the needle. You know, and this is something I experienced myself personally. You know, I got so excited about these tools and I was almost getting like productivity fatigue. Like I felt like I was so productive day to day that I actually needed to take a break because I was like, my God, I'm just I'm buzzing here, you know. And it was one of these realizations for me where I was like, well, hang on, if I'm just speeding up to execute faster and more, I'm sort of missing the whole point.

22:18Barry O'Reilly:Right. Like I'm paid to make decisions and decisions. some you can make fast but some you need to make slow some you need to give yourself time and space to think so what i really started to getting intentional about is putting like thinking time into my schedule that could be walking around the park at lunchtime that could be going for you know a run to clear my mind before i have to have a high stakes meeting it could be right like these become a part of my system of work where you need almost to change the way your brain is operating to think deeply, to think, you know, very thoughtfully about these high stakes decisions.

22:59Barry O'Reilly:And that again, that's a gift because leaders make their best decisions when they're calm, when they're, when they've clarity, not when they're running from meeting to meeting to meeting or doing another AI doc, another AI doc, another AI doc. You're in too much in reaction mode. So I think it's recognizing that in yourself and then adapting. Again, this goes back to your traits. It's recognizing how do I do my best work? What are some of those innate things that I do to do my best work? And the tasks that matter and then designing tools around it. And I think that's probably one of the things, you know, most people have not got to grips with yet.

23:36Barry O'Reilly:And again, because the fear is if I automate or make work be completed faster, I'm going to be given more work to do. Again, that's a fear. It's not, I'm going to make better decisions with the work that I already have. That's a great point that if you're on a team and you're given a task, I'm sure there's conscious decisions of if I get this done too fast, they're going to think, well, one of two things. One, I can give them more work. And two, everything's going to be done that fast. But the flip side is if I take too long, then my boss could go, why did it take so long? you have AI. So there's that, right?

24:15Like it's fascinating.

24:17Barry O'Reilly:It is right. But we're also very much at the beginning of this story, right? Like nobody really knows how this is going to go, how it's going to end. People are figuring it out in real time. You know, they're, they're, a lot of their thoughts are based on implicit assumptions that most of them are flawed, right? So, so helping people understand that you just don't automatically get 10 % faster because someone gave you a ChatGVT license on Monday, is, you know, something managers and contributors have to also recognize and understand, right? It is a massive redesign of jobs. And again, this is one of the things like most people are getting very worried about their job, but a job is just a container for a bunch of tasks.

25:01Barry O'Reilly:And the way the world is going is that many low-level tasks now are being automated that used to be part of a job. And some people tie their entire identity to the job, even though it's been reassembled in real time around them. Again, so that's a difficult thing for many people to deal with, right? They might still be measuring their excellence in a task that can now be automated rather than a task that is a higher order task, like decision-making, judgment, like finding, again, And the example of the project manager who created a beautiful task management system is now actually should be focusing on solving the problems of the project, not building and capturing tasks and wandering around and asking everybody, have you done your tasks?

25:48Barry O'Reilly:But many people tie their identity to those tasks of the job, you know, and that's tough for many people. And again, we're all going through this sort of together. Some people sooner, some people later, but it's going to happen. This is a true technology revolution and a redesign of how we work. Without question. You mentioned a term I want to talk about, productivity flex, and why it can become an AI fake. Explain that. Yeah. So like one of the things we saw very early in our studio, and we have like founders and entrepreneurs coming to us all the time in nobody's studios with business ideas.

26:26Barry O'Reilly:And I'd say literally about three years ago when ChatGBT like really sort of hit the mainstream, suddenly we went from founders who would show up with like a crappy pitch deck and like a rubber band prototype to suddenly founders showing up with these beautiful set of product specifications, go to market strategies, financial models, like perfect data rooms and all the documents you would dream an entrepreneur would have in place for like seed funding of a business. business. We were literally like, oh my God, this is amazing. Look at this person. Look at all the work they've done. And then instantly we would sit down and start going through the docs or talking to the entrepreneur.