The AI Growth Problem - Michael Stich

0:00Michael Stich:Hey, 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 Michael Stick, partner at Court Avenue. Michael has spent more than 25 years helping some of the world's biggest brands navigate innovation, digital transformation, customer experience, AI, commerce, and just about every major shift marketing has faced over the last two decades.

0:44Michael Stich:Today at Court Avenue, he works with organizations including Kia, Epson, General Mills, Dell, and the U.S. Air Force to solve complex business and marketing challenges. Now, before that, he held leadership roles at WPP, VML, Rockfish, Bridge Worldwide, Texas Instruments, McKinsey, and Dell, giving him a front row seat to the evolution of modern marketing. And along the way, he's advised Fortune 50 companies invested in startups, helped launch groundbreaking products, and built businesses that have transformed how brands connect with customers. He's also been recognized as a Cincinnati marketing legend by the AMA and has earned multiple industry honors for his leadership.

1:26Michael Stich:But there's another side to Michael. There's always another side. He's a husband, father of four, startup advisor, as I mentioned. And when he's not helping companies think about what's next, you'll often find him playing guitar with his rock cover band, The Grateful Dads, which we will get into, at church on Sunday. Michael Stick, welcome to the show. Thank you, Steve. So honored to be here. What a joy and what a privilege to join you on this discussion. Can't wait to dig in. I can't wait either. And like I said, you've worked everywhere, man. You're like Johnny Cash. I'm at everywhere, man. Consulting, client side.

2:00Michael Stich:What was missing, if you will, along the way that you said, I'm going to help build something new with Corda. Oh, gosh, I love it. Thank you for that question. So I'll start with I've done client side. I've done agency side. And then I've been the consultant along the way. I found that I could, when my wife moved me to Cincinnati 20 years ago, I found that I could make a good living in Cincinnati by working on the agency side on a national scale. And that has worked really well, predominantly with WPP agencies during their heyday and then separately on a couple of independents, Rockfish before they sold and now this one.

2:39What I learned through the process of living on the agency side out of the city, which is a great place to raise kids, is that my joy is in creating jobs. I thought it was going to be the intellectual endeavor of being on the forefront of innovation, which I do like. I thought it was going to be, you know, being a part of a fast growing space that that throws off a lot of cash and, you know, is financially rewarding for me and others. For me, it was actually the joy of creating jobs that made me realize, gosh, what a great moment in time to create a new kind of company that can be a good vessel for job creation.

3:15And we've been able to do that 300 strong here in just six years. And that has given me my greatest joy and reward is seeing some folks, you know, be able to pay down their college loans, be able to put a ring on a finger, a down payment on a house. some things like that, that a good job, that an accelerating job can do for you and your career. For those of you that have been with us through a few of these instances, whether it be Bridge Possible, Rockfish, VML, now Court Avenue, there's a pretty good family tree amongst these companies in which we can look back and be like, we were there then because we were sitting in the midst of the forefront of innovation.

3:56We're doing that again now, but we're in the midst of one of the biggest transformations, AI, that I think any of us have seen in our lifetime. And it's just a joy to be able to use this vessel to be able to do that. Trust me, we'll get to AI, of course. Everybody is, right? We cannot not do much these days.

4:14Michael Stich:But I want to still stay on the Court Avenue topic for a few more minutes. Yeah. Was there a problem or problems or challenges or things you saw that other agencies weren't doing or hadn't figured out that you went, we can do that? Yes. So I'll start with, you know, you and I have been around a bit, Steve. We've seen some waves of innovation. In the 90s, there were portals and application service providers and marketplaces, right? In the Web 2.0 era, 06, 07, 08, 09 came APIs and social media and the rise of app stores through, you know, on top of iPhones and Android. Amazon exploded and we saw the rise of things from cloud on through to e-commerce in the 2012s to the 2016s.

4:59And then the rise of customer experience platforms or whatever you want to call them, but CX-based solutioning that happened. Around 2020, at the time we were talking about things like Web3 and metaverse and those sorts of things as COVID hit. But if you double click into that, there was a collection of technologies that were nascent and driving the next wave. And that was AI, virtual reality, you know, encrypted technologies, cryptocurrencies and blockchain based technologies and a variety of others that were coming in that were kind of changing the Internet again. And so I saw that early, been touching AI for over 15 years, combination of advisor for companies, those sorts of things.

5:38And just said, hey, wouldn't it be great to create a new organization based upon the next generation of technologies and ride that wave in a way that typically when those waves happen, they give way to emerging independent agencies that don't have the legacy to manage and they just move fast and create. So we've done that. And at the same time, it's a good way to then help clients think through what is this stuff? Why should I care? How do I get started? And can you do this for me as I eventually have to realize I've got to organize around it and build it into my organization? So that's what we're doing.

6:13And it's been a great way to ride this time along the way.

6:17Michael Stich:I love just the simplicity, if I can say the word, that you put that. And that's the point. Yeah, I think so. Don't look for complicated. Yeah, I think so. I mean, you stick around long enough, you start to see patterns, right? And so we've seen those patterns of clients wondering, what is this? Why should I care? To, okay, I know I should care. How do I win? To, okay, I know how to win. I got to bring this in-house. To, okay, once it's brought in-house, I got to diffuse it across my organization. Those are four stages. It's kind of like, I said this before, it's kind of like an amoeba eating food.

6:47It senses, it understands, it incorporates, and then it diffuses. And it's the same thing, whether it be a website or now we're talking about AI implementations. the enterprise, you know, all is the same phasing. And then a job of an agency is to be out in front, is to help guide them, show them how to win, win for them, then show them how to integrate it. And you're onto the next thing. And if you can understand that that's the playbook, you can make some pretty good companies along the way.

7:14Michael Stich:How would you say that you've built this agency from the ground up, right? Has it affected the way you personally look at the way you lead? Ooh, love that question. Short answer is probably, but I'm basically me, Steve. So I would say I have some intrinsic values that I think are important, as do my partners, Dan and Kenny. We're doing this in order for us to create a great organization that serves its clients well, that honors a good understanding of how value is created and then sharing in that value creation with our clients and with our people. And sort of how we lead starts with values and it starts with, you know, making sure that we've got great experiences for our clients.

7:55We're doing good work and that we're creating an environment for our people that they feel like they can be successful within. But that also has some expectations and some urgency and some, you know, some accountability to it as well. And it's that mix, I think, that works really well. People like a good challenge and they like being successful. And so sort of creating an environment for that is important. In terms of the mechanics of this company versus others that I've run, what is interesting is that Court Avenue is architected to be a collective for entrepreneurs. And so you could call it a mini holding company.

8:27I would disagree. I look at it more as an operating system. But it is more than just a single agency. It is a combination of capabilities that collectively come together in very unique and strategic ways that I think, again, do not live with a lot of the legacy businesses that our brethren in our industry create. And then we find ways to interoperate with each other in a way. So leadership is less around sort of leading a single monolithic entity and more about conducting an orchestra and an operating system of capabilities and finding ways around how that operating system needs to scale and grow as the company goes through its different growth stages.

9:04Right, exactly.

9:05Michael Stich:All right, let's get to those two little letters. Here we go. Here we go. First question. A lot of people are talking about how to do AI, but very few are talking about how to actually operationalize it. And my first question for you is, what do you think the smartest companies are doing differently right now when it comes to operationalizing it? I think they're letting the people who understand it make decisions. There are a lot of people who are talking it and who are in decision-making positions who don't really understand it and are saying yes because they have board pressure or CEO pressure to do something and to say we've got a plan.

9:45And then they've got to come up with a plan that if you double-click and triple-click into it, it really doesn't have a lot of teeth, doesn't have a lot of detail, and it's not really known to be something that can or would succeed. A lot of dead pilots out there. We all know that. And I'd say those that are really living it are those that are specialists in a job to be done and those that are deep on AI capabilities and putting those things together in a way that evolves individual tasks inside of the enterprise, but then also leads to some good process re-engineering internally. And so I'm seeing those that succeed, and I'm seeing good things from companies like Pepsi, Tyson, General Mills, Kia, Elanco.

10:29It's those that are allowing for those specialists around jobs to be done to help with or inform the decision-making around the actual application of AI.

10:39Michael Stich:What are some things you think one to two, whatever, marketers when it comes to AI are overestimating and underestimating or overvalue, undervalue? Let's see. I think the, so a lot of folks are walking around with AI for efficiency, and I like to have the lens of AI for growth. And it's so easy to talk about how much time we're saving, how much you can do these things in such a faster way that we can put out so much more content than we ever had before. And all of that is good. But if it's not driving growth, it doesn't matter. And at the end of the day, a lot of our clients are CMOs, are chief growth officers, chief commerce officers, those that are tasked with growth.

11:20And if there's not a real good, hard lens around how do I apply this so I actually drive growth, then I look at it and say, then the rest of the stuff is secondary. And you can hand that over to the CIO. They'll find ways to drive efficiencies. That doesn't need to be your first focus. And so how do you do that? Well, let's say you're finding ways to address new customer bases and new audience segments. You're finding new channels to sell through. You're finding ways to increase your conversion rate by increasingly relevant or highly converting experiences. Those are things you can do to drive growth.

11:54And if you can think about how AI can help you do that, then that's a better angle or increasing your share of wallet within your existing customer base. Great, great, great ways to go. Right. Different than I wrung all the costs out of this thing and I found a way to replace our, you know, our offshore production team through AI tools. Respectfully, that's not going to get you to the next level. Like what's going to get you to the next level is I drove all this growth. Yeah. I like spending and steering clients towards do that. And then once you get once you can get there and we talk about how to do it efficiently.

12:24Michael Stich:How different. Let's go back a year even. How different are your conversations with clients now when it comes to AI? I think clients are a lot more mature one year on or two, three years on as long as we're in on this. I think more clients than not have roadmaps of what they're doing, enterprise roadmaps of where they're going and what they're going to put in place that are a collection of solution spaces that fit various organizations. Some clients are even starting to hire people from OpenAI or Anthropic and starting to say, OK, I'm going to create an AI center of excellence within my organization that's going to guide this.

12:58Others are sitting within IT departments or sitting within the CMO office. But the point is there is an aligned upon path of solution spaces that people are going to put in place. Where I think it's entirely industry specific is how aggressive those roadmaps are. The high tech industry is crazy aggressive, as you might expect, right? They are out in front of everybody in terms of bleeding edge implementation of the stuff. And it's fun to be in that industry because of how aggressive they are. different than healthcare, different than financial services, who because of regulatory regulations within their industries are rightfully more cautious and have a roadmap, but is more relevant to and respectful of their regulatory environment.

13:40So it all depends on their industries, how aggressive that roadmap is. But the point is, if you've got one and it's aligned to and it's getting rolled out, that's a great place to start.

13:47Michael Stich:Right. So what do you say to a CMO of your client? And they're like, they're trying to balance experimentation, if you will, with AI versus I still got to drive results. Like, I'm sure it's probably a case by case, right? But I mean, our CMOs specifically coming to you going, I need help. I'm not sure where to go or what I should do or how far down that AI rabbit hole should I go? Like, what are you hearing from CMOs? It's everywhere. It's in too many places. So yes, it is the dominant agenda item for many clients. Many of them are using it as a bolt-on to their existing agenda and things that they got to get done.

14:26And they're assigning it as a bolt-on to some of their top performers in order to ensure it. I prefer to think about it as, yeah, you've got to drive growth. You've got to drive your plan. You got to get through your brand planning processes, your commercial planning, and all your execution.

14:40Michael Stich:You got to do all your seasonal promotions and everything else you're doing. Yes, 100%. With, you also have to find a way to build planning into those efforts. And that's where we're spending a lot of time with clients is process mapping, instrumentation. How do you think about use of these things? Bill Parcells had a great quote, you got to win today and win tomorrow at the same time. And I love that idea. Yeah, you have to deliver on your commercial plan. You have to drive results. And yet you also have to plan for the future. And if you're not purposing back and forth between those two things, you know, that meant on the football field that Bill Parcells would allow for some playing time for the young and for the rookies to be able to come in and get some experience at the expense of some of the veterans.

15:21At the same time, he also had to win the game. And so it was a judgment call of how much are you doing. I'd say it's the same thing. Find the time to build experimentation into the plan delivery that you're driving.

15:32Michael Stich:Yeah, exactly. Let's look at the agency business as a whole for a second. You've seen it from every angle, right? A lot of them. I'll just go for you. In 2030, what does the agency of 2030 look like? I think we're already starting to see it. We've had a period of over-consolidation in the industry. I think the big will only get bigger. I could argue that it's going to be a two or three horse race at the very top of the largest hold coast. And those that have best nailed the operating system model. And Publicis is the poster child of that. And it's working for them and has been working for them for a while.

16:09Of course, Omnicom and IPG are both trying very hard to be that number two with that model. All rooted in understanding of first-party data, all throwing off different service areas out of that intelligence with an AI solutioning over an integrated across. I think that'll be, you know, at the very top for the largest multinational clients, a good solution. What's happening on the other side of the barbell is the rise of the independents. And I think we're entering in, we're in the middle of a great time for independents to make hay. And I won't quote some clients by name, but I'll say that part of the reason why we have some of the clients that we have within the Fortune 500 and even the Fortune 50 is because they don't want to just be another logo on the side.

16:54They don't want to be 11th in line to have their A team be the B team from these hold codes. And we've been at it for a long time. Our ability to know who the best talent is in the Staffordon Clients business is not only a guarantee that we can make them, it's happening, but the results for them are better. And so that is a fair game considering the size of the marketplace. I see continued bifurcation between rise of independence that will grow. What I like about your timeframe that you just asked is we got four years then for us to then describe and define what that next generation hold core operating network is going to look like.

17:32Yeah. And I think we're building that. Others will look at the bunch of independents and start to compile them together and say, here's a collection of independents. we're architecting Court Avenue to be an operating network that comprehends how they should fit together and has a backbone of support behind it that includes finance, HR, IT, and AI intelligence that plugs into those capabilities so that we can be both organically, growing organically for our clients and also acquisitive in the future to bring some other companies in.

18:00Michael Stich:So one thing I noticed, and I have to bring this up because in my research about the company, I noticed that Court Avenue scores really high on employee NPS. Thank you. You cannot fake that, as you know. Thank you. So pull back the curtain a little bit. What's the secret? Yeah. So industry average is 20. We're at 61. At the end of the day, this industry has two currencies, clients and people, in my opinion. And you got to make high NPS scores for both of them, high client NPS, high employee NPS. And we're pleased to say we think we're leaders in the industry on both. On the employee NPS side, industry average is 20.

18:31We've got a 58 last year, 61 this year. Good numbers. And I'll start with the fact that we care a lot about a few things that make it a good place to work. We invite curiosity and we encourage curiosity for everyone in the company. Be in the business of understanding clients, understanding work, understanding technology, and asking a lot of questions. We're ambitious. We want to win. We have a sort of an expectation for greatness. and we have those high expectations that manifest themselves inside of not only the work and doing great work, but hey, come in here and help us build the next great company.

19:09Like be a part of it and throw yourself in and know that when you're here, it's gonna be, in a good way, challenging, but also something you can look back upon and be like, I helped build that place and be here for this moment in time because we've got other people who are really good coming in and wanting to build something great. I think there's an element here around relationship. Let's do take the time to stop and make each other laugh. Let's go ahead and beat each other up about the right idea, but let's separate that from respect for the individual. Everyone's got their own thing going on.

19:43Everyone's got their own baggage. Everyone's trying their best to do a good job. Let's allow for that. Let's honor that. And let's have people come in with a baseline, a modicum of respect for everyone. So whenever they're here, what we'll get to is the right answer through conflict, but we'll also get to enjoyment and experience and celebration and relationship with each other through respect.

20:03Michael Stich:So how do you build someone listening? How do you build accountability without creating burnout? I love it. I can't promise that there won't be times it won't be hard from a burn perspective, especially if you think about an agency in general, the space we're in. And you think about a company that's growing as fast as we are from scratch in the space that we're in. So I would say we like hard, just straight up. Like we like complicated problems from our clients. We like clients giving us their most complex problems. And we like working hard within the company itself. And we have to also respect and manage to burnout.

20:33And that means the way I should say, you know, I think we've built a pretty good operating controls capability through some of our operational team. That includes Janine Wheeler, our CFO, Jana Roszkowski, our COO. We're able to take a look on a week by week basis across both billable rates and value added time through utilization, business development, et cetera, who's burning too hot? And then, and when we look at them over the last, you know, three, four, five, six weeks, how do we get them help? And we meet every single week on where do we have capacity? Where do we not have capacity? And how are we both flowing our resources to needs?