Artificial Intelligence Podcast: ChatGPT, Claude, Midjourney and all other AI Tools

Is The AI Bubble About To Burst With Lawrence Mandelberg

• Jonathan Green : Artificial Intelligence Expert and Author of ChatGPT Profits • Episode 370

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Welcome to the Artificial Intelligence Podcast with Jonathan Green! In this episode, we dive into the intriguing dynamics of business self-destruction and the AI hype cycle with our distinguished guest, Lawrence Mandelberg. Lawrence, an expert in organizational growth and sustainability, shares valuable insights on why some businesses unwittingly set themselves up for failure and how to navigate the complex landscape of change management.

Lawrence discusses the common pitfalls businesses encounter, such as resistance to change and lack of clarity in purpose. He highlights the importance of understanding the true value of your product or service and the significance of embracing change strategically to foster growth. 

Notable Quotes:

  • "Organizations have a built-in resistance to change... but growth forces change. You cannot have growth without change." - [Lawrence Mandelberg]
  • "Every human being loves change that they do unto others. Nobody loves change others do unto them." - [Lawrence Mandelberg]
  • "It's not about how often should we change, but about how much do we have to be better to justify investing in the change." - [Lawrence Mandelberg]
  • "The inflection point for change is when your current reality becomes more of a drag than your potential future." - [Lawrence Mandelberg]

Throughout the episode, Lawrence emphasizes the necessity for businesses to critically assess their operational strategies, looking beyond symptoms to address root causes of recurring issues. He illustrates this with compelling examples and provides listeners with practical frameworks for evaluating and implementing change effectively.

Connect with Lawrence Mandelberg:

If you're interested in understanding how to prevent your business from self-destructing and want expert advice from an insightful strategist, this episode is a must-listen!

Connect with Jonathan Green

So is the AI bubble about to burst? Let's find out if these businesses are self-destructing with today's amazing special guest, Lawrence Mandelberg. Welcome to the Artificial Intelligence Podcast, where we make AI simple, practical, and accessible for small business owners and leaders. Forget the complicated T talk or expensive consultants. This is where you'll learn how to implement AI strategies that are easy to understand and can make a big impact for your business. The Artificial Intelligence Podcast is brought to you by fraction, a IO, the trusted partner for AI Digital transformation. At fraction a IO, we help small and medium sized businesses boost revenue by eliminating time wasting non-revenue generating tasks that frustrate your team. With our custom AI bots, tools and automations, we make it easy to shift your team's focus to the task. That matter most. Driving growth and results, we guide you through a smooth, seamless transition to ai, ensuring you avoid policy mistakes and invest in the tools that truly deliver value. Don't get left behind. Let fraction aio help you. Stay ahead in today's AI driven world. Learn more. Get started. Fraction aio.com. Now Lawrence, I'm so excited to have you here because you're really an expert on why businesses can self-destruct or cause their own destruction. I find that really fascinating and one of my big beliefs is that whenever we have a hype cycle that a bunch of businesses start that are cool. Don't solve a problem so they have a cool feature or a cool function that, and businesses like that can survive when it's really good times. But then when we're canceling subscriptions, when everyone's canceling, like the tools or resources they don't need, they cancel the things that are nice to haves before the need to haves. And I think that's like a core flaw in businesses, but I know there's also a lot of like management problems. So from your perspective, like we're in the third AI hype cycle and like the hype cycle is slowing down a little bit. When you look at all of these businesses, what do you think are some of the signs that a business is heading in the wrong direction? Other than my. Good idea versus problem solver. Boy that's a little bit of a different question and I love the question. There are many different signs based on the maturity of the organization. One of the things that's very common. Is that organizations have a built in resistance to change. And when we talk about technology in general and modern technology in particular, and ai, you would think that those businesses would embrace change. They would embrace as many new, different things they could get their hands on. What human nature does is it tells us, I don't want change. I want stasis. I want to know what's coming. I want to be able to have my expectations set. So there's a psychological barrier to change, and it shows up very quickly. The other thing that's very common in businesses that are heading in the wrong direction is people saying, we've always done it that way. Why change? We were successful?'cause we did it this way. Why would we change? And growth forces change. You cannot have growth without change. And I can explain why that is. It's what I call the arc of success. But that's the short answer to your direct question. There's another question that's floating out there that I think is important, and that is underneath the surface structurally, organizationally, what is it causes, what is it that causes businesses to get too close to that dangerous cliff and throw themselves off? And it always starts with a lack of clarity of purpose. By clarity of purpose, what I mean is you have to understand the value of the service or the product you're delivering. You have to understand the market that you're delivering it to and why it's valuable to them, and you have to understand how you get it to them because your competition are not the people selling the same thing as you are. Your competition are the people that your customers can spend their money on. That's not your product or service. And if you don't understand the value of what you're delivering, you don't know how to position it or get it in their hands in the way that's, that makes you a hero to them. So that's the more, the deep rooted problem. Does that make sense? Yeah. I think that's something really interesting to me that often when I work with a product creator or business, the way they describe. What they want, what they think is valuable is the opposite of how we talk as a customer. So with authors, a great example of this is they go my book has to be really long. It has to have every feature. And I go, great. Have a new 800 page book. Do you wanna buy it? And they go, no, that's too long. And we have this thing where we switch mindsets, right? When we're consuming or buying and versus when we're creating, we tend to value the wrong features. Switching to this mindset and asking this question. I think this is a good evolution of my idea of what problem do you solve? Because if you can't clearly state like your value other than it's really clever, it's really interesting. It's really cool. That's the most important thing. And I think that's exactly what a lot of people miss. It's that what do you do? We make paper. Why people need paper? What's the difference to you? And I love that you mentioned that we often think my competitors are just people who sell similar products, but. If you are running a karate studio, your competitors are not just other karate studios, they're Judo studios. They're gyms. They're yoga studios or anywhere where someone can get exercise it. You're, or also anywhere people can go after school or after work. You're an extracurricular activity. Yes, and that's really an important lesson because we often think. Our competition is so narrow, and then we only look at a small number of people to check market size, to check competition, to plan our marketing strategies and to see what they're doing and I really like as well. This idea about change, because I'm very tech forward. I do a lot in the AI space, but once I develop a process for doing something, I'm slow to change it. I think of change as phases or stair steps, like we change learner process and then we stick with that first six months, 12 months or years. And there's a really important question about change, which is there's gonna be a dip. You change in productivity while you're learning the new system and learning how the new computer works, the new copy machine works, and how long does it take before the increase in productivity makes up for that dip? If we change too frequently, we're always learning and never implementing. So there's a negative to changing too much. There's also negative changing too slowly. I'm certainly guilty of this, of like once I learn a way to do something, I don't. It's very hard to convince me to learn a new way to do it. I'm like I already solved this problem. The thought of redoing all of that research is very challenging. So I really understand why companies get into this mindset and it's really hard as well. It's if this we're we patterns, right? If you see if this works 10 times in a row, why would it not work the 11th time?'cause there's evidence of it working. And that's, I think, something that holds us back as well. When we look at special technology shifts, right? Fax machines were great for a really long time. Now the thought of having a fax machine or receiving a fax is like mind blowing. My children don't know what a fax machine is. They don't know what a pager is. When at the time when I was, the thought of having a pager was like, this is amazing. I'm so reachable. I'm part of the future. So I think this is very interesting. How can, like how do you assess how much change is a good amount? Or how do you self-assess and say, you know what? We need to embrace some more change. We've gotten too stagnant. Gotcha. Jonathan, I have to tell you, that's the second question you've asked me. And of the 40 or 50 podcasts I've done over the last several years, I don't remember anybody that's asked me two questions in a row at the beginning that were such good questions. So kudos to you. I wanted to comment on this because you talked about it a little bit and I think that the premise is a mistake. It's not about how often should we change, how fast should we change, how much should we change? How regularly should we change? The question is, when does our current reality become more of a drag than our potential future? It is always gotta be looked at in a situational mode as to the value of staying where you are or moving, because as you said, change is expensive, takes time, takes money, you have to catch up, you lose some productivity. So it's not about how often should I do it, it's about how much do I have to be better to justify investing in the change. And this is the truth with every piece of technology. I bought my first computer in 73 and I have done everything from literally bleeding edge, alpha, beta stuff to no. I want 800, I want, 80 million users. I'm not I want it just before they obsolete it. And the key here is how much leverage do I get? The new thing so that's the question you have to ask. And lemme just add this to it because this is really important. This is part of how you start to evaluate that there's a whole cost benefit assumption mitigation strategy that you have to go through if you're really gonna do a good job of this. But there's a thing that I found when I did my research and again, this is not Larry's brain. This is Larry's research. I found this thing called the arc of success. It's the path of what success looks like. It starts with an idea. If the idea is a good idea, it creates growth. When you have growth that creates complexity. The way you manage 30 plus customers is different than 300 and different than 3000, right? Same with employees. Complexity creates the need for rules. Rules create a loss of flexibility. And when you have that loss of flexibility, that's an inflection point. That's when you have to stop and say, what is it that we need to look at changing? So every time you go through that arc with a new idea, you've gotta go and take a look at where you've been and if what you've put in place is still good or not. And if it has to change. And there's one more thing I want to tell you about change and this is one of my favorites. Every time I speak I always open this way. I ask the audience. Generally speaking, how many of you believe people like change? And of course, if there's 30 people, usually nobody raises their hands. Sometimes there's 500 people or a thousand people, I'll get 10, 20 hands, right? And then I say, okay. Now, how many of you generally speaking, believe people don't like change? And of course everybody raises their hand and I say, you're all wrong. Every single human being loves change. It's not change that's the problem, it's who's doing the change. Everybody loves change that they do unto others. Nobody loves change. Others do unto them.'cause you can't control it. So this is a very big problem because you have to learn when to evaluate the need for change. You have to learn how to assess how much you're losing if you don't change, and how much you're gaining if you do. And then you have to figure out how to make that change yours so that the staff owns it. So the staff doesn't say, I don't want to change, change. The staff says, these are great ideas. Let's do 'em. Let's go. So one of the challenges right now is that it's hard to do that decision making calculus. So AI and new tools are coming out so fast. This happens to me all the time. People are like, oh, you're using chat GPT while you're in the past. It's all about Claude. And then two weeks later, like, why are you using Claude? It's all about ChatGPT. You're living two weeks ago. Like the cycle of change is so fast. That the, it's hard to calculate how much will we benefit? Because by the time we master the tool, it'll already be obsolete or that something will change or there'll be a market shift. And I think that's why people are hesitating to jump in because it doesn't feel like we've chosen a winner or chosen a working path or like settled. That kind of VHS versus beta, once it was settled, everyone bought a lot more VHS machines. My family unfortunately, had thought it was gonna be beta, so there were less and less videos for in the video store. Our younger listeners won't know what I'm talking about, but everyone our age already knows what I'm talking about. But it's that kind of just make calculus hard. You go I think this will make things better. But we really don't know because there's no longitudinal studies, there's no companies that have been AI forward for five, 10, or 20 years. There's only companies that are like six months or 12 months or 18 months'cause it's such a new technology. So when it's a little ephemeral or vague. What are some ways you can as go through this assessment when there's not that data that would help it to be easier? So there's two ways of looking at this. There's forward looking and there's backward looking. When you make a change, you should have a sense of the investment you're gonna make, the size of the return you're expecting. The duration for that value to be sustainable, to continue to providing benefit. When you do that, if you do that on the right way, you can say, we're gonna make this change and we expect to generate this much income over the next 18 months. Or we're gonna have some metrics, some measure that we know we're gonna be able to improve to this number over the next 18 months. Once you hit that number. You've paid for your investment. Now you're free to go make a change. But don't make a change until you evaluate the value of the next investment and how long it's gonna be good for. Don't throw away the good just'cause there's something better if it's still making you money. So that's the foundation, that's the basis. But what you have to be able to do is you have to be able to take that new technology. And tactically inject it into your operational environment and say, where are the benefits gonna come from and how are those gonna turn into revenue? How are those gonna turn into money? How are those gonna turn into something I can leverage to get more customers or to sell more product or to make more profit, or to improve my relationship with my vendors? And it's the nitty gritty. Elbow grease crap that most technology people have not been trained in and don't even want to deal with. I in the smaller organizations. So earlier you talked about how people like to do change to other people and not receive change. One of the big challenges, especially when a company hits like an inflection point or stagnation point, when they have to go from directed leadership to distributed leadership, that it feels like. A change, especially like if you're bringing it, same as if you bring in a technology you don't wanna use. If you bring in ai, it feels like you're giving up control or giving up power. And that's a very scary thing to do, especially when you've been the boss for a long time. Or the decision maker to bring in something, a tool you don't know how to use, it starts to make you feel obsolete a little bit. How can someone go through this decision making calculus and overcome that challenge of oh, if I bring in this change, or if we modify the way the company's operating, I'm no longer important, no longer in power, and maybe I'll be the next thing we change out. I'll lose my position or lose my authority. You're getting into psychology and the psychology that you have to implement is rooted in culture first, and if you don't have the appropriate culture, you're going to have those kinds of situations where you have people fearing loss of power, so you've gotta fix it before that even happens. You've gotta have a culture. That is based upon a common set of shared values. That is what is referred to by some people as a should culture. In other words, you wanna minimize the rules as much as humanly possible and homogenize the values as much as possible so that people have the ability to react. Not think about the rule. In other words, what's the right thing to do? I know what the right thing to do is. I don't need to look at the rule versus I gotta get the book. Am I on the line? Am I over the line? Am I crossed the line? Do I ask forgiveness or do I wanna ask for permission? You've gotta get that culture fixed. If you don't get that culture fixed, you can't fix what you're talking about. The second thing is everybody has to understand the role they have in the company, from the secretary, from the person that answers the phone to the CEO. If the CEO believes, or the person who's in charge of the technology believes that they're at risk of being discarded after a change is made, that they aren't providing enough value or they're not looking at the value they're providing and promoting it in the proper way. It's the same thing as we talked about before. Who's your competition? My value is not that I know this product, my value is that I know how to find a good product and how to evaluate when that product should be implemented and to understand how to get the rest of the organization to adapt it, adapt or to adopt it. And if that's your proposition, your value proposition, why would you ever. Lose that power, why would you ever lose that value? So it's a real psychological shift that's rooted in, first of all, what is the purpose? What is your value? And second of all, how does the culture work? So we're getting into some of the very complex stuff that I talk about in the book, and I'm doing it in a very abbreviated way. So if I'm not making sense, please tell me. No, I think this is really good 'cause this dovetails into something I often talk about, which is that if I come in as an AI consultant or a actually ao and the first thing I say is, we're gonna build this AI system and we're gonna be able to fire 20% of you guys, then the team is gonna sabotage the project because there's an element of self-preservation. And it's interesting to see that it's the same thing at the leadership level because if the leadership feel like a change is gonna push them out. They're gonna sabotage as you would. We all self preserve, right? We all wanna protect our positions, and so it's really important to couch change in terms or in a strategy. That means we're gonna enhance you that no one's getting fired, that this is, there's still a new role for you. It's just that it, instead of director, it's captain or like it's, it's still a leadership position, just has a slightly different structure. Now you aren't micromanaging as much because you have more divisions. I think this is really good because. A lot of companies are going through pretty dramatic change right now. This is a really big season for change. A lot of things are happening in different markets and I think it really helps people to see that there is a path forward. Now, one of the things I find really interesting is that, companies seem to get stuck at the same points that we often think when we're going through something. I'm the only person this has ever happened to. I'm the only person who's ever had imposter syndrome. I'm the other person who hates hearing this outta their voice or hates what they look like on video. The same thing. You think your company, oh, we're the first company where we have this dysfunction. So I think it's really helpful to know there are certain points. What are some of the kind of warning signs that you're hitting one of these stagnations or inflection points where. Oh, we've hit a plateau. It's time to do the next change. I mentioned a couple of things and those are still true. Another thing that happens frequently when change needs to occur is what I call the whack-a-mole syndrome. I. Operationally you are functioning, but there's problems. And those problems, every time you fix 'em, they go away for a while and then they come back. And the reason is that you're not addressing the problem. You familiar with the whack-a-Mole game? There's a hammer and Oh Yeah. I love that game. So that's what I call the whack-a-Mole game. It's like you're you notice your day starting to be disrupted. By little emergencies that happen, more and more frequency, little distractions that take more and more of your time and your energy and take you away from the focus you need to have, and you spend more and more time trying to fix them, and the more you spend time trying to fix 'em, the less you're fixing them. What's actually happening is you're treating symptoms and when you're treating symptoms. You're not getting rid of the problem. So when you notice those things starting to happen, you have to slow down and you have to look deeper and say, why is this happening? Let's get behind it. So for example, we had a client that was in that was in social services dealing with orphans. And they were really struggling because they had too many orphans and not enough caseworkers. And they kept having repeat problems and they thought it was that the caseworkers weren't working efficiently enough. We came in and did an analysis and what we found was that the reason the caseworkers weren't getting the work done wasn't'cause they weren't working hard enough. It's because they had more work than a human could do. But nobody knew where to go to get support. All they knew to do was to hire more caseworkers. The solution to the problem was go to the families. Take orphans in and engage them in support of new efforts to recruit families. So by expanding the family base, they had more families ready and prepared, and it didn't take the social workers as much time or energy to get orphans placed. And instantly the back load and the pressure went away. They just stopped looking at using the staff and they went to a free resource that was available all the time and eager to help. So it's the whack-a-mole problem. When your problems keep recurring and everything you do to fix 'em doesn't work, you're not attacking the problem. That's a inflection point when you have to change. I think that's really good. It's we start to get to a point where you come home at the end of the day and you go, what did I do today? Or, you have this list of things you thought you were gonna do, and none of them happen. And I think that's a really good way of looking at it because it's sometimes hard when you are in the weeds or in the middle of an emergency. Like I was working on a project recently where everything was an emergency or everything was a five out of five. Yes. And then if everything's an emergency, nothing's an emergency because it's all equal value. And I think this is a really good sign because you don't realize it's happening. It's like it's slowly getting warmer and you go, oh, it feels like I didn't do anything. You have that feeling when you drive home. You go, I don't remember driving home, but I got here. You entered that trance state. So I think that's really helpful for a lot of businesses in this tumultuous time. Like how do they know? They need to look outside of their own systems for help. Like what's the sign you know what I'm seeing? I'm having a lot of emergencies. I can't see myself out. When's the time where you go, maybe I need to look for something external, whether it's reading your book or going through a coaching program or bringing into consultants. What are some of the signs that it's the right time to get external help? I like the question. I'm gonna rephrase it. How do you know what help to look for? It's not about when you need help, it's about what is the help you need. Michael Jordan was once asked about why he needed a coach, and he said. Most people think I'm the greatest basketball player ever. This was years ago before COVID. And I tell you right now that when I'm being coached properly, I'm learning all the time and getting better. If I'm the best there is, and I'm getting coached and I need coaching, everybody needs coaching. So the answer to your question is. Always, you always want to go look for outside expertise to give you help and support. The question is, what is it that you want? And what you want is somebody that's not going to turn you into a psychic or a psychia psychiatric patient where you gotta have them around for years and years. You want somebody who you can say, this is a problem I'm having. I want you to come in here and help us figure out how to solve it and then go away. So it's a little bit of a different way of thinking about it. And by the way, that's exactly what I do. I don't do anything for anybody on a recurring revenue basis. If you can't give me a specific objective that you want me to help you with, I'm not working for you. And once we get that objective, we're gonna put a timeline in place, we're gonna have milestones. And when we're done, we're gonna know we're done, and I'm gone. You'll have learned something and you won't need me to do that anymore. Something else pops up, you can't get help with or you need help with fine. Sometimes you need somebody on a phone call. Sometimes you need somebody to come in and look at a computer or a code. Sometimes you need somebody for a year, but it all depends on what you need. But the thing that never changes is everybody needs help at some point. Just make sure you have that need clearly compartmentalized and identified before you go hire somebody. I think that's really good because sometimes it can feel like you go to therapy and they're like, come five days a week and in 20 years you'll be better. And it's 20 years. I don't know. I wanna get better today. So I love that For people who. Love your kind of mindset. Wanna know more about your book or where they can find you online and maybe even wanna work with you. Where's the best place to connect with you and see what you're working on? Mandel Berg dot Bizz. M-A-N-D-E-L-B-E-R-G dot BIZ. But there's an easier way, if you can remember, businesses don't commit suicide or businesses commit suicide. Boy, that was a Freudian slip, wasn't it? Just go online and do a Google for Businesses, commit suicide. Businesses don't fail. It's easy to find. That's all. You gotta remember. The website. One of the websites is businesses Don't fail.com. The other one's Berg Bids and there's a boatload of stuff up there. We'll make sure to put those in the show notes and below the video on YouTube. Thank you so much being here again, Lawrence for an amazing episode of the Artificial Intelligence Podcast. Thank you for listening to this week's episode of the Artificial Intelligence Podcast. Make sure to subscribe so you never miss another episode. We'll be back next Monday with more tips and strategies on how to leverage AI to grow your business and achieve better results. In the meantime, if you're curious about how AI can boost your business' revenue, head over to artificial intelligence pod.com/calculator. Use our AI revenue calculator to discover the potential impact AI can have on your bottom line. It's quick, easy, and might just change the way. Think about your. Business while you're there, catch up on past episodes. Leave a review and check out our socials.