Real AI Transformation Costs HALF of Everyone's Salary for 2 Years | Chris Blackburn, Liatrio

0:00It turns software and building digital products into a team sport rather than an individual sport. It brought culture and process into the thinking a lot more and really just had this hyper focus of looking at the end-to-end of everything that's being built. You're a big believer that AI isn't just going to change jobs, it's going to change life. And I believe that too. We believe that because things are moving so quickly right now and how hard it is in change management for these large complex organizations to truly operate in a new way is what we try to do is strangle away a part of the organization.

0:34So what does transformation cost? To transform an organization into modern ways of working with AI is you are likely going to spend the equivalent of everyone's salary over a two-year period. So if the average employee is $150,000 a person, take that and divide that over two years, everybody inside the organization. So efficiency, as you say, is the means, not the point. And there's a lot of talk about efficiency, but as you say, that's not the destination. That's the first step.

1:04So Chris, why don't you start by introducing yourself? So I'm Chris Blackburn, founder and CEO of Liatrio. Started Liatrio a little over 10 years ago after having a long history in contracting and consulting in the technology space. But really, everything goes way back further than that. My father ran a software consulting company. Nothing like what we do at all today, old digital VACS, VMS systems and all that. But I really got to see what it was like to run a small business, be an entrepreneur and all of that.

1:39And I just knew that that was going to be the future for me. I have a degree in computer science, so I come from a technology background. And part of my early kind of transition was I found out that I do not have a huge passion for writing code. I am not the person that can be put in a corner. The old days when I started, it was like, give them a pizza and a two liter of Mountain Dew type of thing. And that just wasn't for me. I am a systems thinker. I'm a huge efficiency freak. And I think that really led into a lot of the stuff that I do.

2:11So early in my career, I actually got into like system administration, both Unix, Solaris, as well as the early days of Linux and the network administration and all that type of stuff. I really liked hooking computers and systems and all of that together. Ultimately, really, that led right back into software development space, but kind of the stuff around it and what we now call software delivery. So source control management, build automation and all of that, which turned into continuous integration and continuous delivery. And then really when the DevOps movement happened, I feel like I found my space.

2:44DevOps was such a huge part for me. I think it aligned a lot to how I think about efficiency and not just efficiency for efficiency's sake, but efficiency of a system, the end to end system. So DevOps brought a lot of thinking around like value stream mapping, lean techniques, systems thinking, and all that type of stuff. And I got real deep into it and super nerdy about it and just love everything there. You know, it turns software and building digital products into a team sport rather than an individual sport. They brought culture and process into the thinking a lot more and really just had this hyper focus of looking at the end to end of everything that's being built.

3:23So we talk about that today. We call it the from aha to cha-ching, the entire value stream and looking at everything that connects in there. So ultimately that became the beginning of my, you know, real part of my career was kind of the DevOps movement and the purity of DevOps. I live in Sacramento, California. Sacramento is the state capital and really all the work in the area is state and federal government work. And we all know how slow that moves. And so I wanted to find something faster and better and more awesome.

3:55So I spent all of my career in the Bay Area, a lot of that in San Francisco and all the surrounding areas. And just really got influenced by, you know, the startup culture, hustle culture, but more than anything like passion, excitement, and motivation for building the future and all of that. I thought that was really exciting. However, I found myself all the time in large complex organizations, enterprises. And I tell the story as almost a joke, but, you know, you could be in a building in downtown San Francisco and stand outside the elevator.

4:28And on one end of the building is a new high-flying startup. And on the other end is a old stodgy enterprise. And as people walk off the elevator, you can almost just tell where they're going. Are they motivated, excited, passionate? Are they going to change the world and they're going to the startup? Do they feel like, you know, life's not awesome? This is not enjoyable. They're just here to do a job. Felt like they were going to the enterprise. And I really wanted to be part of a change there. So my entire career was spent in the enterprise and it was spent trying to bring this passion, excitement, motivation to the enterprise.

5:02And then finally, the final piece of it was being in the enterprise, I got to see every other consulting firm on the planet there. From the biggest, most strategic firms, all the way down to the service providers. And I just really felt like if you looked at what the work that was being done, it wasn't always the customer winning, but the service provider was winning. And I just thought that was backwards. And I thought I could build a firm where we would win by default if our customers win. And so that's where I started Liatrio, like I said, a little over 10 years ago, you know, in the DevOps space for enterprises or complex organizations.

5:37But really, it was the purity of DevOps more than anything, end-to-end flow of value, getting teams to work better together, efficiency plays, small batch, quick iteration to learn and experiment and try things out and uplift the organization together. And I thought that was the most important thing of Liatrio is building a firm that was doing uplift or enablement. And I think that's where we're really unique. And while everyone says it, everyone says they do enablement, I think Liatrio really stands out in the way that we do it.

6:08We work very closely with our customers, pairing, hands on the keyboard, showing them a better way, building a better kind of culture and excitement around all of that. And really, more than anything, it crosses the entire hierarchy. So today, Liatrio is about 175 people in size. About three-quarters of the team are engineers, hands on the keyboard, builders, and some really amazing engineers. But what's unique about them is they are all coaches, they're guides, they're teachers that take the customer on the journey.

6:40We have a saying that we are not the hero, we're the guide in the story. Our customer needs to be the hero. And that's really exciting. 25% of Liatrio looks more like management consulting. But really, that's like the change management of the rest of the organization. Working with executives and senior leadership to show them how they're there to influence their team, guide them, think about things in the new way, challenge them and all of that. So just up and down the stack of these really large, complex organizations. So a lot of these words are used throughout the industry and mean different things.

7:14Change management always kind of feels like maybe a funky word that talks about just process more than anything and new ways of doing stuff. We think about change management of doing that while building with the customer. And not just change management on the teams that are builders, but change management through the entire organization. So that's what we do. Obviously, this AI thing, and I'm super excited to talk about it, has really changed how we look at the opportunity space more than anything. But I think little has changed from Liatrio's perspective.

7:45This is just a new piece of technology. Yes, it's 10 or 100 or 1,000 times greater and stronger and more powerful than the technologies before it. But our goal is to help our customers adopt the new technology, embed it in their ways of working, change how they work, and change their organization to ultimately deliver better digital products and digital services to their customers. And really proud of what we're doing, excited for the future. You know, we've been going through this AI kind of hype cycle of what it's going to be.

8:19Our engineer is going to be a thing. Now they're going to be the best thing. Our consultancy is going to be around. Now they're obviously needed and all that. So I'm just crazy excited for what the future has in front of us and for us to play a pretty big part of that. Yeah, and it seems that you're at the cusp or in the takeoff of a new industry. And I mean, as you said, consultancy has been around for a while, but this is an informed consultancy that didn't exist before.

8:53And people, every enterprise is struggling to get their hands around it. I've seen that the big consultancy, I do some work with Boston Consulting, BCG, and they have a whole build arm now. So they go in and consult and then build solutions. Do you guys do that? And I've thought in watching BCG that there is a huge market, you know, just because of their global reach and the demand, they can only reach the, you know, Fortune 2000 or whatever.

9:41But there's, the economy is built up of smaller organizations that need that help. And you go down into smaller, medium-sized organizations. Is that right? We do. Our primary focus is the largest, most complex organizations for sure. And what we say is it's the largest or the most complex. We see a lot of smaller organizations that have a ton of complexity, and they have years of history and ways of doing things and structural issues and things like that that cause them to be very complex in how they deliver their digital value.

10:22And, you know, to begin with, we were just a straight technology consulting firm. And now I believe that, you know, we're going to stop talking technology or engineers and things like that, and we're going to start talking builders and knowledge workers, and everyone is going to need this same uplift. So if you're a white-collar worker that works at a computer, you're a knowledge worker, you're going to be a builder of the future is what I believe. So it also widens the net of opportunity and teams that need that help. But, yeah, to answer your question, primarily focused on the largest organizations, but we spend time in, you know, that mid-market or small enterprise focus as well.

11:02And I agree with you. I think a lot of them do need help, but they need help across the board. The way that we're kind of driven and kind of what motivates us is we think that the largest enterprise organizations are the companies that everyday humans rely on every single day to go about their day, right? So these are the ones you rely on to do your banking or financial work or go to the grocery store or travel and all of that, and I think have ultimately the biggest opportunity or benefit to humanity for a long period of time. I love startups. I love new things that come out, and I think those are going to be fantastic and grow there as well.

11:39But what guides us or what drives us is to say what's going to be amazing for humanity in the future, and a lot of the existing companies that are there today have this real opportunity. I don't think you're going to see new startups come out of nowhere and start an airline or something like that. The cost of capital and airplanes and all that type of stuff is so high that it's almost difficult to disrupt. But there's a ton of opportunity within those industries, as an example, to make them better and make them better for everyone.

12:12So that's kind of where we try to focus and what gets us excited and gets us motivated. Yeah. And I've read some of your stuff. You're a big believer that AI isn't just going to change jobs. It's going to change life. And I believe that, too. But can you explain what that means to you to change life? Yeah, absolutely. I think it's all intertwined together. It's going to change jobs that are going to force a change to life and all of that as well.

12:47I'm always probably a big believer that I think things are going to move faster than they actually do. So there's going to be a time horizon to this and all of that. But I just believe so deeply that it's technology. And AI is just the technology of choice today. But technology is deflationary. Technology is there to do more with less type of thing. And I just believe we have this awesomeness right in front of us today that can lead to a lot more just human life enjoyment. And I really believe that I want to drive towards it. I've been telling a story lately, you know, where I'm excited about the future and what keeps me motivated personally.

13:22My parents, they're aging like everybody's parents are type of thing. And, you know, I think about what would make them live longer so they could be around us and be around their grandchildren and hear soon their great-grandchildren and all of that. And it's obvious to look at things like health care and other areas like that, right? If we can improve the health care system to give them better care and cancer research and all of that type of stuff, that will definitely have an impact on their life longevity and life happiness, right?

13:52But I take it all the way down to just the everyday uses of things. And kind of the example that I've been walking with lately is, you know, take airlines again, right? Is if we could figure out a way to work with Airbus or Boeing and improve their efficiency and how they build and deliver airplanes, which maybe will make them cheaper for an airline like Delta to purchase or something like that, that'll translate all the way down to the customer having easier access to airfare at a cheaper price.

14:22And that will mean that over the next 20 years that my parents are hopefully around for, they'll be able to take an additional international trip or two. And that'll just give them joy and excitement and see in the world. And, you know, while you probably can't measure that and say that equals them living for an extra year or something like that, I think it's easy to see that there's a potential there. And then take that and just apply it to everything. And I think that that should be a motivator for us and keep us so excited about what the potential is to get there. You intertwine the jobs conversation in it.

14:55I think it's going to be very interesting. I think society is going to have to figure out so much of what it looks like. I've been saying I believe that a four-day work week is coming sooner than later. And then, you know, with increased efficiency and output and just awesomeness for everybody else, maybe that turns to a three- or two-day. Who knows? But what does that mean for human purpose and passion and excitement? I think we're going to have to figure that all out, right? I have three kids in college right now at the same time.

15:26You know, so I think deeply about this as well. Like, what does their career look like and how do they stay excited about what the future is when the future is pretty unknown right now and exactly what it's going to look like? And I think it's just helping them find passion, helping them find something that they could be excited and motivated by and be part of the future versus having the future kind of tell them what to do. So that's what really keeps me excited for all of it. And, you know, this isn't just for my parents. It's for everybody's parents. It's for everybody's children.

15:56And I think that if we all get motivated behind a message or something like that, that it could just be really, really great. And I think there's the opportunity for it, you know, and that's what we see specifically. Sorry that I'm going on and on here is, you know, spending so much time in these large organizations. We are certain and we know there is humongous opportunity for efficiency of existing service, for opportunity of new services and all of that. And that should translate directly to the consumer.

16:27And it should translate into having more for less or having the same at cheaper prices or whatever it is that I think could really do some amazing things. It's going to be bumpy. It's going to be rocky, especially for the next few years of what that looks like. But that's exciting to me for it to be bumpy and rocky while we figure it out for the greater good of everyone, I think. Yeah. You use an analogy of farming, that before mechanized farming, most of humanity spent most of its time growing food.

17:00And that AI is a similar unlock, not just for one industry, but for cognitive labor that consumes a lot of modern life. What do you see as the possibilities? I mean, you mentioned, you know, having extending health span is the term people use now to, you know, spend more time with families. You mentioned a shorter work week.

17:33But what are the possibilities with that? Yeah, I think this is where I think people have to figure it out. So, you know, the farming analogy, I think a lot of people are using that now. It's becoming pretty, pretty simple to think about. You know, if you look back in the early 1800s, you know, 90 percent of the population worked in the agricultural space in some way, somehow. And now it's like three percent or something like that. Right. A significant change there. And if you think about dropping a John Deere tractor of 2026 back into the early 1800s, like theoretically would help that single farmer out, you know, on his very small plot of land or something like that.

18:15But the rest of the system wasn't there to support it. Right. So there wasn't cooled travel trailers and things like that to keep the crops fresh. You know, railroad doesn't it didn't exist as much as it does today. Just, you know, making sure to take the increased productivity of a farm and then spread it out for everyone. And I think we're going to go through a lot of that right now is the underlying system that's going to take advantage of all of this. But what does the future look like?

18:47I don't know exactly. And I think that we're going to have to figure it out. I hope it's not more time for people to sit around on the couch being on TikTok or watching TV, but it's more time for them to go after passion projects and things that they're excited about. Passion is a huge motivator to me, and I think it's unfortunate. And I bump into this regularly. We talk to people that are customers or in the industry and stuff like that, and they will just come out and say it, that this industry and the space is not a passion project for them.

19:17We're in technology. We're very fortunate to be paid well because of it. And I think a lot of people are in the space because it's paid well. And they work to live, you know, type of thing and all of that versus mixing work and life together and being excited about all of that. So I think we're going to go through this giant passion reckoning happening here very soon where people are going to have to figure out what that looks like. But I think people are going to have to be intentional about it because if you're not intentional, you could just end up being on the couch watching TV more or just scrolling more on your phone.

19:49And I think that that's an opportunity for a lot of people, new businesses and all that type of stuff to build more things that are more enjoyable for people to be part of. But I think that that's going to be the bumpy, rocky part of it as we figure it out for sure. If we just flip to a three-day work week next week, you know, overnight type of thing, I think it would be really, really weird for sure. And I think that the structure and system and the supporting mechanism of it is going to have to change. You know, like we would need more bowling alleys and golf courses and all that type of stuff for people to spend time at.

20:24And like, so it's not going to just happen overnight. It's going to need to happen, you know, while the industry moves around it. Yeah. Yeah. And it's going to happen gradually as people figure it out. And I've had Nick Bostrom, he's a philosopher at Oxford on the podcast. He wrote that book, Super Intelligence, that a lot of people have read. But he wrote a book more recently called Deep Utopia. Like, what is human life like once we live in a technologically solved world?

20:59And what you're saying is about motivation, that I think the responsibility is going to fall back on people. It's going to have to be in the education system of how to find things that you really care about, as opposed to going out and getting a job and having a guy tell you what to do every day. That's right. Yeah, and I talk to young people. My kids are tired of hearing it.

21:31I have a niece who's about to go to college, and I want to shake her and say, you know, you're living in the most exciting time in human history. Like, be excited. Absolutely. So, efficiency, as you say, is the means, not the point. And there's a lot of talk about efficiency, but as you say, that's not the destination. That's the first step.

22:02Absolutely. Yeah, can you talk about, right now, enterprises are facing a bottleneck between AI and real life. They are chasing efficiency, but a lot of that efficiency kind of disappears. You know, if someone saves an hour of time, that doesn't necessarily flow to the enterprise's bottom line.

22:38Absolutely. So, can you talk about that, how enterprises are adopting what they need to adopt to transform in this AI world? Absolutely. There's so much to unpack here that we feel like we've learned, you know, as an industry over the last 15 or 20 years and all of that. And you're exactly right. Efficiency is not the end goal. Efficiency frees up the opportunity for the end goal and what that looks like.

23:13So, you know, looking at the picture of this is, what is efficiency? Why do you want efficiency? What does efficiency look like currently inside of large, complex organizations? And how do you, like, compare it to something else, you know? So, we talk a lot about our space almost trying to mirror things like a manufacturing plant, a physical manufacturing plant. Or the goal of that manufacturing plant is raw materials come in one side and go out as a finished product on the other side to be sold to a customer. Then we talk about the digital factory type of thing and ideas come in one end and a digital product goes out the other end for customers to use and all that.

23:53And inside the physical factory, the raw materials come in and they go through machinery and process and all of that as well. You could think about, like, I don't know, building a bumper or something like that, right? It's something cuts the metal, something drills holes into the metal, then we weld it and paint it and all of that as well. And if you stood in a physical manufacturing plant, it's, you know, more common now with, like, lean methodology and all of that to look at the efficiency and the lead time and cycle time of that plant.

24:24And when people or machinery are actually actioning is the only time that actual value is being done. And you want to, you know, reduce the amount of overhead and waste in the system so that you make a very efficient plant. And it's easy to see because you could watch the actual thing being built. I believe over in a, you know, software or digital kind of business, it's much more difficult to look at. And I think that's the challenge for the organizations. But here's what we look at is inside of a physical manufacturing plant, there's data out there and metrics and all that type of stuff.

25:00Some of the most efficient plants on the planet are Toyota plants and the Toyota process and all of that as well. And, you know, they measure things like 70% efficiency of the flow of the system and all of that, right? Where 70% of a human time or time of the system is spent on building value, not doing other pieces of the puzzle. We translate over that over into the digital or the enterprise. We've measured this before and it's like something like 5% to 6% of time is being spent on value-added tasks.

25:33So, the high level is value, overhead, and waste. Value, overhead, and waste is in any system whatsoever. If you talk about the physical manufacturing plant, the only time is when you're welding, when you're drilling, when you're spraying paint. Those are the only value-add times where you're actually producing a product of value. Overhead in the manufacturing plant would be like sharpening the drill bits or servicing the welder or even sweeping the shop floor to make it safe to use. Like, those things have to be done to make sure you do the value.

26:07But waste is anything else in between. It's stacked inventory. It's extra motion. It's all of those types of things. And we try to translate that over directly into software and the digital organizations. And like I said, we measure them that the average organization that we spend time in is somewhere in the neighborhood of 5% to 6% of efficiency. So, that means on the given 40-hour work week, on average, a person is only spending, you know, three, three and a half hours a week on value-added activities.

26:38And value-added activities are building the digital product. And we know inside a lot of organizations, there's a lot of people that do not do the building part of it. So, by default, they have no value time. And it's not saying they're not valuable, but it's saying their time should be spent on overhead activities that are helping the build time increase and all of that, right? Like, what's crazy about technology, and then obviously now in the AI world, is it's a two-dimensional view. So, if you look at just the hours in a week that's being spent on value, you could look at those actual hours and say, are they being done with leverage?

27:16Is leverage being applied to them through any type of technology or automation or nowadays AI? And you could get a, you know, 2x, 10x, 100x bump in that individual's time of being spent on the thing. But you called it out very specifically, and you're totally right, is just because an individual's productivity or efficiency increases, does that matter to the system? And ultimately, does that matter to the bottom line of the organizations? And I think that's where the huge challenge is at and where we spend a lot of our time truly looking at the end-to-end.

27:51I think there is a lot of focus today, and I actually think it's rightfully so. A lot of focus on the individual builder and creation of software, of using AI to improve the efficiency there, but it's bottlenecked by the organization. The most complex organizations on the planet, you know, usually deliver software to production, you know, like on average monthly at best type of thing. And that means that you have a lot of stacked up software, you have a lot of waiting, you have a lot of approval process and all of that. So we use techniques like value stream mapping. Value stream mapping is very simple.

28:22It's just visualization of the end-to-end flow of value and all the handoffs and coordination and all of that that go into the system. And it really raises awareness to the folks of what this looks like and where their challenges are at in the org. You know, kind of maybe taking a sidestep, though, is I think that the AI one that's going on right now, like I actually love it. I don't think that many organizations are seeing true bottom line or system improvement with AI, but I feel like everybody sees that it has to happen here soon.

28:54And at least that's giving them time to experiment and try things out and learn from it. So I think AI is more than just like, if it's just a catalyst today, a catalyst to change management for efficiency's sake, to look at the end-to-end system, I think that's super successful. But so anyways, going all the way back to our numbers, if our average customer is operating at 5% to 6% efficiency, which means they're doing three or three and a half hours of value added work in a given week, you could leverage that with AI or you could look at expanding that.

29:27And I think that's where our big focus is at, is let's expand that opportunity so people are doing more value. I mean, remember, the value is the fun work, too. If you're a builder of a system, you don't want to be sweeping the floors or servicing the drill bits or welders and stuff like that. You want to be building the product. So increasing the time that they get to spend on value-added tasks and then add the second dimension of leverage through technology and AI to it is what our primary focus is across the board. This starts leading into so many different other areas, though, that's really complex is, you know, looking at the end-to-end system, you start wanting to cut parts of the system out to improve the flow.

30:06And today, that means cutting out a lot of existing practices and bureaucracy and handoffs that were there for a reason where you kind of wanted a human in the loop to validate, to confirm, to align, to coordinate and all of that. And I think that part's going to be difficult, but I think that's going to be where the biggest opportunity space is at with AI is to reduce the human in the loop on everything there. So almost that you're always in approval, you're always being coordinated, you're always being organized and all of that.

30:39I think that's where a huge opportunity is going to be. And I think ultimately that's going to mean more people are going to move into jobs that have been considered individual contributors, more builders, more people that are actually value producers versus the overhead. And that, you know, that means, in my mind, likely a shrinking in the organizational hierarchy, less middle management. And this gets back into the passion part of it and all that as well, where this is a real spaghetti system for sure, is do people that made their way into management want to go back into being an individual contributor, knowing that's where the only place where true value is created?

31:19I think there's going to be a hierarchy for a bunch of people that sit on top of individual contributors and become the player coaches and the motivators and all of that type of stuff to the team where you're actually leveraging your skills to the broader team. But on average, I think it's going to be a significant reduction in that hierarchy and the coordination in the middle layer there for sure. And I think that's going to be a very interesting thing to go through. You speak to a lot of CEOs who are C-suites, and I know you've been critical of, you know, there's a lot of talk about AI transformation, but as you said, a lot of it's on the margins.

32:03When you go into an organization, what's your process, and what are the things that you see over and over again that despite the ambition, people are doing wrong? Yeah. Yeah, so you're absolutely right. You know, I think in any technology, we saw this in the DevOps space, is that, you know, DevOps was a purity thing to start with, and then all of a sudden the term got overused, and everybody was doing DevOps, and DevOps kind of meant nothing.

32:36And I think that that's just an unfortunate reality of our industry. The same thing happened with Agile early in the days and all of that as well, right? So it's like, are you doing the actual behaviors and the systems that kind of align to that guide and all of that? So you're right. I see, you know, a dozen news articles a day about an organization transforming with AI or, you know, deployed 30,000 seats of ChatGPT, so we have enabled the organization on AI.

33:09And there's a major disconnect of what that really means. Now, is that a step in the right direction? Transformation, absolutely it is. Does it mean you're transformed? Absolutely not. And, you know, depending on how you define transformation, you could think of it in a very small subset, or you could think about it across the entire organization. I tend to think about it across the organization, which means I see very few organizations, if any, that are truly transformed. But they should be on the journey of transformation in general. So to your question, you know, what do we do?

33:39How do we come in? And when I talk to C-suite executive leaders and all of that, the number one thing I, problem I find is they personally are so disconnected from the work on the ground. And this, again, goes back into the Toyota production system and lean manufacturing and all that is, are they walking their factory floor? And I don't believe they are in almost any case. And I think that's going to be one of the biggest enablers of what the future is. Because otherwise, all they're doing is they're getting a delivery of a message through the hierarchy from the bottom to them.

34:15And, you know, it just gets rosier and rosier as it goes up type of thing. And so they just want to believe that they're doing all the right things. But I think if executive leaders start walking the factory floor, talking to the operators, the individual contributors, the builders of software, the builders of the system overall, they'll really start understanding how far away they are from, you know, the utopia state or whatever they're trying to go after. So we encourage a ton of that. We encourage leaders to get involved in it.

34:45There was a book out from McKinsey called Rewired or something like that. It's a few years old, actually. And it says in there that they believe that the CEO, the CEO should have something between two and four days a month of focus on the transformation. That's a significant commitment. And I don't think many places are doing that at all. And if it means that the CEO should have that much, then down a layer should be even more in all of that. And I just don't think there's enough of a commitment towards the transformation.

35:17I don't think there's enough of an understanding of what it truly means to change. I don't think there's enough of spending time on the shop floor and looking at value stream mapping and other things like that to see where bottlenecks are in the system. So that's what we do is we come in and we talk through that and we talk about why that's important and all of that. And then we start encouraging organizations to start looking at what they're doing, how it's working, where bottlenecks and handoffs and struggles are at in the organization. And then find a small area of motivated people that are excited about it that can go after this and make a change and use it as a kind of use case, a starting example of what this can look like across the organization.

36:01And that's what we usually do. That's what we do is we either guide them on their mission to start or we do it with them. And I think the doing it with them is something that's very unique for us is, you know, you said this a minute ago about BCG as an example. And I look up to them in a lot of ways for certain. They advise and now they build. And I think what's important for us is we advise and build with. And that's the most important thing is we don't build for, we build with. And do I think building for is important in some areas? Absolutely.

36:35It's just not a focus for us. Our goal is to enable the organization. So we want to come in on products where they want to build with so that they are uplifting and guiding their org. And I think that just helps a lot of the parts of the organization that are being challenged. Yeah. And so you put engineers into the organization while you're there to understand the processes. And it's not, you know, sitting in a boardroom and talking about, you know, the problems that they're having.

37:11That's exactly it. Absolutely. So, yeah, we deploy engineers and consultants in the same way. And they do the same thing just as at different layers in the organization. Is the engineers will get right into the system of building, see where the struggles and difficulties are at. I mean, we see it at every customer we go into, how long it takes us to get a client laptop and get access and get into their building system and source control management. It's just bureaucracy after bureaucracy over there type of thing.

37:43So that's what the engineers do. And the consultants immediately get into, all right, let's start seeing how you're doing planning and coordination and organization and how you're enabling your teams and all that. So it's immersive. And that's what we want to do more than anything is not, you know, have a group of people that are assessing and then giving boardroom feedback. We want to have a group of people that are doing. So our consultants and our engineers or our builders do the work so that they could report back on the struggles and the challenges inside the organization to then build a strategy and help them build a game plan for changing that.

38:17Yeah, the, you know, you're talking about collapsing the, the hierarchy and having the CEO on the shop floor.

38:31Organizations resist change. I mean, there's, you know, people naturally, whenever changes in the wind kind of retract to protect their turf. So how do you, how do you get through to an organization? Yeah, it's, uh, it's not easy and it's not, uh, it's not just like a simple kind of playbook to do it.

39:02You know, every organization is unique. It's unique in, in, in some way of, of, you know, where they're doing well at, where they're struggling, uh, you know, what has come in and allowed them to do things in a better way or not, uh, the culture of the organization. We go into some organizations that are like, so friendly, they even call it like friendly to a fault, uh, friendly to the point where they can't give each other feedback and things like that. So you walk in and you're like, wow, everybody's really excited and really motivated here. And then they can't tell anybody else the truth or changes and things like that.

39:36We go into organizations where, you know, feels very political and political games and all of that. Our, our, our approach is, is the same every single time. We're just going to embed in there. We're going to show you all what we have learned through, you know, many, many other customers and how we've made them work, how we've had experience in the outside industry, uh, and just start applying to applying that to the organization and their unique case. And, you know, we, we, we, we see this all the time. I'm sure every other consulting firm on the planet sees this a lot as well, is it depends on where you start out on the org.

40:12You can get inside of a business unit or a team or whatever it is and have success in that team and then be blocked or challenged by the larger part of the organization as well. And, but our goal is always that like, we are never going to be blocked forever. We're going to see the block and then we're going to work a way up the organization to try to challenge those other aspects of it. Uh, and bring people along on the journey is the most important part is the worst thing we could do is be one part of the organization where we run into, I don't know, let's say a, uh, architecture review board or something like that, that slows down the system.

40:46And then just go tell them what's wrong with it. We would want to go over to that organization, ask them to come over to our shop floor and walk it with us and show, uh, like, see what we're going through and ask them to partner with us on what this can look like in a better, you know, uh, more efficient way for the outcomes that we want to go after. And it's really just bring it, trying to bring everybody along on the journey. I don't go into very many organizations at all. I wish I could say zero, but I don't go into very many organizations at all. Where I believe there are actually people in there that are trying to harm the system.

41:20Everybody believes they're in there to try to make the system better for sure, but they're there because of something that has happened before. And if, if my role isn't here, what if you know that, uh, that time we didn't, uh, uh, review the code goes live again and we have a data problem or something like that. And so they put all these systems in place for things that have happened in the past, instead of trying to build that from the ground up. And, you know, this is what things like continuous delivery and all of those aspects we're trying to do back in the day is, is build a lot of those fundamentals and the expectations into the platform, into the pipeline so that it flows through there.

42:00I think the same thing is going to happen now is just, it's people understanding the end to end system, seeing where they can improve it, walking the shop floor. So they understand it and being excited and motivated about the change for, uh, for the increased productivity and outcomes of that organization. Yeah. How do you get a handle on an entire organization? I mean, a lot, there's a lot of talk of digital twins, uh, I mean, and, and do you, do you, uh, go in, uh, and, you know, investigate audit or whatever, and then put together a plan and present it to the C-suite?

42:41Or do you go in and, and, and, and, and just start operational, uh, operationalizing your ideas, uh, sort of incrementally? Yeah. And, uh, I mean, uh, you're, one of the, your people sent over the analogy of, uh, uh, uh, like, uh, you know, I used to live in Asia, these fig trees that they're vines that take over a tree and then they drop air roots and they build a new tree around the old tree, the old tree, and the center eventually dies.

43:17A strangler fig pattern. Yep. Absolutely. Yeah. Yeah. Yeah. So how do you, uh, how do you do that? Is that, you know, you, you, you make a plan and present it and then execute it, or is it more organic that you're just changing things from inside? Yeah, I think it really depends. It depends on the customer. It depends on the opportunity that we are going after there. Um, you know, as a smaller boutique firm, uh, I wish we got invited in by the C-suite to say, Hey, help us transform.

43:52Uh, but that's not the reality. Uh, as a, as a smaller firm, what we do is we get in and show success. Uh, that, uh, becomes noisy, becomes excited, that works its way up the hierarchy and we get invited in to talk about bigger and bigger things. That's, that's been our journey forever type of thing. To answer your question, it's actually changing right now quite a bit and changing with the dynamic of, uh, the excitement around change and transformation and all that, that I think that we haven't seen in a long time. Um, is typically the way that we have done in the past is we come in underneath an initiative of something where they want to do something specific and the outcomes of it.

44:30And we build with them. We build a platform applications, whatever it is for them that they want from us. And we show them how to do it in a different way. And we always, uh, do our assessment while doing another four letter word of consulting is assessment. And it's like, pay a bunch of money for them to give you a PowerPoint presentation. And we just don't want to do that. We want to build something. And while we're building it, it's easy for us to assess the organization and then give a recommendation for change and how you would scale that through an org.

45:03You said it to begin with. I mean, these are humongous organizations. Our average customer that we go into has 5,500 people in technology and 12 layers of hierarchy. That's the average. So we have plenty of other ones that have tens of thousands of people in there. Changing an organization of that size is a, you know, significant task over many, many years type of thing. Our goal is to truly just build the momentum and excitement for that. You know, our goal with we leave every customer is are they on the transformation journey without us is where we ultimately want to get to is where we want to, to see our customers, uh, succeed through that.

45:41So, you know, yes, that's not just six months. That's usually, you know, the order of years to get them on that journey, but that's where we want to leave them to your question about, you know, this idea of the strangler fig tree or the strangler fig pattern that we've been talking about. It was an old, uh, uh, architecture pattern. The idea was almost like the either mainframe or monolithic application is don't try to rewrite the entire monolithic application at once is how do you just pull off bits and pieces of it? Maybe even keep the old one running while the new one's running and validation and verification between the two.

46:17And then when you could shut down small pieces of the old monolithic application, you could run it in new services outside of that. We've actually been applying that same thinking and we're calling it either strangle the enterprise or strangle the organization. We believe that because things are moving so quickly right now and how hard it is in change management for these large complex organizations to truly operate in a new way is what we try to do is strangle away a part of the organization. And literally build a net new division or business or practice inside the org that has as little restriction in the old way of operating as possible.

46:57You know, we call it like a tax free zone as an example. The reality is, is any size organization, you will never get tax free. But is it like low tax zone where you don't have all of the existing expectations and bureaucracy and things like that in there? But more than anything, it's to get the people, the customers, people over to the new organization and have them have the freedom to act and operate in a new way. So we've started to see quite a bit of success in this so far is when you just say, hey, we're building a new org over here.

47:32And day one, the org is one person. And what does that mean that we're going to do differently in this new and modern world? Well, some of the first things we would do is we would have very small teams. You know, this idea of two pizza teams historically in the past. I don't know what a two pizza team really is, but our customers we're in, that's like eight to 15 people. That's a ton of people. New teams in this new modern world, I believe, are two or three person teams where they have autonomy, where they understand the customer, where they work really closely there.

48:05So is this a product owner that is hands-on plus a couple of builders? I think so in a lot of cases, right? And so you would start with literally a three person team and then you could build up a second three person team next to them. And then maybe you need a platform team to support it or whatever it is. But you slowly just start pulling pieces over rather than just saying, hey, this giant group of people, you're going to start acting and operating in a new different way. And we've seen a ton of success in this already and where it scales really quickly over there.

48:35Now, you've got to be cautious. You don't want to just grab people and bring them over and don't have them understand the new ways of acting and operating. And this is where I think enablement and uplift is really important. And another challenge I think is going on right now is how much investment do you really have to put in the people for them to be part of this new way of operating? One of the most frustrating things we do is when we go into organizations and we talk about AI uplift or AI enablement. And we have different service offerings that range from a couple of weeks all the way up to a couple of months in time.

49:10And the most frustrating thing I hear is, oh, no, you know, like we were hoping for something for like a couple of hours. And it's just like the feeling of, oh, my gosh, do you not understand how much is in front of you? And OK, maybe all you have is budget for a couple of hours to start with. And that's better than nothing type of thing. But really need them to start thinking so much bigger of what the what is needed for these organizations to transform. So going back to the strangle of the organization, that's something that's really important to us as well. Is when we bring people over to the new org that's going to act and operate in a modern way, they go through an uplift.

49:45They go through some of our service offerings that are deep and detailed for weeks or months to have them learn about the new ways of acting and operating in a modern AI first, small organization, small team, you know, quick iteration, fast feedback style way of acting and operating. Yeah. And you mentioned, you know, budget and whether they're, you know, an organization is willing to commit the people you advise them to commit to to this kind of transformation.

50:17So what what is real transformation actually cost? Is it spread out over over years? So you're you're not demanding too much. I think we're still figuring it out, but I'll share some kind of information that's right in front of us. But I want to maybe preface all of this with I believe that the potential of AI is so great that spending lots of time, lots of energy and lots of resources should almost be looked at as a strategic advantage to learning on the journey.

50:53That's going to that's going to that's going to come our way is we have this new technology and you look at you say, I understand this could be significant, but we don't exactly know how to get there today right now. And spending just just time and almost just R&D for no real ROI to start with, I think is an OK activity right now. I know that's hard to justify. I'm sure every CFO on the planet will hate me saying that type of thing, but I think it's a real thing for certain. Here's what we are seeing and we practice what we preach as well.

51:25And so, you know, what's unique and about Liatrio that we always try to push is our people are constantly learning. They are constantly trying net new things. We spend a ton of time. We always have since the beginning of Liatrio. We spend a ton of time on all of our people to make sure they have time to improve, learn and practice new ways. Real early on in Liatrio's history, we built a program called Flywheel. And Flywheel meant we were going to pull our deployed engineers and consultants off of the customer for a week, a quarter and have them try new practices, technologies and techniques to improve and then go back to the customer with those new skills.

52:09It gets them out of the customers ways of acting and operating, almost frees them from that. So right there alone was four weeks a year that we were spending on this, right? That's not nothing. That's a significant cost, especially for a consulting firm where that means we're not billing that time and all that as well. And we had done that forever. And we see the value to our customers where our engineers and consultants are always sharp and they're always learning the latest and greatest. I think just again today, things are just on hyperspeed is if you go away and get deep into a customer for six months, it's almost like being under a rock for six months.

52:45You would come out and the world will look nothing the same at all. So we're spending even more time on that. We have an internal program of AI fluency that we build that we call Forge. And the Forge is somewhere between two and six weeks per person on our team that we just invest in, is we take our people and run it through this program here because, and I think our folks are already starting at a higher level. You know, if this is a zero to 10 or whatever, our folks are already at a four or a five and we spend two to four weeks on having them go through the system to get even higher than that.

53:20If you're starting at a zero or a one, you know, if you're just a pedestrian user of ChatGPT or something like that, you have a long ways to go. So it's more than just the individual. It's the system. So what does transformation cost? We've been doing this in a couple of different customers now, some very large engagements. And like a just like wet finger in the air rule of thumb to me is to transform an organization into modern ways of working with AI is you are likely going to spend the equivalent of everyone's salary over a two year period.

53:58So if the average employee is $150,000 a person, take that and divide that over two years for everybody inside the organization, those dollars are huge. I mean, that's like, you know, seven, 800 person team is like $100 million. These numbers are absolutely insane. So I think we're going to be going through this big period. And I think CFOs are going to play a big part of this as well is how do we calculate the ROI? What are we going to do better coming out of the end of it?

54:29And I think this is unique to every organization as well. There are plenty of organizations out there that could do a lot more. They could have more digital products and digital services. So I think the sale there would be like, hey, our team is going to be modern. And with the same size team, we're going to do four times as much. But I don't think every organization is like that. I think there are plenty of organizations that don't have uncapped potential, uncapped opportunity for product. And they're likely going to have to look the opposite way for we're going to do the same amount of output with one fourth of the team size or something like that.

55:06And I understand that's scary. And that's, you know, not something that we want to talk about. I do believe I'm just so excited about the future and so positive with the belief that's going to get there is that there's going to be so many more new jobs, so many more new companies. And hopefully that passion part of it will allow people to go work in an industry or in a job or whatever that is much more passionate to them. But going back to the question, wet finger in the air is take the entire total cost of compensation for your organization and you're going to run that, divide that in half.

55:40And that's what you're going to spend for a couple of years in a row for sure. And it's a tremendous number. Yeah. The one of the things that struck me about your reading about you guys, that you're tool agnostic. You're not tied to one ecosystem. And if you have AWS come in, they have a consulting arm. They're going to, you know, sell AWS products and services to your organization. Uh, so do you have partners or how do you decide?

56:14And this is also goes to, uh, sort of the internal, um, education, sort of ongoing education. It's hard for any of us to keep up with the research, let alone the applications and the tools that are, are coming off the research. Um, so yeah. Can you talk about that? Just, uh, where do you look for solutions? Uh, yeah. Uh, yeah, I, at the beginning we are tool and kind of product agnostic for sure.

56:47Um, I believe that there's a lot of tools that we would maybe recommend against and things like that. But, you know, you're talking about the major cloud service providers and all of that. First of all, every large enterprise has all of them almost to begin with, you know what I mean? Different pockets of their organization and things like that. You know, they, they mostly all use, uh, some of the greatest software delivery platforms, GitHub, GitLab and other things like that. So, uh, we usually come in and say that, Hey, what you have today is likely going to work and let's build upon that and learn from that until we get challenged and say, maybe something else can be better.

57:24And that's one of the biggest things as well is if you get people into this kind of continual learning and continual assessment and continual trial thing is, and you build your system, all your systems where things can be swapped out and are not so hard quoted to a single platform. I think that's going to be something that's going to be something that's going to be really huge in the coming years. I would be scared to death to, to sign three and five year term, uh, commitments to a lot of these providers of any sort right now, because I think things are changing so rapidly and what's probably going to happen is you're going to go from one to the other, then back to the first one and, you know, to a net new one and all of that.

58:03And that just makes an organization comfortable with change. And I think having comfort with change is probably one of the most important things that they could do. And if you build the organization and the systems comfortable with change, I think that's really, really critical. Um, on the partnerships, uh, talk that you have about, we have a few partnerships. Um, I think that there are, if you look at a lot of smaller consultancies, I think a lot of them get started and get built, uh, through relationships as partnerships.

58:33And that's totally fine. That's their approach. But I think that it just kind of sends you in one direction and then you're kind of beholden to the partner. And I don't like that. I don't want to be beholden to them. I want this to be a win, win, win scenario. If our customer can win first and foremost, and as the tool or product provider and Liatrio can win, that's what I want to have. And I want to make sure that everything works in that direction. And that's not always the case. I will say, especially now things are moving so quickly, some of the newest tools and things like that, that are coming out there.

59:07The folks are much more, uh, partner focused for benefit of the customer. Um, you know, I think back in the day when you were selling seats or licenses and all that type of stuff, you actually didn't care if the person used the seat or license all that much. You just cared to sell it and we've heard all the horrible stories of the federal government and how they have, you know, hundreds of thousands of seats licenses that aren't even being used. But I think in this new world of tokens and usage and all that type of stuff, I believe those partners are like squarely excited and motivated by their customer using more of it.

59:45And not more for waste, but more for value. And that's where I think Liatrio can play a big picture in there is building that kind of triangle relationship between the customer is going to win first. And then if the provider and Liatrio win because of that, that would be awesome together. So we're seeing a lot more positivity, uh, in partnership plays now than we have in the past. Yeah. You know, I've been talking to people about the C-suite and how the C-suite's approaching this. And, uh, you know, it seems to me that, that, uh, uh, CEO should have a digital twin of his organization connected to, uh, a very focused, uh, you know, fine-tuned, uh, reasoning LLM that he can brainstorm with alone in his office, ask crazy, stupid questions.

1:00:40And, and, and, and come up with ideas, uh, do you, uh, ascribe to that idea and, and do you do that yourself? I mean, when you look at an organization, how much, uh, do you use AI as a sounding board? Yeah. Uh, great question. And like a million different avenues that I could think about it is, is I think that this digital twin idea, this, uh, intelligence layer of an organization, kind of all of these things are coming together that we're going to learn a lot about here in the near future.

1:01:15Um, Jack Dorsey, uh, CEO of block had a, uh, kind of a white paper recently talking about where he sees the future of large organizations going. And wow, it was crazy. It's like, you know, this, this hierarchy of one type of thing is like, he thinks that everyone is going to report directly to him. You're going to have like an intelligence layer for middle management and then all individual contributors, uh, type of thing. You think about that future and, and maybe that's like the idea of the vision of where it could go and we'll never end up there,

1:01:48but we'll end up somewhere that's better than what we're at today. Uh, but you think about that, you think about the digital twin, you think about, uh, intelligence layer across the board. Uh, and it's very interesting to think about. I think that the complexity is, is these enterprise organizations are so complex is like, how do you digital twin something that you can't even take a picture of today? Right. And, and I think that that's where maybe it's challenging for that, but can you do that in smaller areas for sure? So maybe not the entire enterprise, but specific groups and teams and all that.

1:02:21And as you improve them and they get more mature or what better connected, uh, you could do that, uh, across the entire board, you know, like where do we ever go into an enterprise and they have a CMDB that is completely accurate. And it's like, never, like literally never. And if you don't have a CMDB that is accurate, how are you going to have a digital save for listeners? What CMDB is, uh, a change management database, uh, and, uh, or configuration management databases.

1:02:54It more or less is a definition of all systems and services and, uh, like how they were put in place to be there. So the very simple one is you spin up a new server, you put, spin up a new VM, it goes into the CMDB to be tracked, uh, for the future. So people know why it's there, what it's serving, uh, and all of that. And then as you start connecting systems together, it builds a map and everything there. I mean, I like, since the beginning of my career, I've been on CMDB projects and wanting that to be perfect data.

1:03:28And I think that it's one of those things where, you know, it's gotta be almost perfect for it to be valuable and anything less than that, it's just a nuance and it's just in the way. So if you can't have a CMDB, how can you have a digital twin of your organization, which is, which is the people and the teams and the communication boundaries of all of that. So, yes, I think that's a vision and I think that's exciting of words to go. Uh, I believe you could do less of that you could do. And we've started to do this inside of our organization where we hook our, uh, our LLM and some, uh, automation and customization that we built in there into our entire system.

1:04:09And our entire system is pretty simple, which makes it easier. So Slack, Slack is our digital office. Everything starts in Slack. We have email, we have calendar, we have source control, and we have a dozen other tools. It's really easy for us to integrate all of that together so that our intelligence layer can see an email come through, see a new lead and HubSpot come through and, and translate and connect that directly to conversation that's going on in Slack. Uh, we also regularly record all of our internal conversations over Zoom and all that.

1:04:43So the transcriptions all captured there and that's all fed into the knowledge base that gives us so much information. So we do exactly what you were saying. We sit around and not just me, but everybody in the organization. What if this was going on? Like, tell me about bottlenecks in the system. Tell me where we have opportunity because our system is pretty darn well connected. I would not say it is not perfect either because it's so hard to have perfection. You know, you have a phone call with somebody or you have offline conversations or whatever it is. You have a conversation in a, in a private Slack channel that can't make it into the, the, the larger knowledge set.

1:05:19So, and I think ours is pretty good and gives us a lot of that opportunity. And yes, we, we show that off. We, we show what that could look like at a large enterprise and, and, and what it can mean to them for the future. Yeah. Okay.