The AI adoption mistake most companies make

Nicholas, it's wonderful to be on your podcast and congratulations on your success. only a few months in, but you're doing a great job.

great question. So I I've had a bit of an interesting journey. most of my past eleven or twelve years has been spent as an executive director in non profits. that's not for profits is what we call them in Australia, and social enterprises. So that kind of mix of leadership in organizations that have an economic and social purpose. And From time to time after you've done things like this, you want to dabble in the actual consulting part and be an advisor and not just working in the machine. You're sort of advising from the outside on the machine and maybe you have some unique insights to bring that you've learnt from your different experiences. So very early on, when I was in working in the state government, I realized that that wasn't going to be a sustainable career path for me as a public servant. So I spent a few years learning, and then I started my first part time consultancy called Purposeful. and at that same time I took a job as an executive in a non profit. and so that's where it all started really. And then having spent about ten years in different types of nonprofit executive roles and doing different consulting things, that's where you find me today gone full circle. now just doing mainly consulting again. But this time, my experiences have taken me through technology and innovation for a few years. And that's why right now Shackleton Labs focuses very much on how do we help leaders, owners, founders bridge that gap between innovation, ambition, and actual practice. So how do we get from where we want to go to where we need to be? and drawing on my experience throughout the past decade plus on that.

Yeah, it's a great question. I I think non profits are in this really difficult position where we expect so much of them because they have a social purpose, but then we fund them like they are real paupers or they don't really get what they ever need to fulfill their ultimate goal, purpose or function. So, you know, what's what's maybe a good starting point is what's different between how a business runs and how a not for profit runs. So a business is responsible for making profit, to return that profit to its shareholders. A not for profit serves a community purpose or a range of community purposes. And there's an expectation that a not for profit should deliver economic outcomes, but also social impact. So there's a lot of there's a lot of weight on the on the shoulders of not for profits to do that. And whereas corporates have a lot of room to work on productivity and how they work to improve. through innovation programs, funding, RD and incentives and everything like this, there really isn't the same infrastructure support or funding to help nonprofits embrace and adopt innovation, which is really a proxy for improved productivity to help them become more efficient, better at fulfilling those dual economic and social outcomes. So when I noticed that gap working in a major organization setting up their innovation lab, I thought, okay, you know, if this is a widespread problem in Australia where we have sixty thousand not for profits, we're really leaving a lot of productivity and potential impact, you know, on the table where we could harness this. So that's why I wanted to get into that space.

Yeah, well I think the first thing to say is think about what your goals are for innovation. I think it's often a lot of people are just jumping in and and using Chat GPT across enterprise or Claude and just, you know, everyone's going on their own journey. I think a better way to do it is to think quite early on, what are your goals for AI in your organization? at at Shackleton Labs we talk about eight different goals that you can sort of think about and how you want to approach them and Having a a goal directed conversation can help you make sure you're implementing the right sort of tools to get to where you want to go. we also talk very much about innovation readiness and AI readiness. So we have a framework which helps you look at what are the five drivers of innovation adoption or AI adoption that help you actually get the technology in the business and working. The reason for this is that you know, whilst we have over ninety percent of enterprises have people running AI tools and programs in them, really interesting study came out recently showing that only five percent of these use cases are generating positive economic return on investment. So yeah, so this is why we need to have custom programs that are really well thought out from the start, really focused.

And actually make sure that these organisations are ready to adopt and not just sit on the tools that are there.

Yeah, it's a good question. I mean, look, that ninety-five percent stat for me is particularly interesting because it's also the same percentage of startups and small businesses that fail in their first year. So what we're looking at is really what is the cost of trying something new and the risk profile of that? And what Shackleton Labs tries to do is to sort of say, ask those questions like why, what what what is causing that failure and how do we reduce that likelihood of failure or increase the the probability of success? What are the levers that we can pull around that? And so I mentioned the first thing that you do is you look at kind of what are your core outcomes that you want to focus on. And I'll run you through some of them just for context. So you can implement AI or an innovation program to grow revenue. you can look at scaling your impact. You can think about improving service delivery. You might want to build an innovation culture in your organization, which I would highly recommend. You may want to reach new audiences or markets. You might want to lift productivity, you may want to deliver develop future leaders, or you want to have a systematized innovation process across the organization, a real engine that makes it all happen. So you can see by me kind of taking this from one big word of innovation that it really spans out to what are you trying to do with it? would be my first question. and then it's also even just thinking in really basic terms, The nonfor profit space has a real challenge around innovation because we don't adequately define what it means. So, you know, Micolas, I might ask you, you know, what what do you think innovation means in the non for profit sector? And then I'll share a definition with you.

That's okay. Let me share one. So go ahead, I cut you off. Are you going to share a different one?

Okay, no worries. so you know, because there isn't a definition, what I will do is every time I run a workshop or I'm invited to speak, I'll show my latest iteration of what I think a good definition is, and then I'll get people to crowd vote on it, and then I will either tweak it or improve it based on that. So where I've landed so far is innovation in the n in the full purpose sector. is the process, skill set or result of creating new programs or projects that create social and economic value for an organization, its clients, beneficiaries, partners and community. So it's it's a big one, but I think if we can't define something and we don't know what the goals are of that process, then it's sort of silly to get technical with AI straight away and try and imagine that it's going to just succeed if we put it in place. So the other drivers that we speak to around readiness to do AI quite well or innovation are what you need to have in the organisation is a growth mindset or a belief that, you know, capability can be converted to outcomes. You need to have innovation capability, so the skills, tools, time and awareness and knowledge to run experiments, not just talk about them. You need to have intelligent governance, so you need to have clearly defined guardrails and policy that Have a risk appetite, decision rights and reporting rhythm to encourage experiments, not stifle them. You need to have transformative leadership, so visible executives that sponsor AI and protect that innovation time and effort, and the behaviors associated. And you've got to have the adaptive culture piece, which is key as well. So that that's psychological safety to try, learn from mistakes and misuses, misses, and share. from your wins but also your your failings quite openly.

Did I did I bore you too much with the with the innovation stuff? That's okay. We can talk about podcasting.

Of course, of course. You want the unique experience. Yeah. so first thing to say is I I really like your reasons for starting your podcast and they're very similar to mine. it's about curiosity, learning, and also elevating and profiling people who are not celebrities. I'm really into that. but you know, as the podcast grows, sometimes you will get, you know, more impressive or important people. That's natural. I was a huge listener of podcasts in two thousand and sixteen when they were not as popular and I I just loved them. I love the storytelling medium. I'm a very order auditory, oral person, someone who, you know, receives information through their ears really well. and so I loved that world and I thought, wouldn't it be great if there was an Australian perspective on a lot of the same sorts of content that I'm hearing from America? you know, just two people sitting down in a really casual way to discuss, you know, what is meaningful and important about work. how does work create social outcomes and value? And so I created my podcast, Humans of Purpose, in twenty seventeen. And I'm not sure if it's the same for you, Nicholas, but I had this idea that what would happen is that I'd have a lot of fun, I'd meet amazing people, and I'd also be able to create a name for myself in a new industry in non profit. But then also maybe that I had the consultancy as well. So I thought I'll have guests on and then they'll ask me about the consultancy and then they'll become clients and it'll be this lovely smart business thing that never worked. Never got one client from Humans of Purpose. But you know, had a fantastic time, met great people and spent seven years on it, three hundred and fifty episodes. And throughout that time it gave me a great chance to really experiment with how do you turn something that takes a lot of time and energy and cost sometimes that people don't realise to produce, into something that is either a break even or revenue positive situation. So I ran all sorts of experiments from membership models on Patreon, you know, providing extras, tweaking, marketing and, you know, everything from hiring a social media marketing manager to joining forces with a digital agency in a collaboration. And what was interesting was just learning from how how you run experiments, which I still you know apply today in my innovation work. But then thinking about what is going to be the w the right model to actually make this monetize. And for humans of purpose, what worked really well was sort of like brand and marketing deals that we would sell in packages. So we would have situations where we could promote guest content and allow them to speak more openly about the benefits of their business in integrated marketing packages. And it was really a thought leadership sort of platforming play. and that that led to about 20K 20,000 in recurring monthly sorry annual revenue which was pretty good, more than break even and showed that there was good potential for growth in those numbers over the years. Then what happened was I got a pretty serious job to build and implement an innovation lab, a global innovation lab, through a non profit in twenty twenty three. And at that point I thought with a young child, I can't do this juggle of podcast and full time work and you know, being a dad and everything at once. So I spent a lot of time, this is before I y knew how to use AI. I spent a lot of time trying to craft the perfect email to go to a hundred and fifty trusted people in my network to sort of pitch the strengths of the podcast and really see if anyone was interested in finding a new home for it. So that was the sort of process and then a question you might have would be, you know, how do you know how much a podcast is worth or how do you value a podcast? is that something in your mind?

Yeah, 'cause it's like what I mean, what are you selling is sort of like the question. and it's really a bundle of IP rights, and you know, a pl a platform, a consolidated audience, sort of a revenue platform of some sort as well. And it turns out that there's a service in the US that exists that will if you send all your numbers, they'll just give you a valuation. So I did that. And he was unable to sell the podcast himself. So I took his valuation and then pitched it to a hundred and fifty contacts. That narrowed down to five who were interested, which narrowed down to one, and then they took it on in twenty twenty four and are doing amazing things with that. So

Yeah. Yeah. It's been running ever since the the sale and

Sorry? great question. Look, I think it must be up to about four hundred and fifty or five hundred. when I finished it was three fifty. and I still miss it. I love podcasts and I love the process. And that's why when people reach out authentically like yourself, I'm always very happy to be a guest because I think it's it's an amazing platform and way to learn and be curious and share that with others.

that's a that's a great question. well I think you I think you're doing a good job, I must say, first of all, but but I think one important thing is active listening. So you know, one of the best things that has ever been said to me, and I apply this not just in podcasting but in consulting life and in my general life, is that all people have two ears and one mouth. So we should listen twice as much as we speak on average. So as a host, you're there to really be an active listener, to direct the conversation, to ask really good questions. but that doesn't involve always talking too much. It's sort of like, you know, how little can you talk but get the right kind of flow in the conversation? I think other things that are important in conversations are leaving spaces. So, you know, You don't always have to fill space where there's silence. I think it's it's a sign of maturity and confidence to allow space to linger. And if you ever watch really good journalists like Louis Thoreau or some of these other guys and how they talk to people, they will often fill fill spots just after controversial or deep questions with enough space. and not not feel a need that it's awkward to jump in and close that space. So intentional space is really important. Active listening. and yeah, just thinking about what are the types of questions that you really feel comfortable with, which is I I think is where you get to over time.

Who who's gonna blink first, Nicholas? Yeah, that's right.

Such a great that is that's a fantastic question. So let's tack that on to my last answer is just get really good at great questions like that. what would I tell younger Mike? Young okay, so this is gonna be controversial, but it's often advice that you hear from older people who are fifties plus, or even sort of graveyar bedside near death confessions. So at the end of your life, almost no one Who's speaking to their relatives says that they wish they worked harder or more days in the office. no one has ever said that on their on their on their bedside at death. They always talk about they wish that they spend more time with people who they care about and love and relationships. So I actually think having strong, healthy relationships is a really important foundation for business and life success. so maybe it's not as as controversial as you would think. And what that means to me now is if I had to go back ten years plus, I would focus less on trying desperately to succeed and more on trying to be open and honest and form good relationships with the right people who are moving in a similar direction. would be really important. the other thing would be that it's not the amount of the work, it's the quality and focus of the work really matters. So you can burn out really easily doing what we do by just thinking that you can brute force your way to success. It's very w rare that people actually brute force their way to success. They learn how to prioritize and spend time on the right things that are high yield, and cut out waste focus on things that don't yield. so definitely doing review around what are the things that you are spending time on that are valuable and have proven to be valuable and produce results, optimizing for that and then cutting out all the waste, the things that you know that are tempting that are not real growers for you or your business or life.

How personal do you want me to go here, Micholas?

so one regret that I've talked about a fair bit, it's it's a difficult one. It's sensitive for me, but I regret not being a more present dad for the birth of my first son, Marlo. he's an absolutely beautiful child, but when he was born I was in a difficult position where I just accepted an executive role at a large technology company in Australia. And in Australia we only get, you know, ten days of parental leave for dads. And I wasn't there nearly enough to support my wife and to be a present dad for him in the first year of his life. and I'm very lucky that we're going to have a second son in a few months and I'll get the chance to do that the right way this time. But what I've learned is that I prioritised my career at a time where I didn't have a lot of choices, but I should have tried harder to work on making the right choice and that would have been to to be with my son.

Yeah, if you just go to shackletonlabs dot com, I I assume you you may drop that in the show notes or whatnot. they're welcome to find me. I'm also on LinkedIn if you just search for Mike Davis. I can share my LinkedIn contact as well. And yeah, I mean the best reason to contact me is if you have a look at what Shackleton Labs does. we are basically all about building capacity and capability to help people and organizations do innovation better. and implement their innovation ideas, ambitions and potential. So that's what we're here for. We're working in the for purpose space mainly with nonprofits and and social enterprises, but we also have expanded the offering and services to coaching and master classes because there's a strong understanding there that executives and leaders across the corporate and all other sectors need help in this space. So we do a fair bit of coaching now and master class work too.

No, thanks for having me. It's lot of fun.