The top CEO's approach to coping with the artificial intelligence era (Eng)

meeting the AI moment CEOs are confronting a make-or-break test of their leadership. Here’s whatsuccessful leaders are doing to get AI right. AI has yet to deliverthe ROI many leaders expected. What are they getting wrong? “This isprobably the biggest, most complex transformation we’ve seen—but it’s 80 percent businesstransformation and 20 percent tech transformation,” according to McKinsey’s North AmericaChair Eric Kutcher. “That’s different from how most people have thought about it.” On this The McKinsey Podcastis cohosted by Lucia Rahilly and Roberta Fusaro. The following transcript has been edited for clarity and length. This is it—your legacy moment Lucia Rahilly:Eric, today’s CEOs are confronting a welter of consequential changes. Let’s startwith the big kahuna: AI. Talk to us about what the advent of agentic AI means for leaders. Eric Kutcher:I tell everyone that this is the most exciting moment in my 28-year career. I call itthe reimagine moment, the CEO legacy moment. As one CEO I really admire said to me, “This is Watching your kids adopt this, watching your grandparents adopt this, watching everyone havean LLM [large language model] at their fingertips—it’s amazing. My wife doesn’t go to a travelagent anymore. She just asks, “What does Chat say?” Or my son, when he was a senior in theearly innings of this technology, two years ago—he prepared for exams by taking every problem Every one of our employees is using it—whether at home or at work, they’re using it. Unlikesemiconductors, which took years, this happened overnight. It’s the most democratizedtechnology we’ve ever seen. That’s also probably because of the scale of this technology today.This is probably the biggest, the most complex business transformation—but it’s 80 percent CEOs who take this on will take their organizations to a different level. And CEOs who sit andwait—their companies aren’t going to exist. They’re not going to thrive. It’s that binary in terms What about that ROI? Lucia Rahilly:We’ve seen so much research on the challenge of translating AI investments intobottom-line results. Many companies are experimenting, but few are realizing meaningful ROI. ‘This is probably the biggest, the mostcomplex business transformation—but Eric Kutcher:The reason we’ve seen these results is that we’ve been in the world of, “Let’s takethis technology, deploy it, and watch good things happen.” And good things have happened.They just don’t add up. You can’t just rely on the technology—back to my 80/20. You have to So if you’re a CEO, how are you approaching this problem? Leaders need to envision what theywant this to look like in five years. That may be nothing more than high-level thinking, their ownNorth Star. It may be how they articulate where they’re going organizationally to realize themagnitude of this change. And they’re all choosing very differently. Some say, “I’ve got to bring One leader told me, “I’ve got a few folks who are running ahead. That’s not OK. I need everyoneto run at the same pace, and I’m not going to let the first three slow down.” Another said, “I wantto triple the share price in four years.” He went to one of his functions and said, “I need you togo from 1,000 to 3,000 customers. And I don’t want it done the way we’ve done it in the past. The other thing I hear about a lot from CEOs is fluency. The irony is that the youngestemployees often know the technology better. I’m a tech guy. I was an engineer. But to somedegree, I’m a Luddite relative to these kids. You’ve got to really want to learn—it’s such a big One CEO I love has a passion for golf, and he said, “I went to ChatGPT to figure out what shaft tobuy. That was my eye-opening moment. That changed how I thought about everything I do atwork.” So the mechanism for creating fluency—that intellectual curiosity and willingness to What’s the future for human workers? Lucia Rahilly:As leaders start realizing more meaningful productivity gains from agentic AI, thenext step will presumably be to reinvest some of those gains into growth. Do you see this Eric Kutcher:What will the future organization look like? The short answer is none of us knows.My two cents: The organization will feel a lot flatter. You’ll have human and agent hybridworkflows. You’ll have to figure out where to deploy agents: What’s the objective function? Howdo I evolve workflows where people and agents are responsible for output? You’ll need way I also think it’s an organization where people who are fast learners, who are willing to challenge,will succeed. And folks who just go through their daily routines—those jobs or tasks can easily One of the things I hear a lot is, “Gosh, the early stages of the career ladder will go away.” I don’tbelieve that, because as a CEO or leader, I’m not just thinking about this moment; I’m thinkingabout the future. I know I’ve got to apprentice people. I can’t just have everyone come in readyto play a senior-level, judgment-based role. I have