Tag: Consulting

  • Who’s Jobs are AI Taking Right Now?

    Despite all the speculation over why Amazon is laying off 14,000 workers, as of this writing, and with a few exceptions I’ll note below, I don’t personally worry a great deal about AI taking away jobs currently.

    The reason is that while new AI agent based services and products are becoming better at replacing humans at certain tasks:

    • Many tasks are not automatable — especially ones where the “product/service” is actual human interaction and judgement. And those tasks tend to be the ones that take the longest and the most people to do.
    • Technological improvements can lead to increased demand. The classic examples of this are how the advent of spreadsheet software increased the number of accountants (when calculation work became cheaper and easier, the demand for accounting-style thinking to be used broadly across the business increased) or how automated teller machines (ATMs) increased the demand for human tellers (by making it imperative for convenience to have more branches).
    • AI tools are great at answering questions and doing assigned tasks. But you still need a person with actual judgement and experience to ask the right questions and assign the right tasks

    While the above three advantages may ultimately disappear as technology improves, in general, I am optimistic that, by making workers more productive overall, AI technology will make workers more valuable overall.

    The one exception that I immediately saw, however, were entry-level knowledge workers. New (and, in most cases, young) knowledge workers (engineers, designers, analysts, writers, management consultants, etc) are uniquely not valuable when they first start a job. They lack context, judgement, and skill. They tend to only prove their value after they’ve had the chance to learn on the job. Historically, the bargain was that entry-level knowledge workers would start with relatively lower-value tasks that would, through time and exposure, help them learn the context, judgement, and skills they would need to become productive. This is, after all, the path I took as a novice management consultant and later investor.

    But with new AI tools, the case for hiring these entry-level knowledge workers dramatically weakens. Claude Code might not be able to replace the judgement of a senior architect, but it can probably get up to speed on a codebase faster, write code more accurately, and all without needing rest or paid time off than a fresh-out-of-school developer. Gemini might not be able to have the same type of insights as someone with a deep rolodex in an industry, but it will certainly know more and can conduct & summarize internet research much faster than a freshly minted consultant. ChatGPT might not be able to capture the artistry or investigation skills of a Pulitzer Prize winning journalist, but it can definitely write up summaries of stock market movements or the press releases from a company better than a novice journalist.

    This is ultimately self-defeating — as without new junior talent, where does one find good middle-level or senior talent — but it’s also something that I fear we are already beginning to see. This Goldman Sachs research report I just read has a great Exhibit 4 showing how while new AI tools have not significantly impacted employment in general or even employment in tech, it has meaningfully increased unemployment in 20-somethings who work in tech (see image below), exactly the demographic who’s value as entry-level workers has now been largely displaced by AI.

    How the tech industry (and other knowledge work professions) ultimately choose to handle this will be the defining test of how we incorporate AI into our economic lives.

    Over just the last few years, AI does appear to be hurting the employment prospects of the most closely exposed workers, such as young technology workers (Exhibit 4, left). Our global economics team recently showed that employment growth has turned negative in the most AI-exposed industries, but that the aggregate labor market impact remains limited so far.

    Jobless Growth [PDF]
    Goldman Sachs Research

  • Surviving a Consultant’s Axe

    Gawker, who seems to really hate McKinsey and other management consulting firms, recently put out a “Complete McKinsey Survival Guide” in response to McKinsey recently being retained by magazine publisher Conde Nast where they lay out a couple of interesting thoughts on how to survive a consultant’s downsizing tendencies including:

    “Suck Up—Kiss ass, Kiss ass, Kiss ass. “Suck up to your own superiors, and their superiors, and theirs.” It’s just that simple. A brown nose could give you a minute edge on your fellow layoff-eligibles.

    Practice Subtle Backstabbing—You don’t want to be seen as a desperate bastard ready to sell out any and all of your colleagues to save your own job (even though you are). You just want to plant the seed. Take it from someone who’s been there: ” Don’t talk shit about individuals, talk shit about DIVISIONS in a passive-aggressive way. Saying things like: ‘Those fellows that work in [blank] division are really nice guys, but I’ve worked here for five years and I still don’t know what they do’ is a winner.” Corporate espionage at its finest, ladies and gentlemen.”

    And they even made a suggestion that you practice some form of sexual quid pro quo as a means to escape the hatchet…

    The read was entertaining, albeit a little ridiculous with some of the suggestions, but this consultant wanted to clear the air and offer three thoughts:

    1. A consulting firm is not necessarily there to fire people. Yes, that is what they are often called on to do because many firms are staffed very inefficiently (too many people in some divisions, too many managers with no reports in other divisions, too many layers of management/bureaucracy) and management oftentimes lacks the competence or the courage to trim headcount on their own. That being said, management consulting firms are also frequently brought in to do other things like:
      • Business strategy – what markets or market strategies should the company or business unit pursue
      • Supply chain strategy – how can a business reduce its cost structure by re-negotiating its contracts with suppliers
      • Workforce re-deployment – how can a business re-organize its salesforce (not necessarily downsize) to optimize its results (e.g. move X people from West coast to Europe, etc)
      • Operations support – how can a business optimize its decision-making process (e.g. how many people need to approve a decision before its made) or operations (e.g. how can I make a factory process work more smoothly)
    2. If the consulting firm is here to help your company fire people, there’s probably not much you can do. Any consulting firm worth their salt will come to their final recommendation based on objective fact-finding and analysis where they poll many experts both from within the company and externally. It is relatively unlikely that Gawker’s suggestions that you subtly backstab another division or suck up to the consultants will change any of that, unless you have an amazing ability to prove the value of your division or group in such a way that even your senior management and external experts cannot (in which case you should have been doing that already…).
    3. You should see if you can join the joint-working sessions. Although this likely won’t change the outcome, it probably makes sense to join the consulting firm-internal team joint working group if you can, if only to help raise your awareness about (a) how senior managers think and rationalize large business decisions, something with which can help your career, and (b) come up with a sensible way for how to spin whatever decision the consulting firm comes up with.