How the best CEOs are meeting the AI moment

I love when I see a CEO go spend time with a junior team and I really understand what they're doing day-to-day. You want to get to know tech, go spend time with the folks in your organization that are great at using it and watch them and ask them questions and watch their eyes light up when they get to interact with you and teach you something. That's Eric Kutcher, Senior Partner and Chair of McKinsey North America. He's talking about the need for CEOs to reimagine their organization's system-wide using AI. And reaching out to AI Native Talent is just one step, and forging an AI-integrated workforce. This is the McKinsey Podcast, where we help you make sense out of the world's toughest business challenges. I'm your host for today, Lucia Raheli. Eric Kutcher, welcome to the McKinsey Podcast. Lucia, it's so good to be here. Thank you for having me. So let's talk CEOs. Over the past several years, leaders are just confronting, you know, a welter of consequential change. So let's start with the opportunity space. You've been so closely involved with helping CEOs navigate this new AI economy. And in particular, the newer headline advance into Agente AI, talk to us about what you think this new, agente age means for today's leaders and for how they meet this moment. I tell everyone, I think this is the most exciting moment that I've lived in in my 28-year career, right? I call it the reimagine moment. I call it the CEO legacy moment. I had one CEO, I really admire, say to me, this is the real fourth industrial revolution. And the reason why I just think this is such an amazing moment, it is the most democratized technology that we have ever seen. Watching your kids adopt this, watching your grandparents adopt this, watching everyone have, you know, whatever form of LLM at their fingertips. My wife doesn't go to a travel agent anymore, she literally says, what does chat tell me to go do? When I watched my son in this senior year, which is two years ago, you know, so sort of in the early, early, early innings of this technology, he'd be preparing for his exams. He'd take every problem set that he had done, and every test that he'd been given, and every quiz, and he threw it into chat and said, make me a 90-minute exam, right? And then show me the answer key. And so every one of our employees is using it, whether they're using it at home, whether they're using it or working or using it. And so this technology, unlike semiconductors, which took years or whatever, this has happened overnight. So the most democratized technology, but it's also probably because of the level of scale of where that technology is today, overlaid with the magnitude of change, right? It is probably the biggest business transformation of the most complex business transformation, not technology. And so the thing I say is, it is an 80% business transformation, 20% tech. That is different than how most people thought about it. And I do think the CEOs that take this on are going to take their organizations to a different level. And the CEOs that fit there and wait, their companies aren't going to exist, they're not going to thrive. That binary, in terms of its level of importance. So Eric, you're talking with CEOs every day, we've seen so much research about the challenge of translating AI investments into bottom line results, right, into the P&L. Many are experimenting, few are actually realizing the value it seems. So how do you see leaders address that value creation challenge successfully? The reason we have gotten no results out of this so far as we've been in the world of let's just take the technology and deploy it and watch the good things happen and good things have happened. They just don't have them. You can't just rely on the technology back to my 80/20. You have to take a step back and really reimagine the process. So then you get into this question of if you're a CEO, how are they approaching the problem? And my reminder to them is they really, really, really need to be having their own mind. Where is it they want this thing to look like in five years time? By the way, that may be nothing more than high level thinking and kind of giving them their own North Star. It may be how they articulate where they're going to the organization, can realize the magnitude of change. That's in my mind a choice they have to make and they're all choosing it very differently. Some say I've got to bring the whole organization along at once. Some say if I can get one or two functions to do something magical that I can use as an example to challenge everyone else, that alone is sufficient. Literally one said to me, I've got two or three folks that are running ahead. That's not okay. I need everyone to be run at the same pace that I'm not going to let the first three slow down. I have one that was incredible. He said, "I want to triple the share price. I literally want to triple the share price. I want to get it done in four years." That's it. That's it. Right. This is not a small company. He went to one of his functions and he said, "Here's your objective to get to tripling the share price. I got to triple the number of customers we have. I need you to go from a thousand to three thousand customers. I need you to do the work. And here's the deal. I don't want it done the way we've done it in the past. Here's my vision for how it's going to get done. You guys have to go make that happen. That to me is the difference between those that are out in front and those that are kind of waiting to see the technology. The other thing I hear a lot from CEOs is like the fluency of this thing. The irony is that our youngest people in the organization know the technology better. It's the old folks like me. That's not their daily. So how do you get fluency? How do you get people to start? I had once the yield was really interesting. No, it's true. Right? It's always true. I hate to say it. I'm a tech kid. I was an engineer. But at some degree, I'm a bloodite relative to what kids do. It's just not as familiar because you have to go back and really want to learn. Right. Right. How do I learn? That to me is such a big thing. When I watch one CEO, I really love to hear the passion for golf. I have a passion for golf. We were talking about something. And he's like, I literally went on to chat GPT to figure out like what shaft I should buy. That was like my eye opening moment. Like I had a conversation with AI on something that I cared about personally. It wasn't work. And he goes, wow, they changed how I thought about everything I do at work. So what's the mechanism to create fluency and create that level of I call intellectual curiosity and willingness to pause and say, you know what, I want to do this differently. That's a strong one big time. Fantastic. Okay. So did you think you were going to get this much talk out of one person? No. I also didn't think you were going to describe yourself as an old part. So as leaders start realizing some of these meaningful productivity gains from agenda AI, do you think they will, I mean, the next step would be to reinvest some of those gains into growth. Do you see this new org chart that will result from that resulting in reductions in the human workforce? What if the future organization really looked like? I mean, the short answer is none of us know, but here's kind of my own two cents. I think the organization will feel a lot flatter. I think the reality is you will have human and agent hybrid workflows. That you're going to require a lot of judgment. You're going to have to figure out where to deploy those agents. You're going to have to figure out how do I think about continuously improving on what's the objective function? How do I evolve all of those agents, et cetera, in a workflow that's going to have, there's a whole bunch of things I am responsible for on the output and I've got people that have to do some of it. I've got agents that have to do some of it. And I happen to believe in doing that. I will have way more workers and judgment in way less managers. And so I think it's a flatter organization. I really do. I think it's an organization where people that are fast learners that are willing to challenge will succeed. And the folks that just kind of anonymously go through their daily routines, we won't need those jobs where those things can easily be replaced. I also think one of the things that I hear a lot as well, gosh, the beginning, the early stages are going to go away. And I just don't believe that because I am going to be as a CEO or as a leader, be thinking about not just the moment, but the future, and I know I've got to apprentice people. Right. I can't just have everyone come in ready to play the senior judgment-based role. I have to give them the opportunity to learn and experiment if the youngest people that are the best understanding of the tech. So if I really want to do this and challenge ourselves, the thing can do it differently, it is much more likely that the young folks, the less experienced people, will have more fluency. What are you seeing in terms of addressing the upscaling challenge? How should CEOs be thinking about balancing between new, like, not AI native and at least AI literate talent versus existing teams that need to be upscaled in order to accelerate growth? I have this question all the time. Like, do you have to bring everyone along or do you have to give them access? And I think where my head has gotten to is you've got to give them access to the education, the tooling, et cetera, and if they choose not to, you can be Darwinistic because they're not going to succeed in any environment going forward personally. I'm trying to give more hands on experiences. I just got back to the two day off site. We talked about how we create, frankly, a community of them through, we use Slack inside the firm so they can actually see these agents in the workflows and they can tweak them and they can add to them and it sort of creates this community and kind of awareness. I think you've got to create that ground swell. And then the other thing is like every training you do and inside the firm, we do a lot of trainings. Every one of them is now 30% all on how are we thinking about AI and what you do every day. The more you talk about it, the more you get people to experience, the more they recognize they can't ignore it. It would seem that starting first internally when you're thinking about changing workflows and embedding agent might be a lower stakes way to go, for example, than going outward and direct to customers. Are you seeing more of that is inside the organization a good place to start? I've gone a bit back and forth in my own mind. I think very few people get excited about internal change or the purpose of internal change. So if I'm a B2C company, can I change something around the customer? That's what I think about and that's what the organization kind of gets their head around. I think the majority is there to serve whatever that end customer is to drive towards a different outcome that leads to the company's success. So I think you've got to do more that is going to be more customer-oriented because that's what matters. So in that case or in both cases, really, let's talk about AI governance, particularly vis-a-vis agentic as agentic gains traction in more complex processes. Governance has to become vital, right? How should leaders be thinking about responsible AI at scale? I am not the expert on this to be perfectly frank. So we should be a little bit careful how deep we tread. I think the term responsible AI is a very big and potentially loaded term. It is absolutely important we do that, but I think if you ask people, they will think about it, right, in many different levels. We have some level of responsibility has to do with what do we think about when we hit AGI and when we hit AGI, what does that mean for the human and the jobs and if all of us can get replaced? I don't think we're anywhere near that risk anytime soon and I happen to believe in human ingenuity, right? But you could argue part of responsible AI is how do I think about the broader good and humanity? And so that's one definition of it. I don't know, obviously, a whole bunch of other risks, which is you are going to and we are going to create a level of technical debt as a result of this that if we don't have the right governance, we have 15,000 agents today, that number will go to 30,000 agents tomorrow. Well, don't have to retire these people or these agents, I call them people, we have to retire these agents or these micro agents or these atomic agents because I don't want people to call on the wrong ones because the wrong ones have issues that I've followed over here. How do I manage the life cycle of this is a real issue? And I think the CIO can have to deal with that in a real way. So when you talk about responsible AI, it's just in different levels. And I think we are going to have to have real governance around this and I think depending on which part of the problem you're trying to solve, I think you have different parts of your organization and I think about this more. Let's turn from AI to geopolitics given that the shifting global order presumably remains a top priority for CEOs. How are you advising leaders to plan for growth in a world where geopolitical dynamics remain so much in flux and in some cases with such tangible ramifications given supply chain reconfiguration and so forth? The majority of what they're thinking about is what is the right answer for me and my organization over time. If you talk to most CEOs, they will say, we have found a reasonable equilibrium. I do think there's a question of just trust that exists across what have been historical allies and can our rely as much on what have been alliances of the past as we go forward. But I think those questions largely sit at a governmental level and I have to say I'm not seeing people stop investments, actually kind of continuing through and doing the investments they know are going to be the right investments. Here's a question. There's a way in which tech itself has become too political as country start thinking about sovereignty, data sovereignty, it's kind of a hot topic it seems. What should CEOs be thinking about when it comes to global strategy and competing in a world that's shaped by national tech priorities? One level is you sometimes hear about this question of decoupling and are we going to have one stack or are we going to have multiple stacks and how will it evolve? I happen to believe we're going to see two stacks more because of the way that they're both kind of competing to win and so you're going to have very different solutions in that space and I suspect they will also largely exist in different markets because of geopolitics and some of the protections and so forth that you're describing. There will still be collaboration as you think about the development of multiple stacks there. Then you get into kind of what are the implications of sovereign AI or data restrictions and we've been living in that world for a while and I think we are going to continue to live in that world and it's only going to be greater. What I think you will see is there are some places where they really do want to have more not just availability of technology stays within but more of their own local technology that gives them a say like we're not reliant on what does that mean in the world where the geopolitics can be quite tricky. That's effectively what I think people are trying to avoid and so there's an element to that which is where does the data sit where does the AI modeling sit how much can I use that data outside that is very real. That's okay. I think that is incredibly manageable, maybe slightly more expensive. There's a difference of I only want to use technology that was developed in my region. I think that's harder because I think that runs a real risk and so I actually don't think that will play out because I think the economic impact of not having the best available is much greater than the risk associated with using someone else's. So then you're going to stuck in a world where sure I have more complicated data center constructs. I have more complicated data residency constructs. That's all manageable. It's a complicating or complex factor. It's not a game changer. Interesting. So you've talked a lot throughout this podcast about leading through this interval of uncertainty, this interval of change. What other leadership mindsets and behaviors do you see among the CEOs you work with who navigate this kind of challenge particularly well? I think the great ones figure out to be centered and find things that allow them to escape from moment to moment. I think the great ones also love what they do. I think you can't do these jobs unless you absolutely love what you have to love the organization, you have to believe in what you're doing. I think the great ones today have sort of gotten past them. I'm going to say what I think people want me to say and I'm going to say what I believe. I think this is so important and I think it kind of helps them. It's really easy if you say what you think people want to say and then the wind switch. You're sort of stuck and it makes a very hard usage. When you believe in something, you don't worry about which way the wind's blowing because you believe it. I think the great ones also really are constantly learning. I love when I see a CEO go spend time with a junior team and they really understand what they're doing day to day. You want to get to know tech. Go spend time with the folks in your organization that are great at using it and watch them and ask them questions and watch their eyes light up when they get to interact with you and teach you something. I think those are the people they really understand what's going on in the organization because they take the time. I also think the great CEOs of the moment are willing to be more vulnerable. I am struck by how in a world of the past where you had to be the command and control and you had to be able to demonstrate that. I think it's okay. That's a great question. I don't know the answer to it or gosh. That's a really good point. I got to go think about that some more. I think it's incredibly liberating and I think the great CEOs are figuring that out and it's incredibly inspiring to their organization to feel that the person is human and approachable and all that. Yeah. That's interesting. The CEOs, I mean AI is presumably revving up the pace of executive decision making, right? In addition to juicing productivity and all these other transformational changes that's enacting. Our CEOs prepared to make strategic moves at this new speed of pace and at scale. Are they handling that piece of it? Yeah. I think most CEOs, I'm probably going to get a lot of trouble in this and I'm probably going to get a lot of hate mail from some of my friends, both inside the firm and my CEO friends. They actually spend less time on strategy than you think. And so much of what they are actually spending time is the change management, the moving the organization from A to B as opposed to deciding where going from A to B. Now the beauty is I can execute on B a bit faster, but I still have to go through that change. What may change right now is the ambition that I have big enough. Is it bold enough? How you bringing the organization is just so hard that that is what I really believe you've the good CEO spend their time on. You talked about junior folks that you work with who are young, starting out in their career. You had one piece of advice for one of these junior folks. What would it be? I'm not good at one. I can do three, I think. Good. Okay. Maybe we'll see. Number one, never lose your intellectual curiosity. The thing I worry about is it is super easy just to go to the AI and ask it to go do something for you. You've got to ask not five wise, like we used to always do, but F50 wise. Why is that the ace? The second is never stop learning. Like this is the point of the folks that come in today understand what this technology can do. How do I maintain that? Never stop learning. It's another form of the intellectual curiosity. And the third is never lose your own voice. I can tell when someone's written something through AI. Find your voice, make it you, and then use everything around you to help communicate and never lose that. If you haven't figured out how to express yourself in your way, you're really not thinking critically. So, Eric, tell us, and I think you said some of this at the beginning, but tell us more, are you optimistic about 2026? What are you most excited about and what are the leaders you work with most excited about as we embark on the new year? I think this is the most interesting, transformational moment that we will live through an our professional career. To be at the beginning of this, to shape the way the change takes place is unbelievable. I also am optimistic about the rate of adoption in a positive way versus where we've been in this. Some people call it pilot purgatory of the past, because I think organization is trying to realize that I just can't insert the technology. I actually have to think about what I'm going to do to change the way I operate. When the beauty of when you do that is you can set this bold audacious goal, and that's fun. It is so fun to go after something that no one ever thought possible. I sometimes get this question as AI a bubble, and I'm like, I have no idea if the valuation is a bubble, but this moment is not a bubble, this moment is real, and it's going to happen, and whether or not the valuations are right, who cares. The question is, do I see a world that looks different 10 years from now as a world that I get excited about? And I think there's optimism across the board. I think, which always, by the way, that too makes me nervous. I don't like it when people overreact, because that's when something goes awry, but I think this next decade is going to be wild, and it's going to be exciting. Eric Kutcher, thanks so much for joining us today. This was such a great discussion. So much fun to be with you. Thanks so much for listening to the McKinsey podcast. I'm Lucia Rally. And I'm Roberta Fissaro. Find us on McKinsey.com. We'll have a transcript of this episode up shortly. 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