HS146: Costly Choices and Forced Dollars – Thanks AI

Jon Attil-Johnson (0:03)

Hi, I'm Jon Attil-Johnson, CEO of Numertis, here with my co-host.

Jon Burke (0:07)

Jon Burke, CTO of Numertis.

Jon Attil-Johnson (0:09)

And you are listening to Heavy Strategy, the show that tries to ask the right questions, not give the right answers. And sometimes those right questions come to us from our listeners, which today's show is actually launched by, provoked by a question from one of our listeners.

Jon Burke (0:26)

So, in response to a previous show on the subject of technical debt, we got this follow-up.

Can I propose another kind of technical debt, the buy now, pay later, Clarna model? I work in K-12 public education. We don't use AI to improve our bottom line. As the CTO, having to vet AI products that are in a freemium model, playing whack-a-mole and disabling every AI feature that is student-facing until it can be vetted, writing policy and procedure regarding AI and student use, all of this work significantly decreases my ability to complete my real work. Add in the significant increase of cybersecurity issues created by AI in the hands of bad actors and my ability to focus on real work is further eroded.

Jon Attil-Johnson (1:15)

Well, John, this sounds like a perfect case of what we call forced dollars. And just for background, for everyone listening, a long time ago when we were asked by clients to help them build ROI models, we explained that there really are only four kinds of costs to really consider. There are new dollars, which is money you can be making in new ways by appealing to new clients or offering new product lines. Save dollars, which is reducing costs of delivering the same product. So reducing the same product, lower costs to deliver. More dollars, which is going after your existing clients with your existing products and just getting more of them scaling up your operation. And finally, there's forced dollars, which is money you have to spend because somebody is making you. And I would say this falls clearly into the category of forced dollars. And the question really is, what can I do about it?

And broadly, it's a subset of a broader problem, which is that assessing the impact of new technology on the existing environment, if it's done properly, costs money and may result in simply not buying this stuff in the first place, which is great. But, and there's a whole discussion we could have about decision paralysis, but it doesn't sound like this person is in a position to actually make those decisions.

Jon Burke (2:45)

Exactly. So it is important to keep in mind that if you assess 10 products and select one and implement it, the assessment cost for that product is not what you spent assessing it, it's what you spent assessing it and the other nine that you didn't adopt. So you've got to do your ROI calculations against real costs. But in point of fact, what this person is complaining about is sort of a two-pronged dilemma for them. One, they have to assess new features as they come up and decide whether or not they can be put on the student-facing side of their system, which are made available on the student side of their systems. They don't have a choice about that as part of their requirement as K-12 education CTO. And on the other side, they have to invest an effort in turning off all that stuff that they're not allowed to expose to students yet.

So they're hit both with the assessment burden and with the prevention burden because they can't do the assessments instantly. They have to first disable it, then assess it.

Jon Attil-Johnson (3:57)

And of course, there's the documentation burden, which they talk about, which is writing policy and procedure, which is all core force dollars. Because anytime you have to do any flavor of compliance, that's force dollars. It's not bringing any good to whatever your corporate mission, in this case, education is. It just costs you time and energy, as this person is pointing out.

I think there's an implicit question here, which is like, what do I do about it? And John, I don't want to say that we're stumped, but I think this is, we've seen this challenge before. Every time there's a major technology shift, somebody has to go out and figure out what do we do if people start using this technology in an unauthorized fashion? Oh, what does it take to turn it off and turn it on very intentionally?

How do we do that? Like, how do, you know? And ultimately, it requires a new human or new humans with the charter of doing that. And I feel for this person, because just looking at their email address and the fact that they're coming from the education environment tells me there's not a new person in their foreseeable future.