Shelley E. Kohan (00:05)
Hi everybody and thanks for joining our weekly podcast. I’m Shelly Cohan and I’m really thrilled and excited to have Aaron Strout with us today. He’s the author of Wired for Purpose, Why Humanity is the Biggest Differentiator in a Digital World. So welcome, Aaron.

Aaron Strout (00:23)
Thank you for having me. I’m thrilled to be on the show.

Shelley E. Kohan (00:25)
It’s awesome. So you actually have over three decades, I hope I’m allowed to say that.

Aaron Strout (00:30)
You are?

Shelley E. Kohan (00:31)
three decades of marketing and business leadership. You’ve done everything from building websites early on to scaling a massive healthcare agency to a multi-million dollar, a billion dollar operation. So welcome. And our topic today is super intelligence AI and the human differentiator, something that’s on top of mind for a lot of our retailers and brands.

that are out there. And what we’re going to cover is what AI’s intelligence is really built on. We’re going to talk about the AI race in terms of business and society, why trust connection become the ultimate differentiator, and why retailers and brands should really what they should do about it. And one of the things, Aaron, you are very particular about, and we’re going to sum it up with this, is how this wave of AI actually compares to the Industrial Revolution.

So we’ll go ahead and jump right in.

Aaron Strout (01:28)
I love it, Shelley. I’m ready.

Shelley E. Kohan (01:30)
All right, let’s go. So let’s start. Okay, so you have this theory of how intelligent AI is based on human intelligence. So tell us a little bit about that.

Aaron Strout (01:42)
Well, I think it’s worth framing that, you know, this isn’t just magic that showed up and all of a sudden this computer knows everything, right? At the end of the day, the computer needed to get its intelligence from somewhere. Now that said, what’s a little bit scary and at the same time thrilling is the fact that computers have now learned to learn, right? And this is where the whole agenc conversation comes in. What I will say though, it’s like the proverbial,

ship setting sail and they mentioned that if you were to leave California, I live in the Bay Area now, if you were to leave heading toward Hawaii and you are one degree off, the fact that you would end up, I think it’s something like 5,000 miles south of where you’re, you know, pointing to. And you think one one degree, that’s not that much, right? It I like if you look at 360 degrees and you go 20 feet, it’s nothing. But over time, and this is where the models and the training and all of those things can really go awry if they’re not set up properly.

we also I think anyone that’s used AI probably has seen AI hallucinate. It’s great when it’s great

Shelley E. Kohan (02:46)
Yeah.

Aaron Strout (02:46)
and when it isn’t, it can it can be horribly wrong and embarrassingly wrong. I think we probably also have a few of the scars to prove that.

Shelley E. Kohan (02:56)
Yeah, and I I think that’s so true. And and when it hallucinates, it’s really bad typically, like it’s way off, which can be very dangerous, especially as, you know, companies are kind of building out their AI technologies. And when we think about AI, it’s really trained based on human judgment, right? And data and intent, right? So it it’s a reflection of us, what we’re putting into it, right?

Aaron Strout (03:20)
Yeah, totally. I mean, a good analogy is I have a daughter that’s nineteen and she just went off to school. And the funny thing about me is I love to cook and we make all these different dishes, but a lot of the dishes that we make sort of ongoing, I do it much more by feel than by like exact numbers, right? So the kids are like, How do you make, you know, aioli or how do you make your chicken marsala? And it’s like, okay, I have to sit down and think about what are the ingredients and how do I replicate it.

And there is this nuancey area, which I like to call the last mile of the human, where you know, you do adjust the salt, or you adjust the amount

Shelley E. Kohan (03:54)
Right.

Aaron Strout (03:55)
of acidity, or you adjust how much you’d like the chicken done or not done.

And those are the things that we sometimes forget to train into the models. And sometimes if we don’t, that last one degree that could point us five thousand degrees south is the thing that comes into play versus, my gosh, you you know, I was able to make that exactly the way you taught me how to do this, mom or dad.

Shelley E. Kohan (04:17)
Yeah, and Aaron, what’s interesting about that is if you take what you just described and now you put it in a company and you have all these functions, you have HR, you have marketing, you have operations, you have all these functions that are all doing what you just said across every level of the organization. And so if you take that one, you know, recipe change, that one degree, and you times it by a large company, the impact is substantial.

Aaron Strout (04:45)
Yeah, I just did an interview a few weeks ago and one of the things we talked about was a company that had laid off it was Ford, had laid off, I think it was three hundred and fifty of their quality assurance engineers only to turn around and have to rehire all of those same engineers at a premium because they had paid them out their severance. They lost them and then I’m sure they had to do some convincing with some of them and probably had to pay them more to bring them back. And the reason was

some of the digital sort of validations that the line was doing on certain parts for the cars were not recognizing abnormalities. And one of the things that you sort of find out is when you look into the nuance of this is a human being can hear a rattle of like, you know, a door being made. And they’re like, you know what? I’ve seen this before. And this is when a part wears out like three up the assembly line. And if you don’t know to look for it because it’s not in the training of the actual AI.

Or within the the digital visibility of the tool that’s monitoring it, then you never know what that is. And so those are the little things that we just forget about that again, I am a huge believer in technology, a huge believer in AI, but it’s this trust but verify and really let that human being be the last mile so that anything you’re producing, you can gut check and say, that makes sense, or

That doesn’t make a ton of sense. Let me dig into that a little bit. It’s why I love, you know, when Gemini in your Google Chrome browser gives you the sort of references so that you can go and read the article and say,

Shelley E. Kohan (06:15)
Yeah.

Aaron Strout (06:16)
I see where you get the answer, but that isn’t exactly the way I would have interpreted it.

Shelley E. Kohan (06:21)
So it’s interesting the example about Ford and so part of that is that like a race to quickly, you know, adopt AI and get it out there and kind of be very competitive in the marketplace? Is that where some of this rush is coming from?

Aaron Strout (06:38)
I would s definitely say it’s that. I think the other thing is is that we have been led down this path, this slightly false narrative where especially companies that are governed by Wall Street where they have to report, you know, on quarterly earnings, they’re doing everything they can to find an edge. And especially with oil prices being through the roof and labor going through the roof. And during the pandemic, a lot of people decided they didn’t want to work the same way or as hard as they did before.

And so you have to find ways to find these edges. And I think there was the promise early days of AI, which by the way has been around for 60, 70 years. I think we forget that it didn’t come to be with ChatGBT.

Shelley E. Kohan (07:14)
Yeah. Right.

Aaron Strout (07:16)
It became democratized with ChatGBT and some of these other sort of AI tools, these generative AI tools. But I think the issue is that companies immediately look for cost cutting versus how can I do what I’m doing better or

How can I scale? Or how can I do more innovation? Right. Those are the things that companies really should be looking for. So back to the Ford example, you know, it is expensive to hire these 350 engineers. And if you’re trying to squeeze every dime out of automotive production, and it is a very competitive market, it seems like a logical place to look. But when you dig down into it, often these are the things that last mile that can be the most dangerous to take the human out of the loop.

Shelley E. Kohan (08:02)
The other concern is trust, and this trust factor is twofold. So you have trust from the consumer who’s buying, you know, the cars, and therefore now they have question marks in their mind about the quality assurance, you know, especially if this is broadly reported in the news. And then you also have the trust factor with employees. Listen, they fired me once, they brought me back. Is this going to happen again? So it’s kind of like a a twofold trust issue.

Aaron Strout (08:30)
Yeah, Shelly, I couldn’t agree more. And I know part of what your whole thing is is about trust. And I couldn’t like that is the ultimate difference, right? Or one of the ultimate differences. I mean, I talk a lot about something called the networkers code, right? Or the connector’s code, rather. And in the book. And it’s about this idea of how can you connect more meaningfully in ways that are sometimes unobvious with people. And I’ve seen

magic happen over and over again as a result of doing this. And I think trust and business. And by the way, it can be a I like to know that a machine was involved because sometimes machines can be at least mostly infallible. But I would like someone to have eyes on it at the very end just to make sure before it goes out the door there was nothing that was visibly wrong. Or maybe there’s a couple places where you’re like, I know the machine kind of tends to fail on these three or four spots. So let me just

Gently wrap this with a hammer or let me like, you know, lift up the windshield wiper, or let me test the brakes and make sure that, you know, they feel like they’re supposed to feel. And I think those are the types of things that, you know, it is critical for trust to be there. And that is the thing that AI is going to continue to have a hard time replacing because I am a big believer in the fact that AI cannot build trust.

Shelley E. Kohan (09:44)
Yeah, it’s it’s one of the biggest challenges I think in our industry. Well, in a lot of industries, but specifically for retailers and brands. So how should leaders balance this pressure to move fast? So to stay competitive, you have to stay productive, you have to stay, you know, up against your competition. So you wanna there is this pressure to move fast. And like you said, you know, Wall Street puts a lot of that pressure on companies as well. But then they also have this responsibility for their own employees, their people.

as well as their customers. So how do they balance these two kind of almost conflicting things?

Aaron Strout (10:21)
Yeah, it’s a great question, Shelly. And I would say that there’s not a perfect answer, but I think the thing that has always worked in the world of technology is one, going in and doing a bunch of experiments. That’s another thing I advocate for in the book, right? Which is let me test this out, see if it works. If it worked, let me build on it. And so I think there’s an opportunity for companies in particular to look inward for some of the innovation. And I’ll throw out another example.

IKEA. IKEA s a few years ago, I want to say it was probably three or four years, four or five years ago, decided that they wanted to start to lean into bots, chat bots to answer questions, right? I I think most big companies have done this, but they took it to a degree where they thought, like, we can actually get 8,000 reps out of the field because of the fact that we won’t need them for this. Turns out that wasn’t the case.

I think especially because we know there’s this like Pareto principle 8020 rule where probably 80% of the questions can be answered by looking them up or technology, but it’s the last 20%, which are usually the most complex, that don’t have a simple answer and do require human beings. So the short version of wrapping this up is IKEA, you know, started to lean into this, realized the error of their ways, and instead of, you know, having a knee-jerk reaction, they looked and said, Let me see if I can cross-train

These 8,000 reps. So they’re still available if I need them for the complex questions. But let me create a new revenue stream, which is they are now interior designers because they all knew the catalog intimately. They sort of knew what IKEA’s target audience looked like, right? People looking for value, but at a reasonable price, not high-end, not super low end. And so they were able to provide a service that actually started to generate new revenue. So those are the things I think is like, can a company save some dollars?

But really look more toward how can I do what I do better? How can I do it in a more innovative fashion? And how do I sort of surprise and delight the client, the customers or the clients so that they’re like, you didn’t just sort of take the fun out of this or take the human being out of it. You actually created something even bigger and better that maybe I’m willing to pay a premium for because of the fact that, you know, it is now better than what it was before.

Shelley E. Kohan (12:41)
It’s great because IKEA is such a global brand and they are they have a lot of different functions throughout the company. And for them to be able to quickly adjust and be agile is not something we commonly see in large, large companies. It takes so much to kind of move the battleship, so to speak. And so it’s great that they were able to pivot. So if you were helping retailers and brands, is it the culture that made them

be able to pivot that quickly? Like what what drives a company to be able to test, measure, and quickly change if things aren’t going right?

Aaron Strout (13:21)
I think culture plays a major part of it. I I think people always under appreciate and underestim underestimate the power of culture. And I’ve seen it in a few different companies I’ve worked in where it’s gone well and where it’s not gone well. And I worked at Fidelity Investments for nine years back in the earlier days of, you know, digital. And you know, they had a good culture and they really did a lot of things right. But there were nuances when you had new leaders come in, some that wanted to go really fast and be really innovative, some that were a little bit reticent to do that.

So I think it is trusting that what got you there isn’t the thing that’s necessarily gonna be the success metric of the future. However, it it is an important bedrock of what you’re doing and to say, okay, you know, we’ve been around for 50 years. We’ve always sort of taken we’ve zigged when people have zagged, like Patagonia is a great example. Patagonia has been built on this idea of doing what’s right for the environment and knowing that they’re

Customers really deeply care about these things. And as a result, they are doing things that lean heavily into that. Even if they’re using AI, and I don’t know whether they are or not. I assume that they probably are, but they will do something in a way that feels human, feels authentic to the environment, and feels like they’re always looking at their employees and customers’ best interests first.

Shelley E. Kohan (14:40)
Yeah, I think that’s a really good point. and I do think there are a lot of concerns with the use of AI and the consumption and there’s a whole societal kind of pushback on automation and AI. Do you have a point of view on that?

Aaron Strout (14:56)
I do. I mean it’s again, there’s no nothing new. History repeats itself and it is when bots first came out, right? Or even like phone trees early days where you’d call up and they would try to sort of get the computer to answer your question. And sometimes if you’re checking a balance, that’s fine. Or sometimes if you need to know store hours or where to go to like do a return, that’s fine. But if it’s a

You know, I’m looking for a gift for my wife who’s impossible to buy for. I know she’s worked with this particular personal shopper before. Like, what’s the best way that I can sort of get that knowledge so that if I go and buy her something without asking, that I can get that? And that might be again CRM assisted, where if I go to Nordstrom and they’ve got my wife’s preferences in their system, but it would be helpful for me to also maybe go and talk to her personal shopper or

you know, maybe see some of her transaction history so that I can say, well, she’s already got a million sweaters or she’s already got a million pairs of shoes, which doesn’t preclude her from getting more shoes. But it’s little things like that where it’s it’s that nuancey piece that again, AI just hasn’t sort of completed that last mile of. And it’s always that, you know, intuitive piece. That’s why when I write content or, you know, people generate content, I always make sure I go over it with a fine tooth comb to make sure it feels like it’s in my voice.

And usually it’s something that I’ve inspired with the book or an idea that I have and AI helps me do the research, but I wanted to make sure that like if I had to sit down and you were to ask me questions about that article, I could with a straight face answer every single one and have a, you know, defense behind any of my arguments for or against.

Shelley E. Kohan (16:36)
Well, I think the other the other question I kinda want to ask you is about so AI can become commoditized. And what I mean by that is, and I’m specifically referring to retail, but you know, retailers in the past they would have these technologies out there, systems out there that were proprietary, right? And so it would take years and years and years for competitors to kind of figure out what other companies were doing. Today I’m not seeing that. Today I’m seeing

Tons of vendors out there, tons of technology. Everyone has access to the same technology. So basically, every competitor can have all the exact same tools, right? So how do we then differentiate that service, that shopping journey if everyone in facts has very similar tools?

Aaron Strout (17:24)
So I love where you’re going with this. I I will say, just to give you an example, this past weekend we were down in LA and we needed a hotel to stay in. And I, like many people, have my three or four chains that I like to use on the regular, especially if it’s just like rote business travel. But I was doing a book signing, I was in West Hollywood, which I know has a little bit of a quirky flair to it. And so I have

Shelley E. Kohan (17:46)
It does.

Aaron Strout (17:47)
a good friend that I used to work with, and I said, Hey Peter, give me some recommendations, right? I I’m I can look it up on the computer.

He did and gave me a little blurb about each and you know, gave me a reason for or against, but it was pretty balanced. And so we ended up staying at this place called Hotel Ziggy. Hotel Ziggy is very sort of quirky, but we really liked it. And what we liked about it is they actually if you call their phone, they have an AI assistant who can answer any of your questions, sounds exactly like a human being. But the human beings in the hotel at the front desk, like who helped us find an extension cord,

helped me replace my iron that I needed to use to to iron my shirt. They were the difference. And there was like an an unpolished feel. And I I know that might not sound good, but it didn’t feel like you walked into this opulent palace and it’s like, my gosh, I’m in my sweat, you know, pants and my t-shirt, and I feel like a little bit of a loser. But it felt like it was cozy and sort of at home and there was no judgment. And they had musical acts that played, you know, small musical acts in the evening. And

It just was like this quirky feel that fit us at this time. And so I think that quirkiness is something that it’s hard to replicate. And in the human beings, and and again, the human beings were not, no disrespect to the Four Seasons or the, you know, the Ritz Carltons, you know, who are very well trained and very coiffed and in their uniforms. These people were in black, you know, all black clothes. They were kind of funky or whatever.

But there was a personality that really lent itself to the overall experience. So I think there are a lot of people that will choose the local coffee shop over the Starbucks because they want that talent of the local barista. They want, you know, something where they’re not afraid to make a mistake or you’re not going to get notified on your app, which sometimes is helpful, right? But sometimes you just want to have that experience. And I think people in general try to choose that. It’s like, do I do Amazon? I want it fast, quick, cheap.

Or do I want to go to a local boutique where maybe the salesperson, I’ve got to know they knew who I am. They know that like the traditional size X doesn’t really fit me the way it should. So I have to go up a size or down a size. So I know that’s a long-winded answer, but I think those are the things that we’re never going to get rid of as a society. And I

Shelley E. Kohan (20:02)
Yeah.

Aaron Strout (20:05)
think we make those conscious choices of like, do I want fast, decent, cheap delivered to my door, or do I want to have something where

I can really be a participant in the process and then I can go and tell a story about that sweater that I bought or this belt that I bought or the wine that I bought at the particulars in the store.

Shelley E. Kohan (20:23)
I love that story. I mean I think that’s a great example. And I I I I think

Aaron Strout (20:27)
thank you. I just made it up, so I mean I I lived

it myself, but I did just make that up, so pull it up.

Shelley E. Kohan (20:33)
You just pulled it out. But here’s the thing that’s

interesting about your story is that you probably didn’t know exactly what you were looking for. And this is our customers. Our customers, they don’t know, they can’t articulate, here’s exactly what I’m looking for today. I want this, I want that. They just are in that moment. So when you were looking for the hotel, you probably couldn’t have described to your friend, here’s what exactly what I’m looking for. And our customers are like that too. They kind of they know

In the moment, okay, I’m gonna do Amazon today because I don’t have a lot of time. And then tomorrow I’m gonna go shop local. So I think it’s important and I do think retailers understand in the moment shopping and the customer journey is kind of in that moment, and customers don’t always know what they want. So what can retailers or brands do to keep AI from like taking over the brand ethos of the company?

Aaron Strout (21:29)
Yeah, I don’t know if I have a perfect answer for this, but I do I did start to think about it. And so one of the things I started to dig into is one of the first places you see a brand’s representation. It starts with the brand identity, the logo, the tagline, right? And then it’s things like the website or their storefronts. And then the other piece is what advertising do they do, whether that’s on TV or print or radio, whatever. And so one of the first things that came to mind was what companies have sort of gone.

Counterintuitive with their advertising. And this is something that I don’t think AI would think about, right? So one of the first ones that came up as the example that I looked up was Volkswagen Beetle in 1959. So going back a lot of years, but think small. And so it was a picture of the Beetle, which anyone that doesn’t know it, it’s this like teeny tiny, kind of funny looking car, but a cult classic that Volkswagen even brought back in the last 20 years. And it was a picture of the car with like a massive negative space around it.

And it was really celebrating the fact that like this was a cool thing, that it was small, it was economical and it did look different than the normal, right? and just another example of that, like Burger King in 2020, they did something called the moldy whopper. And so they literally did a time lapse of their their burger growing moldy, which seems completely antithetical to anything you want to do. But their their desire was, unlike other burger chains,

Where apparently you can put fries in your purse and two years later it comes out and you can eat them and they still taste the same, is that it proved that they were not putting preservatives in their burgers, right? So

I think that’s a couple of the places. And then I do believe that companies, if you were to do a whether it’s looking at net promoter score or CSAT or just overall general, like, you know, trust in the brand, overall sales growth of the brand.

They’re probably companies that have a strong culture. Apple’s one that comes to mind. People love or hate them. but they built something special that people trust and over time they continue to want to buy those products. And I think a lot of it has to do with the culture, the authenticity, which can be very difficult when you’re going from a Steve Jobs to like new leadership in a company. But I think the best companies, especially those that have survived over time.

you know, have maintained those cultural touch points. They have the values sort of spelled out. you know, it’s interesting. One last little anecdote is it’s kind of like the ultimate experience. I on my podcast, I r have my first episode of season three, which is coming out in September, the CEO Burning Man. So Burning Man just put out a documentary in

Shelley E. Kohan (24:09)
Yeah.

Aaron Strout (24:09)
conjunction called The Man Will Burn. And so Marion Goodell was talking about shepherding this experience and sort of the

return to humanity and it was quite fascinating, but they’ve had thirty years of this weird, you can’t directly manage it. It’s like pushing a rope. Like you have to sort of facilitate. But if you push too hard, people are like, wait, why are you trying to, you know, ruin my experience? And they had these 10 principles. And so that I think is the type of mentality that I really appreciate of like having something that you can stick to, adapting to how it changes over time.

But knowing that that’s the thing that’s going to guide you, not what are your sales or like, you know, what retention of customer. I would look at things like, you know, the N NPS, which is would you recommend this product or would you recommend this service? It’s kind of the ultimate question. And, you know, if you would, that says a lot about the company. If you wouldn’t, then that says a lot about the company.

Shelley E. Kohan (25:08)
That’s a really good point. so the other thing that you really are passionate about is that you believe this wave of AI is compared to the Industrial Revolution. So tell me a little bit about that.

Aaron Strout (25:23)
Yeah, I have a lot of thoughts on it, but the particular one was sort of twofold. One of which is everyone, I think not everyone, there are a lot of people that believe that AI is going to take all of our jobs and that we’re gonna be dead in the water. The Mark Zuckerberg superintelligence essay that he put out there, which I think was a little bit of the basis of we talked about. I was thinking about that. And one of the things that I think people also get scared of is that,

you know, people are gonna go out and use AI and essentially with us all out of business, like we’re gonna like, what do we do with ourselves? And if you look at the Industrial Revolution, obviously a much longer time frame, it’s somewhere between like 60 and 100 years that it sort of took hold, but really sort of precipitated by things like the steam engine and the printing press and things like that. That it didn’t it it did sort of wipe out certain aspects of the economy. So agrarian, you know, culture

the individual farmers, the individual iron you know, the iron you know, what do they call blacksmiths, things like that. But what it did do is it created so many more opportunities, which created a whole nother layer of wealth and created all of these other things that you could do because now you had the time and the disposable income and people were able to sort of think outside the box. You know, if you look at revolutions

Revolutions don’t happen when people are at their most oppressed. They happen when people start to be able to pick their heads up and look around. And so I think with AI, what we’re going to see is unimaginable products and services and experiences that we never could do before because either we didn’t have the time, we didn’t have the know-how, we didn’t have the compute power. So that was the piece that I really wanted to connect this to is the industrial revolution radically changed not only sort of our job structure, but

How we lived, how we bought, how we, you know, created new products. And I think we’re living through that condensed into probably, you know, a two and a half to four year time period. But history does repeat itself. And so for anyone that’s afraid, go back and look at what that impacted. Now, don’t be a farmer, don’t be a blacksmith in this new age. So that’s why you should be trying and getting used to the tools and maybe don’t go

Shelley E. Kohan (27:38)
Yeah.

Aaron Strout (27:39)
into a job that you know you’re gonna be immediately obsolete.

And that’s not rocket science to figure out, so

Shelley E. Kohan (27:47)
Yeah, I love that thought process. And I do think both brands, retailers, brands, companies, and the government, they all kind of have a responsibility, kind of upskill today’s existing workforce to do what you just said, which is to work alongside AI.

Aaron Strout (28:04)
Yeah, I couldn’t agree more.

Shelley E. Kohan (28:07)
Well, thank you so much for being here. And again, your book that is everyone should read the book, Wired for Purpose. where can they get that? Probably anywhere, right?

Aaron Strout (28:17)
They can. Can I just flash it up so people can see what the cover looks like? So

Shelley E. Kohan (28:20)
Yeah, sure.

Aaron Strout (28:22)
Amazon is the easiest place, and it’s the only place, unfortunately, you can get a print copy of the book, but literally the audio version it and the the audible or I’m sorry, the ebook version of it, you can get it. Goodreads, you can get Barnes and Noble, anywhere like that. So I can throw out the website, which is get wiredforpurpose.com if people want to go and learn more about, you know, I do a blog there.

and learn a little more about me and sort of, you know, activities. I do book signings and things like that. But I do appreciate the opportunity to to be able to point people in a direction. So thank you, Shelley.

Shelley E. Kohan (28:57)
No, thank you so much for being here. I’m sure our listeners learned a lot today.

Aaron Strout (29:02)
I hope so. And they can, you know, look me up. I’m always happy to engage with people on LinkedIn and other places. And so I’m just Aaron Strout, plain and simple, not nothing fancy. But this is a great conversation today, Shelley. And I love what you’re bringing to the world and how you’re thinking about AI and trust and looking at it with a retail lens. So bless you for doing that for your listeners.

Shelley E. Kohan (29:24)
Thank you.

Aaron Strout (29:26)
You’re welcome.