The AI Sherpa Podcast

Podcast Transcript:

Jack Monson: It's the franchise AI update for August 2024 brought to you by WSI. Joining me once again is my friend RM. He's the chief AI officer at WSI. Robert, how are you?

Robert Mitchell: Doing great, Jack. Looking forward to this awesome conversation.

JM: Yeah. And I'm looking forward to all of the conversations that we're going to have over the next several months, bringing everybody the latest information and updates on AI specifically for the franchise space.

JM: It really feels like no one else is bringing this to the forefront yet. And my friend, you are obviously the thought leader in this industry, though. I don't know if this is something you thought you'd be doing five years ago, being the chief AI officer, right?

RM: No, definitely not. It's definitely a great pivot to my otherwise great franchise career, 23 years in franchising.

RM: But I do love that WSI has picked me up a couple of years ago and allowed me to spread my wings, as it were, in the AI space. Technology has been brilliant. But there are a lot—I want to say there are a lot—of other thought leaders in this space. So, I'm not the thought leader.

RM: There are a lot more who are doing brilliant work in AI, but we'd like to pride ourselves on being one of the trailblazers, as it were.

JM: Yeah, you absolutely are. And I think that might be a good place for us to start our conversation today, getting kind of a broad overview of where the franchise industry is right now when it comes to adopting AI.

JM: What can you tell us about that?

RM: Sure, that's where I was going with that comment. In typical years—and maybe you can attest to this as well—it seems as though franchising has always been, how do I say this nicely, politically correct, kind of a laggard when it came to technologies. They kind of took their time, waited for it. Maybe it's because of the very nature of franchising. It's hard to deploy across a thousand-unit chain or whatnot, being the big ship.

RM: Hard to turn.

JM: Hard to turn that big ship. Absolutely. Exactly.

RM: So I get that, but I love that ever since two years ago, when Patty, myself, you, and Dan were on that panel and we just were explaining to people those two new letters that came out—AI, that is—I think that ever since then, I've had people approaching me at conventions, calling me, reaching out.

RM: People have been approaching me at conventions, calling me, reaching out. I think that they're eager because, and I think the reason why they're eager is because they recognize this is not like other technologies. The deployment learning curve is very minimal. And I think that's the brilliance of this technology.

JM: Yeah, optimistic. It also feels—and tell me your thoughts on this—that AI is maybe something that's more being on the offense as opposed to being on the defense all the time, right? With so many other technology things that have come around over the past couple of decades.

JM: Yeah, it feels like franchisors are like, 'Oh, another thing that's going to ruin my business if I don't invest in it,' right? Cybersecurity, issues with the internet, issues with privacy, and other things that might not even be technical that come along. We're constantly playing defense with some of these things.

JM: AI though is something that comes along, and people, I think, have really realized this is something that could actually grow my business. It's not something I should only be afraid of.

RM: I think the reason for that, Jack, and I think that this is where we've seen it with our clients, is that a lot of these fear-mongering-type of examples that you gave—maybe it's not fear-mongering, but just things you have to do, or else—they have that same thread in AI, mind you, but it's a different type of 'you better get on the bandwagon or get left behind' type of thing.

RM: But that aside, I think it's because of the tendrils of AI. What I mean by that is you have every role in every department that can be upskilled and improved. Whereas before, you would have the department that generated the most money. I'll tell you, accounting has been left to the wayside for years.

RM: They don't—they're not a revenue generator. Marketing and sales are important. Ops is important because they need to drive franchise owner growth. So there are all these departments that tend to get all the attention and all the money. But the beauty of AI is that it allows Susie over in accounting to be upskilled to make her job 50 percent more productive and truly impactful in the organization and affect the bottom line.

RM: So that's where I think the shift is, that people are recognizing that.

JM: Yeah, it could be that some of the things that we've seen just during our careers in franchising—the explosion of the internet and social media taking over—that was all seen as something that the marketing department needs to deal with.

JM: Whereas AI is great for marketers, sure. But there are so many other things that a company could do that have nothing to do with marketing. So, I think what you're saying about getting AI involved with all of these other departments, and maybe some places that really could use some help these days, right?

JM: I think that's maybe what's leading to some of this growth. So tell me about WSI and your work there. Are you working with WSI franchisees? Are you working with other franchisors as clients? Give me an overview of that work.

RM: Definitely. So there's both. And I think that's probably why we're so effective because we are drinking our own Kool-Aid. That's one element—I guess I used that phrase wrong. We are drinking our own Kool-Aid, meaning we are deploying our own AI tools within the organization, at corporate and for our franchise owners.

RM: But a second way of using that phrase is I'm actually working with clients directly for WSI corporate. We have our own consultancy model, and it's just like a lot of franchises do this. They have to have a corporate-owned store that tests out the technologies and their framework at the same time.

RM: Literally, at the same time, from call to call, it could be a client call, or it could be a franchise owner's client, or it could be a franchise owner of ours that's looking to understand this new framework.

RM: And for those who aren't aware, WSI is a digital marketing franchisor. It has been for 28 years—I think it is now. So, our business model is to help digital marketing agencies or entrepreneurs become digital marketing agencies around the world, where our shift has come is that those digital marketing agencies are now becoming AI consultancy agencies as well. So there's another product line they can offer. And as I said this before, most marketers are seen to already have been dabbling in this anyway. So it's a natural progression for the end client to already assume we are the experts.

RM: And so I'm here to upskill our franchise owners, get them using our framework, and give them the tools to easily deploy solutions. That's the hard part right now. It's really hard to find AI architects that can build these tools anyway. So what we're doing at corporate is, one, building out that additional module or franchise offering as well as working with clients in the franchise industry specifically. Now, the beauty of that is I get to work with banks, healthcare, travel—all different types of clients of our franchise owners. In addition to my clients, which are 100 percent franchise-focused, we can get an understanding of how the model needs to tweak for different types of industries.

JM: Got it. Tell me about some of the brands that you're working with and the things that they're doing. Any good stories you can share of examples of how you're helping those franchisors grow their business with AI?

RM: Yeah. And I think the best way to explain that—of course, I don't want to say any names because a lot of them are trying to keep it under the radar, partly because of competition reasons. They know their competition, knowing they're about to get 40 percent more productive. But aside from that, some of them are legacy brands with thousands of locations. Some of them are service brands, some of them are retail brands, and some are food and beverage brands. But really, it's across the board.

RM: One of the things I always say during workshops is: every task, every workflow, every role, every department in every industry will be affected. They will need to be reimagined—their roles and their portfolios. All that needs to be reimagined in the realm of AI. It's a paradigm shift on epic proportions. Now, in order to better understand how we are helping our clients, it’s better to help you understand how we help them. So, we don't go in—I’ve mentioned this before, and I think in our last conversations—we can't go in as a hammer in search of a nail. That's a SaaS product. You take a Salesforce, and you punch it, squeeze it, and make it fit that organization by whatever means necessary. No offense to Salesforce. What we try to do is we first have to set the baseline as a consultative agency. We work with our clients. We’ve got to give them AI policy. We’ve got to give them governance and strategy and help change their culture. That means a leadership, top-down approach. Understanding that the adoption of AI must first start with the ones who have to set the culture and set the strategy moving forward—and actually write the checks, right?

RM: The other part of that is the employees. We call it the bottom-up approach—and no offense to that either, it’s just the nature of the beast, right? That is understanding the aptitude and attitude of the people in the team, the people doing the work. Are they scared of this technology? How do we make them not scared? Are they scared of their job being taken because of this technology? Let’s make them not scared. Let’s upskill them to make them relevant again. No offense, but that's happening. People are feeling like this technology is pushing them out.

RM: So, we go in with that premise first, and then we go hog wild—training, upskilling, going into deep dives, analyzing those tasks and processes to find the true use cases. Then we start solutioning those projects.

RM: We’ve built a great calculator that says, ‘Okay, this is what you're doing now. This is what it's going to cost you. This is what it costs every day to do those or every week or every month to do these tasks.’ If we build the tool and it costs 5, 10 grand or whatever to build the tool but saves you 50 grand, then that's a worthwhile tool. If we flip that and realize, ‘This is a really sexy, shiny penny—we want to build a chatbot for this,’ and we realize it’s only going to save you a couple of grand and it’s going to be a huge build, don’t do it.

RM: So we have this great formula we put together. But it’s got to be needs-based, and it also has to be value-based. So we have both there. Then once we do that, we build it, we deploy it, we train the users on how to operate it, and then we monitor the success of that. We have to help the new employees who are using this tool understand how to use it. Then we want to monitor what it did—how did it upscale people? At the end, we continue to coach and mentor the team. We ‘Sherpa’ the leadership, as a common term in WSI. We work with the AI champions in their organization.

RM: And it’s all for the continuous improvement through AI. Then we do that through an advisory that we do for all of our clients. All that to say, that’s the framework. But one little stat I want to throw at you—I know you're waiting to ask another question, but this is a great one.

RM: So we pull all of our clients, before and after training, and we continue to pull them.

RM: One of the questions we ask a lot is, ‘So, how are you improving your workflow based on our workshops that we provided last month? How have you improved it? What have you done? What’s changed?’

RM: And I’m not making this number up. They tell us the number. We don’t give them a multiple-choice question, right? They say, ‘I’m probably about 20 percent more efficient because of what y’all taught us.’ One guy said 25, but let’s just take him out—the top and the bottom. So about 20 percent more efficient. And the ones that don’t say, ‘I’m more efficient,’ you know what they say? ‘Better quality.’

RM: And so what we’ve taught them to use is these tools on a regular, everyday basis, and they’re able to make their work happen faster or better. I just love that. That’s a long-winded answer.

JM: No, I love that. And staying on that tone of adopting the technology and everything AI within a franchise company.

JM: You mentioned something about your clients all having, I think you called them a Sherpa internally, right? How important is the Sherpa?

RM: They're the AI champion. Yeah.

JM: Okay. So how important is it to have that AI champion within the franchisor's organization? And is that a must-have? They've got to have somebody who's going to work with you directly and really champion the AI cause internally. Is that correct?

RM: We can't do it without them. It's 100 percent necessary. So if the number one thing that we first must have is leadership’s buy-in—that’s number one—but number two, we work really hard in those first workshops identifying that champion.

RM: And usually they’re one and the same. A lot of our clients came from talks that I did, or Dan did, at sessions we provided. And they came, and they convinced leadership that they should look at us. Leadership got on board. And then whoever that person was ends up being the champion.

RM: Now, as you indicated, this is crucial. The reason why it's crucial is they help facilitate that new culture shift. They are typically running a weekly or biweekly ‘AI at [blank] company.’ And everybody comes in, has office hours, and we're participating in those as well, but they're facilitating. And so they’re changing the culture, and they’re gathering those needs.

RM: And they’re helping to build the enthusiasm for this adoption. Because the worst thing we could imagine is we spend all this money—or the client does—we build these tools, and they sit on the shelf. So having an AI champion is absolutely a must.

JM: Got it. What else does a franchisor need to have inside? Obviously, you’ve got to have the buy-in from the decision-makers, or you wouldn’t be there in the first place. And you’ve got to have that champion. Are there other people who need to be really involved with you and really involved in AI? Or is that more of a department-by-department type of thing that you’re helping them?

RM: It's funny that the answer to this question is not what you might think. We 100 percent absolutely need to have their—I’m not sure what the title might be—but their chief information officer, like the person who's like Chicken Little. We need to get that person on board. And nowhere has this been more apparent than in banking. We’ve had downright knockdown drag-out discussions about new ideas. He could not do this. This is not—we’re a bank. We can’t have personal identifiable information out there. So we have to have them in the conversation because we're not going to build something that's going to threaten the business or threaten the customers of the business.

RM: So we need their Intel to help make sure the build is safe and the products we put out of their services we provide are safe to their business model. So it's not that we need the one champion like, ‘Everything is green, everything’s great,’ and the other person is like a doom-and-gloomer. We need them both.

JM: Right? Yeah. You’ve got to bring in the department of no, whether that’s the IT guy or the legal department too. Do you run into trouble there?

RM: I hate to say this because there might be some franchise lawyers listening to this podcast. They don’t quite know what to do with it yet.

JM: Yeah. Yeah.

RM: And so that's where we're finding out that they’re playing with unknowns. And lawyers are risk-averse, so they don’t want to start making claims or making statements that aren’t quite ready yet. So they’re in a holding pattern, I think, for most legal teams.

JM: Yeah, no, I think that's changing. There are so many lawyers in the franchise space who just don't fit the description of what we saw lawyers as in the franchise space 20 years ago, right? There are so many who are open to new ideas and innovation, especially when it comes to marketing and things like that.

JM: So I think that's also a sign of the times, that even lawyers are seeing this is something we have to deal with. We can't stick our head in the sand. And I guess that brings me to another question. Do you still run into—and hopefully, that number is decreasing—do you still run into a lot of brands that just don't want to hear about this and want to stick their heads in the sand?

RM: It's hard to say because when I'm in networking and I'm out in the community or I'm on Facebook or LinkedIn, it’s all the champions, all the enthusiasm around AI. And I don't have people coming up to me boldly and saying, 'What are you doing, promoting this end of the world?'

RM: If they have those comments, they're keeping them to themselves. If I were to guess, I'd say that the ones that have always been averse to new technology are going to continue to be averse. Although one of my clients—I'm very proud of this particular master franchise owner because he's identified this—and their organization as a whole has been very slow to develop new technology. And so this is a brilliant step up. This could level up their whole network. So I guess it's a little bit of a mixed bag.

JM: That's an interesting position, though, to have a master franchise owner or maybe a multi-unit owner that's really influential within the system. Do you ever get any of those folks as your champion? Because that would be amazing.

RM: And that's our goal with this particular client. Because a master has the same problems as every other master. They all address the problems in different ways. And this is what we found with this particular organization—they’ve figured out band-aid deployments over the last 20, 30 years of ways to work around. As we call them, there are so many workarounds that the staff are having to do. The process map graph would make your eyes cross. It is, and so that's all we got to present. We got to just take this process map that we built from our deep dive with so-and-so employee and just hand that to corporate.

RM: Look what this employee does just to accomplish one task. Are you kidding? That should be an eye-opener, just the data itself. So yes, it's great to have a champion that's got, basically in essence, a mini franchisor, right? 120 locations and the ability to take the successes of that and be like, ‘Look what we could do.’ And the corporate can't turn a blind eye to that success if we actually deploy it.

JM: Yeah. And the other franchisees can't ignore that as well, because there's always that one multi-unit franchisee in a system that everybody's watching. And if you can get that person on your side to be your champion, that's a successful formula, I think, for the brand.

RM: Sure. Definitely.

JM: Tell me about—you and I have talked about this over time, over the past year and a half since AI has really been on the top of everyone's mind—we still get a lot of brands who might not say this to you, but they say this to me: 'I just don't know where to start.' What should we do? Obviously, my answer is, 'Have a conversation with Robert, and then you'll have even more questions,' right? But you'll be moving in the right direction.

JM: If somebody were to come to you today and just say, 'We are doing nothing. I don’t know even where to begin.' What would you advise them to do next?

RM: It's funny, prior to the call, we had some questions we were thinking about asking each other. And this one was one that I had in the back of my head. And that's exactly the biggest challenge of AI implementation—that franchisors or businesses in general don't know where to go because this came up so fast and so quick that there are no experts in this space. There are no people—I shouldn’t say experts. There are no graduates of a four-year degree that you can hire that know this inside out. And to that point -

JM: We’ll have those people in about six years. We'll see those people.

RM: The University of Tennessee, to plug my alma mater. I'm actually consulting with their new college, the College of Emerging and Collaborative Studies, on their AI divisions. We have a whole AI degree they’re creating, and so I'm consulting with them to make sure that everything is moving in that direction. But at the end of the day, it's still four years away if you just started the college today. So that’s the challenge. But going back to your question, yeah, they don’t know where to go. There is no true leadership in this space that’s affordable. There’s the Deloittes, there’s the BCGs, there’s the big groups out there, but unfortunately, they’re big ticket. And so a lot of the solutions that we offer are in line with that, because we’ve been doing this for years. We were poised for this. I say “we”—WSI. We’re used to technology changes and shifts. And we had to adapt to social media when it came out, SEO.

RM: And I think that we’ve already had this as part of our ethos, being able to be ready for this change. So I think, as you said, the answer to the question is: people don’t know where to go. Well, WSI definitely has the chops and the team built and ready to help any franchisor with their AI deployment. That’s the quick and dirty, low sales pitch.

JM: Excellent. Over the next several weeks, we're going to be talking about a whole range of AI topics for franchisors and people in the franchise community. We’re going to talk about trends for emerging brands, maybe what that looks like for some legacy brands and bigger brands.

JM: We’re going to talk next, I think, about customer experience and a whole bunch of different topics all related to the latest in AI for franchisors. Robert, anything else you see coming up this fall that we're going to talk about, or maybe things that people should start thinking about as they’re getting back in the groove with going to events and hitting the road again and learning more about franchising?

RM: And I think that it depends on what your role is at the company, right? So if you're inside of the company and don’t have a leadership role, be the squeaky wheel. Because a lot of people—I talked to a gentleman yesterday, nothing to do with franchising. He was in an industry which is a telemarketing industry. So his business model—he would have a whole room full of telemarketers calling for his clients, that kind of thing. I was aghast about how little technology he used. I'm talking, he still uses spreadsheets, and the numbers are on the spreadsheet, and the colour does deep calling.

RM: I just thought, 'Oh my gosh, you're already out of business. You just don't know it yet.' And so I think I'm trying to talk to those people in franchising. I'm saying, ‘Can you be the squeaky wheel?’ Because you're on a trajectory you don't know yet that's going to bring your business model to a stopping point—a point in which you have to make a decision, and it’d be too late at that point.

RM: So I'm telling everybody, if you're in the organization, start having conversations. If you're excited about AI, start those conversations with those who have the power in decision-making to make a shift in the organization. If you are leadership, okay, look at your competitors. Just look at McDonald’s. If you’re in food and beverage, just look at McDonald’s and Wendy’s. I know it’s a bad example, but just bear with me. They’re investing in AI technology to take orders. What does that do to your profitability of your model versus theirs? They don’t have to have as many employees. Their labor costs are down. Their pricing is going to go down, and their customer experience is going to go up. Hypothetically.

RM: So if you start having these conversations at leadership, you better start pivoting based on some of the other players. And so I guess what I'm trying to say is: start looking inward and start looking outward, and start making those changes. Have those conversations and bring it to every board meeting. Robert, before we go, if someone has a question directly for you right now, or they want to learn a little bit more about WSI, where can we send them?

JM: Excellent. And if anyone does have something that they would like to hear us discuss over the next few weeks, please send any questions or ideas to jack@socialgeekradio.com. And I would love to share those ideas here with Robert as we continue this podcast series.

RM: You can go to my LinkedIn page—RM. I forgot the actual link. We can put it in the show description. But also, WSIWorld.com. We’re finalizing our AI page, so you can go to that one eventually. You can email me directly at rmitchell@wsiworld.com.

JM: Excellent. We will see you again in 30 days, my friend.

RM: All right. Cheers.