They're Selling You the Wiring and Calling It Electricity

Sean BaenenAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

The vendor’s deck is usually very good. Somewhere around the sixth slide there is a picture of your firm as it exists today, which is unflattering but largely accurate. You have systems that do not speak to each other, client data living in seven or eight places, and more than a dozen institutionalized workarounds that some capable person invented years ago, but nobody is sure anyone ever wrote them down.

That slide describes your firm, and the following slide arrives carrying the remedy. Unify the data, buy the platform, hire the agents, and you are AI-ready.

The vendors are right about the problem, and if you are a regular reader of my work, you know their problem statement is also my own. Most companies in this industry still run on systems that do not talk to each other, on institutional knowledge that lives in three or four people's heads, and on processes that vary by practice because nobody ever decided which version was correct.

Artificial intelligence laid over fragmented data produces noise. I argued in “The AI Fortress” that intelligence can counter the drag, but only on a clean operating model, never on one you keep trying to fix by adding to it. What follows takes that argument a step further, for the owner who has to live inside the choice.

The trap on the seventh slide springs easily, and the pivot from the sixth slide to the seventh deserves a harder look than most leaders give it. Notice that nothing in the diagnosis (nothing is standardized and machines need standardization) actually implies the conclusion (buy our software).

The deck has established that your operating model is illegible and then proposed a remedy that does not make it legible. A platform selling into an illegible operating model has no commercial reason to make the model legible, since the illegibility is the market, and a market that pays better to work around friction than to remove it will reliably produce the products we are all being sold.