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Leader's Digest - July 2023

Will AI help us save resources - or make us consume even more?

There is one factor that has remained a constant throughout thousands of years of technological progress: Whenever progress was made with the expectation of being able to produce more resource-efficient, that same progress was then quickly leveraged by humans in order to increase consumption. Both the lines of production efficiency and resource consumption are exponential curves. With that in mind, in this month’s issue of the leader’s digest, I’d like to throw a provicative thought at you: Artificial Intelligence is expected to bring us a quantum leap in production efficiency. But what if it also brings a quantum leap in terms of how many resources we consume? Two data points that sparked this thought process for me:

1) Exponential Electricity Usage

In June 2023, a 4 week old AI start-up (”Mistral AI”) received €105 million in funding. This marked the biggest seed round of any European start-up ever. While this would be remarkable regardless of the background of the company, it caught my attention because of how the funds are going to be used. Most of the cash will be spent not on talent or inventory, but on computing power. Computing power that is required to train large language models. This is remarkable, because most of the cost of computing power translates directly into the consumption of electricity. So, in other words (and put as a slight exxageration): Mistral AI will blow €100 million through the chimney in electricity bills. And that’s before they even have a product. The question I have on my mind is: Can AI actually be operated at scale without consuming every resource we ever had? Read more on this.


2) Exponential consumption

In a recent interview with Peter Pernot-Day, the head of strategy of the fast fashion giant Shein, he explains how Shein was able to reduce overhead drastically - wile at the same time increasing the time to market, getting close to the point at which they can produce at a speed that feels like “real-time”. So, did AI really help save resources, then? From a production cost perspective, the answer is a clear: Yes! But then again, it seems that the efficiency gained in production was handed straight to consumers by scaling up the production. So at the end of the day, the resources that are being saved by the ability to produce just in time for new consumer demands, are now overcompensated by using that same ability to decrease the lifespan of the produced goods and, ultimately, consuming (and producing) a lot more. Here’s an alternative thought: Instead of using generative AI to create the next fashion trend - could we use that same intelligence to look backwards and identify timeless classics that will stand the test of time in order to design long-lasting, non-trendy fashion? And if we can’t, how can we find a healthy balance between frequent changes in fashion trends and resource consumption? Read more on this.



 

I need your help - can you introduce me?

As you know, strategy is my passion and I am offering consulting services around corporate strategy. If you know someone that would benefit from support by an experienced consultant that gets stuff done, I’d appreciate if you would introduce me. I am kind of a multi tool that can be used to analyze complex environments and derive structured, clear decision papers and action plans. While I am versatile and confident that I can deliver excellent results for most management-related challenges, there are three areas that I specialize in:


Strategic Sensing

Looking into the future to identify upcoming, disruptive changes and trends by researching market trends. The goal is to understand how they impact you and which strategic implications they have for your business. The exact trends depend on your industry. Some examples are technological, cultural, political and regulatory trends.

Strategic Planning

Applying structured frameworks for setting strategic goals and deriving specific action plans and roadmaps to hit your targets. This can be as operational as translating goals into KPIs and targets and it can be as strategic as formulating a long-term vision for the organization and deriving organizational requirements.

Transformation & Growth

Helping to move your business to the to-be future state, that you envision. A possible starting point is to align your leadership in an off-site workshop, defining the desired future state and then crafting the communications strategy and the roadmap for change. What exactly needs to be done depends on your individual situation.

How I work: Decide - Design - Deliver

Strategic topics can be daunting. That’s why I believe it makes sense to work in incremental steps that give you clear decision points at every step along the way - and defined breakpoints at which you can stop at any time, if need be.

Decide:

1-day Insight Workshop

In a workshop format I help you understand which tools and methods you can use to develop and drive business. I offer workshops for Strategic Foresight, for Strategic Planning and on how successful transformations are achieved.

Design:

Zero to One Study

In a short sprint of 1-3 weeks, we work out what really matters for you. In this timeframe, we can fit a full project for Strategic Sensing, a cycle of Strategic Planning or a decision paper for a to-be state of your transformation and key initiatives to get you there.

Deliver:

One to Infinity

Once you know exactly where you want your organization to be, I support you in getting it there. This can be full-time support, a part-time model or even targeted sparring.

Wherever you are in your journey of corporate strategy - I got you.


If you’d like to forward information on my services, here’s the link: www.gueth.com/consulting


Thank you so much!

Philipp



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