Could AI Be a Good Leader?

Todd Howard: I'm using this AI tool on my phone to help me cut calories. And if that thing sends me a text every morning and tells me, " Come on, man, get up and go for your run," I know that's very different than if Spencer texted me and said, "Dude, I'm outside. I thought we were meeting up for a run." The accountability to your fellow person is so high relative to something that you know is fake.

Spencer Clouatre: All right, Aaron. today we are truly blessed, um, because we've got a person who's willing to self-reflect and, uh, has the courage to look in the mirror and, find that inner experience. He's always a cozy conversationist, Todd Howard, a longtime friend of mine. Now, Todd and I met... trying to elicit truth on the sprint football field, and we had too many linebackers. Aaron, we had like 100 linebackers trying out for sprint football. It was like 158-pound football, and we needed to get rid of some linebackers. I don't even know if we had enough helmets for everybody, but the coach backed us up 20 yards from each other and said, "Run head-on at each other and just, just hit each other." I lost a lot of brain cells out there that day. but me and Howie were banging up against each other. I think Mark Bill snapped his collarbone. it was a tough, tough go. But Howie was at Norwich for two years. I was at LSU before showing up at West Point, so we were a little seasoned, a little bit older than the folks that were there. we both left sprint football. Howie went to the parachute team, and he became the captain, and they still the coolest guys out there. What a great experience that was. And you know them, Aaron. You drive home and watch them jumping out of helicopters every day, so you know how cool that can be. then We left West Point. Howie's a mech engineer And we went to flight school, and he was ahead of me through flight school. And I will tell you this, always admired him. Always very close, He was my sponsor going into Fort Bragg, and I was gonna sign in the 19th Replacement Company, and he said, "Dude, hold up. Wait up. Just wait for a little bit, and you can come join the unit I'm in. we have new Lima model Black Hawks, and we do some special mission stuff, and, it's a really cool unit, and me and you will be sister platoon leaders." And that sounded so attractive to me that I just hunkered down, man. He changed my life many times. That's one of them I mean, great redirection. And, so I waited, and I joined him, and we shared time as platoon leaders. and what we did is prepare to go to Bosnia. It was, an early deployment when not everybody else was deploying, and, we got on it. we had a really strong group of young lieutenants. And Howie changed my life again there. Howie, you may not remember this, but I was micromanaging my platoon and Howie just slid the mirror in front of my face and, told me what I was doing. I was a great sergeant, but he made me a better platoon leader. I still today remember that experience. I tell that story a bunch 'cause Howie, you changed my life there, too. Again, always doing it, you know? Uh, the next thing I would tell you is that his service to our mission in Bosnia was over the top. And Howie, I can't thank you enough. I'll do it publicly everywhere I can. Now, we started training for the Marine Corps Marathon when Howie was up at, at Fort Belvoir. Howie was a company commander, and y'all were flying, you had Hueys and Blackhawks, right?

Todd Howard: yes. Yeah.

Spencer Clouatre: Um, 9/11 happened. September 11, 2001, the world changed that day, and, it was Howie, part of the team that was going to the Pentagon and pulling folks out of there, So really right up into the combat, of, this attack on our country, heading to the sound of the guns. But the next step in my life is that my son started applying to West Point, and it was Howie again who put the mirror in front of my face, said, "Hey, man, you might wanna make sure that Caleb wants to go for Caleb and not for you." And that was such strong advice to me, and I took it to heart. because ultimately it goes back to this eliciting truth and finding the inner experience, and making sure that the people around you are taken care of, and that's his genuine care, of even teaching me how to be a great dad, how to be a better father, for my own son. So now recently, Aaron, you gotta know this cat, he's a chartered financial analyst. He's been in this industry for 20-some odd years. He's taught at West Point for us a few times. Every time I had to teach a currency class, it was Howie coming up, and, his development of those young leaders was tremendous, But he just finished a full Ironman too. 54, brother? How old were you when you finished this full Ironman up at-

Todd Howard: 53. 53.

Spencer Clouatre: A- Aaron, all that to tell you that he is an expert in decision-making. He's an expert in relationships. He's been in this industry, since he's left the Army. Left the Army, that was a hard decision as well, leaving the Army. went to Auburn, got a MBA, chartered financial analyst, worked with, Delaware Investments, Logan Circle Partners, and now with, MetLife, 20 years in the industry, continuing to move up. Now living in London, So all that to be said, Howie, thank you so much for joining us, man.

Todd Howard: Man, I felt like you were gonna make me emotional there thinking about some of that stuff, I haven't done nearly the deep think. But I know this, I, I felt like I was always a taker in my relationship with Spencer. I, I always felt like, this guy was setting some standard that I was just trying to measure up to. I mean, I was the guy before Spencer showed up that I would pull into our PT in the morning at, like, 20 seconds before you had to get in formation. And Spencer's there, like, 30 minutes early getting all organized, and so I'm like, "Damn, I gotta, I gotta get up earlier, man. Spencer's here now." And he would just be way more organized than I was, but, uh, I think some of that organization maybe, I don't recall that story of you micromanaging your platoon, but I know that the two of us cared a lot about the team that we had, and I think it really carried a lot of weight. And we ended up, who knew? But we ended up having, like, an all-star- Season ... company there. I swear I think half the unit went on to 160th-

Spencer Clouatre: Mm-hmm ...

Todd Howard: on the pilot side.

Spencer Clouatre: Yeah.

Todd Howard: And it really just kind of shows you the caliber of the pilots 'cause that's a pretty exclusive group.

Spencer Clouatre: Yeah.

Todd Howard: I think what I've always loved about Spencer is how deep he's willing to go in conversations with me. I feel like in life I've, I have a narrower kind of friend group, and I have the people that I interact with. I generally interact more with the folks where I feel like you do have this deeper conversation and deeper connection with. I don't feel like I do very well in, uh, you know, just standing around in a room a- and making small talk with folks. I find that, like, anxiety inducing. But, a real true, heart-to-heart conversation I love, and Spencer and I have had, many of those. so yeah, I think to have, a long-term friendship, I think that's the best thing about being in the military is the people that you share that kind of experience with, and then y- the experiences you get in that world are unmatched anywhere else. you can't recreate that. And so I know when I've had friends of mine who've had kids that are looking to go into the military or go to one of the academies, that's what I'm always kind of leading with is"You know, th- you have a lot of time in your life to do normal things." "The opportunities you're gonna have, I can't even tell you what they're going to be because I don't think any of my friends knew what they were gonna be when they had it." when I was getting out of the Army after seven years or so, you had no idea you were gonna go teach at West Point and end up getting a PhD and all kinds of other stuff. it just kind of comes up, and I think that's one of life's lessons. I think one of the parts of being a more mature adult and a better parent is accepting- That you have to have some flexibility in what you're thinking about for your future, and try not to get too attached to any one particular outcome because that ends up being limiting. But if you really just kind of open yourself up, and I think for me, I got too attached to the outcome earlier on in my military career of I'm gonna get out in seven years. And I think that ends up limiting your opportunity in the military. and I feel like in this career that I'm in now, in this finance career, yeah, you just find different ways. The markets are always changing and evolving. What clients and investors are doing changes and evolves, so you have to have some flexibility in your approach to what you're doing. And then more than anything, I think the underlying world's changing so much underneath us that we have to re-adapt to that and have some flexibility. My favorite attribute in someone to work with is someone that's hardworking but has a lot of intellectual curiosity and creates questions and tries to go find answers to those questions. Hopefully you try to guide them into questions that you think can add value to your process. But, yeah, but that's what we try to do.

Spencer Clouatre: Yeah. Yeah. Absolutely.

Aaron Phipps: Like having that adaptability, I think what's hard is especially from a young age, we keep asking kids, "What are you gonna do when you grow up? What do you wanna be?" And, it seems like having that level of adaptability is it's actually quite scary, I think, until you've lived life long enough to know that you can adapt to it. and I think that's been a, an ongoing theme in Leadership Economics, is actually really being able to have confidence in your ability to overcome the unseen challenges that come down the road.

Spencer Clouatre: Yeah.

Aaron Phipps: Yeah.

Spencer Clouatre: We used to talk about it. I mean, Howie was the first guy, or the first officer I knew to get like pilot in command, where you can command the Black Hawk yourself. Like you owned the airframe, and you could take out a regular old pilot out with you. You got that before me, Howie, and I was some impressed that you got it. But we used to always talk about situational awareness, like as such a big deal. Like managing the cockpit. Get off the stabilator, get in front of the airframe, and all the rest, and, uh, you've always been really good at that. Like creating situational awareness, Aaron, to fit into our four buckets, Howie. We talk about allocation, and then kind of information, and motivation, and then execution. to maintain situational awareness means to create great information and understand unintended consequences to kinda get people aligned to the right outcomes. that's basically what we're paying a pilot in command to do, right? Is to, ... manage that process. And I feel like it's alive and well. If you believe in free markets, it's alive and well in the economic thought, and I think that's where me and Aaron finally kinda settled on this idea of a generalizable framework that's useful in your personal and professional life Aaron uses all the time, and I love this, is that leaders create something, a vision, that is better in their idea than to where they're at, and that always means there's some uncertainty in the future, So- I don't know. If you could think about one of the decisions you've had, the big decision, you were just talking about maybe you limited the information a little bit in thinking that, "Yeah, I'm getting out at seven years." But I felt the same way, I feel like, As I got older, I felt I understood this more. But I've always thought you kept everybody else's perspective and you created better information because of that. When you told me I was probably micromanaging, you probably was watching it because you are situationally aware, but you're also thinking about the perspective of Chalmers and Geller and, all those cats that are like, "Hey, get that dude off my neck, man. He's over here watching me turn wrenches." So-

Todd Howard: Yeah ...

Spencer Clouatre: I don't know. How have you managed that?

Todd Howard: I mean, I would bring it to the modern day, it's a great analogy to think about in the helicopter, right? When you're doing a good job, you've planned so well that you're staying in front of the whole mission, you're staying in front of the aircraft.

Spencer Clouatre: Yeah.

Todd Howard: And so as things are happening, navigation, radio, all that, none of that is setting you back. And so you stay in front, ... then you're better prepared and you have a little bit of space to react if something changes. And I think in my current job, as someone responsible for portfolios and some different types of fixed income bond portfolios that are very sensitive to global macro geopolitical events, there's only so much of that information that you have control of. Um, but you feel like you constantly have to be doing homework to try to s- have that same feeling of, okay, this is the sequence of information that I think can come up, and you try to break down into chunks that you feel like you have a competitive advantage in. So it could be a really good analyst covering Latin America looking at a upcoming election in Colombia, for example. And you might say, "We're gonna have a opportunity here to do something. This is what we expect to happen two weeks out, three weeks out-" Yeah. "... four weeks out."

Spencer Clouatre: Yeah.

Todd Howard: And then you can follow that. But it gets back to trying to identify... That, I think that the most difficult part of all of our lives today is managing the informational input that we have, and whether the information is overly biased. and so then you have to seek out, like differing opinions because it all gets so filtered for us. It can be anxiety inducing, right? Because you can wake up just to the most negative headlines. that I think for us, if you try to stay in front of your portfolios and you try to anticipate the type of risks or decisions you wanna make- You have to spend a lot of time trying to synthesize that information, and that's where you have to have a team that's helping you do that. There's too much for any one individual. And so in many cases, you have people that just get really down into the idiosyncratic elements of any given story.

Aaron Phipps: Mm-hmm.

Todd Howard: And they know the story so well that almost regardless of the headline, they've already somewhat anticipated that headline, and then they have a reaction to it. I think if you draw it back into just our kids and their careers and making those choices, there's so much information at their disposal. But it also dealing with AI and these disruptive technologies, and then just the information overload about how disruptive this is gonna be and what it's gonna do to the job market, and there's just an increased level of uncertainty attached to that that adds to stress, and then people hold back on all kinds of life decisions, whether it's to have families, get married, go get a job, move. And so you feel like as a parent you're having to help navigate that,

Spencer Clouatre: Yeah.

Todd Howard: we'll be sitting back on this thinking that in 20 years it's still crazy.

Aaron Phipps: you know, when I was a kid it was the internet coming out and then Facebook coming out. but I think what's difficult is that there's a lot of this ambiguity going on in terms of it's not just being able to predict what's going on in the future, but, even for kids right now trying to pick what major they're gonna get into in college, it's complicated and is a little unclear right now. 15 years ago it was always going to be computer science, like learning how to code, learning how to work with computers. Was a really solid bet. and I'm not saying that it isn't now, but it's definitely changing. It's becoming a little more unclear what you're gonna get out of the inputs you put into college. ... What you see going on a lot right now is people trying to come up with a narrative that helps them understand this ambiguity. And like you were saying, if people approach something with some preconceived notions of how things are working or with their own story, it's already going to immediately filter out the kind of information that they, that they allow in and that they use to make their choices. And so part of the problem is first understanding what is the narrative that you're holding and also being willing to open up a little bit to accept that there can be multiple narratives that are difficult to maintain at the same time. They're not always perfectly consistent. part of the skills that, you guys clearly developed a lot of this over your careers in the Army and I think just growing up as well, myself, that you start to, develop that confidence and that ability to recognize that your story that you're holding doesn't have to be the ultimate truth right now. Like, you could be wrong, and being okay with the fact that if you are wrong you can adapt and adjust. how do you interpret the information that's coming in? How do you create some streamlined sources of information? I would say that being able to solicit that information while also being able to maintain multiple models of how things work is sort of like the general abstract version of this, but being able to impart that advice on younger people is, I think, a lot more difficult right now, given AI. Yeah.

Todd Howard: Like, I think one of the challenges from a leadership standpoint in any organization, right? And especially the way the technology works, right? So conceivably 55-year-old Todd Howard, relatively senior within my organization, 20 plus years of experience, I should be our most-- one of our most productive employees. I have all of this experience there, and so I should be adding more value to the business than somebody that we just hired a year ago. And with AI, The company can invest some of its capital into giving these tools to allow its more productive people already become more productive. But does that then replace a job? but it doesn't necessarily replace the job, but then how do these like young people then gain the skills necessary to be that next person that can use this tool to become even more productive? And so I feel like they can feel this divide between they want to be productive and add value. Some of them feel like they are adding value, but it's their timelines, and I think it's a generational gap between what we grew up with and what they grew up with. I feel like no matter how fast we try to move certain people along or promote, it feels like it's too slow. And I... The guys and gals that I work with, when I talk to them, they're in their late 20s, early 30s, and I didn't start my career in investments or investment management till I was 32. and part of it was because took too long to get into West Point and then, seven years in the Army. Next thing you know, you're in your 30s and you're like, "Okay, now what am I gonna do?" but it gives you that perspective that, you know- it doesn't have to happen overnight. Patience is truly a virtue. and I know it's a cliche, but it, it truly is the ability to sit back and have that experience and pass that on to people. Just be like, as long as you know that you're in the right place and on the right team, and you're working with the people that you wanna work with, like, stick it out. 'Cause I can guarantee you, If you leave and somebody just pays you more money, you'll be happier for a month or two, but if you don't like where you are and you're changing your dynamics, that's not lasting happiness.

Aaron Phipps: part of this is that when you say patience is a virtue, there's all sorts of different areas where we can be patient. there's one thing about being patient with your colleagues and being patient with your kids or something, but I think w- what you're pointing at is being patient with your understanding of the situation. we want to be able to understand everything that's around us and have a map of the land right in front of us, but, sometimes when we try to force that, again, we're gonna get pigeonholed into something that's not quite the right path for us. And so, looking at new employees coming up, trying to train people in this new world is really complicated for professors right now, for elementary schools right now. Like, everybody's trying to understand, how do we give students the skills given AI can do a lot of the stuff that we've been teaching them for a long time? And I think, you know, in businesses, they're definitely going through the same sort of a thing, but what is difficult and never replaceable is going to be people's ability to understand sort of the real world context. You know, AI is not part of the real world, and so it can't actually understand the dynamics between people and your teams and your clients as well. And so it seems to me that my sort of rough estimation is that over time we're going to be shifting a lot more to emphasizing those skills and developing those abilities in people, where there's always going to be some need to understand how people are working and how you can actually interact with them effectively, 'cause that's difficult and that's a skill that you develop through experience. And so being in a company for a while gives you that sort of contextual knowledge of actually how does this company work? What are our cultures and norms, and how do we improve that? I don't think AI can ever replace that. So like you said, it's tricky if most of your jobs are defined by technical, tasks, but I'm optimistic that we'll be able to sort of adjust a- appropriately.

Spencer Clouatre: Yeah, I think it's gonna challenge not only the markets and corporations and how we do things, how we educate people and all the rest, but it will also challenge just how we govern ourselves. we've been empowered with the ability to communicate with the ability to cooperate, and now we have this thing that's gonna do this really, really well, and it'll challenge some of the bureaucracies out there, because now it will be able to do this for us, and that makes it uncertain. And then I'll fall all the way back to how do we motivate folks, younger folks specifically, what Howie has mentioned, towards an uncertain future, That becomes the really, really hard part. And I think what I'm falling back to is what you were both alluding to, is that you really gotta trust the people, the leadership around you, the coattails that you're on, and be good every day. So, it's definitely challenging and I think the young folks today are the ones that are really hardest to motivate. Can we really have their perspective, is the question. Howie, you're trying to lead these folks right now. how are you building trust in your younger teammates right now, man?

Todd Howard: I think you have to empower people and then challenge them. I think that's the number one thing that's missing in the current culture. And this isn't like a, a MetLife cultural thing. I think that, this is a Coach Bobby Knight like ism, right? Where he talked about every generation has it easier than the generation before them.

Spencer Clouatre: Right.

Todd Howard: And I think we've gone out of our way to- Make, I don't wanna say make things easier 'cause I go, I don't think there's anything easy about what your kids or my kids have gone through to just put themself in a position to be successful. There's a lot of ways that their life is more stressful than ours was. I said, but I think when people join organizations, I feel like we have an obligation to really challenge them.

Spencer Clouatre: Mm-hmm.

Todd Howard: and I think make it hard enough that there's a lot of pride, and I also think the hardness in many cases this is just like intellectual hardness or what time they show up for work or what time expect them to leave, like really pay their dues in a way that the people kind of bind together. And there's a balance there, right? Like obviously too much of that is unhealthy. Mm. And then, but too little of that I also think means that they feel like they're not being challenged enough, and they may not know that that's what they're asking for. but I often try to just give people a lot of rope, try to give them some opportunities, to contribute to the process, let them kind of work through the explanation, how they arrived at that. And you wanna do this again in like enough of a lead time so that what they're working on isn't urgent, needed next week for a particular client or something. You want it to be, "Hey, we're trying to make an existing process better. I think you're well positioned to do that. Here's some bits of guidance," right? Some like commander's intent, but I'm not gonna tell you exactly where I think you should end up. And then as they're bringing it all forward, you're there to kind of help coach and other people to help coach them along. I think people respond very, very well to that. I did wanna go back though, Aaron, to what you talked about on AI, and I, I truly, truly hope that you are correct. I think my bigger fear around this informational side of AI, and there's Yuval Harari . I don't know if you guys have listened to this guy.

Spencer Clouatre: Can't stop listening to him. Yeah.

Todd Howard: Super, super smart guy. But if you combine what he says, and this is how geeky I get sometimes when I'm sitting there last night hanging out with Nicole and we're watching this Thomas Jefferson documentary on Netflix.

Spencer Clouatre: It's so good.

Todd Howard: The power of Thomas Jefferson was his words. AI is a language model. It literally creates words, and Yuval kind of describes it as, our society is built on words, whether it's the Constitution, the legal framework, and now you have this artificial intelligence operational thing that, that works on words. and to his point, like- A lot of people that used to get ahead were the ones that could figure out how these laws could interact a- And now you have these things that are gonna just completely trick it up. But also that's building information, and that's building the words and operating system that we're gonna be growing up with now. And so to try to disentangle it, I do completely agree with you that the human side of that, the consciousness side of that is what differentiates the two. and it's the interaction with fellow human beings that differentiates it.

Aaron Phipps: Well-

Todd Howard: But yeah, I really wonder how much these two things are gonna get very, very blurred, as we go forward.

Aaron Phipps: One of the ways I've thought about, like, why is it so different now than it was, say seven years ago before we had ChatGPT, 'Cause we've had machine learning and some pretty advanced statistical models for a long time, and one of the big breakthroughs really that, kicked this off was actually getting the machines to produce language. so like you said, suddenly now it feels like they're actually thinking because they're producing and ingesting language. So pa- part of the problem though is that, I always think about, leadership as being an act of creation in that you are putting something or moving the equilibrium that we're all in, sort of this, this dynamic, direction of the world. You're just shifting it in some way, and that can be in your own personal life. That can be with your family. It can be with your job. But the idea is that, that very human act of actually, imagining something new and moving the world in that direction, I do not believe, that AI will ever fully develop the ability to do that the way we do. and the reason is that, oddly enough, they don't have, sufficient ambiguity built into how they think. So when we view the world, we can imagine how things are from other people's perspectives, and we can imagine sort of a different future for ourselves. I believe that we could train AI to think sort of perspectively like that and to even have some sort of an imitation of that level of empathy, that theory of mind. but because of the, the fuzziness and sort of the, unpredictability of the way we imagine the world moving, that creates these unique opportunities for us to develop something, that wouldn't have even really been imaginable by an AI. And there's a long conversation about whether AI is truly creative, can it create new art, and things like that. I believe that we can make it look and feel very similar to the kinds of art that we think about. But, but really being able to make it behave like a human, is going to involve some strange processes like, forcing it to have the same sort of, ambiguity, memory loss, the same sort of dreaming that we do. These are processes that, I still think we're a very long way from being able to actually programmatically make AI think this way. So my point is that there's always this role for humans the special ability of ours to actually, To imagine something different and create it, in our own world. So again, that's why I'm optimistic. I hold onto that, but, but- ... you know, who knows? The future's different.

Spencer Clouatre: And Aaron, I, first of all, I totally agree with you, I would say this as a fact, that the people who are leading the most impressive organizations out there are the folks that do soft skills better. there is something better. I mean, Howie, most of the people you're working with have a, they're all chartered financial analysts, which is a tremendously hard thing to do, right? so they have the hard skills, but the soft skills get into a level of information collection that's a little bit different, and I think Aaron's arguing that human beings receive those soft skills and interact with other human beings better than AI ever will. Demis Hassabis, and he's, quote is this, "If you stop to think about it, we've essentially found a way to make sand think. It's miraculous." that's a really deep thought, I think, and, I, I really enjoy that, and he's been the dude in charge of this AlphaFold, folding proteins and the stuff that AI can pull off, The second part, Yuval Noah Harari. Yuval would challenge, this whole idea, Aaron, by saying, "Do you really understand how you think?" Like, the large language model at its start was just putting in the next word. it's filling in the blanks. now what we're really asking is how, what is that process of how human beings think, and how is it different than the sand that is now thinking for us? And, I don't know if I can truly unravel that. Now, this is way, this is some deep stuff, because when I start a sentence, I don't fully know how it's gonna end, what we started with, Howie, is that one of the human being's, real traits is that we can see many different outcomes. It's why a horror movie or why a love story why movies are really good, because we're wondering what the outcome is, and there's value in that, you know? So I don't always know how I'm gonna finish a sentence or how I'm gonna make it end. and I don't know how far off AI is from us actually what we're doing as well, and that kinda scares me a little bit. I love Aaron's hope, though. I'm with you on the hope side, yeah

Todd Howard: I think on the soft skills of leaders, the people that get ahead. and it varies, And it's the unpredictability of it, Aaron, to your point, the parts of the decision-making process that are human are the parts that are a little bit more flawed, or people are leaning in a certain direction, not necessarily because they have great information that's helping them go there. It could be just instincts, right? Yeah. It's that flying by the seat of your pants versus just using the instruments.

Spencer Clouatre: Yeah.

Todd Howard: I, I completely kind of buy into that's what makes it very unique. And some of the skills of those, of the people that get ahead, and this sounds negative, but it's like ego-driven motivation or narcissism or what have you, these emotional characteristic traits in addition to then IQ, right? the interaction between those two things, The emotional side of a human and the IQ side, and the interaction of that's, I think, what creates the more ambiguous or more uncertain outcomes. It's the part of us that we don't fully understand. I know people try to spend a lot of time trying to understand their conscience. but, it's very difficult concept to even try to get around, right? But, I have often tried to come to the thought that our thoughts are not who we are, Mm-hmm. Like, who we are is deeper than that. Our thoughts are just something that's swirling around in a brain that's something that we don't fully understand how it even works. But we know there's a network up there that they've copied using these computer algorithms to try to get the same type of outcomes and these connection points, but yeah.

Aaron Phipps: part of the difficult thing is also that we like to think of our brains functioning the way a computer works. 'Cause for a long time, that was a useful analogy. if you think about the f- the processor in your computer, it's trying to compute all these different, tasks, but- It turns out, one of the things that I love to talk with my students about is that our brains aren't actually, quite the same as a computer because they're not digital. And what that means is that, a computer functions and will always function, I think, e- except maybe once we get into quantum computing, I don't know. but it, it always functions on these ones and zeros. There's always a definite zero or a definite one. But your brain doesn't actually work that way, where it's firing different synapses and things. It's, it's not always guaranteed to fire another one. There's a threshold that once, once the signal getting sent to it is strong enough, then it fires. But there's this weird threshold that's a bit fuzzy, and sometimes it's gonna fire and sometimes it's not. again, that's sort of like the extent to what I, I can really, lean on from the neuroscience, but it is clear to me that your brain, it doesn't quite function digitally. And I think that this matters because it injects by force a lot of the, sort of the softer, types of interpretations of the world around us. One of the things we've talked about in the past has been soft information. And so that's another thing that I think will be very difficult for, AI to ever really pick up on, is that when you're talking with somebody in a room we were talking about it in the context of making loans from a regional bank and how there's a whole new level of being able to interpret, what, the character of the person that you're tr- you're considering loaning money to. and in the end, that was always the deal breaker, was that if you, if you can't really trust in this person's character, it's not clear why you should give them a loan, even if there's all these other things that might look right in terms of their finances. that kind of soft information that we're interpreting, isn't always, very, conscientious, and it's not stuff that we can put in a spreadsheet or analyze as much as we'd like to. but I think that that kind of information and those kinds of experiences will become the keystone of actually developing the skills that are going to help people, succeed in life.

Spencer Clouatre: Would y'all agree that... And Aaron, I'm with you on the quantum computing. I don't know how much of this you cha- track, Howard, but it is, there's some nuances between zero and one, and it could be that idea of character and the rest of it once we get there, really change the world tremendously. But would y'all say that the new technology and the AI that's out there, if leaders create something that is new with this vision, is AI helping us frame the trade-offs, the marginal benefits, marginal costs, and the, the numerous pathways of uncertainty and ambiguity that could exist? that idea of framing the trade-off to even start the allocation has to be something that, our younger population has to be motivated by. this is the tool that can help us frame trade-offs better because we have better information, and then we may see the motivations within the execution, and then in a Bayesian sense, we learn from that. It becomes a learning model, and this AI will help us do that faster. So I think this leadership economics framework, Howie, that we've thrown up, like it's very general and it has some simple principles, empowered with by AI, that this thing can help us make better trade-offs. Now, are we doing that? God, I don't know if we're really thinking about it. and I could go from a global sense all the way down to an individual sense, are we really framing the trade-offs of these actions that we take globally? we may not be doing it well. there's a ti- time horizon problem here too. So I- let's just think there. Does AI help in framing the trade-offs?

Todd Howard: Yeah. I'm glad you brought it back to that because if you think about it, The information theoretically is better, right? And so you should be able to then evaluate decisions better and therefore identify the right path to go down. But when you were saying that, Spence, I was thinking of is that the kind of leader that people wanna follow? and so if you don't have the human aspect to that leader, if all you're doing is making decisions based on all these inputs and you're doing a good job of it, I think if you're a, maybe a baseball team manager, like the team just wants to win. And if, if that can just get all the, the percentages right and get the right team on the field at the right time, even if some of the decisions are a bit unorthodox because that's what the computer's saying and it results in wins , I, I think people can get behind that. Mm-hmm. But then you wonder about the performance of the team that just has a coach that everyone just wants to play for and then they do things that the computer couldn't predict.

Spencer Clouatre: Right.

Todd Howard: so there's some, there's some balancing act in there, right? Because you start losing the human aspect of it if you're, if you're just taking this information and leaning on that. And I feel like human resources is trying to t- take over so people delegate leadership to HR.

Spencer Clouatre: Guess who doesn't wanna be involved? The leaders. Like, that's- Yeah ... the whole problem. me and Aaron have taught leadership economics up at West Point. We have these great leaders, people you know, come in and talk. The first thing they say about the leader's responsibility is to train new leaders. Like, that's your first responsibility. But then if you're getting in this bureaucratic sense where, the leaders are talking about leaders of development, but I'm subbing that out to somebody else You know what I mean? how can I ever take that as serious if it's almost hypocritical that I'm not- Yeah ... worth your time? We all see- Yeah ... that. Human beings have very good radar for this. it's happening everywhere, I think. And it feels kinda weird to me, You know, you can't fake genuine. Human beings have a pretty good radar for catching when you're faking. You know what I mean?

Todd Howard: it has to get humanized, right? You can have something come up with your internal cultural direction. the metaphor I love, or the image that I love is the Norwegian, World Cup team, where the whole crowd is like, they do this rowing thing. And that's what we're trying to do, right? That's the motivation side of getting everyone to try to row, 'cause we're all trying to go somewhere.

Spencer Clouatre: Right.

Todd Howard: And so I feel like the leader has to lay out, where are we trying to go?

Spencer Clouatre: Yeah.

Todd Howard: How are we gonna try to get there? And then down at the lower level leader, it has to be, "This is your piece of where we're trying to go. This is what you need to be doing to get us to go that way." Yeah. And it just doesn't happen a lot.

Spencer Clouatre: Yeah.

Todd Howard: And I think part of the problem is they just come out with these big presentations, just from the top all the way down, "Okay, here's our, here's our mission statement," or here's this or here's that. but it, it rings a bit hollow because of the part you said, Spence. the leaders aren't involved enough or care enough, or somehow there wasn't enough buy-in. And then I think some things just are different. some businesses lend themselves in a much different way to having very hands-on leaders, and other ones don't. Like, if you're a foreman on a crew, a construction crew, and you have, a great group of guys and you're super motivated and you kind of bring your, positive energy every day, that team is gonna be better than the team, down the road. Even if they pay those guys more, like, if this guy comes in with a good group of people and they're all on the same page and they hang out after work together, whatever-

Spencer Clouatre: Yeah

Todd Howard: they'll probably outperform s- outperform the next one. It's, so you're always trying to kind of find that balance.

Spencer Clouatre: it's in a principal-agent problem. the further you get from it, the harder it is to align everybody. There's scale problems here, for sure. It's everywhere.

Todd Howard: Yeah ...

Spencer Clouatre: but ultimately, I think the leaders, as you try to align motivations, incentives towards some North Star, me and Aaron, it falls out in a production function very cleanly to us. it is a production function. My family has a production function, Aaron's family, your fam- we all have production functions, what we're trying to do with our scarce resources. and getting involved in that can build trust in the outcomes, and then the p- relative prices, I would call it, is kind of- We see that it becomes common knowledge in your commitment to those things. you can say- Yeah ... all you want, but, if we're trying to elicit truth about who really wants to be out here on the sprint football team, well, we just line up 20 yards from each other and start knocking the hell out of each other. I mean, how many people showed up the next day? There was a lot less linebackers the next day.

Todd Howard: I'm convinced that to this day, when I meet people and I can't remember their name, I'm like, "It was that 150s football practice man."

Spencer Clouatre: Dude, that one practice, I'ma tell you. it was a bunch of pit bulls. We might as well tied 45-pound weights around our neck and just drug them around like bunch of small little dudes, and we're gonna figure out who's the toughest bastards here. And, that's what we did. And, that's a, that's tough way to get to information. We do it all the time in the Army. It's easy. When we train hard for things and all the rest, but that same mechanism is always at play and working, So-

Aaron Phipps: Yeah ...

Spencer Clouatre: But we're, again, eliciting truth to make better decisions, to frame better trade-offs. And sometimes in my head, I'm wondering, is better information or more information actually better to frame the trade-off? That's one of the questions I've written down here,

Aaron Phipps: I mean, what's interesting here is that we've talked about, that execution part of AIME by looking at who owns what and how much rope you give people to make their choices. and now we've veered into, some of this information and motivation. Mm. when you're talking about, having some outside consultants come in or delegating certain, jobs to HR where it's going to be their job to motivate people, the problem is, as Spencer said, you can't fake that genuine. so the real information is coming from what are the choices that either the people around you or the leadership above you, what are the choices that they're making? what are they showing you are the priorities? And so it doesn't matter what a consultant says. It doesn't matter what HR says. In the end, the information about what matters to the organization and for the team is gonna come from, the priorities that the leader demonstrates. And I think, that's what Spencer means when he says the, that price of commitment, what are they giving up, in a sense? for the priorities that they've set. And the other thing about motivation is, you know, you can think about people being motivated by money, but I've got a good set of research, and I think there's growing research about how these, uh, financial incentives, these, extrinsic motivation, has its limits. And so the real piece of motivation that we focus on is how well do you align what people are looking for in their lives with the goals of your organization. when you ask people, "Are you satisfied with your compensation?" Of course, the answer's always gonna be no. But, but instead, there's a question of, How well do you think, y- your goals in life are being met with, the direction your organization's going in? I mean, I'm not sure I would phrase it exactly like this, but that's sort of the idea is that if your goal is to just be really rich and retire at 40, I'm not sure that that's necessarily achievable with an organization that you're in. but if your goals are to find, meaning in your life, both in your personal life and in your professional life, that's gonna be something that an organization can help with. And being able to align those objectives together, helping them get on board with what the team's actually producing. there are some industries where that seems very difficult to do. and I, you know, working in academia, I think it's very difficult to really see your contributions on a day-to-day basis, right? In fact, the more satisfying part over time has become working with students because you actually see them learning something that they didn't know and probably wouldn't have learned otherwise. And so the motivation has to come from seeing how, what you're doing is actually contributing to something that you want out of your life. And so anyway, as we go through this, that's again hitting on a lot of these core buckets of information, how you give it and then also how you receive it. Spencer's last question was, how much is too much information? and I think the unfortunate answer there is that you have to develop that discretion, there's a lot of information that can come at you right now that's noise, and so being able to identify the true sources of useful information is part of your job, I'd say, as a leader.

Spencer Clouatre: Yeah.

Aaron Phipps: I don't know if that's satisfying.

Spencer Clouatre: I, if we answer it, I don't, I think we're done. as we started with, Aaron, like, if, if leadership economics ever answers or if AI ever answers this thing completely, then, um, there's no need for a leader. and that's why it's out of equilibrium at all times. That's some nuanced trade as to... I, I always come to this question like how much, How much do you want it? what do you want, and how much of that thing? Because when you start adding things, there's diminishing marginal utility, there's diminishing marginal returns. So w- the production function, we go back to it, what is your North Star? And that could change, as the context changes. it's, it's very interesting and, what I lean to, Howie, is that these principles can help unravel the complexity for you. And I don't care if it's AI and I don't care if it's us, these principles still work, I think AI will be better. I'm scared of the AI that we're training because that thing could take over the world, Aaron. whatever you're building over there, the agent that has these leadership economics ideas in it, the question becomes what is the outcome we want? You know what I mean? what is the outcome we want? 'Cause then we're framing trade-offs that should be prioritized towards that outcome. And then that's gets... where it gets kind of blurry, you know? And that's where people start to show their true colors, into how much. Howie, I call it the currency of commitment. You've traded currencies. You've been in the world of currencies, And most currencies, I think, chase, an acceptable risk, An acceptable risk, but a belief and truth in the future of that currency. we have a fiat currency in this country. It's trust of the United States and its future. And I was joking a few, uh, episodes back, brother. I said, "I hope I have a high FICO score," that the currency of commitment, my currency, the Clouatre currency, I hope is strong for the friends that I've maintained, and I do believe that we're all maintaining some bit of, credibility of our own currency in our actions that we take, And that may, that may simplify it a little bit too much, but those are the relative prices when I think about it. and every organization have them. every family has them,

Aaron Phipps: but, you know, you can think about how this plays, with a political environment, too. we talked about the narratives people are developing already and how that affects the way they interpret information. a, a good example of this right now would be, like, data centers. This has become, for some reason, a huge, point of friction, I think, for people, and I've heard people talk about data centers more now than I think I've heard in the last five years, where we- Mm ... we've had data centers for a very, very long time. All of Amazon, all of these websites, everything's running off of these giant data centers. and now I think that there's this renewed conversation about it where people are very concerned, and I think that for me, there is a narrative that is developing around, why this is being done and what's the value of it. But I think more broadly, I wanted to ask you a little bit about, your thoughts on either issues that we will face going in the future here with AI or, I guess more broadly about how people's narratives might affect their interpretations of truth on the ground.

Todd Howard: Well, to me, the first issue, I think if you're looking for what's gonna, tip this thing over, I think somebody brought it up a few months ago, I don't know if it was CNBC or Bloomberg, but they're just talking about these,token maxing concepts, right? So I think every Fortune 100 company, maybe Fortune 500 company is out there now with these massive CapEx budgets pulling in AI, and they're using all these different vendors from Anthropic and Hebbia and ChatGPT and Copilot, everything, right? And then so every company's trying to figure out how they can integrate this into different workflows. And at the end of the day, the end goal is to have your business be more productive, which effectively is same amount of work or more work with the same people or the same work with fewer people, and that's gonna improve your bottom line, it's gonna be profitable. So that, that's the goal. That's the ambition. That's why all this CapEx is getting thrown at it. But because every business now is, just maxing out this, this investment into the space to see how it can get pulled in, the revenue that's driving the hyperscalers is kind of off the charts, and people are justifying valuations, et cetera, based on this revenue gain. But there's, there's gonna come a day in the next few quarters where the CFO of the company I work for and other companies is gonna get this, variable cost attached to this expense item that didn't exist a year ago And for big companies, it's gonna be hundreds of millions of dollars of new IT, AI services. However they expense it, I don't know, And they're gonna say, "But wait, our earnings per share only went up X. we hired another thousand employees. what are we getting for this investment?"

Aaron Phipps: Mm-hmm.

Todd Howard: And then the business has to make one of two choices, either maybe the business is highly more productive, and so it's been worthwhile and they keep doing it, or they realize it's marginally more productive, but they're spending way too much and they can't sustain this, so then they're gonna look for lower cost vendors to come in. And we know that, there's a laundry list of lower cost providers of these models, or that we just don't need as sophisticated models to do certain things. I think it's very analogous to some of the challenges in our educational system, where everyone getting a college degree for the longest time hasn't always made a ton of sense relative to the jobs they're going to take, may not require a college degree. But who are we to say, "Don't go out and get additional education and training, and who knows what is gonna be around the corner for you"? But I think that, when you start seeing that pivot by the people that are actually paying the bills today, because there's only so much revenue that can keep going that way. I get that people think hyperscalers can keep absorbing it all, but at the end of the day, it's like if you work for an investment firm, an insurance company, or a bank, or whoever, I'm using my world as an example, they have limited resources, and so they're investing in this today hoping for some outcome. But when they start realizing that the timing mismatch here is gonna lead to some different decision-making, that's when everyone's gonna start really questioning this CapEx cycle, and then It's gonna be really challenged. but I don't know where, I don't know where we are in that. And maybe if it, if it works, then people don't mind spending the money on it. But even still, you still look at where does all the, the marginal revenue come from in our society for all these businesses to make enough money to upstream enough money into these, hyperscalers and the amount of capital that's being spent there. I mean, the numbers are staggering.

Aaron Phipps: Well, I think, What's hard about this is that, there's still so much, of a lack of clarity in terms of how people are gonna use this. You know, is it, is it going to be complementary to people's jobs or is it going to substitute jobs? And the answer is that it's gonna be a little bit of both. And then there are questions of, well, does this open up new business opportunities that people use? so, so there's this whole world of, speculation. the point about, maxing out and building up and scaling like this, it's a bit scary because you don't, you don't know where the market ends up in terms of how people value this. I know Microsoft also pulled the plug on some of their AI usage, because they realized it wasn't actually doing them any good, or at least it wasn't worth the cost that they were putting into it, right? So, in terms of where we are in this process that you're describing, certainly for some companies they are fairly far along in realizing that there are limits to how useful this is relative to the cost. So, my hope would be that this happens, gradually as the market evolves, that, companies can make these decisions instead of all of them occurring all at once. But, how does this alter the way people work? I really do love this question of like complementarity versus substitutability, and when you say companies are just trying to maximize their profits, and that can be done by either, making more with less or making the same amount with less. a- again, I, I would say that, I'm fairly optimistic about how the m- market works this out. But I think it still raises a lot of these questions about how do we develop people? How do we teach them how to make these, crucial decisions about how they, allocate their time and their lives, and how do they develop certain skills that are going to be useful in the future?

Todd Howard: This might be a horrible analogy, but one of these coworkers, and he was right, should've bought Meta, years ago. I always look at Instagram and social media stuff and I'm like, I just don't get how this thing's gonna keep growing. are we at some point just all gonna be influencers selling each other stuff? I don't get it. But it continues to grow and the amount of revenue that gets pumped into that and the advertising efficiency I suppose. I took myself off that stuff like a year or two ago just because I felt like I was just wasting time- Oh, yeah ... that I should have been sleeping- Your life just like, uh ... reading, doing something way different. I mean I still fall into voids here and there, but I try to not... Spend as little time as possible on that sort of stuff.

Spencer Clouatre: The free markets create exactly what we demand. this cycle we're talking about an allocation on an expectation that gets close to reality, and then we start asking about the return on investment. Was it really productive or not? Was it an efficient use of this scarce resource, you know? Yeah. it's just happening on such a large scale, it's such a large bet given all the CapEx that's put into this thing, that, if we're wrong, it, it could hurt, and I mean hurt in a avalanche sense, not just one or two people, but all of us, it's a big bet. It's a big bet on where we're going and what the future looks like. And then the, the incentive structures for the world change a little bit, right? as we make these adjustments, it's always been hard to figure out what does the truth really look like. And we were back into the same framework we, we were in. How do we elicit truth, We can't just split off 20 yards from each other and just start running into each other to figure out who really wants to be on this football team. What we do is make real investments and see if they're productive or efficient into what we want, or what unintended consequences will pop out. And I think the best leaders in the world and the people that, that have set us on the right pathways and created the visions that have made this, this planet better, have been pr- better at figuring out unintended consequences. and we gotta trust in our free markets. I do believe in free markets. They have better information than I do. But boy, I hope the unintended consequences don't come get us on this go. I don't know if we have any real leadership, in managing this whole thing. we're talking global now, just global AI race, which seems a little bit of as a collective trap, so yeah.

Todd Howard: It certainly feels like there's no collective leadership on this one.

Spencer Clouatre: No.

Todd Howard: This is definitely a nuance of living, in the UK or Europe is the s- societal consequences of social media- like they clearly are more concerned about that than in the US where capitalism Mm-hmm is definitely driving the bus. and there's, there's trade-offs attached to that, and I know there's a lot of pride in the US around that kind of capitalism push, and there's this global narrative in investment world about US exceptionalism. And yeah, the US does for a very large economy have higher growth rates. there's like a joke in Europe that, yeah, you wanna work in the US, get paid in dollars, but live in Europe where the quality of life is just a bit different. but again, it results in underperformance on their part because they put in these kind of safety checks that- Yeah some of them may or may not need to be there. But, that's probably a bit kind of

Spencer Clouatre: going

Todd Howard: off- No ... going

Spencer Clouatre: off

Todd Howard: piste.

Spencer Clouatre: No, no. there's not many times in my life where I can get to this spot and speak about it very honestly with people where we're at now is the ultimate trade-off, I think, is between competition and cooperation, and both of those edges are really kind of spots that can be harmful. You know, you go too cooperative, and if you go collective, that thing goes bad fast. that changes all the incentive structures. If you go too competitive, that thing can go bad too. You know what I mean? Like, if there are no rules or it's just all eat what you kill, versus I am my brother's keeper, like this, just this trade-off of an equilibrium. I think in the US we have leaned towards you eat what you kill, more competitive, and that has resulted in these competitive growth rates. But, we all, I think, in my head, wanna be cooperative. Like we're gonna need each other. We're all broken timber. We're gonna need each other. And this AI has just created almost like this, third party almost, Can AI start its own corporation?

Todd Howard: Yeah, I wish you were right, Spence. I feel like my life experience is that there's a lot of people that don't care about their neighbors.

Spencer Clouatre: Yeah.

Todd Howard: I know. And, and that, that is, that's tricky. You know? And I get, man, like I think I would expect all three of us here, like your first order of business is taking care of, your family.

Spencer Clouatre: Yeah.

Todd Howard: and I, I know I have that mindset, but I never ever want it to be on someone else's back.

Spencer Clouatre: Yeah.

Todd Howard: Or cause somebody else some pain somewhere, right?

Spencer Clouatre: Yes.

Todd Howard: Um, and that's, yeah, that's the part that makes this whole thing a bit-

Spencer Clouatre: It's real- ... a bit dull ... it's really hard. It's really, really hard, and I- we're talking in global sense. But also, when I go on a little run, Howie, I told you I'm putting in my two miles a day. Very slow two miles. 10-minute miles, Howie. You'd be proud of me. But, um-

Todd Howard: I'm right there ...

Spencer Clouatre: the other day, I s- yesterday I stopped and picked up a nail. It's a roofing tack nail, and I happened to see it in the little parking space, where these new houses are, 'cause there's new construction going on. I ran by it at first, honestly, and as I was a distance away from that, I'm like, "Man, let me go pick that thing up." This is some lady driving in, you know, or some guy's gonna drive in, drive... A roofing tack is designed to get flipped up and put a hole in your tire. And I s- ... I spun around, I spun around and went, picked it up, and I put it in my pocket because I knew I was running by a dumpster, and I knew I'd throw it in the dumpster. Now, the person hopefully that I saved from that could be me. I don't know. I feel like in my little community, I have a feel for that's my responsibility to help, and I don't know what the responsibilities we have of each other. But in my 30 years in the military, you know, if I m- m- we approach over 30 years in uniform, and what we've done, we're gonna need to cooperate as well.

Aaron Phipps: Yeah. I don't know. so the question is what, what drives people to behave that way, and to sort of establish and maintain that kind of a culture? we've spent a lot of time talking about AI, and I think, what might be a useful, final question here is a little bit of, you know, Todd, if if you were to imagine an AI as a, as your boss, how well or how good of a leader do you think an AI could be? and the reason I, think that this sort of highlights some of the things that really make for a good leader, and I don't have an answer to this. But I just thought, you know, w- what is it about, about Spencer here that you think is more convincing, in terms of leadership than, say, a very well-trained chatbot?

Todd Howard: Well, man, that's such a good question to actually just think about. But what popped into my head right away kind of gets back to your initial comments and why you thought AI wouldn't replace, but it's that I would know that it's fake And so how could I like I'm using this AI tool on my phone to help me cut calories. And if that thing sends me a text every morning and tells me, "Come on, man, get up and go for your run," I know that's very different than if Spencer texted me and said, "Dude, I'm outside. I thought we were meeting up for a run." The accountability to your fellow person is so high relative to something that you know is fake. And so- I love that. Yeah, I mean, that's a very good start ... I, I was skeptical of you earlier, Aaron, when you said that, 'cause I was like, "Man, this Aaron is just so naive. He's sitting there thinking this isn't gonna just eat us all up." But no, I th- you're right. that question, like, brings that out. people know it's fake.

Aaron Phipps: I think what, what I'm struggling with is like why does that matter? if we put an AI in a, in a Spencer body, would it be different? But I agree. Like, if Spencer were to text me and say, "Hey, I'm out here. Where are you?" That matters a lot more so I, I don't know what the answer is there about, like why is that different, theoretically speaking, but it definitely has a different feel to it. you feel a different level of connection or commitment to people. And so I, I know Spencer- But here, here's what's

Todd Howard: scary, and sci-fi, right? But it's- I answered that question because I know that I need, some personal motivation to be part of my equation. But imagine if you grow up with AI like when we did road trips back in the day, you stared out the window and you were bored out of your mind, and too bad, right? Or you try to read a book and get sick or what- whatever. And then when Spence and I were parents, man, I remember his... He had a, a small TV strapped onto a stool, so Caleb could watch something in the car when they were doing like a road trip. This is before they had them in the headrest, you know? we modified the cars to entertain. So we exposed our kids to this technology, and you can imagine that future kids are gonna be getting taught by AI in some ways. And maybe for a teacher, where if you're just trying to learn, I don't care if it's real or fake, I just wanna learn. but I wanna ma- make sure that what I'm learning is the right thing to learn. But I don't... Man, I don't know. I feel like this, you could go really deep on this question.

Spencer Clouatre: Dude, and yes. I don't know who said it, but this like idea of, we've got your attention, can we also gather your intimacy? our kids in the future could have an AI bot that's the best friend they've ever met. It's uniquely designed for them. Do they care that it's fake? I don't know. It's happening already, I think. So yeah. this is when the question is like is the AI a tool or is it an agent? is it its own entity? I don't know. Did we really make sand think? I don't know. When did carbon atoms live? We're largely made of carbon, right? I took a organic chemistry class. It was the best C- I made at West Point, so- I mean, when does carbon live? We just made sand think. Lord, who knows?

Aaron Phipps: Yeah, but I, again, I think this comes back to, there's more about leadership than knowing the right stuff, there has to be something more about, that soft information you take in on how you interact with people, the kinds of examples you see. I mean, in the end, the people you're trying to lead are also humans, and so seeing another human do it, maybe that's more impactful. I don't know. I think about my wife is a special education teacher, and, certainly there are many parts of her job that could be replaced by an AI. in fact, some, some teachers, use technology a lot more than others. But for her, the most satisfying thing is the connection she has with those kids and understanding more of their background or their family background. it's often heartbreaking and hard, to handle, but at the same time, there's something very satisfying about that connection with people. and for whatever reason that I don't have an explanation for, I think that's the same mechanism at play when you've got Spencer in front of you pushing you to go as opposed to some, some computer. And so what makes a person a better leader seems to be, for me it's much more about, their capacity to inspire and to, relate. I can see a, a future through that other person. I can see that, you know, they've got the lifestyle or they've got the, the aura. They've got the ... They've got something that I wanna, also have. You know? That seems like a happy way to live. I don't know. I'm just curious about this too. I still can't put my thumb on exactly why I'd be much happier, hunkered down with, with Spencer as opposed to some- ... mech robot that can, obliterate the enemy faster than Spencer could. I don't know

Spencer Clouatre: we're using it right now. you asked Todd how you feel about a AI boss, but I'm sure our AI is helping us, cut calories as well. So in some sense, we're all taking some directions from AI already, I think, Don't you agree?

Aaron Phipps: Yeah, yeah. But, I think this is where I love thinking about what makes leadership hard.

Spencer Clouatre: Yeah.

Aaron Phipps: And, and it's that there's not a formula for it.

Spencer Clouatre: Right.

Aaron Phipps: and I hold to this because AI can't have something that's not, in a sense, already formulaic. And that's a bit of a simplification, but leadership involves all sorts of different kinds of information that we seem uniquely able to gather and synthesize, and it also requires, this ability to expand the things that we think matter, but then also to focus our attention and our teammates' attention on it. Mm-hmm. And I think that the, the difficult parts of leadership are the parts that don't have obvious answers, and that's why, I like to focus on underlying principles of how people behave, and then allow people to devise their own tools to match their current context.

Spencer Clouatre: your last podcast where you said leadership is, how people feel when you're in the room, Mm-hmm.

Todd Howard: so I think, yeah, how do you feel if you're taking orders from AI? Like, I think there's things we do in our life where I don't care that I have no feeling, right? If it's I'm taking a picture of a barcode and it tells me this is a D-minus, thing, don't put that in your body 'cause there's no nutritional value, I'm like, "Okay." I don't need that to come from... Although maybe it's even more helpful if it comes from someone that, makes you feel even worse about thinking about it 'cause you're really close to doing it anyways. But no, I think that it's really hard to replicate that, and I think one of the things missing in leadership is that there's not enough feeling. I always feel like my happiest moments in my career, whether it was in the military or, in any other job I've ever had, is in those, like, good-feeling moments where you feel like we did X, Y, and Z, it resulted in this outcome. And the feeling you get together from doing that together that's why you're doing it. And maybe it does come with a financial reward at the end of the day as well, but it's, it was more about kind of getting from A to B as a group or a team.

Spencer Clouatre: Yeah.

Todd Howard: and somebody that can articulate that, that gives you the confidence to keep going down that road when you're starting to lose... 'cause some of these things take years to, ... to go from the, the work to actually see the results, And so you kind of need the team behind you or the firm behind you saying, "No, no, no, we see you guys going, this is gonna pay off. We've seen this before. Just keep doing the right thing and, it'll pay off."

Spencer Clouatre: this is, kind of played into my hands, Howie. And Aaron, I would tell you the value of something, we've talked about this, one of the core principles, the value of something comes in its cost, right? If it's costly, then it's probably valuable. And, I keep talking about the currency of commitment, and what I think we've just said is that AI, AI can't produce the currency of commitment. But another human being could get you to commit. if you were standing outside my door, I'm gonna exchange currency of commitment with you, and you're committed to me, then I'm gonna give you all I got, I'm gonna share my commitment with you. I think the best friends in your life are where we share our greatest commitment. The currency of commitment works between human beings. But can the currency of commitment work with an AI agent?

Aaron Phipps: I don't think so. Uh, Adam Smith's whole theory of moral sentiments, that's where all of this started, and that's the whole question he's trying to untangle back in the 1700s is why do we do anything for other people?

Todd Howard: Mm-hmm.

Aaron Phipps: And what is it that actually ties us to each other, and why do we care about certain things? And so of course, he was coming at it from a more philosophical standpoint and less neurological. But, I think that that's sort of the role or the gap that leaders fill is that how do you, how do you tie people together in a way that makes them feel, uh, um-

Spencer Clouatre: Use it.

Aaron Phipps: Use it ... committed to each other?

Spencer Clouatre: There you go.

Aaron Phipps: Yeah. I know. but how do you get them to feel that sort of obligation towards each other, that empathy about each other's circumstance, and then also the expectations they hold each other to? Mm-hmm. uh, I think that a lot of this comes from respecting the fact that the sacrifices we make on behalf of each other, whether big or small, the way we prioritize each other's needs or the team's needs, are really where, leaders can influence that, that culture and the information people have available to them and the decisions that they're going to be making on behalf of the team. so always the last thing that we like to, give our guests an opportunity to answer is what would be, the number one piece of advice that you would give somebody who wants to be a better leader or a better person starting tomorrow? You know, nothing huge, but something that they can just start working towards.

Todd Howard: The one thing that comes up t- for me all the time, and it is the most basic leadership principle that people don't do, is just lead by example. Lead from the front. show people that you care, you're right there with them, and it, it kind of gets down to when maybe Spence and I were micromanaging our guy- it was just wanting to see what they were doing, staying late if they were staying late. I think that is it. I think we lose sight of that 'cause it's so basic, and, and we get complacent around some of our leadership roles, but of all the roles you have, stay true to that. And, I think people generally see that. show them that level of commitment that regardless of your rank, title, what have you, that you're kind of still in it with them and that this is a team effort.

Aaron Phipps: this is something also from a personal perspective, some of the advice that's really related to this is, if you wanna be a runner, then see yourself as a runner and do that. if you wanna make a change in your own life, being able to see, see the person that you would be if you were a runner, and then waking up tomorrow and setting that example for yourself, just on a personal level, even if it's not with other people, Like you said, it may be common advice, but just starting tomorrow by being that leader that you expect other people to see you as, leading by that example seems to be some of the most useful advice actually.

Spencer Clouatre: that's how you keep a high FICO score, Howie. It is. It is your credibility. Lead by example means you're showing me your currency of commitment by believing in me and, leading by example. Because we do not appreciate hypocrisy in currencies, nor in our relationships,