Melissa Cheals, CEO of Smartly, joins Henrik and Jeremy to explore what it really means to become an AI-native company—and why that decision is becoming unavoidable. From challenging $1M, 12-month product timelines to rethinking leadership, communication, and how teams work together, she shares how AI is forcing organizations to question long-held assumptions about how work gets done.
Melissa Cheals leads Smartly, a payroll and people management platform serving 24,000 small and medium businesses in New Zealand. In this conversation, she shares how AI is reshaping product development, leadership, and how organizations operate.
A key moment comes when her team estimates new features will take 12 months and $1M to build. Instead of accepting it, Melissa pushes back, using AI to better understand her team’s perspective and communicate the need for change more effectively. This becomes a broader shift in how she approaches leadership, using AI to think more clearly and navigate conversations with less friction.
The discussion expands into strategy. Companies now face a fundamental choice: become AI-native or continue building on existing systems. As AI adoption increases, it also exposes silos and bottlenecks. Melissa shares why cross-functional collaboration—and leaders actively engaging with AI themselves—is critical to navigating this shift.
Key Takeaways:
Smartly: smartly.co.nz
LinkedIn Melissa: linkedin.com/melissa-cheals
LinkedIn Smartly: linkedin.com/company/smartlynz/
00:00 Intro: Challenging AI Assumptions
00:28 Meet Melissa Cheals
01:17 The Spark For Change
02:36 Vision And Early Signals
03:48 Hiring For Transformation
06:12 Unlocking Data With AI
08:27 Breaking Silos Across Teams
10:39 Why Leaders Must Learn AI
13:42 Leading With AI And Clarity
17:05 The AI-Native Decision
21:45 Thinking Bigger With AI
25:23 Less Meetings More Writing
26:33 The Self-Disruption Imperative
29:11 Breaking Silos With Value Streams
31:28 Managing Fear And Change
32:50 Learning And Shipping Faster
34:58 Debrief
📜 Read the transcript for this episode: ai-native-or-not-the-defining-choice-for-companies-right-now-with-melissa-cheals-ceo-of-smartly/transcript
Melissa Cheals: Then we're getting these crazy sizings from the engineering people saying it's gonna take 12 months and a million bucks to build that. And I'm going, no, no, no, no. I'm not sure that this is good work.
It's like opening a can of worms. We're probably, actually, to be honest, we're not probably, we actually are going to have to reinvent.
If you don't start to think about how you're gonna move to AI native platforms or architecture, I think you're gonna just end up with a legacy product that'll be dead.
Hello, I'm Melissa Cheals. I'm the CEO at, smartly, which serves 24,000 small and medium businesses in New Zealand. We are owned by um, Datacom, which is a Australasian technology company. I'm very excited to be here today and talk to you about how AI can help organizations transform and change and really, um, scale their human potential.
[00:00:56] Jeremy Utley: Maybe it'd be helpful to take a step back and set a little bit of context because you have these hard one insights around driving organizational change.
I'd love for you to give us a sense for the journey that you've been on. Call it the last, what we met 18 months ago. Is that right? Approximately? Remember downtown Palo Alto approximately 18 months ago?
[00:01:20] Melissa Cheals: Yes.
[00:01:21] Jeremy Utley: Ella introduced us. I had come to know Ella through some work with the New Zealand government 15 years ago, and then I get a call from Ellis saying, Hey, I want you to meet my CEO.
We're in town for Saster. We sit down, sitting outside of Verve Coffee there in downtown Palo Alto. You start telling me about your vision for change. Can you, can you start there and just say why did you feel the urge to transform and, and how did you begin that journey?
[00:01:49] Melissa Cheals: Uh, how did I feel the urge to transform?
Yeah. I remember, I remember that day and it was sunny, beautiful, sunny day in Palo Alto and, um. Oh my God. You started talking into your phone and you were talking to Jet GBT and I'm like, oh my gosh, what is he doing? And then you had come up with, um, and created some communications that went back out to us and within the meeting before it even finished.
And I think I had a number of those kinds of experiences, seeing what, what was early stage, you know, happening in the market, in the software industry. Around AI technology and thinking, oh, I really, really, we really have to learn more about this because it's gonna change the landscape. And so how do you get going with that?
I think one of the first things was to, um, really start to set a bit of a, a, a vision with kind of people in the organization around what might be possible in the future and what was happening, and help people really. Kind of understand the potential for what we could do. And so be able to talk about a number of case studies and think about a number of case studies of how people had really, um, completely changed, you know, speed, cost, and, um, quality through kind of starting to, uh, adopt ai, but also recognizing that data and AI are inextricably linked.
And so actually having to think about those things together. I think at the same time, that was why actually, um, Ella was bought into the company, was actually going right. We need someone with some passion and energy and some kind of, uh, real drive to understand and bring this capability into the business and then start talking to the business about the importance of it and the why and actually how it could help them.
[00:03:48] Jeremy Utley: I think that's really, it's a really important insight. Henrik, you know, one of the things that we learned from Bryce Shamal. Was that he was brought into Moderna before the AI moment, if you kind of trace his hero's journey, he wasn't brought in as the AI guy. And, and Melissa, I'm hearing you say the same thing about Ella.
It said that she was brought in as the AI person. I know, uh, Stefan, who was the CEO of Moderna, hired Bryce a year before Chad, GBT came out. Because he knew they needed to change and then AI kind of got served up on a platter. Right. And I think in the same way, Melissa, what you're saying is you had a sense that something needed to change even before the AI moment.
And you in bringing in a person like Ella, you actually created capacity for change. I'm just thinking about that as. I think a, a leadership tactic because I think a lot of leaders make the mistake of going, who on my team should I add this to their plate? Who should be the AI person or the change person?
And if it's just another kind of responsibility on someone's already existing long list of things, it's gonna get neglected. Whereas it sounds like, correct me if I'm wrong, but, but you actually hired someone for the express purpose. Of catalyzing a change. Is that right?
[00:05:09] Melissa Cheals: Yeah, I think, um, if I look back, so I've been, uh, working with Smartly, which is obviously payroll and people management for kind of five, six years now.
And when we started, we were, uh, I think we've 3.4 times the revenue since, um, in that period. And three and a half. We started out
[00:05:32] Jeremy Utley: tax revenue in five years.
[00:05:34] Melissa Cheals: In five years. So all I would say is you've got to almost stay in a constant state of kind of change and what's the next thing you need to do to grow?
And you start with this capability, which might be in, um, really good customer support, really good sales, really good engineering capability. Then you need to augment that with other kind of capabilities and skills as they're coming up and around. And so marketing and go to market and all of product development and all of these things all have to be built up and you have to build that up I think by bringing in key people who you really give permission to build a capability or build.
Um. Out to the possibility of the idea of what it can do. And that's exactly where this came from. Going well, as a payroll business, the amount of data and information we have that could really support even like economic trending, understanding, you know, insights that would actually help businesses, you know, start thinking about, for example.
All the, you've got all the salaries of all the kind of customer support people that do things in call centers, and you almost could tell people, well, this is roughly what you should pay. And as a new business or a startup or small businesses, that sort of in entails extremely valuable. But how do you unleash that?
How do you harness that? So you're having some of these problems before AI even turned up. To say that, um, you've got this latent potential in the business, either through your people or your information or your products and services, and how can you really unleash that? And so, yeah, Ella was bought in with the whole idea of what can we do, right?
Let's, uh, let's, um, really, really look at this and then start talking more broadly to the business and people in it.
[00:07:34] Henrik Werdelin: So I think we have increasingly been. Identifying that one thing is AI and learning that. The other thing is basically the organizational permission or structure or space or methods to allow that unleashing to happen, right?
Jeremy brought up yesterday that in Amazon they have like a whole kind of like methodology where you have a new idea, you can express it as a press release, and then if your boss like it, there's like a whole method for them allowing that person to go and pursue that. Could you talk a little bit to what is some of the, kind of like the learnings you have from doing that in your organization?
It sounds like learning ships is kinda like maybe one approach for, for kind of unleashing potentially the palace that AI gives you.
[00:08:24] Melissa Cheals: I've got some stuff I wanted kind of just going through my head. So, um, I think one of the big things I just wanted to kind of talk about too was, um. One of the things is actually the power of the, the multiple people rather than one person.
So we've talked about how we brought LER in and how you kind of can bring some people into drive change, but one of the things I'm a big proponent of is we run the business, we don't run departments. So silo, and I've got responsibility for this, or I've got responsibility for that, is less powerful than if you work on it together.
Actually you're saying we're actually working on this as a team, and so I find that quite interesting because AI actually creates conflict because actually if you want this kind of outcome in engineering or you want this sort of outcome and product, and then somebody else can't keep up with the speed with which AI can now provide.
Then they'll get frustrated with those people. But if we're not trying to solve these problems together and we're just leaving it to that person and that person, it's actually not as strong. So I think one of my, to come back to your question is, I think one of the, one of the big learnings is sometimes tackle some of these, uh, things that you're finding out of, uh, your developments as a team and try and utilize the different skill sets too.
Come up with something that's bigger and better than what one person would come up with on their own. We haven't talked about that much. I mean, I think there's, you've gotta have two big things going on at the same time. You've gotta have leaders who are, uh, working together and brought in to, to kind of drive the change.
But then also from the bottom up, you want to create champions and individuals within the business. From everywhere. From every area. And you wanna open it up to everybody. So it's not just for the leaders and the managers, or it's not just for this one person that comes in and tries to create change. You actually want to elevate, elevate the whole company and everybody.
So everybody's using it daily or everybody's problem solving.
[00:10:39] Jeremy Utley: You know, the other thing that I, that comes to my mind, Melissa, and I just wanna give you a compliment on the air, so to speak. You didn't approach this like this is everybody else's thing. You approached this, like you had to change as well.
And I think that is a really important piece of this puzzle is you and your own learning journey. Um, because I have seen, and maybe we can get into some of these anecdotes, but I've seen many times you're actually able to call people on whether it's expectations, whether it's that conflict, whether it's.
Timelines and capabilities and features because of the, your depth of knowledge. Can you talk about your own learning journey? It's, 'cause it's not just about senior leaders working together and champions from everywhere. It's also, or, and maybe it's just implicit in how you think about these things, but it's you coming alongside the rest of your team to be learning as well.
Am I right?
[00:11:37] Melissa Cheals: Oh, absolutely. Right. And I think one of the. Powerful things we did early on, and, and we did do, you know, some real dedicated time to training to learn and be curious about prompting and what that actually looks like and what does it mean if I can't prompt, how can I talk to it if I'm not learning about that, how can I, um, support or challenges challenge others to, to grow?
And so I think, you know. Leading by example. Um, yeah, I've heard examples of of CEOs who they, you know, do a weekly video showing what new thing they've done or how they've done something. One of the powerful things we did was we had dedicated time where we just sat together, where we were on in a meeting, but nobody was talking and everybody's got the cameras off.
But you can actually put some ideas or thoughts, or ask some questions to everybody. But I'm there with the team. We are learning prompting and we are trying to do, um, a, a different kind of thing, or we are challenging ourselves to learn a new piece of it and I'm in there with them doing it at the same time.
[00:12:45] Jeremy Utley: And what was the impact of that? How did that impact you as a leader to be on the learning journey with the rest of the team?
[00:12:53] Melissa Cheals: Well, it was massive energy. I mean, um, when you can. Achieve something that you never thought you could or, um, I mean, one of the things that makes, which is just a very simple thing, but just makes me feel better, is if I'm more excited and heated up about a topic, AI makes sure I express that with dignity and give dignity to others and actually give respect to others and reframes it when my emotions might be really heightened.
And so. You know, being, being authentic, it can make you, um, I think interact with people in a better way. And so once you start experiencing some of that, you feel better about yourself and you feel better about what you are, um, doing and how you're doing it. And that's quite powerful, I think.
[00:13:43] Jeremy Utley: Can you walk us through that?
I mean, I, I know you're a very passionate leader, but you said, when I'm heated, AI helps me express it with dignity. Walk us through as a leader. What's an example of a time where you go, I'm heated about this, and how do you get AI to call it dignify? The expression of those passions? What are you actually doing?
How are you actually working?
[00:14:08] Melissa Cheals: Well, recent example, um, actually, I know, I know we've talked about this one, is we have to speed up, uh, we need faster, uh, shipping and it'll be cheaper and more quality. And I know that AI can do that because I've heard examples and I've seen some of the things that it can do.
We are trying to build out our new product, uh, to competitor parity, uh, and to make sure it's amazing and what customers want. And, um, the product guys were putting in their requirements and their prototype. They built these cool prototypes and five minutes with these amazing design sprints and, and got them up and running and the customers loved them.
Then we're getting these crazy sizings from the engineering people saying it's gonna take 12 months and a million bucks to build that. Thank you. And then that's multiplied by a number of them. And I'm going, no, no, no, no, no. And so I'm feeling very excited about and very, I'm not sure this is good work.
So I have spent quite a bit of time talking to myself and talking to chat, uh, chat chatty G, or talking to our AI friends and um. They're kind of going, well, actually your engineering people don't forget. They're all about quality and they're used to compliance, and if they do something wrong, there's big consequences.
And so you need to remember that they're coming from this mindset and you need to help them shift their mindset to A, B, C. And so it's kind of helping me really think about it in their shoes. And so then actually I was able to get some coaching advice around. Quotes that I can say that'll make me sound really great and respectful and with integrity, but also get across the fact of the kind of change that we need to have and that we need it now.
[00:16:00] Jeremy Utley: Okay. Okay. But hang on. So there's, okay. This is amazing. This is so good. But there's two layers here, right? And I, I think it's actually worth unpacking both layers. One is, uh, the knowledge that there's a new way, and that is actually really important, right? Because the reality is a lot of CEOs get an estimate from a engineering team that's gonna be a million bucks in 12 months.
They go, great. Can't wait to see the progress update in six months. So you there, there's an important kind of awareness layer where you go, no, no, no. Like you said, no, no, no, no, no, no. Like it can't be a million bucks. It can't be 12 months, which that's one. And then the next layer is the self-awareness to say.
I now have a, a cognitive amplifier to help me express this in a way that's not gonna be off-putting to these engineering leaders. It's gonna be
[00:16:49] Melissa Cheals: inspiring.
[00:16:49] Jeremy Utley: Right?
[00:16:50] Melissa Cheals: Respectful.
[00:16:51] Jeremy Utley: That's, that's amazing, right? It's, it's multiple orders, uh, layers if you will, of leadership. Call it wisdom that you're able to deploy because of your own experience.
That's incredible.
[00:17:05] Melissa Cheals: I, um, am flabbergasted too by the constraints that we're working to, that are sitting in our organizational psyche. So, you know, for example, the product guys, they were feeling it too, but they were kind of going, well, this, this is obviously all we can do is cut down scope and all we can, we can cut and cut and cut scope to make it smaller and get it in.
And that's how what they would try and do. Rather than going, actually, we might have to completely turn everything on its head. It's like opening a can of worms. We're probably actually, to be honest, gonna have to, well, not probably. We actually are going to have to reinvent and that's a big decision for A-A-C-E-O of a tech company.
Are you going to go AI native and. Start your reinvent, your architecture and your platform and your tech, or are you going to try and, um, you know, build it in on top of what you've got? It's a really big decision.
[00:18:01] Henrik Werdelin: Can I ask you to maybe spend a little bit of extra time on that decision and what are kind of like the, some of the pros and cons in your mind?
Um, because you point it's a big decision.
[00:18:16] Melissa Cheals: I, um, I think that, uh. If you wait and you decide that you want to rebuild out your platform to be AI native, how long is that gonna take? And then are you gonna get behind competitors and behind the eight ball while you're doing that? So how much is it gonna cost and how much time is it gonna take?
And then how far forward is that gonna take us into the future relative to just building out what we've got? And I, I, I think it's whole. Idea too, of what exactly it is that you're going to build, because often build versus buyers never came into it. But actually you do need to start thinking about that now.
That sometimes there are companies that can do, for example, like access and identity management, or they can do big parts of what you might want to build. They build that out already. So maybe you don't need, maybe you should be focusing on building. Uh, back out your platform or building out the pieces that are really differentiating, that are real assets, that are really value, uh, to your shareholders rather than thinking about just building out everything.
Um, I mean, my, my kind of approach to it is, it's, and, and so you probably actually have to build out your platform and change it, and you need to get going and learn. And get all of the AI infrastructure and orchestration in at the same time. 'cause that will inform what you should build. If you don't start to think about how you're gonna move to AI native platforms or architecture, I think you're gonna just end up with a legacy product that'll be dead.
Um,
[00:20:00] Henrik Werdelin: and how much do you think it's a technology decision and how much do you think it's an organizational decision?
[00:20:06] Jeremy Utley: Well.
[00:20:08] Melissa Cheals: I think it's, uh, I think it's an organizational proposition decision. I think it's about thinking about what it is that drives shareholder wealth and also, um, competitive advantage. I mean, some of these small startup companies, um, Kenrick that you are supporting or that you are kind of people are involved in, they can actually rebuild, especially when you're operating an environment like ours and payroll.
A lot of our stuff's rules based, actually, someone's gonna come in and someone could come in and rebuild that out reasonably quickly. So, um, with that in mind, why wouldn't we do that rather than others? So
[00:20:51] Henrik Werdelin: I think one thing that you mentioned, uh, in passing, which I think more and more of the companies that at least I talk to, that are going through kind of this AI coming of ages kind of moment.
Is that when everything is possible for you and your competitors, then it kind of like very quickly come back to what do you wanna be as a company? Like,
[00:21:13] Jeremy Utley: yeah,
[00:21:13] Henrik Werdelin: not what you do right now, but what do you actually want to be? And because you can be most things today because you can write most things in code, then it becomes like both a philosophical question, but it also becomes a very much a leadership question, right?
Yes. What is it that I as a leader, decide that this company is gonna be over the next five years? Are you in your, in your pondering, is this some of the things that are then also kind of like suddenly becoming front of mind of we actually have to articulate as a narrative what it is that we want to be?
[00:21:45] Melissa Cheals: Oh, I think that's been front and center of, um, I think clarity and curiosity and connection of, I think, are really, really critical principles to how you should run a business. People can't get clarity and get rid of their fear unless everything, so this whole culture of documentation, which is all your data, all your unstructured data, uh, the power of putting that within the system within, within your company is astronomical.
And I think the other thing I would just say is what you wanna be in five years, what you wanna be in 10 years. Um. We're operating in the old model thinking, and even I have to really check myself at times around what's possible. And so when you're creating this vision of what you wanna be in five years, or you're thinking about where you're going, you almost kind of need to check yourself and go, right, well, have I thought big enough?
And actually, how could this be even bigger or bo or bolder? Because the constraints and what we can do are completely different. So, um,
[00:22:51] Jeremy Utley: where do you go to push that thinking or when you, when you ask the question, am I thinking big enough? How do you know? Are there, do you have a external board of advisors that you're, where are you looking to orient around kind of scale of ambition or to calibrate even?
[00:23:06] Melissa Cheals: Yeah, so. That's, we need more time doing research and looking at other things and not talking and meeting and checking on things. I think you have to be looking, if you're partnering with other companies, especially tech companies, actually the ones that are forward thinking and seeing what they're doing, listening to beyond the prompt, a bit of a pitch.
But I like. Actually hearing what people are doing. Let's double down a little bit on
[00:23:36] Henrik Werdelin: that. Yeah. Like, yeah, let's double down on the prompt a bit more about.
[00:23:40] Melissa Cheals: Um, so I think more than ever you can't be internally focused and you have to be out finding and seeing what's working and hearing and talking to people and seeing what's happening.
And that's where also though I think with ai, you have to inject, um. You have to keep trying to inject some experience, some capability into the business at the same time as growing your capability.
[00:24:08] Jeremy Utley: Let me say this, just because we, Henry and I had a conversation yesterday, which we're not going to release to the public, and so we, Henry and I have in our minds, hey, insight from a conversation which will be released for other reasons.
But one of the things that came up in that conversation that I actually think is very valuable and worth just kind of flagging here, because now people aren't gonna hear it otherwise. Part of what a leader has to do with that extra time is seek outside inspiration is go to the conferences. I know Melissa, you're big on conferences, is getting outside of your bubble.
See, because. Unexpected input is what provokes your imagination, and if what you do with the 20% or 50% or whatever the number is, kind of new capacity. If all you do is more of the things that you're already doing, then that is, it's effectively an inward orientation, right? If what you do with that extra capacity is flare out and seek unexpected information and sources of input, whether it's beyond the prompt or what, whatever it might be, right?
There, I think is actually a very pragmatic way to preemptively decide you wanna be using newfound capacity.
[00:25:23] Henrik Werdelin: Can I actually imagine that triggered a question, Melissa. When you team in your new AI native world in 2026, your team gets 50% more time and they might decide to go and get more inspiration. All those things we talked about.
What is the thing that you ask them not to do? What can they not spend their new found time on?
[00:25:50] Melissa Cheals: Wow. What a great question. Hmm. Because I think the amount of time that they spend, um. Maybe trying to influence other people on going a certain way or talking about something that they want to do. Ideally. Ideally they're writing, ideally they're writing stuff down, rather than having meetings with people to just talk to when they, when they're uninformed thinking, the thinking's not formed.
So I don't want them to spend their time having meetings with other internal people. To ask them their ideas about what they're doing.
[00:26:33] Jeremy Utley: Can we go back to, I think this is related to the idea of self disruption. We didn't call it that earlier, but you mentioned with AI powered startups effectively capable of replicating, uh, capabilities, features, et cetera.
You, Melissa asked the question, why don't we do it ourselves? Which to me is that's a self disruption imperative. Why not do it ourselves? Can we talk about how you have those conversations internally among your leadership team? How do you think about deploying resources, commissioning experiments, setting goals around disrupting yourself?
[00:27:12] Melissa Cheals: So the question is how do you go about,
[00:27:15] Jeremy Utley: it's hard. I mean, well, maybe, maybe I'll say this. Self disruption always involves destroying part of the business. You know, the kind of canonical example obviously is when. Jeff Bezos saw what the iPod was doing to CD sales. CDs were the third biggest product on the Amazon platform.
And Bezos had this thought, what happens when somebody does that to books? And then his next thought was, why wouldn't we be the ones to do that to books? And so then what he did is he went to Steve Kessel, who is the head of physical book sales at Amazon, and he said, Steve, you're fired. Your job is to build a new product and your key goal is to put your old team outta business.
Good luck. Right? That is an unfathomable kinda strategic framing, right? And so my question to you is, how do you and the leadership team at Smartly and a Datacom think about commissioning people and efforts to disrupt the business? I mean, the iPad, the primary product the iPad destroyed was the Macintosh, right?
Steve Jobs is literally paying people to destroy another product's business. How do you and your team think about that? That's, that's my question.
[00:28:32] Melissa Cheals: Yeah. Yeah. Yeah. That's a great, it is a great question and I, um, I was thinking about this from two angles, actually. One, you can, um, you can just disrupt it by deciding to do something differently.
And, um, I think when you are trying to reinvent everything, you have to go there. So you're gonna have some mess along the way because that's part of the learning. Then you've gotta be very thoughtful to, um, make sure that everybody doesn't feel completely sad and upset when something doesn't go right, because that's actually part of the learning process.
So, a couple of things I would say. One is last year one of the things that we as a leadership team decided was to try and break down silos. And again, it's kind of pulling in some ideas, but then letting people. Contribute to that. But we came up with this whole idea of, um, of, of value streams where you would, you would have a group of people cross-functional group of people that would be assigned to create value in some sort of area.
So whether it's payroll or whether it's, um, integrations that will provide outcomes for customers. And so. We set up these groups and of course the product and engineering people are going, what the heck? We, why have we got, why have we got an accountant and a finance person in our payroll team? Or why have we got these group of people contributing?
It was crazy, the cross pollination of thinking because it's that whole idea of people with different perspectives bring whole kinds of new ideas into the whole idea. And so then this group, these, each of these groups was allowed to. Swarm around the particular thought that they thought would be add value to the customer, and then they were allowed to go and trial it and create a paper and do a prototype to see if it would work.
And so the energy that created was amazing, but at the same time, the fear and the uncertainty around, okay, now you are, you are mucking with what is our standard operating, you know, this is how we run the factory. This is how we run the, run the engine. You turn it upside down. And so you've got that stuff happening at the same time.
And I think you have to have a, be, be comfortable with the level of that of, of some of that. Um, what is it forming, storming to? You can get out the other side. But interestingly, from those value streams, we found that they were really great at generating ideas, but we're now having to go to round two because actually when we got into delivery mode, we couldn't get it out the other end because.
We needed to change that piece as well. It's almost like pulling up a rock and then the next one will follow and the next one, and then you just keep solving them along. Um,
[00:31:24] Jeremy Utley: you've gotta kind of be the, uh, the, uh, amateur psychiatrist. Right. In a way, Melissa, because I think I mentioned this to Henrik or on a recent conversation, but I heard Paul nurse, who's the, you know, he's a Nobel Prize winning biologist, he said.
Managing a lab means 90% of the time, he is an amateur psychiatrist because people are failing 90% of the time. So how do you manage folks? They've, you've, you've commissioned these value streams. You created, as you said, energy and also fear. People are going, what are these cross pollinating teams doing together?
Then they've got amazing ideas, but you can't deliver. The other end of the pipeline. How are you managing expectations and energy now to sustain the momentum while mitigating the fear? What are you doing
[00:32:13] Melissa Cheals: celebrating the successes and the cool prototypes and the cool ideas, and also the champions that have brought those forwards, celebrating and letting them actually talk to it so that they own it, so that people can see.
Uh, we reward trialing things and we, and we do it, we are actually making progress. So I think you've got to focus on the progress you're making. And then I think with dignity and respect, start to look at some of the problems that come up next, and then do the deep thinking about how you're gonna solve for those, which is, and this is where the learning shift idea is.
This is how this has formed over from, over the last couple of days from all the work I've done is. Actually now you can take these prototypes and things. Now you can, you don't, you don't have to build everything and make it perfect and oh, the whole idea of scaffolding and actually some stuff we're gonna throw away.
We are not going to keep it. So in a world we are used to everything needing to be thought that it might be here forever. It's gotta be architecturally sound. Everything's gotta be amazing. No, actually, if you've got it clear and you've, um, got that clarity around what the scaffolding things are that you are doing when you're experimenting, and then it's okay because this stuff's not forever and it's time bound, and we'll, we'll put some real good rigor around that.
This is how you start solving, I think for some of those, those next issues.
[00:33:39] Jeremy Utley: Can I ask one clarifying question? Is learning ship a play on words of some kind? Is it a play on leadership? Is it a play on, is it an alternative to something else? Why learning ship as a title?
[00:33:54] Melissa Cheals: Because, um, the learning, the, the purpose of the, of the piece of shipping of it is, is to learn.
It's not to. Deliver a perfect, fully. So it's actually the, the word, the wording and the language, whether that evolves as people, as we, as I start talking to people about some of these concepts will be interesting to see. But the learning piece is key because shipping in its own mind is perfect and
[00:34:24] Jeremy Utley: it's, it's a play on ship.
It's not shipping, it's learning shipping. That's what I was. Yeah, I didn't, I didn't know if what you were saying is it's not leadership, it's learning ship, or if what you're saying is it's not shipping, it's learning shipping.
[00:34:38] Melissa Cheals: It's learning shipping.
[00:34:40] Jeremy Utley: Yeah.
[00:34:40] Henrik Werdelin: I think that is maybe a good start. This is a good place for us to stop 'cause we're running out of of time.
But we're super grateful for you. To, uh, be on.
[00:34:52] Jeremy Utley: Drop the mic Melissa. Get outta here. Get outta here. I'm gonna try to make you famous. So Melissa, I mean, the thing is she's a real deal. She's CEO multi-hundred person company serving thousands of small businesses. She is in the game in terms of in the midst of an organizational transformation and she's also just a wonderful human being.
So I thought there's something for everybody to like here really.
[00:35:18] Henrik Werdelin: Yep. Um, so I'll, I'll bring, I'll bring a few things in. I'll stop with the one that I thought was something we danced around in other conversations, but I thought she really hone it in a very interesting way. She basically says, you as a CEO right now had to decide if you wanna be an AI native company or not.
And that is a fundamental question, and it's not just an engineering question, it's a full organization question and mm-hmm. I actually think for some people it might be fair for them to say, you know what, we're not going to be,
[00:35:49] Jeremy Utley: and that is cool too,
[00:35:51] Henrik Werdelin: I guess. I mean like, I'm obviously drunk
[00:35:53] Jeremy Utley: Kool-Aid, so like I'll be like,
[00:35:55] Henrik Werdelin: you'll be gone.
But I think that that's a fair thing as a CEO to say, and then if you decide, Hey, I want to be an AI native company, then you have to have like, there's a whole list of things you have to then do. Obviously you have to. Rethink how you do your organization. You have to think about, uh, you know, how you built stuff, but you also have to think about what is, what is it you gonna be in the next five years?
And there, I think you brought the second thing, which is a new obsession of mine, which is basically we have operated for the last thousand years in business building under a mentality of scarcity. You don't have time, you don't have money. You don't have resources, you don't have any of these things. And the, the thing that is so mind buckling with AI is that you probably have to rethink that now in a world of abundance.
Mm-hmm. When you have everything in space. Yeah.
[00:36:51] Jeremy Utley: Yeah. It's hard.
[00:36:51] Henrik Werdelin: Even to the point where, you know, just the question of like, what are you gonna spend 50% extra time on if that becomes available to you, is actually complicated for a lot of people because it's just such an unfathomable thing that you suddenly have like.
Double the time. And so she,
[00:37:08] Jeremy Utley: I think, sorry, can I, can I pause you there? Just, yeah, because you triggered something for me when we talked to Bryce. Do you remember the first question he asks in his, uh, org transformation or transformation readiness questionnaire? Do you remember that pop quiz?
[00:37:25] Henrik Werdelin: I think it was something to the extent of like, where do you think, like how much you think?
No, I'll, I'll butcher it
[00:37:31] Jeremy Utley: if is something like this and I'll, I'm actually having dinner with him. Smart Id happens to be in the Bay Area, so I'll ask him in person. But I think Bryce is
[00:37:37] Henrik Werdelin: the former head of AI at Moderna. Just for people to
[00:37:41] Jeremy Utley: episodes and go listen to that episode. Bad catalog, whole thing's.
Great. But one thing Bryce uh, asks is if we succeeded beyond your wildest expectations. And, and I think, I can't remember the percentage, but it was a non-trivial percentage of people who basically can't answer the question because they've never allowed them to think of wild success, success beyond imagination.
And I think it's, it's kind of what you're getting at here, Henrik, which is in a world of abundance where effectively intelligence is now metered. It's a commodity. Intelligence has always been the scarce resource. It's always been the rate limiter on growth and and value creation. Right. And when now the, the effective rate limiters what I can imagine doing with unlimited intelligence, most people have never allowed themselves to imagine, you know,
[00:38:37] Henrik Werdelin: you know, actually that comes to the, I we asked, uh, Melissa this question in the into where we ask what is the one thing.
If your organization, people in your team are getting 50% more time back in 2026, what are the things that they should not do?
[00:38:55] Melissa Cheals: Mm, I
[00:38:55] Henrik Werdelin: love that you shared a good answer, but it was a difficult ans it was a difficult question for it to answer now, and I think it goes back to maybe what would be one of the interesting thing in a world of abundance.
Your question is not what you're going to do, it's what you're not going to do. Mm-hmm. Because you can do anything, right?
[00:39:11] Jeremy Utley: Mm-hmm.
[00:39:11] Henrik Werdelin: What is the features that you will not ship or which one will you kill? Because the, what is the thing, you know, all those things. It's kind of like a mind bending kind of like
[00:39:20] Jeremy Utley: prospect.
Well, a Adam, Adam Grant has often talked about a two don't list, like it's a do list, but what are the things you're not going to do that you've just decided I'm not going to do them. I think it's, it's kind of the essentialist idea, right? We talked with Greg McKeen a year ago, but his whole premise of essentialism, you know, the very notion of priorities is a paradox because that word was only pluralized in the last a hundred years.
For all of human history, priority meant literally the very most important thing. Then at the turn of the industrial Revolution, all of a sudden we started speaking about priorities as if you can have more than one very most important thing.
[00:40:04] Henrik Werdelin: That's fascinating. The, uh, last thing that I picked up, which I thought was just interesting, she had, we talked about first principles and she had this thing which you kind of riffed off, but basically in an organization you need clarity, you need curiosity, and you need connection.
I thought those three Cs was like very fascinating amongst other reasons, because I think there's something interesting about, you can have a lot of clarity in what you want to become and still have curiosity of how you're gonna get there.
[00:40:38] Jeremy Utley: Mm-hmm.
[00:40:39] Henrik Werdelin: And so clarity and curiosity doesn't have to be at odds with each other.
And then the connection is obviously about trust, connection with your customers, connection with your, your, the people that you work with. And so what's sort thought clarity, curiosity and connections. That's kind of the first principles for building an AI native company. Was, was kind of interesting.
[00:40:58] Jeremy Utley: You know, one of the things like kind of a hallmark quote from the conversation that I wrote down here, I'm just looking at, while listening to you, she said, if I can't prompt, how can I support or challenge others and her passion to lead by example, dedicating.
Time herself to being on the learning journey. Her, you know, she mentioned having group calls where cameras are off, but everybody's available just for the purpose of co-locating and co-learning and the, the effect of her being there, I mean, when she told the story about the engineers who said, great.
It's gonna cost a million bucks and take 12 months. And she, one, she had the wherewithal because of her experience base and her credibility and authenticity as, as an AI first leader to be able to say, no, no, no, no, no, no. I can't take a million bucks. I can't take 12 months. But then she also had the reflexive collaborative muscle to say, I can't just say no to the engineers.
I need to work with AI to find a way to frame this in a way that's inspiring and motivating rather than demotivating to them. And to me, that kind of multi-level AI awareness is it's, there's no other way to do it than to do it, right? Like there's a, there's a sign that hangs in the D School. I think it's John Gage.
I, I think he said the only way to do it is to do it. And that's true with ai, right? There's no. The only way you learn both those lessons, one 12 months and a million dollars is an unacceptable timeline and budget. And two, my saying it that way is unacceptable. I don't have to say it that way. And they don't have to do it the old way.
Both of those realizations are so important for leaders to have embodied.
[00:42:46] Henrik Werdelin: What's your experience? You go around and you teach a lot of people about AI and. I meet a lot of senior management teams that are curious about how to use AI organizations, I guess tend the same, but my observation is that you often get into do keynote and there's this sense from the senior management team that go out and teach the people how to
[00:43:08] Jeremy Utley: do this.
Yeah. Delegate. They think it's a task to delegate. AI's not a task to delegate and, and,
[00:43:12] Henrik Werdelin: and now was, I was in a meeting the other day and somebody's like, oh, we should really have some, you know, front deploy engineers helping the different teams doing stuff. And I was like. You could also just deploy them to yourself just to start with, right?
Mm-hmm. And so I guess my question is, do you also see that there is this kind of interesting dilemma that a lot of senior management teams are very intrigued by ai, know that they have to kind of start to use it in the organization, but has a tough time making themselves the patients here?
[00:43:40] Jeremy Utley: Yeah. I, I call it my vendetta against hypocrisy, Henrik.
I am on a vendetta. I mean, certainly for myself, but also for the people that I interact with. I, I don't know if I told you this story, but it's, it's kind of classic illustrative of exactly what you're talking about. I was in New York a couple weeks ago with over a thousand CXOs of Fortune five hundreds, and one of the big four consultancies, and right before I go on stage, I kid you not as like, we're in the green room.
The person who's gonna facilitate the q and a at the end goes, Hey, just wanted you to know, I've been hearing this phrase, AI fatigue a bunch, so. People are kind of, you know, and I was like, do you want me to change my talk topic because I'm gonna be talking about it? And he goes, no, I just wanna let you know.
And so real time, I kinda improvised, I, I, this is what I did. I got on stage and I go, Hey, quick, you know, quick poll. Raise your hand if the phrase AI fatigue resonates with you. Every hand went up. I said, keep your hand up if you're feeling AI fatigue. And then, you know, a lot of people light two hands up.
And then, you know what I said? I go, keep your hand up. If I could toss you the clicker and you could share your screen on the cool stuff you're doing with ai. And every hand in the room went down and I go, isn't that funny? We're all tired of talking about it, but nobody's doing it. And to me it's, it's like the perfect encapsulation of exactly what you're talking about and, and what my epiphany actually, I actually had to, I, I have, speaking of, uh, vendetta against hypocrisy.
I believe in the value of documentation. I learned that from you, Henrik. When we interviewed you about idea flow, you talked about your habit of documentation. So folks can read that if they want to later. It's a great, I love your Google Home assistant that sends ideas to a Trello board. I still remember that.
I don't, do you still do that?
[00:45:30] Henrik Werdelin: Yeah, but now it's off. Upgrade is a cloud code thing that goes into like an ION thing. But I guess,
[00:45:35] Jeremy Utley: well, no, stop. Okay. But what I was gonna say is I'm laying in bed that night. I'm in that hotel. I've just given that keynote. I actually had to, I had to get myself up and I wrote it.
I could find you a photo of the piece of paper I wrote it on because I realized AI fatigue is actually what? It's AI insecurity.
[00:45:56] Henrik Werdelin: Hmm.
[00:45:57] Jeremy Utley: These people are saying, I feel AI fatigue because they feel this, I would say almost existential, ubiquitous sense of pressure. They need examples, and yet they have none.
But they can't say I'm feeling AI insecure. So what they say is, I'm feeling AI fatigue.
[00:46:17] Henrik Werdelin: I'll give you, uh, I agree. I'll give you one other kind of like analysis of it though, and maybe it's on the list of like AI people going around saying, send snooty stuff to people. I go to these meetings and I see these presentation where people present all these agents that they build into the organizations, and then they talk about how many hours they've saved.
And then I tend to ask the question, what, where does the hours go?
[00:46:41] Jeremy Utley: What do you deal with those hours?
[00:46:43] Henrik Werdelin: And nobody has an answer like it is like they just have evaporated. Right? And so I think one reason why there's also the fatigue is because that people are kind of like, I think they're anxious, I should say, because that they don't know.
They say how to do it and they hear that it's important, but also because that it's a complicated period of time right now where you actually have done a lot of stuff. It's a little bit like. Having done a lot of exercise, but you don't really lose weight. Mm-hmm. And you're like, that is so unfair.
Interesting. And I've been to the gym like four times a week. Right.
[00:47:16] Jeremy Utley: You know, I, well this, I think this is, I think it's related to hopefully somebody that we're gonna have on the show. I know I've been emailing with him about, uh, and, and our scheduling team to get 'em on the show. But there's this phenomenon called Parkinson's Law, which you may be familiar with, which is the tendency for work to fill the time one gives it.
So if you. If you got 10 hours, it takes you 10 hours to write the thing. If you only got an hour, somehow you get a done an hour. Right? Well, when you ask that question, what, where is that time? I think the reality is right now, per Parkinson's law, that time is being dissipated across whatever unknown number of tasks.
And my hunch, I don't, this is an untested hunch or hypothesis, but my untested hypothesis is that the time. To decide what you do with your productivity gains has to be before you achieve the productivity gain. Because if you wait until after you've got the free time, it's too late to decide what you want to do strategically with your newfound time.
Because Parkinson's law says even though you're more productive now, the time just still gets frittered away. I think if instead of maybe realizing gains, folks thought strategically, if I had 10 more hours a week, what would be the most valuable use of that time? If they would think strategically about that?
Then go into, whether it's upskilling or productivity enhancements, you know, creating agents, et cetera, et cetera. Knowing that my, that the, that the golden ticket at the end of that rainbow or the gold pot of gold at the end of that rainbow is. Now I get to do more of the thing I said was super valuable.
I think that that's my hypothesis. I think it may be actually the way, because then people can not only trace the time that they've saved, but they could also now point to the value of doing the thing that they knew was of strategic import that they kind of predetermined in that exercise. Thoughts, reactions?
[00:49:19] Henrik Werdelin: I mean like I think we should get that person on the. On the, uh, on the show.
[00:49:24] Jeremy Utley: If you're listening to this debrief at the end of the episode, we'd love to know what we missed, what resonated with you that, that we failed to appreciate appropriately.
[00:49:34] Henrik Werdelin: And with that, we thank you for listening. I hope you'll share to somebody that you care about.
And then the only thing that's left to say is bye-bye.
[00:49:42] Jeremy Utley: Bye-bye.