Outsourcing of Strategy, Killing Innovation and Organizations

Big Consulting & LLMs, Similar, and Not Effective

“Strategy is the only activity that creates revenue. Everything else your company does is a cost.”

— Roger L. Martin, Strategy & Time

Customers decide how and where they wish to spend their money, so a company’s revenue depends on the effectiveness of its enterprise growth strategy. Strategy, therefore, is the key factor that encourages customers to spend their money with a business, making strategy essential to sustainable growth and profitability over the long run.

Many Western organizations have blindly fallen into the abyss of outsourcing organizational growth strategies to large consulting firms, unnecessarily spending ridiculous sums of money to pull warehoused, off-the-shelf strategies.

This has resulted in stifling innovation and acquiescing to the status quo, an environment of top-down instead of bottom-up thinking, which has led to high-cost and low-performance. Leaving a void in quality and differentiation as everyone continues to do the same thing — breeding mediocrity.

Professor Mariana Mazzucato states in her book The Big Con that “the consulting industry weakens our businesses, infantilizes our governments, and warps our economies. The industry is opaque and powerful, deeply entrenched in the management of both private enterprises and governments worldwide. But serves neither citizens nor consumers and producers. Instead, it has created a system where our economies are entangled and dependent on firms like McKinsey & Company, Boston Consulting Group, Bain & Company, PwC, Deloitte, KPMG, and EY. Hindering internally driven innovation, obscuring corporate and political accountability and impeding growth.

Also, the over-outsourcing of consultants has created a warped understanding of the employees’ roles within the organization. If you have been hired to do a job, you are considered a specialist. How is it then, in the organization’s financial interest to go out and spend additional thousands to millions of dollars for outside help?

Consultants tell you what you already know or should know or can easily learn with some effort — do your job. In the digital age, with all the access to information, learning and adapting must be part of the job you’re being paid for. It makes no sense in these times, with managers making hundreds of thousands and millions to pay additional similar sums to consultants.

The consultant is said to be a ‘subject matter expert’ but does not genuinely assist in developing tailored and competitive strategies; they take existing strategy decks from their extensive library of client information gathered over many years. Quickly search for relevant industry verticals and competitors, and, voilà, cut and paste into a new shiny but static PowerPoint presentation. Then you get an enormous bill which you just can’t justify to shareholders.

In the information age, the strategy development process must be fluid and led by enabling software to effectively compete in the new global economy.

No substantial strategy development process is happening with consultants; it’s just smoke and mirrors, coupled with polished PowerPoint presentations which reflect the unsightly underbelly of the industry. Strategy driven from within is conducive to a well-run and growing organization in full control of the reins.

Cultivating the applied intelligence do-it-yourself approach within the organization safeguards your strategy from being accessed by competitors because of the inherent nature of how consultants do business.

In December of 2024, a Fortune 500 technology company reportedly paid a big strategy consultant company approximately $2.34M to “come up with a breakthrough strategy” to see them through the next few years. The company’s core staff or team was detached from the consultancy, which often happens. Then, a slick 147-page strategy deck appeared in no time but is now gathering dust on a drive somewhere in the organization where these consultant PowerPoint documents usually go to die. Millions are spent, and nothing is done, this, unfortunately, is very common with consulting.

And who can forget the Nike mess and firing of its CEO? McKinsey used one of its playbooks to advise incoming Nike CEO John Donahoe to slash costs and rely more on data for decision-making.

In brief, following the McKinsey guidance, Donahoe pivoted Nike to a “Direct to Consumer” (“DTC”)-led model, severing most of Nike’s valued wholesale reseller relationships. He also decided to centralize marketing, making things entirely digital and data-driven.

The result was an unmitigated disaster that crashed Nike stock; the share price dropped by a third, and its market capitalization shed over $25 billion in a single day, leading to Donahoe’s ouster in September 2024.

The other danger of excessive outsourcing is the bait-and-switch of senior-level consultants for the less-experienced junior consultant, usually just out of school. What good can occur if the consultant has no experience, essentially, employees of the firm are babysitting while the consultant is refreshing PowerPoints and being tolerated by going to Starbucks several times a day for the staff members involved.

This also deprives the organization of an entrepreneurial culture, and the larger problem is the knowledge drain and security breaches. Suddenly, your competitors are making counter-moves against you or taking your moves. It’s a small street, and consultants talk and use your stuff to get other clients — that’s the reality.

Not the Cart Before the Horse

A 2019 HBR Change Management article titled: Digital Transformation Is Not About Technology, summarizes that companies are pouring millions into “digital transformation” initiatives — but a high percentage of those fail to pay off. That’s because companies put the cart before the horse, focusing on a specific technology (“we need a machine-learning strategy!”) rather than doing the hard work of fitting the change into the overall business strategy first.”

The article listed some key lessons when it comes to digital transformation, one of them was the lesson of “Leveraging insiders.” “Organizations that seek digital transformations frequently bring in an army of outside consultants who tend to apply one-size-fits-all solutions in the name of best practices.”

However, the applied intelligence approach relies on insiders instead — staff have intimate knowledge about what works and what doesn’t in their daily operations. Supplying them with augmenting software will enhance and accelerate their learning to internally drive strategy development at low to or cost.

Insiders can search and access data, too, just like consultants do, and our 6ai software guides them through the intelligence-based strategy development process.

6ai provides an easy-to-use/do-it-yourself software solution that doesn’t require any special training or skills. It isn’t about replacing professionals or people; it’s about being an ally to enhance human productivity to generate and add value to the organization.

Another Lesson: Figure out your business strategy before you invest. Leaders who aim to enhance organizational performance through digital technologies must put strategy first. The strategy will determine what specific technologies are needed. The article highlights that billions of dollars are wasted on digital transformation because leaders are going headfirst using “tech” consultants before developing a strategy. Forgetting that the ‘technology’ is not the business, the business is the business, and the technology helps to run it efficiently for customer experience and satisfaction.

Lesson 4: Recognizing employees’ fear of being replaced is an important lesson to mention. When employees perceive that digital transformation could threaten their jobs, they may consciously or unconsciously resist the changes.

If the digital transformation efforts turn out ineffective, management will eventually abandon the effort, and their jobs will be saved (or so the thinking goes). It is critical for leaders to recognize those fears and to emphasize that the digital transformation process is also an opportunity for employees to upgrade their expertise to add value to the firm and, at the same time, an opportunity to adapt to a changing marketplace and future.

The study highlights that if the strategy development process is internalized, people feel a sense of belonging, an entrepreneurial spirit and a culture and team. Staff will want to show their worth, which benefits their firm.

Key employees or partners must be asked to examine their unique contributions to the organization and then connect those strengths to components of the digital transformation evolution and the firm’s strategy objectives. This gives employees control over how digital transformation will unfold and frames new technologies as a means of assisting employees to become even better at their jobs.

6ai Technologies software and process bring significant competitive advantages to organizations: first, a start-up culture is known for its agile decision-making, rapid prototyping and flat structures. The strategy process of digital transformation, for example, is inherently uncertain: changes need to be made provisionally and then adjusted; decisions need to be made quickly; testing and relentless iteration are a must, and groups from all over the organization need to get involved. A central, easily accessible dashboard for teams is paramount! A strategy development platform is required to maximize the internalization of strategy with supportive software.

6ai supports leaders in deciding on what apps from which vendors to use and which area of business best benefits from switching to that new technology, whether the transition should be rolled out in stages, and so on. Often, picking the best solution requires extensive experimentation on interdependent parts. Furthermore, for certain digital technologies, the payoff only occurs after a substantial portion of the business has switched to the new system. For example, a cloud computing system designed to aggregate global customer demand can only generate useful analytics when stores in different cities, countries, and regions all collect the same type of data regularly.

Therefore, there is a lot of complexity in rapidly changing business environments, and this process is beyond the capabilities of a human consultant with a manual process. We don’t have weeks and months to make good business decisions — speed and accuracy are critical in the digital era. We need the amplifying deep knowledge acquisition capacity and insight generation ability for decisioning.

Digital transformation works best when we go back to fundamentals and don’t put the cart before the horse. Successful change management requires a mindset shift — a coupling of automation and human capacity. Strategy first!

Bigger Is Not Better

The takeaways from the DeepSeek R1 model are the very opposite of what the Big Tech, media and no-nothing “AI influencers” have been saying. Bigger is neither better nor necessary, and once again, China has outsmarted a blustering but fragile US.

As the US puffed its chest with bogus $500 billion white house elephants, China “Let [their] plans be dark and impenetrable as night, and when you move, fall like a thunderbolt,” said Sun Tzu, The Art of War.

On Monday, Jan 27th, NVIDIA shed $600 billion in value, the biggest decline in its history and, if not the largest in nominal terms, in the history of capitalism. In straightforward terms, China’s top AI lab, DeepSeek, demonstrated that big tech: OpenAI, Microsoft, Anthropic, Amazon, Google, Deepmind, and Meta, the usual suspects, have been selling us a story, to keep us obedient while they protected and expanded their market share. The objective is to make us even more dependent on them and not ourselves, i.e., similar to big consulting.

DeepSeek claim is a pre-trained state-of-the-art Large Language Model, DeepSeek v3, for just under $6 million, twenty times less than what Western labs have been saying, and their DeepSeek R1, state-of-the-art Large Reasoner Model (LRM), looks to outmatch OpenAI’s current flagship o1 model.

As it relates to 6ai Technologies software, you don’t need to drink the cool aid. Everything LLMs is not necessary! Smaller, more focused is what is better.

The reality is that the majority of ‘the market’ doesn’t know what they’re talking about. It’s a familiar theme: big-talking founders — similar to WeWork, the fake biotech entrepreneur Elizabeth Holmes, and in crypto-dude Sam Bankman-Fried, the notorious SBF. All talking big game, and when they realize things won’t work, they double down because so many ‘smart’ people have bought in. Can’t possibly turn back now, just keep making promises with no substantiation because they know that the enormous amount of money is blinding investors and the market. People believe what logically can’t be true…but when the herd moves, it is hard to stop — until it is led to slaughter!

Like the Big Consulting industry, the Big Tech industry, too, needs to keep the incumbents going at any cost, they are also reliant on each other to support each other’s incumbency status. But innovation suffers in the long run because of the preoccupation with just keeping the plane in the air. It’s all about protecting the incumbents and expanding their market share and dominance. Stifling others who think differently and want to innovate differently.

Nobel laureate, psychologist, and behavioural economist Daniel Kahneman’s book Thinking, Fast and Slow describes how Slow and not Fast thinking is best for problem-solving. There are two systems at work with thinking — described as System 1 and System 2.

System 1 is quick and jumps to conclusions on general data inputs, i.e., ChatGPT, whereas System 2 is more cautious and diligent, capable of ‘reasoning,’ which is the 6ai approach. Kahneman doesn’t put much weight on System 1 because it tells you nothing he says and often creates mirages in your mind, which leads to poor emotionally led decisions. The quick lacks understanding and meaning so it can often be misleading, giving you wrong impressions similar to how LLMs/ChatGPT hallucinate. Making stuff up, making it unreliable.

6ai Technologies six-steps (6ai) to applied intelligence process-IP endeavours to be like System 2: slower, more deliberative, more logical and holistically inclusive, human-centric and intentional to human effort and critical thinking.

DeepSeek R1 open source also provides systems — foundational models to build on, away from the one-dimensional closed sources LLMs, to more dynamic and intuitive platforms. Slower insight-seeking, a step-by-step approach to problem-solving with architecture that forces reflection and double-checking and the avoidance of hallucinations.

Similar to the philosophy of reasoning by mathematicians and philosophers Emmanuel Kant and Rene Descartes, who defined and ushered in the modern understanding of effective reasoning. 6ai incorporates these approaches into its methodology, maths and coding.

Note: a very important point some observant people have been making about DeepSeek’s innovations, is that it’s ‘all memory-focused,’ but isn’t that what AI is, memory? Don’t confuse amazing memory capacity and capabilities for thinking, reasoning, or intelligence. It is not! A machine is programmed and the memory is trained to generate outputs based on its algorithms. We must not be fooled by its amazing memory for the appearance of intelligence.

But by combining the enormous computational ability of AI and analytic ecosystems with authentic, conscious human intelligence, we have a powerful tool for strategy development and business execution. Without a doubt, AI can be a very powerful tool if used properly, efficiently, and purposefully. Equally as important, we must know the limitations of AI and what it can’t do!

R1 is a mixture-of-experts model with 37 billion activated parameters per prediction based on a shared-expert-distribution. In simple terms, 95% of the network doesn’t activate during inference, saving massive overhead in cost and latency.

But in the end, both OpenAI and DeepSeek are useful commodities, foundational models to help real entrepreneurs leverage off of and build more specific solutions. They are not stand-alone growth businesses in the traditional sense.

Further proof of that is that China is using its open-source ecosystem as a weapon against US GPU export restrictions on state-of-the-art GPUs. They are doing it by simply democratizing access to state-of-the-art frontier models by matching the performance of US frontier models and giving them up for free. Preventing closed-source companies like OpenAI or Anthropic from developing a long-lasting technological moat and, instead, being forced to drop the prices of their models to continuously compete.

The bottom line: for the US and its oligarchy Big Tech industry to compete with China, US companies will have to open-source their models. Which benefits innovation. In the end, this is good for the consumer, market innovation, and for upstart companies like 6ai.

It is never good for capitalism to have only a few large companies and billionaires control all the pertinent knowledge and market ecosystems. Capitalism is at its best when knowledge is open to all and those who dare to be creative and entrepreneurial, and apply their intelligence to pressing problems, building useful things that can make meaningful impacts to humanity.

This is the 6ai mission!