Digital transformation used to be complex and costly, but today, small firms can achieve it quickly and affordably. This session will explore how to avoid the pitfalls of big, rigid software platforms by using nimble, cost-effective solutions tailored to your firm’s unique needs. Learn why transformation always starts with people and the two critical steps leaders must take to drive lasting change. Discover how modern systems allow your firm to leapfrog decades of missed digital evolution, bypassing outdated approaches and moving straight to a future-ready state. This session offers practical strategies to make digital transformation a reality for your business.
TRANSCRIPT
Greg Alexander: Hey, everybody. This is Greg Alexander. You’re listening to the Pro Serve Podcast, brought to you by Collective 54. This show is dedicated to founders of boutique professional services firms. So if you’re in the expertise business—let’s say you’re a consulting firm, an IT services firm, law firm, accounting firm, etc.—this is for you. We help members of Collective 54 do three things: make more money, make scaling easier, and make an exit achievable.
Greg Alexander: On today’s show, we have a Collective 54 member with us. His name is Matt Leta and Matt is an expert on digital transformation. A few weeks back, Matt and I were talking shop, and we were discussing his upcoming book, which I was intrigued by. I asked him a question: “How the heck does digital transformation apply to a small services firm dealing with constraints of money, time, and skills?” He responded with a very thoughtful message, and I said, “All right, I’ve got to expose this to the broader community.” So that’s what we’re going to talk about today. The topic is digital transformation for a boutique professional services firm. Matt, as always, it is good to see you. For those in the community that don’t know you, would you please provide a brief introduction of yourself and your firm?
Matt Leta: Sure. Hi, everyone! Thank you for having me, Greg. My name is Matt Leta. I’m originally from Poland—hence the accent. I’ve lived in 12 countries, which is why the accent is even more mixed than it would be if I were just Polish. I live in Cambridge, in Boston, Massachusetts, now. I run a company called Future Works, where we’ve been focusing on what has become next-gen digital transformation—essentially opening the gates to welcome intelligence to work with us. By that, we mean the most modern AI. I spend my time between two things: the professional services here and a community called Future Horizon, which is like our innovation discovery community.
Greg Alexander: Okay, fantastic. As I mentioned at the top, you’ve got a new book coming out, I think, in April, if I remember correctly. What’s the title of the book, and what’s it about?
Matt Leta: The title right now is a hot topic of debate. The working title is “Future Proof.” I think the resulting title might be different because there are a number of options being tested, discussed, and cleared for copyright and whatnot. Depending on when you listen to this, it might have a different title. You will find this and my previous book, which came out just a few months ago, at leave.guide. There will be two books, no matter what the title is. The book is about understanding what next-gen digital transformation is and why just bolting on AI to business as usual doesn’t work. It also explains how to make it work and what’s required to make it work.
Greg Alexander: Because you’re a member of Collective 54, you understand our audience very well. There is a misconception, at least in my humble opinion, that if you’re a small firm, you don’t have the resources to execute digital transformation, so therefore it doesn’t apply to you. In our last exchange, you quickly corrected that myth. You discussed with me how digital transformation might apply to small service firms more than any other firm because the benefit that the small service firm can get from it is great. You walked me through your process, so I thought I could use that as a structure for our conversation today. The first thing you suggested to me was to conduct a digital audit. I know it’s been a while since we chatted, but I asked you, “What the heck is a digital audit?” Here’s what you told me: identify manual and repetitive tasks that are consuming billable hours, and look at the current software stack to see if there’s underutilized tech. By doing those two things, that’s a good jumping-off point for what a digital audit may be. Now, I’m putting words in your mouth because it’s been a while since we discussed this, but if you think about a digital audit, what I’m trying to do is give members a starting point. Do you recommend beginning with a digital audit, and maybe fill in some gaps that I’m leaving out?
Matt Leta: No, I actually recommend starting with a leader. I have plenty of thoughts, and I’ll summarize them as simply as I can. One, the most important step for any company—whether it’s a boutique company or one of our clients with 100,000 people—is to have a leader who wants the change to happen. This is the one non-negotiable. Without it, nothing will happen. If you are not that person, or if you’re a group running the company, then hire someone. There needs to be a mandate to push forward. That’s the one non-negotiable thing. After that, the second most important thing is to start and not stop. What that means is to begin, engage a number of people in the conversation, and start working with them to come up with solutions. My previous book talks about how to achieve that in just one hour per week in an ongoing fashion. You only need one hour per week from five people initially, which is basically zero marginal cost, and it will do wonders within six weeks to three months, and especially in a year if you continue. I discuss this in my previous book, which is now used across different businesses, big and small.
Matt Leta: I think there is a second concept that I really like to use to illustrate this new change. Everyone uses something digital right now, and I’m sure everyone in the audience and everyone in the Collective uses digital tools. Digital is not. We’re not at the first wave of digital transformation. We’re sort of at a third wave, maybe, right? Because there were computers, then there were networks and connected systems, and now we’ve got intelligence. This next-gen digital transformation is all about embracing intelligence. The way I like to look at it is this: the way we evolved, the way our own brain evolved, was like we walked out of the water as some kind of fish, and we evolved our reptile brain. It was the first layer—the brain stem, amygdala, and so on. Then we evolved to build up the second layer, which some people refer to as the mammal brain, the limbic function—reactions, and so on. Then the third layer emerged after that, which we call the neocortex or the human brain.
As this evolution happened, it’s not like we suddenly gained a new brain that replaced everything else. No, all those three layers work with each other. If you look at modern business logic, we are also just now evolving our third layer. We’ve got the people, which is the first layer—our teams. Every company in the world essentially consists of people. Then we added software and data, the second layer, which allowed us to store more information, work with this information, automate things, and so on. Now we’re adding intelligence. Some companies have been using intelligence for 30 years or more, but it is now becoming available to everyone. It’s becoming a commodity, essentially like embracing electricity. We’re adding this new layer, this thinking layer, to the stack. Just like it happened in our own heads, we are not going to replace our teams, processes, software, and data with intelligence. We’re adding it to the stack, and we need to think about the whole system as we do that. In fact, that’s the only way for us to embrace intelligence in a way that actually gives us an advantage, rather than just bolting on SaaS tools that complicate the landscape and maybe give us a 5% ROI.
Greg Alexander: Okay, I hear what you’re saying. I do, and I agree with it. But in the spirit of making this entertaining, I’m going to take the other side of the argument. Let’s do a point-counterpoint, and what I’m about to share with you I’m sure you’ve heard many times before, so this won’t be surprising to you. Our audience is made up of entrepreneurs, which means they tend to be capitalists as opposed to idealists, and they’re looking to make money. Their biggest expense is labor cost. In fact, it’s 80 to 90% of their expense. So they would like to replace people, not augment people, with artificial intelligence. Are they misguided?
Matt Leta: They’re not misguided. To use a simple, entertaining example, if you look at agriculture 150 years ago, around 70–80% of all people were employed in agriculture. Then we invented the tractor. If you fast forward 100 years to today, only 1–2% of people work in agriculture, and we have arguably way more food. And so what happened was, you know, all those people sort of transitioned out. And because of this innovation that introduced some level of automation or optimization, I think the guiding rule here is that we are all in business to make money. All businesses are governed by the same incentive, which is to make money and to optimize, right? You could say that the guiding principle of all of that is that anything that can be automated will be automated. I think that’s a good mindset. Also, think about what our competitors are going to do, right? What are other agencies going to do? What are other people in our professional services space working on right now? It’s automating more, right? A lot of what we do will be automated, and I think the revenue per FTE is going to become quite crazy.
I saw a graph today showing it going to 10 million per FTE at a tech company by 2030. I don’t know if that’s going to go that far, but I think the current average is something like 270K or something like that. But yeah, it’s absolutely heading in that direction, and we’re all incentivized to go in that direction. Therefore, I think it will happen.
Greg Alexander: Yeah, so let’s hope you’re right. I mean, 10 million bucks per FTE would be fantastic. You know, I think the high watermark in the consulting industry, just as a reference point, is McKinsey, and I think they’re doing about 6 or 700,000 dollars per head. If you just imply what their comp structure might be in that firm, they’re probably earning, let’s say, 50, 60, 70% margins, which is fantastic.
So let’s hope that does happen. But how does a small firm, maybe without the skill in-house to execute a digital transformation to put intelligence on top of the two previous layers—software, data, and people—make this real for them? When I have this conversation with members, they’re intimidated and paralyzed by fear. How do they just take the first few baby steps on the journey?
Matt Leta: Yeah, actually, the biggest issue is not even about our own paralysis and lack of knowing where to start. That transfers onto the paralysis of our teams. We can have the most, like—my company is called Future Works, right? We’ve been doing AI for nine years. My previous agency was doing AI, and this was born two years ago as an AI-native company. We have a lot of experience, and a lot of the team carried over.
For a long time, we had problems where, at this cutting edge, you would think people would just use AI, but they don’t want to. Then we started digging into it, and it turns out there is this innate kind of “I can do it better” mindset. They think the tools are not good enough, and so on. We can prove over and over that you gain a lot more output by using these tools, but it still doesn’t happen.
I like going back to the people. If we have people, software, data, and intelligence, the people are the hardest, most difficult part. We start with ourselves. We need to start embracing that and working with ourselves—not in a month or three months, strategizing and hiring consultants. We can just start tomorrow and not stop. That’s what I tried to solve with the framework we’ve developed over several years, which became the subject of the Leap Guide, my previous book.
It essentially allows for this practice of embracing this little by little, week by week. Within three months, you can really see a difference. You really see a difference. I would honestly recommend doing that because we’ve based it on a lot of other frameworks and approaches. We’ve talked to 150 different people, including those from McKinsey, JP Morgan, IBM, Apple, Microsoft, smaller companies, Accenture, and so on.
All this information helped us create this sort of mechanic for opening up people to this new age of AI. That’s all it is, really—a kind of communication and culture-building exercise dressed as a framework for embracing AI. Once you start working with the people, you can start noticing what things can be improved. There’s a lot of shiny object chasing in this space, and the shiny objects like to attack us from every angle because now every startup can quickly come to a product. You can have a product in a week. And there are thousands of those startups, and they’re all figuring out how to email us in all sorts of ways, increase deliverability, and come up with new methods to do that. So, I’m sure all of you are seeing crazy messages coming from everywhere—LinkedIn, email, you open the window, and there’s a bunch coming. All of those are essentially solutions looking for a problem, right? A good way to look at it, I think, is to start finding the problems that could be solved with this and then, from that place, think of those as opportunities. Then start thinking, “This one looks like maybe we could actually experiment a bit and try to do it within two months,” and so on. As much as there is pressure, we firmly believe that whoever is not embracing intelligence or not on the path to embrace intelligence this year will just not make it long-term because it will be so hard to make up for the lost time. But then, why is the time lost? It’s not actually because of not embracing the tools. It’s because of not starting to open up our teams to work with this and work in a way that’s sort of symbiotic—which is not the best word, but I don’t have a better one.
I could show it, maybe, because we’ve got this system at our company. We’ve got a sort of middle-layer data lake that essentially connects data between people actively doing work and AI. Different models—we’ve got all those different models like DeepSick, OpenAI, Anthropic’s models, and so on—and they all connect and can co-deliver. As the people learn to work with it, they start learning how to produce better data, how to organize things better, so that the AI gets better, and so that they and the AI deliver better work. It all balances out over time, but that’s kind of a later state. I mean, we’ve been at this for a while. To start, I think the best way is to gather five people and say, “Let’s meet for an hour and come up with some problems that we have to solve.”
Greg Alexander: So you mentioned that—five people, an hour a week? That’s very doable, right? That’s digestible. So, what do you spend the hour on?
Matt Leta: So, there is this whole schedule, right? The idea is that it’s a cyclical approach. You’ve got the 12-week program, so there are 12 quests that you do over a quarter. A quarter is important because you want to see results within a quarter to drive buy-in. Each of those steps has different programs. There are 12 of those meetings, 12 quests, and four steps. The first step is the longest because people take longer to start at the beginning. The first step is five weeks long—almost half of the whole thing. It’s called L out of LEAP: Locate. You seek opportunities. You first define the team, then you find themes you’re going to work around, then you find the opportunities and refine them.
It’s so long because a bunch of people are going to come to this meeting and go, “Okay, what is this flavor-of-the-month initiative?” and have zero buy-in. But then, after three weeks, they’re like, “I feel like I’m heard, and actually, this is starting to make sense.” After five weeks, you get a really good set of at least 25 opportunities. Out of five people, on average, you get 25 opportunities. Usually, around 10–15 of them are small ones—quick wins you can implement in a month or two. The rest are bigger projects or ideas you can leave for the future, but you select one.
The second step, week six, is where you evaluate. You rate them all, organize them, and evaluate the one you want to focus on. That one goes into further development. You work on creating an action plan around it for three weeks, and then another three weeks is spent primarily on prototyping. We call it Progress—the P out of LEAP. It’s basically to build up enough of a package to communicate to whoever controls budgets and direction at the company to say, “Okay, put some budget behind it. Let’s make this initiative happen.” Then you repeat. Ideally, at our company, we keep running this. One ends, we take a week of a break, and we start another one or two at the same time. They just keep running and generating ideas. We have over 200 different opportunities.
What happens over time is you can start plugging that into an AI system and start getting assistance in implementing those things with your business. But you don’t have to worry about it at first. The important thing is to document those things and add them. After a while, it becomes easier to build them in. That’s what we use to start. I know of companies as small as 7–8 people who use it, and I know that there. You know, there is a company or client who wants to become a leap-based company. They have 106,000 employees, right? It’s going to take a while to penetrate the ranks, but it’s something that allows us to get people going. It was actually born out of our own pain, seeing executives of our client companies saying, “Okay, we need to embrace AI. We need to move.” And then us, of course, being there to help with this and make money on it. But seeing that it’s just not going anywhere because the teams were not ready, they didn’t want to, they had other ideas, or were unsure where to start. That’s why the leap was born in the first place—it’s kind of like an unlocker.
Greg Alexander: Every time I speak to you, I learn something new. I was not expecting you to tell me that it starts first with the people. That is interesting to me. I also was not anticipating you telling me that the people part of it is the hardest part of it, which is really interesting. When I think of you, rightly or wrongly, I think of a technologist, technology, the future, and things like that. I’m thinking about systems, tools, and acronyms like LEAP. I’m not thinking about the soft side of things, which is a very good reminder. If the leader doesn’t get on board, the team isn’t coming on board, and if the team doesn’t come on board, nothing’s happening, right?
Matt Leta: Yeah, you could imagine a near future where creating anything digital sort of goes to zero in cost. Not that there’s this fable of one person and agents who build a billion-dollar company, right? This will happen for sure, but it’s not like those companies will start out competing with bigger companies with more people. I think they will find their own niches. Our companies still need to transform. If building digital products, embracing technology, and doing custom technology is going to zero because it’s crazy what you can do in so little time now, then the blocker is actually the human pace of change. It’s really a blocker. Change kind of happens generation after generation, but there is a mismatch between the speed at which we can adopt normally and the speed at which we can now create all these solutions, systems, and things. I don’t know how this resolves for incumbent systems, startups, and so on. It’s going to be interesting to see. But we try to advocate for companies to get moving and be able to capture this wave because it’s an incredible wave. There’s so much opportunity.
Greg Alexander: All right. Well, this interview was slated for 15 minutes, but I could talk to you for hours. I’m going to save the double clicks and follow-on questions for the private member Q&A session, which we’ll have with the Collective 54 members. Matt, on behalf of the members, we’re so lucky that you’re in our community because you’re bringing knowledge that we don’t have, and we’re all going to benefit from that. So thank you for your willingness to contribute.
Matt Leta: Thank you. It is me that’s lucky being a part of the community, honestly, because the value has been incredible.
Greg Alexander: Okay, a couple of calls to action. If you’re a member and you want to ask Matt questions, we’re going to have our private Friday role model session, and you’ll be able to ask questions of him. Look for that notification and sign up for it. If you’re not a member and you’d like to become one, go to Collective54.com and fill out an application, and we’ll get in contact with you. Until next time, I wish you all the best of luck as you try to grow, scale, and someday exit your firm.
Note: This transcript was generated by Zoom.