Why Copilot Adoption Is Stuck at 3% And Fix It

00:00:06 Mark Smith
Welcome to the MVP show. My intention is that you listen to the stories of these MVP guests and are inspired to become an MVP and bring value to the world through your skills. If you have not checked it out already, I do a YouTube series called How to Become an MVP. The link is in the show notes. With that, Let's get on with the show. Welcome back to the MVP Show. My guest is Chris. He's joining me from the US. Chris, welcome to the show.

00:00:40 Chris McNulty
Mark, great to be here. Thanks for having me.

00:00:43 Mark Smith
Awesome. Tell me a bit about you before we get started. I know you got a background in Microsoft and you're now on the outside and you're an MVP, which is awesome. But food, family, and fun, what do they mean for you?

00:00:54 Chris McNulty
Oh, hopefully all three coming together. So food, is preferably something that we've made ourselves. And we sort of bounce back and forth. This winter, oddly enough, we've been making summer for all of you. It may seem shocking, but we've, oddly enough, been doing a lot more with mushrooms on one hand and anything I can make with chili crisp. Usually not together. They could go, I haven't decided. But for like dining out, I'm just, you know, sushi and seafood are pretty much regular companions. My business and life partner, Michelle Caldwell, also a former MVP and I, we decided around the first of the year for a little bit health, a lot more just ethics. We decided to just really try to not eat food with faces as we call it. So, you know, we do a lot of work with rescue dogs and foster dogs and I love seafood, so it's relatively, it's been a relatively good run for three months. We'll see how much longer if we stick with it. We saw an ad for steak on TV last night and it was just like, hmm, maybe even the week off. But I'm originally from the East Coast of the United States. My family is mostly back there. Coincidentally, my sister moved out here to Seattle about 10 years before me. We're sort of scattered all over. We do tend to try to congregate on the East Coast where we have inherited my parents' old beach shack, which is a nice place to go for American summer holidays. Most of my life's lived in the Boston area. So die-hard Red Sox. Patriots fan and all that goes with that, we know that Americans have a disproportionate interest in sport ball. And for those of you who may know me from the Intra Zone with my friend at Microsoft, Mark Cashman, I loved teasing him about sports on that podcast.

00:03:05 Mark Smith
Tell me a bit about your podcast.

00:03:08 Chris McNulty
Well, so the Intra Zone was the Microsoft podcast focused on all things in and around SharePoint and M365 and modern work. And so when Mark proposed it to me in 2018 and I greenlit it, I figured I'd be paying for like a digital recorder and would do one or two episodes and it would fizzle. And then he went and got studio support and put some money into it. And so it's really been, it was quite successful. And we kept it going after I left Microsoft, but it wrapped as Mark was leaving Microsoft. So for a variety of reasons, I have my own podcast now, which is tied to the firm that I own, Synerger. So Polaris is focused basically on the boundary between business and technology for transformation. I can start to like, from Synerger, this is Polaris. I'm Chris McNulty. Today, we're taking a look at Microsoft 365 E7, the good, the bad, the ugly. My kids joke that I get into podcast voice at times I'm speaking to them. So, Polaris tends to be a little more business-focused than many of the tech podcasts that are out there. But we're going to do, Mark and I decided during MVP Summit, we're going to bring back the IntraZone for a special Polaris-only episode. We're going to use the IntraZone music, do the IntraZone intros and outros, and use what was our somewhat improvisational style for the intro zone. Polaris, I tend to be incredibly disciplined about the production, the scripting, the preparation, which is why I usually only do one a month.

00:04:52 Mark Smith
Interesting. This is super interesting. As in, I started podcasting in 2017.

00:04:58 Chris McNulty
Is it? Is it? Here's the thing. We all love talking about podcasting. The people listening to it, I think, aren't as fascinated, but I do believe that like, And I wasn't prepared to discuss my principles of podcasting, but I have a couple of rules for people around preparation and promotion, but especially production.

00:05:19 Chris McNulty
Like I had a guest on my podcast and I listened to last year, I listened to hers and she just sort of began. There wasn't any music or intro and she's like, hi, you're here with me and here's my guest coming up. She never said what her name was. Her guest started talking about a topic. I think the microphone was in a tin can. And I said, a little bit of editing, a little bit of mixing helps. And if you can't do it yourself, you can certainly outsource that. And it's gotten much easier. Folks, we're on a platform called Riverside, and Mark's talked about it. I have an audio engineering background. I've done a lot of music recording and production in my life. And so when I started Polaris, I said, well, I don't have Microsoft Studios to fall back on, but I can do audio engineering, I can do audio work. And a week later, I said, oh my God, I am not grabbing waveforms and sliding things around anymore. What I love about Riverside, and I know some of the other platforms have it too, is what we get is we get a text transcript. And to edit the podcast, basically you're editing the transcript. You can cut and paste, you can snip things out, and it will do all the dovetailing for you, which is a huge time saver. And yeah, I love this platform, so I'm very happy Very happy to see you're on Riverside as well.

00:06:40 Mark Smith
So I've been on Riverside maybe four years now, and the text editing and everything, in my terms, is a new thing. I've been podcasting since 2017, over 800 episodes. And you are one of my final guests because I am stopping podcasting as of the end of May. And I release on average three shows a week. One's the MVP show. I have a Power Platform show because I came from a biz apps, been an MVP in that space of 15 years. And then I have a copilot show where I just have Microsoft folks on it. But it's got to the point that my career direction is moving. So I'm doing a rap and I have... So yeah, I'm going to be changing direction in the, I'm going to come back with a new podcast, but I'm going to eliminate. So this, my podcast is called the Microsoft Innovation Podcast. And I've been surprised that I've never had a cease and desist for owning one, a Microsoft domain name with the word Microsoft in it. And two, that for the last eight years, it has always been called either Microsoft Business Applications Podcast to start with or the Microsoft Innovation Podcast. you'd have never been slapped on the wrist for using the Microsoft name like this. Yeah.

00:07:59 Chris McNulty
I'm not going to say never say never, but having spent a decade inside at Microsoft, the general philosophy is to encourage... Fair use and promotional use. I mean, it is a podcast about Microsoft. And so from the jump back into that mindset, Microsoft welcomes the attention. Now, if you were doing something called the Microsoft Innovation Podcast, where all you were doing was complaining about Microsoft 24-7 and telling everyone to get to Google, and you had significant following, You'd be good. That's not to say it hasn't happened occasionally over the years. Certainly, there have been a couple of SharePoint events that have had a letter or two over the years from people, random people at Microsoft saying, I don't know if I want you using this word, but in general, as long as it's clear that you're talking about Microsoft technologies and you delineate what is Microsoft information and what's your own opinion, that's fine.

00:08:57 Mark Smith
I'm renaming, so I'm coming out with a brand new name and I am going from three to four shows down to a single show. And therefore, I'll probably still release once a week, but not three times a week, which I've been doing. The overhead of that is pretty phenomenal. I've actually got three editors that do all edit. I don't use any of the Riverside editing function whatsoever. They're all exported off to editors in three different locations. And the reason I have three is I didn't want to kill everything if one, for whatever reason, got sick, couldn't do it, you know, could potentially drop. I have three editors. Each one has their own show, but then if one does have an issue, I could always give it to another editor.

00:09:45 Chris McNulty
Last year I did 35 episodes. It just sort of got a little bit away from me. I have a day job. I am Chief Technology Officer at Synozur. We are a rapidly growing management consulting firm that focuses a lot on technology and AI, but not exclusively. We do a lot in marketing and in general business leadership too. Most of us are either ex-Microsoft or ex-Accenture. And so that keeps me relatively busy. On top of which, one of our clients has sort of blossomed into a relationship where I'm serving as chief product officer for an ISV to help them truly make the leap to cloud and turning what historically has been on-premises software, composes virtual machines to monitor content processing across the board to get it cloud-ready. And so that work with Reveille is keeping me incredibly busy. And as a result, it is a labor of love. So I hear you, as much as you get help with the tech or the outsourcing, It would be lovely if someone would pay me to just do something like this all the time, but...

00:10:58 Mark Smith
As in, it was my wife that's influenced when I shut down because we pulled out of our accounting, and I just run a small business, out of our accounting system that I'm spending close to 30K a year. on just my production and keeping the show alive. That's not including any of my personal time of doing interviews and things. So that's a bit of a cost, and I'm like, You know what? I've done it for eight years. I know I can do it, and let's refocus. But what I'm interested in asking you about is that you've been Frontlines based on, you know, you've been Washington state-based, to this massive transformation of AI that we've had in the last three years. What are you seeing with businesses? Like at the start of this year, the earnings report for Microsoft showed 3.3% adoption of M365 subscribers are using M365 Copilot. Incredibly low.

00:12:00 Chris McNulty
As a shareholder, I'm incredibly excited about that.

00:12:03 Mark Smith
Tell me more.

00:12:05 Chris McNulty
I mean, it means, this is, by the way, AI is transformative, it is expensive, and it requires several years of exposure to capital budgets to get all of that going. So when I look at that, I say, because Microsoft has intrinsic advantages that no other AI company has, and they have fantastic distribution, they are seasoned experts in things like compliance and audit and security, and They've been making record profits, and they barely scratched the potential of what they can do with distributing Copilot to even more people. I find that incredibly exciting. It's, you know, one... level, it's only 3%. Microsoft is the largest commercial AI company on the planet, just hands down. And making sure that Copilot comes into organizations properly is part of what we do. We don't only work with Copilot. We tend to work a lot with companies who mid-market to enterprise companies. Frequently, we're working with private equity or the ownership groups of these companies to work with leadership teams and to help them reimagine what their business could be with AI. And it's not to say that that core productivity or agent development doesn't have some righteous work there, but to be really thoughtful about the business goals and how does AI allow you not just to do things better, but to do things you never could do before. And asking questions about how are you going to monetize your data? You may never have had a good option before, and maybe you played with APIs, but now you can light this up with an MCP server. Do you want to do it that way? Do you want to offer it as something that's agentic? Are you going to build your own application, which has gotten easier than ever with AI tooling? And at the same time, like Copilot itself keeps getting better. And I think Microsoft's in an enviable position because it's like the, California Gold Rush. I mean, they're not directly in the gold business yet. They're in the distribution business. So you want open AI models? You've got that. You want open AI models running alongside models from Anthropic? You've got that. And they've recently been bringing XAI models into some of the copilot studio things. And I don't think Microsoft is done at being able to bring all of that together with the knowledge of what the commercial world really needs. And it's just Like, I don't know if you started playing around with Copilot Cowork.

00:14:36 Mark Smith
I'm deep in Anthropic Cowork at the moment.

00:14:38 Chris McNulty
Well, I mean, it's fundamentally, there are some similarities across both. Obviously, Copilot Cowork.

00:14:46 Mark Smith
I just switched it on yesterday because it was only just become available on my tenant.

00:14:50 Chris McNulty
It can, because it can orchestrate over your information in a way that other AI can't because of the graph, sorry, Work IQ.

00:15:00 Mark Smith
The thing is, I did a search on, is it, the minute I saw a work IQ, I'm like, this is the Microsoft graph. And it was like, no, it's not. This is something separate. And this is Microsoft. And I'm like, it is the same thing. It's just a new name.

00:15:13 Chris McNulty
It is a new name.

00:15:14 Mark Smith
I know it does more, but it took it, right?

00:15:17 Chris McNulty
So I can tell you from going back to my days at Microsoft, so companies come into the Executive Briefing Center and explaining the graph, part of it is the word, was confusing for people and to be able to say that the graph is a common set of security trend APIs that Microsoft and other applications use to get to all of your data. And inside of that, it's also this signal analysis predictive machinery that can help orchestrate in context what you need to do. That sort of, that context It's something, I think the word graph was hard to explain. Work IQ would be a little bit better.

00:15:57 Mark Smith
So I was on the right track that Work IQ is the next iteration. So somebody in the Microsoft product team about 3 weeks ago released an M365, it'll be a Work IQ, CLI integration on GitHub. And I've plugged it in and itis amazing, like what I can do. It's next level. I suppose this year I've fallen in love with a command line interface and APIs like I never have and what I can do with agents and things like that.

00:16:36 Chris McNulty
Yeah, I mean, I started last year using a lot of... By the way, some people debate pros and cons of the term vibe coding. I love the term vibe coding. I use it all the time. Andrew Connell, who's an MVP buddy of mine here in the States, doesn't like the term. He's my next podcast guest on Polaris. We're going to debate it, but it's really a terminology thing.

00:17:00 Mark Smith
I think we're now into more vibe engineering and vibe orchestration rather than vibe coding.

00:17:07 Chris McNulty
Yeah, I think the word vibe is one of those words like frontier that isn't going to age very well, to be fair. But what I do is fundamentally AI-powered, software engineering, because I understand frameworks and I understand architectures. Last summer, a little bit of a story. So we're on video for this, right?

00:17:30 Mark Smith
No, as a not, the public won't see it on video. I can, but not the audience. They're audio only.

00:17:36 Chris McNulty
Love that. There's a purity to it, and that's the way I do my podcast as well. So what the audience isn't seeing is behind me is about a So I've been doing landscape photography for years. Last year, my partner encouraged me to submit to a juried competition and I was accepted. And so I had to start going to trade shows, but not technology trade shows for selling art to strangers. And so last summer, I was like, how am I going to wade through years and years of photographs and determine what to bring? Because these prints are fairly expensive to lay out. So what I did was I sat down and I used one of the Vibe tools. I said, you know what I want to do? I want to build an application that I can post on the web that will show a pair of photos and ask people, which one do you like better? And doing a contest, giving away some prizes, but I got thousands of signals just from building that kind of application. to say like, do you like this in color or in black and white? So I loaded about 300 of my favorite photos in to look at what patterns came out.There were some things that I liked that people liked. There were some things that I liked that nobody liked. And sometimes there's things I thought were average that people seem to love. So being able to build that application really got me started. And so since then, I've built apps. I was really annoyed that Microsoft got rid of Viva Goals because we were using it a lot with our clients. So I duplicated it. I have a full multi-tenant Microsoft integrated OKR strategy development system. And then because they stopped developing vehicles, I can keep going on. So the kinds of things that you're able to build, I'm not saying that it's the death of SaaS. I think that's a trend that's been overstated, but there's just so much more that you can do and do quickly. And sure, like I'm spending a couple of $100 in tokens here and there, but that's, it would have been a couple of $100,000 in development time two years ago.

00:19:49 Mark Smith
Exactly, As in, man, we're on the same page because I built an OKR system for my own use. And I gave it the three top OKR books on OKR, where it originated from. And I ingested that into a RAG system and then had AI a reason over it and create for all the departments inside an organization, the OKRs. And then I went through and aligned them with organization. OKRs, well, sorry, did that first, and then distributed them. And I have full dashboard, monitors in real time. But the OKRs are not applied to people, they're applied to agents. And it's been intriguing what I've been able to produce. As in, in the last month alone, I've taken over $2,000 of costs out of my business, subscription-based costs, because I've built the applications, but they are explicitly do what I needed to do, no feature overreach. They do exactly what I needed to do and no more. And the most complex one was I built an entire headless CRM. And I've been My first product with Microsoft was MSCRM 1.2. So since 2003, I've got a lot of history with CRM, all of Microsoft's journey, and I have architected a replacement modern CRM headless. It gives me the information I need through the interfaces I want with the right dashboards, but it's just transformed my thinking.

00:21:24 Chris McNulty
Yeah, for better or for worse, with our Microsoft partner connection, as soon as you're, we get Dynamics free. That's hard to me.

00:21:32 Mark Smith
I just turned it off last week.

00:21:34 Chris McNulty
Yeah, but, and so we're a 25-person management consulting firm. Dynamics is a little bit overpowered for what we need, but the price is right. But yeah, I mean, there's a piece of software that someone showed me two years ago that did market analysis. It starts on my website, it figures the competitors, and it'll decide what your go-to-market strategy and so on is. And the guy who showed it to me two years ago, he couldn't make it work. Like he put it down, he said, oh, give me the prompt, I'll test it for you. And then he admitted a week and a half later, like we're taking this off the market, we can't make it work. It's one of those things that always kind of stuck in my head, like it was a neat idea. And we do a lot of advisory work for ISEs, Microsoft partners, other partners who are trying to get into the space. And so being able to rapidly assemble a view of here's this company, here is its Here's its competitors, here's how it could position itself. And it's all grounded in documents that we write, like our philosophy, or how we analyze it, or how these things get steered. And so building out, how do we ingest a news source? How do we not look at competitors and not just say they changed their websites, or someone's made 52 blog posts, but to distill what are the meaningful trends? And so it lets us look at things and kind of have that perspective to say, Do you know 15 of the top 20 firms de-emphasized that we're consulting in all of their digital presence in the last 30 days? That the word transformation has gone way down in outbound marketing, but outcomes and 90-day outcomes are significantly higher. It's the kind of thing that you can, I can build an app that does that, but of course, every app that I build, you could tell that I spent a decade at Microsoft because it is, has intra multi-factor auth in front of it. is all designed to be multi-tenant, service plan brokered. And we have no plans of ever selling any of this software. But if it makes sense for one of our clients to be able to use it, absolutely. It's just so easy to say, great, self-service provision, I can set you up with a service plan.

00:23:46 Mark Smith
It's exciting world. We're already well over time. It's so interesting talking to you, Chris. We'll make sure you put links in the show notes to your podcast so people can connect with you there. But this is probably a well-known community. My biggest audience is in the US, so a lot of people probably already know you.

00:24:03 Chris McNulty
It is always wonderful to find the folks who are new into the community who are coming in because there's a place for everyone. We're recording this here at the end of March. I'm sure it'll be out relatively soon, but if you're listening to this and you'll be attending the M365 Community Conference at the end of April in Florida, please come up and say hi.

00:24:28 Mark Smith
Hey, thanks for listening. I'm your host, Business Application MVP, Mark Smith, otherwise known as the nz365guy. If you like the show and want to be a supporter, check out buymeacoffee.com/nz365guy. Thanks again, and see you next time.