Cutting costs with AI misses the point

In the early days of ChatGPT, Harvard Business School Professor Karim Lakhani predicted that “AI won’t replace humans, but humans with AI will replace humans without it.” That may have been wishful thinking.

In fact, the great replacement has begun. In recent months, major employers, including Amazon, UPS, Microsoft, Goldman Sachs, Accenture, and Walmart, have announced workforce reductions or hiring freezes driven by AI efficiencies.

The World Economic Forum found that 40% of employers expect to cut staff in areas where AI tools can automate work.

It’s understandable that executives look for short-term savings, but if we use AI solely for expense control, we overlook the bigger opportunity for AI agents to transform the work itself. Treating AI purely as a cost-cutting tool might gain a few points of margin, but it won’t create enduring value.

Efficiency matters, but leaders need to look beyond automation and ask how AI can help their teams do something entirely new. Instead of simply replacing humans, automation can help them work faster, smarter, and more creatively. That shift in thinking redefines return on investment.

ROI still to come

Despite record spending plans, most organizations have yet to realize quick returns on AI investments. That might be in the measurement. With AI-assisted tools, specific to analytics, a leading company in the fast food industry has managed to save over 100,000+ hours/year in productivity.

True ROI can certainly be reverse engineered, but many firms measure results too narrowly. It can be helpful to visualize data as three sides of a triangle: technology spending, traditional ROI, and cultural change.

The first two are well-established. It’s the culture dimension that reflects how people engage with technology, what value they perceive, and how their roles evolve.

Making AI part of your culture is like doubling the size of your workforce without hiring anyone. Whereas a new machine on the factory floor might increase output 50%, AI will take the performance of entire departments to a new level. Ignoring the cultural impact breeds fear and resistance.

When employees see agents as partners who take routine tasks off their plate, they find ways to use them to amplify their own skills. ROI soars.

What you can do

To lead responsibly and effectively, executives should focus on five priorities:

Stress empowerment over efficiency. Use AI agents to free people to think, connect, and create. Give analysts more time to advise customers and marketers the leeway to focus on storytelling instead of writing reports. Direct human effort to tasks machines can’t do.

Redesign workflows, not tasks. It took decades for electricity to revolutionize factories. It was only when owners redesigned production around local power sources that productivity took off. Similarly, bolting AI onto old workflows yields small gains. Reimagine processes from the ground up. By the way, AI agents can help you with that.

Measure what matters. Go beyond cost savings. Track how much time is shifted from drudgery to innovation, how satisfaction affects customer retention, repeat sales volume, and how much faster deal cycles close. Broaden ROI to include human and customer impact. Those are the factors that fuel hyper-growth.

Upskill and reskill. A recent Dayforce survey of nearly 6,000 businesses found that 71% of workers received no AI training last year, and that executives use AI at a rate more than three times that of line employees. Imagine that same statistic applied to cybersecurity or safety training – companies would be horrified. Gaps between the haves and have-nots breed resentment and apathy. Training people to trust and use agents unlocks creativity and productivity across the workforce.

Build for customer value. As a rule, cutting staff is inversely proportional to customer satisfaction. Instead of focusing on cost reduction, reorient around value creation. AI that improves service, personalization, or responsiveness strengthens the top line, which is where growth happens.

The future of work isn’t about replacing people but giving them superpowers. AI offers the chance to double down on what only humans can do: empathize, imagine, and innovate. Tools evolve quickly, but they eventually become commodities. The real competitive edge belongs to organizations that use AI to unleash human potential.

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