Our society struggles with this distinction. No founder brags about the 7 figure debt they've taken on. Instead that venture capital represents a 7 figure investment. The difference is whether one looks at the world with a growth mindset, and that difference matters more than every in the realm of AI.
We've seen lots of cost reduction fads in the last 30 years.
Offshoring software development to cheaper labor markets, especially when coupled with object-oriented languages like Java, was supposed to enable the mass production of cheap software "widgets", thus dramatically lowering the cost of application development. Outsourcing customer service, at a time when "call center" was almost synonymous with "cost center", was supposed to reduce personnel costs. Now both software development and customer service have become quick targets for AI in the name of cost reduction. Is this latest fad as ill-fated as its predecessors?
I've worked for Fortune 500 companies that see customer service as an investment where other companies see a cost. This difference manifests because they treat their brand as an essential part of their value proposition. Thus they avoid reputational harm, and see empathetic, committed customer service as a reputation builder. Such companies understand distinguishing cost from investment, and in turn stick relentlessly to a growth mindset.
If your business is flat or declining, then it's easy to see cost cutting as the solution. Business leaders in this position tend to look at AI as a cost cutting tool. Companies have replaced customer service with AI agents, resulting in a predictably dismal experience. We've also seen companies turn to AI-generated code with at best minimal human in the loop. These results are equally dismal.
The mistake is assuming that these businesses have costs that are too high. The actual problem is that their business strategy isn't producing growth. Without fixing that problem, no amount of cost-cutting will change the course.
Contrast this with a growth business deciding on an AI strategy. If I think that AI could amplify that productivity of my team by 2x, or 5x, it would be crazy to cut staff by using AI to maintain current productivity levels. The strategy should be two-fold: first, deploy AI to amplify the productivity of the team I already have; second, hire more people for as long as the AI amplifier effect holds. This strategy accelerates growth, which is the most sustainable thing I can do for the business in the long run.
Consider a mundane example. My company has their platform localized into N languages. Expanding to N+1 would open up new markets and new opportunities, but adding a new language could incur a considerable cost. Pre-AI, the opportunity does not justify the cost. With AI, I can take the same localization team, and add that N+1 language at a much lower cost. Suddenly new opportunities can be affordably opened. If I add another team member, maybe I can go to N+2 languages, or N+5. The right choice will depend on the opportunity size. At no point is cutting team members a rational option.
Do you see money spent as cost or investment? Do you see your business challenge as cost control or growth opportunity? Which mindset you adopt will determine your future in the world of AI.
