Routine tasks have been automated for centuries. Achieving greater efficiency with AI is an inevitable outcome of the ongoing automation of routine work. The greater challenge that few organisations are organised to realise is leveraging AI for greater effectiveness of purpose by serving more customers, doing so better than ever before or through innovation.
Human Limitations
Humans are terrible at forecasting in times of non-linearity. Our mental models do not cope well with the pace of change and the discontinuities that flow from rapid changes in scale. One can see that inability to predict in a recent set of scenarios from the US Federal Reserve shared in the Financial Times. AI is either going to deliver nirvana, destroy us or deliver 2% better growth. Within that range lies all of human history. The Federal Reserve economist are doing their best but with unpredictable non-linear outcomes forecasting is not much value. Remember this when you see any AI forecasts.
When our mental models don’t stretch to imagine a non-linear future, we are tempted to revert to safe and secure heuristics. One reason so much of the AI discourse has been around job losses is that many managers default to ‘new technology = efficiency = job losses’. For organisations that have long believed the goal of business is to deliver a consistent repeatable process and then remove cost through efficiency, at first flush, AI looks like a potential massive cost efficiency. There will undoubtedly be significant cost efficiencies to be realised.
The recent McKinsey State of AI Global Survey highlights that effiency is in the forefront of management considerations. 80%+ of respondents are setting efficiency targets for their organisations in the US of AI. The reality is that the automation of routine work began in the Industrial Revolution and the use of AI to automate even more complex routine tasks is inevitable.
The AI Effectiveness Challenge
The same McKinsey report notes that the best performing organisations in realising value from AI are setting goals beyond efficiency. They are also pursuing AI’s role in Growth and Innovation. Oraganisations can leverage their current cost base to achieve more, though management’s preference for the predictable certainties of cost saving can mean this gets lost in discussion.
A key point to remember is that the model of driving scale efficiencies in a predictable process is one that began long before the internet, let alone AI. Much of the gains of that model came as consumer capitalism spread scale of distribution to global markets. Routine work was in decline in growing mature economies well before AI. With the arrival of a connected global market with real-time information, many organisations have found an efficiency only model more challenging to sustain, either having to re-engineer themselves offshore to lower cost markets or building complex supply chains from global vendors. With these actions comes new threats, such as new distruptions come from those scaled global supply chains or new competitors leveraging global supply in new ways using digital technology. AI is going to drive new levels of threat to the disruption and disaggregation of those predictable business models. Financial services executives are already pondering the implications of consumer AI agents moving money and arranging services at the speed real time finance. No steady scaled franchise is safe in that world. Threats like this one will develop over time into all industries. Just cutting cost won’t be enough to survive. Winning organisations will leverage AI to rethink their customer experiences and their entire value chain using the new economics of AI.
Aaron Levie, CEO of Box, in a long tweet on 7 November 2025 highlighted that an opportunity he is seeing in Box’s client base is leveraging AI to pursue opportunities that organisations would not have seen as economic to pursue with labour. Organisations have let assets like data, content, channels and relationships lie fallow because they were uneconomic to pursue with traditional labour intensive models. Constrained management made people choose the obvious high value use cases to pursue. The rest were deprioritised and simply ignored. That ignored long tail of opportunities is now more in reach for innovation using AI’s capabilities to analyse, sythesize, predict, recommend decisions and automate actions.
What was once uneconomic to do for customers, employees or partners, will slowly become expectations, particularly as other organisations drive expectations of service by deploying AI against those opportunities. AI will drive new competition at new pace, whether startups nipping at corporate heals, international organisations developing solutions with the new economics for the Bottom of the Pyramid or competitors using Clayton Christensen’s disruption to attack from the tail.
Organising for Effectiveness
Being aware of the opportunity or threat is one thing, being able to respond to an opportunity to be more effective is another thing entirely. Most organisations have made it almost impossible for employees or executives to prioritise increasing effectiveness through innovation and growth. Budgets don’t exist for that work as we are used to funding investment through the safety of efficiency. Employees don’t have the freedom to radically redesign business processes or policies to leverage the new capabilities of AI. Even organisational structures (and their power bases) established around existing customer segments and processes will get in the way.
Innovation, growth and effectiveness require agility, entrepreneurship, experimentation and change, not stable consistent scaled processes. To meet the coming AI Effectiveness challenge organisations are going to have to build new capabilities, learn new skills, change systems and unlearn a great deal of ‘modern management theory’. Organisations that do not challenge themselves to be more effective for their customers, communities, employees and partners will find themselves left behind. No matter how few employees they have in their efficient organisations, a more effective organisation will take their customers away with innovation and enhanced experiences.
The time to start radically rethinking propositions, the value chains and priorities of your organisation around the capabilities is now while your competitors are pursuing efficiency. Efficiency is fast follower territory. You can always copy what works later and technology vendors will eagerly assist you to do so by building the easy common use cases into platforms. What is much harder and takes new and unique organisational capabilities are the innovations and growth you will drive with AI. Start the experiments to explore that work today. Investment into this non-linear innovation will yield valuable insights and potentially enduring advantage. Your success will be much harder to replicate and may even be invisible to competitors stuck in traditional management mindsets.