Strategy Defending Against AI Implementation

As AI becomes more useful, strategy becomes more valuable.

Currently on Best of AI there are 603 tools for creating websites using AI. The same for social media posts, video production and editing, illustrations, voiceovers, and every other creative production imaginable.

In one of the best books for agency and professional services firm managers, Business of Expertise: How Entrepreneurial Experts Convert Insight to Impact + Wealth, David C. Baker shares his formula for creating defendable moats, “two rooms, but only one entrance.”

Your business has a Strategy room, and an Implementation room. More often than not, we focus on onboarding clients through the Implementation room when we should be getting them through the Strategy room from the beginning.

We do this for a number of reasons:

  1. We don’t like to position ourselves as experts because that requires focusing on a single industry or service offering. Implementation is universal and doesn’t turn away potential clients.
  2. We think it is easier to sell through implementation, because it requires less trust from the client. This is counterintuitive, because expensive, botched implementations are a real thing. But it is one thing to fix a bad brake job, that just requires more resources. It is another to buy a new SUV to haul the family around when the salesperson recommended you purchase a sports car.
  3. We like implementation because it means more bodies. Even when we sell a fixed fee engagement, we make money by counting bodies and adding a profit.

Even when selling a website or software product the model is similar to the classic Mad Men advertising model: we sell you a markup on the channel (media, website development), but the strategy and creative we throw in for free, or for a nominal fee in the context of a build that can cost hundreds of thousands of dollars.

Even before AI, focusing on implementation has become a race to the bottom. As good software development education moves online and spreads globally the premium for onshore becomes indefensible. And with the pandemic normalizing virtual teams, the global offshore model of 24/7 development has become standard—and clients have caught on to the large markups agencies throw on top of that lower-cost talent.

And as offshore talent has improved and displaced onshore talent, so will AI displace talent of higher and higher expertise as it improves. This week we’ve learned from Google that 25% of its code is now written by AI. That trend is only going to continue and expand to low level illustration and video production work.

As Baker points out, if your expertise can be substituted, then your price premium evaporates. If your expertise is in implementation, AI is going to supercharge that displacement.

Ultimately it will be the strategy and creative concept that will deliver enough client value to demand premium pricing. That, alongside a trusted client relationship with a team that deeply understands the their business, is something that AI cannot manage.