Insights

Throughout much of history, new technologies have shaped industry, spurred growth, and changed the systems that underlie businesses and institutions. Our generation’s steam engine is Artificial Intelligence. Much like other technologies, it will shape us but we have the capability to shape it as well. Technology, in the past, was often used for growth, development, and innovation. While it is true that that technology adversely impacted certain industries and their workforce, this change was often gradual and the innovation and efficiency brought about offset the jobs lost.

Here again we see AI as a tool that is positioned for innovation and efficiency increases. But we have observed that the implementation of AI technology across industry and institutions has been structured around cost-cutting as opposed to innovation. Many large companies have gone on layoff sprees because they see Artificial Intelligence as a means to offset the cost of labor.

Many leaders have been advised to adopt AI or die, but without proper implementation this adopt-or-die model is costly. Firing workers in administrative, analyst, customer service, and other “expendable” roles may cut labor costs in the short term, but they lead to a loss in institutional knowledge, a decline in service and product quality, reduction in innovation, and creates fragile operations. It’s important to note that AI is not an independent operator, it works best in a symbiotic user-tool relationship. In our research and analysis we have found that replacing workers with just AI tools creates a feedback loop system; Workers are fired in droves, and replaced with AI tools, productivity and operational efficiency decrease, leading to lower quality products and services, which leads to decreased profitability. And the cycle repeats itself.

Recent layoffs across technology, finance, and professional services have often coincided with aggressive automation initiatives. In many cases, subsequent earnings calls reference service challenges, integration costs, or slower-than-expected productivity gains

If this unstrategic and unsustainable deployment of AI is so costly, why do firms keep doing it? In our estimation board room and societal pressures, short-term incentive structures, lack of process optimization and understanding, poor guidance, are some of the main reasons.

AI is an exceptional tool for industry but its implementation cannot just be as a cost-cutting measure. At Zion Strategy, we do not approach artificial intelligence as a technology deployment challenge, but as an organizational design opportunity. Before recommending tools, we assess how decisions are made, where knowledge resides, and how value is created across the enterprise. AI is then introduced to strengthen these systems rather than replace them. This disciplined approach allows organizations to improve productivity and resilience without sacrificing quality, judgment, or institutional capability. How this is applied varies by organization and requires careful, context-specific design.