In an AI economy, humans are the competitive advantage
- Claire Baker
- Jun 20, 2023
- 5 min read
Updated: Jun 22, 2023
There has been much sensation (and panic) about the future of work as artificial intelligence turbocharges worker productivity.
Will AI take over white collar jobs? And if AI can do most of the jobs that exist today, do employers even need to worry about people, culture, and HR?

Simmer down. We’ve seen this before.
AI is a powerful tool, but it is far from a replacement for human workers. Similar to other revolutionary labor-saving technology, by the time AI is capable of human-level performance in today’s jobs, it will have generated more novel jobs for humans to do. Despite the breathless panic about humanity’s obsolescence, new AI tools are more likely to improve workers’ quality of life by enabling an alternative business model that isn’t based on cheap labor. Once industries aren’t dependent on cheap, tedious labor, workers’ intelligence, experience, and discretion –in a word, their humanity– becomes the priority.
Disruptive tools like the internet, industrial machinery, the cotton gin, the printing press, agriculture… didn’t end work, they just changed the way people worked.
Agriculture reduced the risk of food shortage and the need for dangerous hunting and gathering every day, enabling sedentary cultures to develop.
The printing press may have eliminated career paths for scribes, but by bringing literacy to the masses it brought the option of specialization to the masses.
The cotton gin and mechanized farming reduced the labor cost of harvesting the staple crops that underpinned the US economy, making an anti-slavery platform a viable political strategy and clearing the path for emancipation.
Factory mechanization eliminated many factory jobs, but it paved the way for most of the worker protections we take for granted today, including the 8-hour day, the weekend, child labor, and workplace safety laws.
Then the internet came along and flipped our entire economic system on its head again.
As AI enables the next labor revolution, you may think that People management will become obsolete as technology does the work that unskilled workers do today. Quite the opposite. AI won’t eliminate work, it’ll just change the paradigm just as the labor-saving technology of generations past empowered workers and improved their quality of life. After a transition period, AI will remove incentives for exploiting unskilled workers, put a premium on skilled human capital, and improve working conditions.
As AI is poised to drastically revolutionize labor, the ability to execute effectively by applying knowledge will be more important than ever before. Although AI won’t end the need for human work (yay-boo!), an AI-enhanced economy will favor the businesses who leverage the tools most skillfully.
In a knowledge economy, businesses who employ the knowledge workers most skilled in using the tools and applying their knowledge will capture the most marketshare. So how can businesses plan their long-term People strategies to prepare for AI in the workplace?
4 business strategies that depend more on humans in a generative AI world:
1. 🧐 Thoughtful process; designed by humans, enabled by automation. AI only accentuates the efficiencies and inefficiencies of the process it automates. Businesses who use new tools to automate inefficient processes will simply enable more waste. Meanwhile, organizations that leverage emerging technology to do more with the limited resources of time, money, customer attention, and human capital will l have a competitive edge in the new economy.
Nimble teams of skilled, knowledgeable specialists will be able to design AI-enhanced processes that out-maneuver incumbents. In fact, scale will likely become a liability in the AI revolution as operational bloat hinders AI adoption. Outdated paradigms like equating hours worked with productivity will only widen the gap as established companies struggle to overcome the time-productivity model at the core of their People management systems.

2. ⤵️ AI accelerates the race to the bottom in a price war. AI tools make it easier for small businesses and solopreneurs to create a “good enough” product to compete with larger incumbents. As the market is flooded with competition offering a similar experience, some will slash costs in order to compete on price. With little difference between quality and features, slashing prices to undercut the competition is a race to the bottom.
In an environment where a few people in a garage can compete with large companies, what will be the differentiator that creates devoted customers willing to pay a higher price? The human touch! As more businesses cut costs by replacing their humans with robots, businesses who figure out how to leverage AI tools create a human experience at scale will be the ones who stand out against the competition.
To understand the importance of humans in an automated world, consider your best and worst customer service experiences:
Have you ever blacklisted a company after a bad customer service experience? Was automation (such as a script or chat bot) behind your dissatisfaction?
Has a customer service team ever turned you from a dissatisfied customer to a raving fan with an excellent customer service experience? Was a human using specialized knowledge, discretion, and empathy behind your positive experience?
Businesses that automate human-friendly processes that route to flesh-and-blood specialists when they will have the most impact will make an impression that inspires loyal customers willing to pay a premium price.

3. 🔎 “Niching down” only makes your humans more valuable. Targeting a narrow, specialized audience has been standard advice to entrepreneurs ever since the internet turned competition global. However, the narrower the niche, the more its business model demands specialization in domain-specific expertise – regardless of whether that expertise produces the product directly or is used to fine-tune AI tools that produce the product.
Instead of making labor cheap, the labor-saving potential of technology will only increase the demand for skilled and talented specialists who know how to use it.
4. 🫥 AI makes employee churn devastating. When the skill of your workers is your business’s competitive edge, workers can demand higher salaries and better working conditions (especially as self-employment becomes a more and more viable alternative). With fewer unskilled workers in an organization, each member of the team will play an outsized role, making their specific knowledge more difficult to replace. The cost of recruiting and training replacements increases as the need for specialization and specific expertise increases.
As your specialists’ skills become more in demand, work culture will be an increasingly important part of your business model, and the cost of lousy people management processes will become unaffordable.

People systems: The only intellectual property that can’t be taken
AI will make it even easier to copy products and for competitors to undercut you on price.
AI will homogenize business processes, making it even easier to copy human-generated improvements as easily as a third-rate musician with sheet music can copy a melody.
Specialization will increase the demand for critical skills, and incentive for your competition to poach key team members.
AI will make it easier than ever for key team members to leave if they are unhappy.
The one asset that your business has that can’t be copied or walk out the door is the same one that will keep your team loyal in a competitive job market: your culture. Competitors can replicate process, but they can’t replicate the way your operations make your customers feel when they’re purchasing or using your product. Competitors can pay more and offer a more robust benefits package, but they can’t replicate what it feels like to work at your company every day.
In a global, automated, AI economy, the humans that create and deliver your culture and operations will be your business’s most valuable, irreplaceable asset. Employers who can’t compete on compensation and quality of life will see their most valuable, irreplaceable assets go to the competition or become the competition themselves. Businesses with a better-treated and better-compensated workforce will retain that talent and the competitive edge they bring.
Are you ready?
Want to build a culture that will attract top talent in a post-AI world? Check out these related articles:
Comments