Why Companies Use AI to Cut Costs Instead of Building Ambitious Projects
Historically, every major technological leap has enabled more, not less: more experimentation, more products, more services, and more jobs. When electricity, the steam engine, or the internet were adopted, the boldest companies didn’t shrink their ambitions. They expanded aggressively, took risks, and created entirely new markets. So why is AI being treated differently?
One reason seems to be risk aversion. Many companies, especially large and established ones, are focused on short-term gains, shareholder expectations, and operational efficiency. They see AI as a way to "optimize" — to cut staff, automate workflows, and increase margins — instead of using it as a foundation for new lines of business or transformative innovation.
But this is a shallow use of a deep technology.
Imagine instead a company using AI not to downsize teams, but to multiply their output. They could afford to hire more people, putting more creative minds to work, while AI acts as an accelerator — automating repetitive tasks, generating prototypes, coordinating agents, and simulating large-scale systems. This opens the door to projects that previously seemed too complex or costly: personalized education platforms, open-ended scientific research, AI-driven drug discovery, sustainable agriculture systems, or highly efficient digital public services.
Yes, these kinds of projects are risky. But they also offer disproportionate rewards, both financially and socially. Companies that bet on bold, transformative uses of AI — instead of simply optimizing existing processes — are the ones that will shape the future, just as Google did with search or SpaceX with aerospace.
Ironically, AI can also reduce the cost of failure. It allows for faster prototyping, quicker insights, and tighter feedback loops. This makes bold experimentation more feasible than ever.
The real obstacle is not the technology, but a lack of vision and courage. Playing it safe with AI might improve short-term profits, but it limits long-term growth and impact. Companies that adopt a more ambitious mindset, and treat AI as a collaborator rather than a replacement, have the chance to redefine what is possible.
So the question shouldn’t be, "How many people can we replace with AI?" It should be, "What are the things we’ve never dared to try that AI now makes achievable?"
Replacing human labor with machine labor is essentially what automation is. Look what happened to telephone operators and bank tellers on one end (replaced by machines like automated switching systems and ATMs) and clerical workers and cashiers on another (replaced by tools like office software and self-checkout systems.)
The sales pitch to businesses is, and continues to be, saving money by replacing paid humans with unpaid machines.
I don't think that AI changes the fundamental trajectory of automation, or its tendency (over the past few decades at least) to widen income disparity as displaced workers move to lower-paying service jobs that aren't yet automated, but it may have much wider impact than previous automation waves.
I really wonder how all this AI stuff feels/seems to a management person who is not a programmer/low-level-minded person. I remember the time when large portion of average workers could barely understand how to "use computer", let alone the wonder of some simple Excel-VBA/Python magic, and as of now, humanlike magical text prompts. Now after decade(s), some of these persons are in a management position dealing with "AI".
Having machines do the goods and services production while humans are free to pursue whatever they wish (with a basic income of-course) IS world changing.
The risk aversion isn't driven by business needs, but by the needs of the employees and unless you are a founder with a majority of voting shares, you are an employee. Some of the more risk tolerant people might do it for their sliver of equity, but many will not.
For example, one of my jobs (I am overemployed) is as a dev for a small startup that first tried to outsource development and then had to hire devs in house as that was a disaster. We have a certain amount of runway. Project is pretty chaotic. Customers are bailing as we cannot meet our commitments.
I would argue rational management would push hard to fix things quickly and spend the money to do so even if it meant raising money sooner, as key customers are fleeing, our reputation is mediocre, and stability is nowhere close. As an employee, I am fighting hard for a controlled flight into the ground to drag out how long the paychecks for this mess keep flowing.
Why?
As an employee, I have no meaningful upside unless my options suddenly get valuable and I long ago learned that you can be laid off with limited recourse, so I value equity at zero. My interests are entirely in prolonging my employment so the cash keeps flowing.
I will take the 100% certain death of my employer over 3 years rather than a 50/50 chance of success as a business.
Same thing with managers and AI. Better to take the certain win as if you are an employee, it isn't as though you definitely gain from the company gaining.
Even startups are beholden to the VCs that funded them. Unless the founder is a multi-millionaire and willing to risk it all, risk aversion will become a factor.
The goal of an established business is to avoid checkmate and draw their operations out as much as possible. They can’t lose limited units.
Newcomers/startups goal is to checkmate the establishment. They don’t care if they have to lose some units as long as they make progression since they’re starting with a full set.
So, expecting established businesses to do something novel is a hopeless endeavor.