The recent announcements of massive layoffs justified by “AI cost savings” are not surprising. According to leading analysts, 2026 will see a shift from AI pilots to operating in an AI‑saturated environment, where productivity, risk, ethics and sovereignty are critical parts of the considerations.  Advancements in shiny, front‑end AI created enough comfort for leaders to move aggressively on eliminating jobs and declaring AI-driven efficiencies. For investors, this can be perceived as prudent, as if senior leadership is optimizing assets and tightening the business operation. They, both leaders and investors, are wrong.

The corporate world is replaying the same script it has used every time a new technology arrives. Leaders declare automation, lay off large numbers of employees and celebrate victory. This playbook goes back at least to early‑1900s England, when new weaving machines replaced skilled artisans in the textile industry.

If employees tasks are deemed redundant in light of new automation, why is this playbook wrong? You may ask.

Some will argue that AI technology is not yet ready for prime time and therefore, to replace humans. Klarna’s experience is a case in point: It replaced 700 customer‑facing employees with AI, only to discover serious customer dissatisfaction and then rehired people to close the gaps. Forecasts for 2026 suggest that roughly half of roles cut for AI automation will be rehired because AI is not mature enough to carry the full load. But the problem with this playbook goes much deeper than technical readiness. It goes to the heart of the business’s objectives and purpose.

The heart of the organization is in question

In business, there is a fundamental strategic choice: Are you a growth player or a survival player? This is not a one‑time declaration; it is a guiding pole for every decision.

Are you in the business of creating new value, commanding a premium price and building long-term relationships with customers? Or are you a “value recycler,” copying others’ ideas and offering them slightly cheaper?

If you are a growth player, your focus must be on your people. Their mission is to innovate—products, services and customer experience. Innovation is not a single act, a one‑off product spec. It is constant evolution in response to changing customer needs. Innovation becomes a way of life, and your value is defined as a living, evolving experience that anticipates customer expectations. That is why customers pay you a premium.

To see the real difference, look at how the organization actually operates. Every organization lives in two overlapping spheres: the “live sphere” and the “documented sphere.”

The “live sphere” is where employees create value by interacting with customers. It is dynamic, responsive and inventive. Customers change, their expectations shift, the competitors are reinventing themselves and employees must deliver flexible, human responses in real time to meet and exceed those expectations.

The “documented sphere” is static. It is the catalog of processes, meeting notes, past reviews, strategic plans and procedures defined by past practice—“best practices,” manuals and standards. This world demands adherence and compliance, echoing Frederick Winslow Taylor’s doctrine that success comes from precise execution of specified tasks to maximize output per person per hour. In this sphere, employees are reduced to rule followers, not creators of new experiences.

When a company declares it is transitioning processes, procedures and customer interactions to AI agents, it is effectively declaring that the center of gravity is shifting from the “live sphere” to the “documented sphere”.  By taking that path, it is no longer a growth company, but a survival company.

The message is:

• We already possess all the innovation we need, and it is fully documented.
• The future is about strict adherence to those scripts, best enforced by technology and automation.

But the “documented sphere” is the realm of the past. It bakes in yesterday’s solutions. Future performance, in this model, is limited by past knowledge, not driven by new, evolving approaches to customers.

Letting go of thousands of employees from the “live sphere” whom together possess thousands of years of tribal knowledge, strips your organization of fast innovation, agility and creativity. It is a declaration that you no longer need to evolve—only to replicate past successes more cheaply. Employees become process operators, and once you define them that way, it is easy to say: Machines can do this better, without fatigue, recognition needs or career aspirations. Even with generative AI, the basis of the agentic AI, is past performance not innovation for the future.

Set aside, for a moment, the debate around how effective agentic AI really is. Remember instead where the true knowledge of your organization lives. It is tribal. It lives in meetings, Zoom calls, staff meetings, planning workshops, hallway conversations and lunches. The real, unvarnished truth about your business does not reside in the sanitized meeting summary; it lives in the animated debate during the meeting.

Who holds that live knowledge? The very people being replaced by AI agents. Let them go, and the tribal, vibrant, innovative spirit of the company leaves with them.

No company announcing massive layoffs has stood up and said: “We’re shifting into survival mode. We are prioritizing cost efficiency and prepared to sacrifice future value creation and innovation.” None of them outline the consequences for customer experience. In their narrative, fewer people equal no real damage, because automation will cover the gap.

In reality, they are declaring a shift away from innovation and growth. They just are not brave enough to say it.

The decision we never made, but rushed to execute

Even genuinely innovative companies fall into this trap. They begin with strong ambitions to be growth‑oriented, investing in the future. Then success arrives—or a shiny new technology appears—and they cannot resist the temptation of cost cutting without a forward innovation plan.

This temptation of quick savings, feeding short‑term equity gains, is where they quietly shift strategy to survival. Cost savings and productivity improvements are important when there is genuine waste and slack. But they only make strategic sense in the context of a clear future growth agenda. They cannot be the main goal. When cost cutting becomes the destination, it carries hidden costs: erosion of customer value.

If you doubt this, visit the graveyard of PE‑acquired companies where “efficiency” dismantled value in the name of short-term savings, only for the business to be sold off or written down later.

You rarely see a company announcing a bold growth and innovation roadmap in the same breath as massive layoffs. The emphasis is almost always on costs. Once again, leadership falls into the trap of believing that technology is more important than people.

The real question that matters is not the one being asked

At the core of this mistake is the question executives are trying to answer:

“How do we save money now that we’ve automated tasks?”

This question is disconnected from any meaningful business problem. It is a narrow frame that sees only the savings created by technology, not the opportunity those freed‑up resources represent.

The real question every organization should be asking is:

“How do we invest the time we just freed—thanks to automation—in creating better, faster, more evolved, innovative, creative, customer‑delighting value?”

This is the question that is being ignored. Because it is ignored, automated transactions are interpreted as pure redundancy, something to be eliminated.

Recent consumer research shows just how fast AI adoption is spreading. One study reports that more than half of American adults have used AI in the past six months, and nearly one in five use it every day—translating to well over a billion people globally interacting with AI tools, hundreds of millions of them daily. Another study of the Israeli market reports AI adoption rates above 90 percent of the population, with more than two tools used per person on average, and that level of adoption reached in only about three years.

If this is the future, your employees will be ready sooner than you think. The question is not whether they will use AI, but how you will channel their use of AI to create the future value your company needs to stay competitive.

Customer value—what many call customer experience—is evolving constantly. This is precisely the moment when you need your people focused on evolving their skills and their value‑creating actions, not standing in unemployment lines while bots execute yesterday’s scripts.

Do not be impressed by leaders who use faux courage to lay off people. It is the easy shortcut. Demand to see the full growth plan. Demand to know where innovation will come from. And if the answer is, “From technology,” pause.

As a client once told me, “Even a fool with a tool is still a fool.” There is nothing more foolish than sacrificing the live, innovative heartbeat of your business for short, quick gains.