Just as Kaizen and “China cost” revolutionized physical product businesses over 40 years, AI is initiating a similar, decades-long optimization cycle for intellectual property and human-centric processes. Companies that apply this “digital Kaizen” to lean out workflows will gain a compounding cost and efficiency advantage, similar to what Danaher achieved in manufacturing.

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Business owners should view AI not as a tool for replacement, but for multiplication. Instead of trying to force AI to replace core human functions, they should use it to make existing processes more efficient and to complement human capabilities. This reframes AI from a threat into a powerful efficiency lever.

Unlike traditional software that optimizes for time-in-app, the most successful AI products will be measured by their ability to save users time. The new benchmark for value will be how much cognitive load or manual work is automated "behind the scenes," fundamentally changing the definition of a successful product.

Don't just sprinkle AI features onto your existing product ('AI at the edge'). Transformative companies rethink workflows and shrink their old codebase, making the LLM a core part of the solution. This is about re-architecting the solution from the ground up, not just enhancing it.

Unlike the cloud-era "digital transformation," which often didn't change core employee workflows, the AI transformation is universal. It changes how every knowledge worker operates daily, making the shift more profound and akin to the move from paper to computers, fundamentally altering the nature of work itself.

Most companies use AI for optimization—making existing processes faster and cheaper. The greater opportunity is innovation: using AI to create entirely new forms of value. This "10x thinking" is critical for growth, especially as pure efficiency gains will ultimately lead to a reduced need for human workers.

The most significant value from AI is not in automating existing tasks, but in performing work that was previously too costly or complex for an organization to attempt. This creates entirely new capabilities, like analyzing every single purchase order for hidden patterns, thereby unlocking new enterprise value.

The ultimate value of AI will be its ability to act as a long-term corporate memory. By feeding it historical data—ICPs, past experiments, key decisions, and customer feedback—companies can create a queryable "brain" that dramatically accelerates onboarding and institutional knowledge transfer.

Instead of broadly implementing AI, use the Theory of Constraints to identify the one process limiting your entire company's throughput. Target this single bottleneck—whether in support, sales, or delivery—with focused AI automation to achieve the highest possible leverage and unlock system-wide growth.

Unlike traditional software that supports workflows, AI can execute them. This shifts the value proposition from optimizing IT budgets to replacing entire labor functions, massively expanding the total addressable market for software companies.