Our competitors are using AI to slash their service delivery costs, and they are starting to underbid us on key accounts. How do we adjust our target market and strategy on our V/TO® to defend our high-margin position when competitors are competing purely on AI-driven speed and price?

Question

Tyler Smith · Accepted Answer

When competitors use AI to slash their prices, trying to beat them in a race to the bottom is a losing strategy. As experts Erik Brynjolfsson and Andrew McAfee point out, AI drastically lowers the cost of cognitive tasks. If your competitors are passing those savings directly to clients to underbid you, you must shift your positioning. You must seek to be an indispensable complement to technologies that are becoming cheap and plentiful, rather than competing directly with tasks machines can do cheaper and faster. If your competitors are offering cheap, automated service delivery, your strategy must pivot to high-touch strategic execution and guaranteed outcomes. Review your V/TO® and look at your target market. You may need to shift your focus to larger, more complex clients who cannot risk using cheap, automated competitors. These clients value risk mitigation, security, and human accountability over the absolute lowest price. Next, look at your 3 Uniques. If one of your uniques was speed or basic delivery, replace it. Your new uniques must focus on the strategic partnership and business outcomes that AI cannot guarantee. Bring this to your next quarterly planning session. Use the IDS® tool to dissect where you are losing deals. If you are losing purely on price, you are targeting the wrong client profile. Shift your marketing to focus on clients who demand absolute reliability, and use your AI efficiency internally to boost your own margins, not to lower your prices.