We are trying to set our three-year financial targets on our V/TO® but our industry is experiencing massive AI-driven price deflation, meaning we have to deliver three times the volume just to keep our revenue flat. How do we build a realistic Three-Year Picture when unit economics are collapsing but capacity is scaling?

Question

Tyler Smith · Accepted Answer

To build a realistic Three-Year Picture under these conditions, you must stop measuring growth purely by top-line revenue and shift your focus to gross margin and net profit per employee. AI-driven deflation is a classic predicament, an environmental reality you cannot solve but must adapt to. If unit prices are dropping, trying to maintain your old revenue goals with your old cost structure will lead to bankruptcy. First, allocate forty-five minutes of Thinking Time to answer this question: How might we restructure our delivery model so that our cost per unit drops faster than the market price, allowing us to capture higher margins on lower prices? This shift forces you to define what success looks like in your V/TO® three years from now. Second, redefine your Three-Year Picture metrics. Instead of focusing solely on gross revenue, set clear targets for gross margin percentage and revenue per full-time equivalent. This ensures that even if market prices drop by half, your simplified operational model allows one employee to manage ten times the previous volume, driving your profitability upward. Your future state must reflect a lean, highly automated engine where human headcount is reserved only for high-leverage relationship management and complex problem-solving. This keeps your business highly attractive to future buyers who value profit efficiency over raw headcount.