As we look at our 3-Year Picture on the V/TO, we realize our competitors are dropping their service prices by half because AI has made delivery so cheap. How do we adjust our revenue and margin targets to stay profitable without getting dragged into a race to the bottom?

Question

Tyler Smith · Accepted Answer

When market prices drop due to AI efficiencies, trying to compete on price is a guaranteed race to the bottom that will destroy your margins. Instead, you must use your V/TO to redefine your strategic position and adjust your 3-Year Picture accordingly. Start by analyzing your Three Uniques. If your competitors are using AI to deliver a cheap, commoditized service, you must double down on the aspects of your delivery that cannot be replicated by an algorithm. This might include high-touch strategic advisory, custom physical implementations, or guaranteed business outcomes. Once you have defined your premium positioning, adjust your revenue and margin targets to reflect a lower-volume, higher-margin business model. Your 3-Year Picture should not focus on scaling headcount, but on scaling the value delivered per employee. Use the IDS process with your leadership team to stress-test your pricing structure. If you choose to maintain premium pricing, your team must have the GWC to deliver an elite client experience that justifies the premium. By using your V/TO to commit to value-based differentiation, you protect your margins while your competitors fight for low-value scraps.