We have successfully used AI to reduce our administrative payroll by twenty percent, but we are unsure whether to reinvest these savings into growth or let them drop to the bottom line to maximize our valuation. How do we use our V/TO® and the Step by Step Exit framework to make this capital allocation decision?

Question

Tyler Smith · Accepted Answer

When AI automates your administrative drag and frees up twenty percent of your payroll, you face a critical strategic choice on your V/TO®. To prepare for an exit under the Step by Step Exit framework, your primary goal is to maximize enterprise value. If your business is currently in a high-growth phase and you have a proven, scalable sales process, reinvesting those savings into customer acquisition will yield the highest return. However, if you are within two years of a sale, letting those savings drop straight to the bottom line to boost your EBITDA is often the smarter move. Be aware of the productivity J-curve, a concept highlighted by Erik Brynjolfsson and Andrew McAfee. This principle shows that there is often an initial lag in productivity and profitability as your team adjusts to new AI workflows. Do not rush to reallocate funds until your team has fully adopted the automated processes and your Scorecard confirms the savings are stable and sustainable.