When we think about industrial revolutions, we usually focus on the technology — the steam engine, the light bulb, the transistor, the internet. But the true power of an industrial revolution is not the technical invention itself. It is the way that invention permanently alters the unit cost economics of doing valuable work.
Steam reduced the cost of mechanical energy. Electricity reduced the cost of distributing power. Semiconductors reduced the cost of computation. The Internet and cloud services reduced the cost of distributing information. Each time, the breakthrough wasn’t just that things became cheaper; it was that entire industries reorganized themselves around new possibilities.
AI now represents the same kind of step change — but this time, the resource being transformed is cognition. The cost of getting a “smart decision” made is collapsing. What once required teams of analysts, consultants, or managers can now be handled by autonomous systems at near-zero marginal cost.
But here is the danger: too many leaders will stop at the first-order effect — using AI to make existing processes cheaper, faster, or more efficient. However, the real productivity benefits only kick in when organizations embrace system-level transformation: reinventing how work is structured, how decisions are made, how value is created.
As I explain in the view below - my view is that over the next decade, the real competitive divide will not be between technology companies and traditional companies. It will be between organizations that rewire their operating models around the falling unit cost of cognition, and those that cling to legacy structures, simply doing yesterday’s work at a lower price.
When electricity first arrived in factories, many industrialists simply swapped out their steam engines for electric motors, leaving the drive shaft, heavy machinery, and the rest of their operations unchanged. Costs dipped, efficiency ticked up, but little else shifted. Henry Ford saw what others missed: the true advantage wasn’t in cheaper power, but in the chance to redesign the very system of work. By giving each machine its own motor, Ford could rearrange production into a continuous flow — the moving assembly line.
Ford’s breakthrough wasn’t about cheaper manufacturing; it was a new logic of production that multiplied output, lowered prices, and made automobiles accessible to ordinary people. That is the lesson for AI today. The first-order effect is efficiency — shaving costs from existing workflows. But the lasting advantage comes only when leaders do what Ford did: reimagine the architecture of work itself, using cheaper cognition not to do the same things faster, but to invent entirely new ways of creating value.
It is tempting to cast Tesla as the modern Ford, in terms of leveraging technology to disrupt the industry. But consider Chinese automotive manufacturer, BYD. Founded in Shenzhen in the 1990s, BYD doesn’t just build cars — it builds entire ecosystems. Beyond EVs, the company manufactures batteries, operates energy storage systems, supplies solar panels, and integrates them into AI-driven mobility and power platforms for whole regions. The strategy is not about producing cheaper cars, but about redefining what a car is: a node in a civilization-scale network linking transport, energy, and data. Just as Ford’s assembly line transformed manufacturing, BYD’s integrated approach points to a future where advantage comes not from incremental efficiencies, but from reorganizing how whole systems — mobility, energy, cities — operate together.
Efficiency gains may give you a head start, but it is the second-order redesigns that change the game. The winners of the AI age will not be those who deploy chatbots to shave call-center costs, but those who reconceive service altogether. They won’t be the firms that use AI to generate better reports, but those who eliminate the need for reports entirely by embedding intelligence directly into decisions.
The challenge for today’s leaders is not to embrace AI as just another tool, but to recognize it as the next great factor of production — one that, like steam or electricity, demands new forms of business architecture. The price of cognition is falling. The real question is not how cheaply you can do old things, but whether you have the imagination to invent entirely new ones.
There is something almost punk rock about this moment: the courage to set fire to the past and refuse to let it dictate the future. Steve Jobs captured it perfectly: “If you want to live your life in a creative way, as an artist, you have to not look back too much. You have to be willing to take whatever you’ve done and whoever you were and throw them away.”