Summary of the Key Points
This article begins with the common phenomenon that companies do not accurately calculate the financial benefits they gain from using AI. It then reviews the adoption of business tools such as ERP, CRM, content IP, and private domains over the past 20 years, pointing out that most companies have only used these tools superficially (registering accounts, achieving minor efficiency improvements) without truly reengineering their operational capabilities through them. The article analyzes the psychological reasons behind companies' obsession with tools (the desire to avoid falling behind), outlines a five-tier model of tool value (ranging from simple usage to transformation of business models), and identifies three major issues that prevent companies from making meaningful progress (focusing on the tools themselves rather than the underlying problems, combining old processes with new tools, and only measuring usage without considering outcomes). Finally, in light of the AI boom, it suggests four critical questions that company leaders should ask themselves, emphasizing that the true value of tools lies in creating irreplicable organizational capabilities and actual business benefits, not the tools themselves.
Detailed Breakdown
1. Why do companies always rush to buy tools? – The desire for a sense of security
Whenever a new tool (from ERP to AI) becomes popular, the market emphasizes that not using it means falling behind, and companies easily follow suit. The reasons are simple:
- Tools are easier than real change: Strategic adjustments, organizational changes, and product innovations are difficult and time-consuming, but buying a system, creating an account, or attending a training session can be done quickly, giving the illusion of progress.
- Tools provide psychological comfort: They are tangible (there is software, an account) and appear advanced (since others are using them), which makes managers feel that they are not left behind by the times.
For example, many companies started using official WeChat accounts simply because others were doing so, not to address issues related to customer trust. In essence, what they were buying was a proof of staying up-to-date.
2. During the tool boom, companies can be divided into two types: “task-oriented” and “capability-oriented”
Behind each generation of tools, there are two types of companies:
- Task-oriented companies: Use tools merely to complete tasks—installing ERP is for bookkeeping, CRM is for forcing salespeople to fill out forms, private domains are for sending mass advertisements, and AI is for writing copy and creating PPTs. The result is that although the systems are in place, employees are busier, more money is spent, but no real improvements are seen.
- Capability-oriented companies: See tools as an opportunity to restructure their capabilities:
- Lenovo/Huawei adopted ERP not just to install software, but to force themselves to question fundamental questions like “Where is the inventory? How are costs calculated? Do all departments agree on the same information?” This led to standardized operations.
- Xiaomi used content IP not just to accumulate followers, but to build trust over years of interacting with users, resulting in a huge order for 50,000 units within 27 minutes after the SU7 smartphone was launched.
- Luckin used private domains not just to send promotional coupons, but to reengineer its customer loyalty program and emerge from a crisis.
The key difference is that task-oriented companies focus on the form of the tool, while capability-oriented companies focus on the changes it brings.
3. The value of tools has five layers; where do you fall?
The value of tools can be categorized into five levels, with most companies stopping at the first two:
- Level 1: Someone is using it: Employees register accounts and attend training—this is about usage rate, not revenue.
- Level 2: Minor efficiency improvements: Faster copywriting, automatically generated summaries—these may increase efficiency but do not necessarily generate more revenue.
- Level 3: Process changes: Tasks that used to take three people can now be done by one person in one day, leading to improved operational effectiveness.
- Level 4: Capability development: Creation of unique capabilities that are difficult for competitors to replicate (e.g., Luckin’s customer loyalty system, Xiaomi’s user trust).
- Level 5: Business model transformation: Tools change who the company serves, how it charges, and how it expands (e.g., AI enables companies to offer personalized products and new revenue streams).
The harsh reality is that many companies claim to be “AI-driven” but, internally, they have only added a few more accounts and reports, using the benefits of Level 5 to exaggerate the benefits of Level 1.
4. Why do companies often stay on the surface level? Three common pitfalls to avoid
- Pitfall 1: Focusing on tools rather than problems: Managers buy AI without asking whether slow customer responses are due to process issues or ineffective sales strategies. Tools should solve specific problems, not just follow trends.
- Pitfall 2: Combining old processes with new tools: Replacing paper forms with electronic ones or using AI to organize meetings does not improve efficiency; it merely prolongs existing practices. True change means eliminating unnecessary steps (reducing positions, approvals, reports).
- Pitfall 3: Measuring usage rather than outcomes: Evaluating tools by metrics like registration and activity rates, rather than whether output per employee has increased or sales cycles have shortened. Tools that do not improve business results eventually become administrative tasks.
5. How can companies avoid wasting money on AI? Four questions for leaders to ask
In the face of AI, leaders should ask themselves these four questions:
- What has been replaced? If AI doesn’t replace existing tasks but merely adds new ones (e.g., writing five weekly reports), it’s a burden rather than an improvement.
- What has changed? Have processes, roles, or decision-making methods changed? If AI only acts as a “shortcut” without altering core operations, it’s ineffective.
- What has been created? More content/reports, or additional revenue, profit, and customer value?
- If competitors also use the same tools, what remains unique about our company? If competitors can adopt the same AI tomorrow, what gives us an advantage? The answers should be proprietary data, reengineered processes, customer trust, and organizational capabilities—these are the real benefits that tools aim to deliver.
Final Conclusion
Tools will eventually become obsolete (just like Excel today), and AI is no exception. The real benefit of using them is not the act of using them, but whether your company can develop better products, lower costs, and a deeper understanding of its customers after the hype subsides. The true value of tools can be calculated using this formula: Business improvement ÷ Total investment in tools (software fees, training, learning time, maintenance costs, etc.). Many tools are seemingly free but actually very expensive in terms of their long-term impact on business performance.