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By Randy Armknecht in AI —

If You're Thinking About Who to Lay Off Thanks to AI, You're Thinking About AI Wrong

If You're Thinking About Who to Lay Off Thanks to AI, You're Thinking About AI Wrong

Every major technology shift of the last fifty years has produced the same split. Companies that used the new capability to build new things compounded their advantage. Companies that used it to protect what already existed paid for it for decades.

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We are in one of those moments.
Too many companies are on the wrong side of the split.

In September 2000, Netflix co-founders Reed Hastings and Marc Randolph flew to Dallas and offered to sell their company to Blockbuster for fifty million dollars. Blockbuster's executives laughed them out of the room.

Ten years later, Blockbuster filed for bankruptcy at a valuation of approximately twenty-four million dollars. Netflix is worth over one hundred and fifty billion.

That's not a cautionary tale about one bad meeting. It's about what the meeting represented. Blockbuster saw the shift coming. It had the capital, the customers, the distribution. It chose to protect the store model. The new thing ate them.

Nokia held fifty-one percent of global mobile market share when the first iPhone launched in 2007. By 2014, their smartphone share had collapsed to three percent. In the years between, Nokia's CEO circulated a leaked internal memo titled "Burning Platform." The line that mattered: "The first iPhone shipped in 2007, and we still don't have a product that is close to their experience." They knew. They couldn't move.

Kodak's engineer Steve Sasson built the first digital camera in 1975. When he demonstrated the prototype, executives asked why anyone would want to take pictures that way when there was nothing wrong with conventional photography. The device was patented and shelved. Sasson estimated digital would be commercially competitive with film in fifteen to twenty years. He was right on schedule. Kodak went bankrupt in 2012. Revenue had fallen from sixteen billion dollars to six.

Satya Nadella became Microsoft's CEO in 2014 when the company was worth approximately three hundred billion dollars. By 2024, Microsoft crossed three trillion — a tenfold increase driven by a deliberate bet on cloud and a decision to make AI a product for every employee. Not a cost line. A platform.

The pattern is not subtle.

Consider the Stakes of Getting this Wrong Right Now

The World Economic Forum's 2025 Future of Jobs report found that forty-one percent of employers plan to reduce their workforces because of AI. The examples are documented and specific. Salesforce, IBM, Klarna, Duolingo — each has announced cuts framed around AI-driven efficiency.

Salesforce CEO Marc Benioff confirmed in September 2025 that he'd reduced customer support headcount from nine thousand to five thousand. His framing: "I need less heads." Two months earlier, he'd publicly dismissed concerns about AI-driven job cuts.

Klarna reduced its employee base from seventy-four hundred to three thousand through AI automation. Months later, CEO Sebastian Siemiatkowski acknowledged the outcome plainly: “As cost unfortunately seems to have been a too predominant evaluation factor when organizing this, what you end up having is lower quality.” The company that executed the most aggressive AI-first workforce reduction became its own cautionary case.

Harvard Business Review found in January 2026 that most AI-driven layoffs are anticipatory. Not based on demonstrated AI performance. Based on AI's potential. Companies are subtracting today's people for a future capability that hasn't fully materialized.

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That is not a strategy. That is a bet against your own organization.

People Are the Value Creators

Amazon Web Services generates over one hundred billion dollars in annual revenue. It represents roughly seventeen percent of Amazon's total revenue and fifty-eight percent of its operating income.

It did not begin as a technology product. It began as an idea — the recognition, by the engineers and architects closest to Amazon's own operational work, that what they had built to run the business was extraordinary. That other companies were struggling with exactly the problems Amazon had already solved. That the competence itself was commercially valuable.

The opportunity didn't emerge from a spreadsheet or a strategy deck. It came from the people who knew the work from the inside.

Alexandra Ebert wrote in Fortune in July 2025: "AI on its own cannot create the next generation of products and services. AI doesn't invent. It recycles. It's trained on other people's ideas, imitates patterns."

She's right. AI can accelerate what your people already know how to do. It cannot replicate the domain knowledge, the customer intuition, the hard-won judgment about which problems are actually worth solving. Those things live in your organization. In your people. They are the organization.

Jolen Anderson, Chief People Officer at BetterUp, said it plainly earlier this month: "This is not an expense game. It's a value game. This race to the bottom line is just not sustainable."

The Larger Frame

The US Gini coefficient — the standard measure of income inequality, where zero means everyone earns equally and one means one person holds everything — sits at 0.490 as of 2024. The United States is the most unequal economy in the G7. The trend has moved in one direction for forty years.

The IMF warned in 2024 that generative AI will worsen within-country inequality. MIT economist Daron Acemoglu, who won the 2024 Nobel Prize in Economics, describes current AI deployment as technology that primarily reduces labor costs without generating equivalent productivity or new value. The surplus flows to capital, not workers.

In sixty percent of US labor markets, fewer than three employers are competing for workers. When every firm in an industry makes the same cut simultaneously, displaced workers don't find the next job. The next job isn't there.

The people being subtracted are the same people who buy your products, pay the taxes that fund the infrastructure your business depends on, and coach your kid's soccer team. This is not a separate conversation from business strategy.

It is the same conversation.

Not Subtraction. Multiplication.

Jensen Huang said it at the Milken Institute in May 2025: "You're not going to lose your job to AI. You're going to lose your job to someone who uses AI."

The question every company should be asking is not how many roles AI can replace. It's what the team they already have can build now that they couldn't build before.

Somewhere in your organization right now, someone who knows your customers, your operations, and your blind spots better than any model trained on public data ever will has an idea they haven't been given the room to pursue. Give that person AI. Give them time. Ask them what they see.

Think bigger — not just about the quarter, but about your coworkers, your community, the people who make your market possible. Improve what you can. Don't subtract what doesn't need to go.

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Cutting your people to protect this quarter's margin is not a strategy. It's the Blockbuster meeting.

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