AI's Impact on the Two Rooms

Many of us have seen moats disappear over the years, forcing us to rethink our value in the marketplace. We accept all these changes now, but there was genuine terror in the past when seismic change occurred. Of course nothing was as significant as the internet ripping out the geographic moat that protected local clients for local agencies, but we have lost a dozen or so big moats. AI rips another one out.

Getting On The Bus

Many firms have jumped from one movement to another, and in most cases they’ve viewed doing so as a way to claim new relevance without making the tough choices that tight positioning requires. There was branding, digital transformation, and more recently storytelling.

These all offered real value, but everyone was doing them…and none of them offered any real differentiation. They were service offerings, and if they were attached to a positioning, they were powerful.

But in the early days of each of those movements, there was this collective hope that “if we can just get on that bus, even though we don’t know where it’s going yet, we’ll be there when it arrives.”

It never arrived at a firm-saving place. They were movements. They meant more to us than to clients, and eventually each of them became unremarkable.

The AI Bus

So is the AI bus any different? Should agencies get on it?

I think we need to admit that we don’t know where the AI bus is going, either. There are a lot of stupid hot takes that are not going to age well. Altman is an idiot for saying that AI will replace 95% of marketing work. So are the LinkedIn marketing bros who claim to have vibe-coded a replacement for HubSpot while eating pizza and playing a video game.

We don’t know where the AI bus is going, but in this case I think we should get on it. That’s new for me.

AI Is Not A Positioning

I guess I need a tattoo on my forehead so that I can quit screaming this from the rooftops: AI is not a positioning. It is a service offering. Yes, you should get on the bus, but it will not solve your lack of positioning. Everyone (who survives) will be AI-fluent. There might be 2-3 years where you can help your clients adapt to an AI-driven world, but that will be short-lived.

If you are only capable of AI experimentation, you should do it. If you can be AI-forward, better yet, but you’re going to get left behind if you don’t get on the bus.

AI’s Impact On The Two-Rooms

Having said all that, AI will impact your business in different ways. Here I’m going to reference the Two Room model that I first talked about in 2012, and then explained in The Business of Expertise. Here’s a recent article that summarizes the argument, but essentially your firm is one building with two rooms: the strategy room and the execution room. Only the strategy room has a door from the outside, and if clients want access to your execution room, they’ll have to go through the connecting door after you shape their strategy. And the dividing wall moves, over time, so that there’s more strategy and less execution.

AI will have a very different impact on the two rooms:

• In the strategy room, you’ll do better and deeper research. You’ll be able to synthesize far more data and drill down to actually solve the challenge more effectively.
• In the execution room, you’ll do work more efficiently and more quickly. This isn’t true now, but eventually I think your execution work will follow brand standards more closely.

As the illustration depicts, there will be more exploration in the first room and tighter implementation in the second.

So then what happens when AI brings these about?

Who Wins

Well, everyone wins, but in different ways.

• Clients will get better work, and more of it. You should not pass along the savings from AI, but instead do more work for the same money. (There’s no way that clients will let you retain the savings for a fatter bottom line.)
• Agencies will be moving the needle more effectively.
• Some team members will have very able assistants, and some team members will master exciting, new jobs that we don’t even see coming yet.

And even though we don’t yet know where the bus is going, we can be sure of three things:

• The size of your firm will be less relevant.
• Your positioning will be more relevant.
• Your collaboration with clients will be tighter.

The Real Enemy

The enemy has never really been procurement or a slow pipeline or your competition or changing work habits of the team. No, the real enemy is within. It’s hanging on to the old ways out of fear of change.

Empires crumble from within. Don’t be your own enemy. It’s a wonderful time to be alive!