Artificial Intelligence (AI) has become an umbrella term. Whether we are talking Large Language Models (LLMs), Generative or Agentic AI, large vendors tout efficiency and automation opportunities. Although costs continue to fall for some models, some meteoric risers such as OpenClaw, an open-source tool that interfaces with LLMs such as GPT or Claude, have exponential potential demand for ‘compute’. Compute describes the computing resources used to train, deploy and operate AI models. As of today, people can pay for compute units across AWS, Azure, Google Cloud and Oracle Cloud (amongst others). One challenge is with predicting the usage of AI models once they are let loose in an organisation. So, before the CFO panics at ‘unlimited’ compute costs to power AI, let’s look at other options. Today, we go back to basics to discuss increasing cost efficiency pending AI investment.
Cost efficiency
Cost efficiency refers to the optimisation of an organisation’s cost base to achieve a given level of output. The lower the proportion of costs versus revenue, the greater the profitability will be. An organisation’s cost base predominantly comprises of it’s cost of sales and it’s selling, general and administrative (SG&A) expenses. The former relates to making the product or service ready the for sale. The latter refers to the overheads or costs of operating the business that are not directly related to production of products or provision of services.
Fortunately for high-margin or high-growth businesses, cost efficiency may not be a high priority. Lawyers, perfumeries and jewellery are examples of high-margin industries. Software (including AI), defence and electric vehicles are examples of high-growth industries. Not everyone is so fortunate that product or service margins are in the >80% range. Even so, inefficiency can creep in when the pressure is off. Where one industry might trumpet an SG&A of 15%, another might be running at 45%. Where a company in an industry has an EBITDA (earnings before interest, tax, depreciation and amortisation) of 10%, your competitors may be hitting 20%. So, how do we increase cost efficiency?
Increasing cost efficiency
There are 3 ways of increasing cost efficiency, which are control, cut and optimise.
1) Control for cost efficiency
Many organisations have little concept of what cost control means. This may sound blasé, but when employees travel first class, go for nights out on expenses or receive ad hoc pay increases, it may be a sign of poor cost control. Policies, procedures and reporting all have a part to play in ensuring good behaviours and reasonableness. Crucially, such policies must be supported by senior leadership.
2) Cutting costs efficiently
There are some costs in an organisation that should never have occurred. The ‘just-in-case’ annual PR subscription, the discretionary bonus when targets were missed or the luxury marque for the office manager. Similarly, revisiting contracts, leases and subscriptions can lead to savings from new vendors, solutions or ceasing entirely. Where transformation leads to cost cutting, these must be sustainable.
3) Optimise for cost efficiency
Where cost control may be unpopular and cost cutting may seem draconian, optimising is the most challenging. Process improvement, lean/kaizen/CI, restructuring and creating a new operating model are time-consuming. They impact people, processes, systems, and in some cases, partners/suppliers. Here, we realise improved organisational performance, which results in delivering more or the same output for fewer inputs. For CEOs and CFOs, this is the traditional way of obtaining benefits through more efficient operations. It also means less reliance on early stage, expensive AI investment that may not make a return.
When investors and the board want AI
Clearly, for some industries and organisations, the pressure to implement AI is huge. If an industry appears to have a strong use case for AI or a competitor is crowing about benefits, the pressure ramps up. In most industries that are not ‘in-person’, there are likely to be applications and potential benefits. Microsoft reckons that most white-collar tasks could be done with AI within the next 18 months (as of March 2026).
Where the use case is especially strong is with routine, structured and repetitive tasks. Here, there is a clear case for cost efficiency with an AI-led transformation. Where there is a high-volume of simple human interactions, chatbots have already displaced large numbers of routine contacts. At present, we have only initial ideas about the future of materials, antibiotics, vaccines, metallurgy, chemical compounds, organics and combustible fuels. AI models will create advances that we never thought possible. Similarly, in mathematically complex (e.g. weather forecasting, fluid dynamics, mapping space etc) and fiendishly difficult to simulate conditions (e.g. fusion reactor, Higgs boson experiments, dark matter etc), AI may lead to new insights and future technologies.
However, in the here and now, many organisations face challenging economic conditions, high taxes, high regulation and supply chain disruption. Where the business environment is worsening and confidence is ebbing away, increasing cost efficiency is lower risk than AI investment. Where short to medium-term operational challenges threaten profitability, controlling spend, cutting costs and optimising are preferred. The challenge may be in convincing investors and the board to wait until things calm down, your business is ready and the benefits of AI investment look certain.
Increase your cost efficiency with Think Beyond
Where rapid growth has overtaken efficiency or slowing growth necessitates more efficiency, we can help. Think Beyond was borne out of philosophy, showing clients a different path to success. Whatever your circumstances, we bet that we can increase your cost efficiency and increase your EBITDA percentage. We will approach the problem with rigour, an open mind and give you an honest opinion on what needs to be done. With one of our founders a former finance leader and the other a former marketing leader, we have one eye on efficiency and one on growth. When those perspectives come together, we get informed strategy execution, sustained – underpinned by efficiency and aligned to opportunities.
So, why not start increasing your cost efficiency and get back to growth? Simply reach out to our team to arrange your free initial introduction. Alternatively, why not message us via our business account on LinkedIn.
Finally, why not read our view on constant change and the cost of unproductive workforces.