Why CEOs Should Prioritize Their Innovators More Than Cost Cuts

This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.Fernando Bergás-Coria is CEO of Ologie, a national branding and marketing agency, where he leads more than 100 employee-owners.

getty​I read PwC’s 29th Global CEO Survey​ for fun, which my wife found concerning and I found relaxing. I find value in reading it to confirm whether other leaders also see the things we’re betting on for our company’s success. This year, the data backs the bet, even though we got where we are by ignoring what many others were doing.

Chasing cost cuts and marginal revenue bumps is an outdated model for running a professional creative services company. It borrows the most soulless parts of the private equity playbook (optimize, trim, extract), and from my observations, it’s largely failing.

I believe much of the problem comes down to short-term thinking: According to PwC, private-equity-backed CEOs spend an average of 47% of their time on short-term issues (less than five years out).​ That focus has a cost. The companies pulling back on investment (about 15%) trail their peers by two points on growth and three points on profit margins. That tells us that caution is not always the safe position it looks like.​

In my experience, AI is one of the clearest tests of which business model you are running. The outdated model throws dollars at bots to shave production time off a batch of social ad versions and then counts the saved hours as the win. That is a cost story, but the data doesn’t validate it. Only 12% of CEOs report gaining both cost and revenue from AI.​

Read that again. Nearly nine in ten CEOs are not getting both. Meanwhile, the ones in PwC’s report who did see a gain aimed AI at demand generation and the customer experience, applying it to products, services and experiences at more than double the rate of everyone else. They spent it on the work customers see, not efficiencies for pennies’ sake. This is the business model we have adopted, and I’ve witnessed for myself how effective it can be.

This model starts with the belief that innovation cannot be ignored and people cannot be replaced. The tools can handle the grunt work, but people need to be doing the work that was worth paying for in the first place. That means investing in people who can use these tools to clear the busywork and putting that reclaimed time into original thinking.

That reclaimed time is not conceptual. It is the hours a designer spends working on a stronger idea instead of resizing the same ad twenty times. It’s the strategist reading that one thing that makes it all click before a recommendation. It’s the team pushing a concept past the first version that would have otherwise made it to a client. None of that shows up on a production report, and I wouldn’t care if it did. It shows up where it matters most: in the work clients remember.

Essentially, one business model buys a cheaper version of what you already made. The other raises the ceiling on what your people make next.

Innovation shows the same gap. According to PwC’s survey when asking CEOs about six innovation-friendly practices (such as tolerating high-risk innovation practices or having routine processes in place to stop underperforming R&D projects), “fewer than one in ten CEOs (8%) say their company has implemented at least five of the six practices to a large or very large extent.” The companies that do back innovation more strongly, on the other hand, are achieving “faster overall revenue growth and higher profit margins.” Originality is what the market pays for, and in my experience, it dies when you manage it like a cost to control.

In creative services, the case is simple: Savings through production may look good for the length of a procurement cycle, but cheaper output rarely wins more work, earns referrals or inspires anyone. Our work is bought when it is seen and felt, so we can only speak to what we create. Trading that away for a 12% chance at a marginal revenue gain, against risk we cannot calculate, is a poor strategy.

Makers matter. Nothing new originates in a closed circuit. A penny saved will not earn you a dollar. Every efficiency has a price, and originality is often what it costs. Instead of prioritizing making your company cheaper to run, focus on being the one worth paying for.​

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