I've been having versions of the same conversation with business owners lately. Profits soften. A client leaves. The AI headlines get louder. Suddenly every conversation about the future starts with what needs to be cut. What I'm describing here is a composite of those conversations, not any one person, because the pattern is what matters.
Sometimes cuts are absolutely necessary. I've worked in turnarounds, and I've been $600,000 in debt. I know what it looks like when the numbers are telling you to act. But I've also watched something else happen. Fear about what's coming becomes so powerful that leaders begin making decisions as though the worst-case scenario has already happened.
So if you're a founder wondering whether AI is about to take your business apart, here's my honest answer. Maybe it will change it dramatically. Nobody knows yet, and anyone who tells you they do is selling something. But when one outside threat starts explaining everything that's going wrong, it's worth getting curious about what that explanation might be allowing you not to look at.
When One Explanation Starts Explaining Everything
One thing I've learned as a coach is to get suspicious when a single explanation starts explaining everything. The account that walked? AI. The soft pipeline? AI. The sales numbers that were slipping long before anyone was talking about AI? Those start getting filed under AI too. I want to be fair here, because AI is real, and it's going to change my business and yours whether we like it or not. "AI is going to change our industry" might be completely true. "AI already did us in, so cut everything" is a different statement, and it's easy to slide from the first to the second without noticing.
I have to watch myself too. The easy coaching article would say the real problem is fear, and that's just as oversimplified as saying the real problem is AI. Businesses are systems. AI could be changing the market while sales performance, cost structure, strategy, and a leader who has stepped back are all making the problem worse at the same time. If I replace your one explanation with my one explanation, I haven't really helped you see the business more clearly.
So I don't try to talk anybody out of their fear. I try to find out what part of it is information and what part is story. Why did the account actually leave? What's happening to pipeline and win rates? Has pricing moved? Are customers actually replacing what you do with AI, or are they telling you something else? Are competitors using it to deliver faster or cheaper? What evidence do we have that AI is already affecting demand, and what are we projecting onto the future? The problem usually isn't being afraid of AI. The problem is letting a forecast about AI substitute for diagnosing what's actually happening in the business.
There's also something seductive about deciding the future is already written. If AI has already killed the business, I don't have to sit with the harder possibility that I don't know what happens next. And I don't have to ask whether some of what isn't working still belongs to me. Maybe it's a client I didn't stay close enough to. Maybe it's the sales conversation I've been putting off. Maybe I've quietly pulled back from leading. A big external threat is a very comfortable place to put all of that.
It would be easy for me to judge a leader in that spot. I don't. When I was $600,000 in debt, I could have written you a very persuasive case for why it was all over, and some days I believed it. Certainty, even certainty that it's all going badly, can feel easier than not knowing. And once you've spent months telling people the industry is finished, changing your mind gets expensive. Every lost deal starts to look like proof, and anything that doesn't fit gets harder to hear. If that's you, the question I'd ask is whether you've become so invested in your prediction that changing it now would feel like admitting you were wrong.
I'd want to ask one more thing before deciding this is about AI at all: do you still want to lead this business? Sometimes what looks like fear about the future is exhaustion or burnout. Sometimes the founder has emotionally left before they've admitted it to themselves. And sometimes there's grief underneath, because you spent decades building expertise and a company, and now you're being told technology may change what that's worth. So I might ask, "What are you afraid AI will take from you that has nothing to do with this year's P&L?" Maybe the answer is money. Maybe it's relevance, or identity, or legacy. If that's what's really going on, no amount of arguing about AI strategy is going to solve it.
I'll own my part in this too, because I haven't always helped leaders in this place. There are conversations I still think about. Sometimes I pushed when I should have gotten more curious. Sometimes I wasn't the right person, or it wasn't the right time. I still don't know whether I could have reached them. That's another trap coaches can fall into, believing that if we'd just asked the perfect question, the client would have changed. Maybe. Maybe not. They had agency too. But I still think about whether I was challenging the story when I should have been more curious about what the story was protecting.
What Do We Actually Know?
Jim Collins calls it the Stockdale Paradox: confront the brutal facts while keeping faith that you'll prevail. I like the framework because leaders under pressure tend to lose one side or the other. We either deny what's happening, or we get so consumed by it that we start treating the worst possible future as inevitable. I'd add one thing. Faith doesn't have to mean "my current business model will survive." It can mean "whatever the facts require, I believe we're capable of adapting." That's a different kind of faith, and I think a more useful one.
The tool I use most here is simple. I separate FACT, STORY, and ACTION. The fact is what objectively happened: we lost our largest account. The story is the interpretation we're putting on it: AI is destroying our industry. The action is what the evidence actually requires: run a real lost-account review, talk to customers, look at win and loss data, review pipeline, find out where AI is genuinely affecting demand, and figure out what can be changed. Separating facts from fear is a good start, but eventually the facts have to tell you what to do.
Be careful with the numbers you're using to reassure yourself, too. "We're still profitable" is true for plenty of companies whose leading indicators are getting worse. Current profit is a lagging indicator. I'd want to know what's happening to backlog, pipeline, margins, pricing, customer concentration, and capacity before I told anyone their worry was overblown. Sometimes those numbers say the fear is way ahead of the facts. Sometimes they say the fear is picking up something real. Either way, now you're working from evidence.
How to Decide When You Genuinely Don't Know
Let me be clear about one thing. I've made painful decisions when the numbers demanded them. This isn't an argument against cutting costs or reducing headcount. Sometimes keeping people you can no longer afford is the irresponsible choice. The question is whether you've done the analysis, or whether fear has done it for you.
There were stretches during my own debt crisis when survival mattered more than growth, and protecting cash was the right call. The difference I care about is between intentional preservation and fear-driven contraction. Intentional preservation sounds like "we're protecting cash for six months while we test these assumptions." Fear-driven contraction sounds like "stop everything, spend nothing, everyone is a cost." They can look almost identical on a spreadsheet. Strategically and psychologically, they're very different.
If the future is genuinely uncertain, don't pretend it isn't. Build scenarios. What happens if revenue drops 5 percent, 10 percent, or 20 percent? Which leading indicators will tell you which of those is actually developing? What changes at each threshold, and what capabilities do you protect no matter what? Decide in advance what conditions would justify which actions. Then the next scary headline doesn't get to rewrite your strategy, and you stop remaking the same decision every week based on how you feel that morning.
I also want to know which decisions are reversible. You can restart some expenses in thirty days. Other cuts remove relationships, institutional knowledge, and capabilities that may take years to rebuild. Those decisions deserve a much higher burden of proof. And it's worth asking a question that sounds simple and usually isn't: what exactly are you trying to protect? Cash? Margin? Your people? Your lifestyle, your control, your distributions, your reputation, or the feeling of being right? It cuts the other way too. Some CEOs keep too many people because they can't stand disappointing anyone. Cutting isn't automatically fear, and not cutting isn't automatically courage.
Pay attention to what repeated defensive cuts teach the people who stay. Here's one way fear can start producing the outcome it's afraid of. Every downturn brings another round of cuts, and the team learns from the pattern. Some people get cautious. Some stop taking risks or raising their hands for longer-term projects. Some of the people you most want to keep may start protecting their own options. The people who stay may get slower to bring you bad news if you already seem close to the edge. You can stabilize this quarter's expenses while destabilizing the culture you'll need next year. And if the next meaningful opportunity does arrive, you have to ask whether you'll still have the people and capacity to go after it.
If your leadership team is pushing back, listen, and listen carefully. If several capable leaders close to different parts of the business independently believe you're cutting too deeply, don't automatically assume they're resisting change. Get curious about what they're seeing, and also about what incentives each of you might have that are shaping your conclusions. Their view is data, not a verdict.
And if nothing in your company can meaningfully challenge a major decision before it happens, that may be a governance problem as much as a leadership one. Who has decision authority? What role does your CFO play? Which decisions require analysis before they're made? Sometimes the answer to a CEO's blind spot isn't more self-awareness. It's a system that keeps one person's blind spot from becoming company policy.
Finally, if AI really is transforming your industry, cutting isn't a strategy by itself. Fear asks, "What do I eliminate?" Leadership also asks, "What do I build now?" What can you automate or augment? Where could AI increase your team's capacity instead of replacing it? Where does human judgment become more valuable, not less? What can competitors now do that you can't, and what can you do that they can't?
What Is Still Yours to Do
Fear makes some leaders disappear exactly when their people need more clarity. Don't. That doesn't necessarily mean being in the office every day. It means being present in the conversations that matter. Review the lost account. Engage the sales team. Ask the hard questions. Make the decisions only you can make, and tell your people the truth early: what's real, what you're doing about it, and what you're not willing to cut. In my experience, people usually handle hard news better than they handle silence.
When I strip all of this down, I keep coming back to three questions. What do we actually know? What are you afraid might happen? And what is still yours to do either way? The third one matters most. Maybe AI does transform your industry. Maybe a lost account never comes back, maybe cuts really are necessary, maybe the old business model is on its way out. You still have agency over what happens next.
And expect the fear to come back. You'll read another headline or lose another deal, and the doom voice will show up again. That doesn't mean you've failed. It means you're human. The work is recognizing it sooner and not letting it make the decision for you.
So here's what I'd sit with this week. What are you telling yourself is inevitable right now? Now imagine for a moment that it isn't. What becomes your responsibility again?
If that answer makes you a little uncomfortable, that's probably the part worth paying attention to. And if you want someone outside the situation to help you separate what you know from what you fear, let's talk.
Let's get after it.
Todd
Frequently Asked Questions
Should my company be cutting staff because of AI? Maybe, and maybe not. AI will change most businesses, but nobody knows exactly how yet. Base cuts on what you actually know, including leading indicators like pipeline, margins, and win rates, not just a forecast. Plan for several scenarios, decide in advance what would trigger which actions, and hold hard-to-reverse decisions to a higher standard of proof.
How do I know if my fear about AI is justified? Separate what happened from the story you're telling about it. Look at why customers are actually leaving, what's happening to pipeline, pricing, and margins, and whether customers or competitors are really using AI in ways that change demand. Some of your fear may be useful information. Some of it may be story. The goal is to find out which is which.
What is the Stockdale Paradox? Jim Collins describes it in Good to Great as the discipline to confront the most brutal facts of your current reality while keeping faith that you'll prevail in the end. Leaders under pressure tend to hold on to one side and let go of the other.
What's the difference between being cautious and cutting out of fear? Intentional preservation is deliberate, tied to specific assumptions, and revisited as conditions change, such as protecting cash for six months while you test what's really happening. Fear-driven contraction treats every expense and every person as a cost to eliminate. They can look similar on a spreadsheet and lead to very different companies.
