Adopting AI Can't Be the Whole Strategy
Why AI adoption is the “underpants gnomes” of agency planning, and the harder question hiding underneath it.
There were maybe fifty people in the room in Austin. The Bureau of Digital’s AI and Your Agency conference is small on purpose, small enough that over two days, you can have a real conversation with almost everyone in it. The agencies represented were small to mid-sized, and the attendees were those who already understood that AI is changing the nature of their work.
The most interesting thing about being in that room was that most people were carrying two feelings at once, and they don’t sit comfortably together.
The first was something close to panic. The work they’d been selling for years, work that used to be straightforward to win and price, has become genuinely hard. Not just lower margins, but fewer clients, stiffer competition, and real downward pressure on labor costs. The ground has shifted under businesses that were running just fine.
The second was genuine optimism. AI is making things possible that simply weren’t before, especially for smaller shops. Prototyping, experimenting, and testing a new service now happens in days instead of months. Initiatives that used to require additional headcount don’t anymore. That’s not a minor efficiency gain. That’s a whole category of opportunity that didn’t exist before.
Both feelings make complete sense. That’s what makes this moment so disorienting.
What was crystal clear was that this moment is an inflection point, and it requires both a strong vision for the future and strong leadership to get there.
Phase 1: Become an AI-empowered business. Phase 2: ?. Phase 3: Profit.
There’s an old South Park episode about underpants gnomes. The gnomes have a three-step business plan. Phase 1: collect underpants. Phase 2: question mark. Phase 3: profit. When the boys press them on Phase 2, on how exactly the underpants become profits, the gnomes don’t have an answer. They just keep collecting underpants.
A lot of agency leaders right now are running the same plan with AI as the underpants.
Phase 1: Become an AI-empowered business.
Phase 2: ?
Phase 3: Profit.
The slogan version of Phase 1 sounds like a strategy. We’re an AI-first agency. We’re embracing the shift. We’re getting ahead of the curve. All true, none of it actually answers anything. Strip away the language, and you can see what’s underneath. Adopting AI is not a strategy. It’s a tool, and tools without a destination are just shiny things you’ve spent budget on.
Phase 2 is the actual job. To what end is this specific business adopting AI? What problem is it solving? What does the agency look like on the other side of the shift? Who is it for? Who’s required on the team to make it work? What’s safe to experiment with and what isn’t? What does shared benefit look like when productivity goes up?
“Are you using AI yet” is a much easier question to answer. So that’s the one everyone keeps asking.
Phase 2 is where companies disappear
Watch the conversations happening across the agency world right now — on LinkedIn, in the news, between owners comparing notes — and you’ll notice the same thing. There is genuine fear that this isn’t just a shift in how the work gets done. It’s a shift big enough that some companies aren’t going to be around in a few years.
That fear is a consequence of the gnomes plan. You can adopt AI and upskill your whole team, standardize on the right tools, rejig your service mix, and post about being AI-first on LinkedIn. And if you haven’t done the Phase 2 work, you can still be one of the companies that doesn’t make it. Because adoption was never actually a strategy.
I get this is scary, but the good news is that you get to choose what to do with that fear. You can be paralyzed by it, or you can be galvanized by it. Just because some businesses will disappear doesn’t mean yours has to be one of them.
My advice is to spend some time reevaluating why your business exists. Specifically, what value it provides, who it serves, and who’s required on the team to deliver it. Those are big, heavy questions. Answering them is the hardest job in your agency right now, and it belongs to the person in the visionary seat.
You don’t need a roadmap. You need a stake in the ground.
What everyone in that room left with was a more accurate sense of where they actually stand. Not just because they’d learned more about AI. But because they’d gotten clearer on their own business. They saw that everyone is in some version of the same boat. That even the early adopters are still grappling with the same fundamental questions about business model, value proposition, team, and direction. That being worried isn’t a strategy.
You have to plant a stake in the ground. This is where this business is going. This is what it will be on the other side of this shift. This is who it’s for. You don’t even have to be right. You’re allowed to revise it as you learn more. But you have to commit to a direction, because no amount of AI adoption will substitute for that decision.
A blunt, tactical guide for the founders doing the actual work
I came home from the conference and wrote a guide for agency founders who are sitting at their desks right now with a knot in their stomachs about what AI is doing to their business. It pulls from two leadership talks at the conference, Dale Bertrand on leading AI adoption inside an agency and Rob Harr on the gap between founders and their teams, plus some of the strongest writing that’s come out of the agency community on this shift.
It covers what your team needs from you, the leadership model that actually works, how to talk about pricing without paralysis, what not to do, and twelve frequently asked team questions with honest answers, including the ones leaders most want to avoid.
It’s free. It’s blunt. It’s tactical. And it’s specifically for founders who are ready to do the hard work.
I’m heading to Web Summit Vancouver next, where the room will be a hundred times bigger and full of much larger companies. I’m curious whether the same dual feeling is sitting in the bigger rooms too. I’ll let you know what I find.
I'm Katie Bedford. I spent a decade helping agencies run better. Now I help agency leaders think better — about their business, their role, and what it all actually means. If something in this piece hit a nerve, I'd love to hear about it.