McKinsey published a report this month with a number I had to read twice. Nine out of ten companies have now deployed AI in at least one business function. But 94% of them say they haven’t seen significant value from those investments.

Nine out of ten in. Almost none getting much out.

That’s not an AI problem. That’s a strategy problem.

Here’s what’s happening. Most businesses are using AI to do the same things faster. Drafting emails faster. Writing social posts faster. Processing data faster. The tool changes. The output doesn’t. Because the thinking underneath it hasn’t changed.

McKinsey calls this the “Solow Paradox”, named after economist Robert Solow, who made a similar observation about computers in 1987. Companies invested heavily. Productivity barely moved. Because they computerised the old way of working instead of redesigning work around what computers actually made possible.

AI is following the same pattern.

The businesses that will win aren’t using AI faster. They’re using it differently.

The McKinsey research identifies three ways AI creates real value. The first is productivity. Doing existing work better and cheaper. The second is differentiation — building new products, services, or business models that weren’t previously feasible. The third, and most far-reaching, is what they call transaction cost reduction. AI so deeply embedded in how customers find, choose, and stay with providers that entire industry structures get redone.

For most NZ small businesses right now, productivity is where the focus sits. And that’s not wrong. But McKinsey makes a point that deserves more attention: productivity gains don’t expand profit. Competition erodes them. What you save, your competitors will save too. The advantage disappears as quickly as it arrives.

The electricity analogy in the report is a useful one. When factories first got access to electricity, most of them simply swapped the steam engine for an electric motor and kept everything else the same. Same layout. Same workflow. Same results, just slightly cleaner. The real breakthrough came when business owners redesigned their factories around what electricity actually made possible. That’s when assembly lines happened. That’s when mass production happened.

AI is at the motor-swap stage for most businesses right now.

The question worth sitting with isn’t “how can AI help me do this faster?” It’s “what does AI make possible that wasn’t possible before?”

For a NZ business owner, that might mean a completely different client onboarding model. It might mean offering a level of service that previously required a much larger team. It might mean reaching a price point that was never achievable before, or building something genuinely new for your market.

McKinsey’s conclusion is blunt: AI is not a productivity revolution. It’s a competitive reset. The companies that mistook efficiency for advantage in previous technology shifts optimised while others reinvented. They cut costs while others captured market share. When the dust settled, the winners were not those who adopted the technology fastest. They were the ones who understood earliest where value was moving.

In a small market like New Zealand, where reputation travels fast and the gap between businesses is often narrower than it looks, the businesses that figure this out first won’t just save time. They’ll change what they can offer.

That’s the actual opportunity.

Which part of your business would look completely different if cost and complexity weren’t the constraints they used to be?