Coordination Costs Are AI's True Breakthrough
FinanceYF5 · x · 2026-07-14
The author points out that the major cost for labor-intensive companies isn't just labor itself, but the cost of "coordinating labor".
Their estimate suggests that in such companies, labor costs account for about 25% of revenue, and about a quarter of that is spent on management, scheduling, approvals, and other coordination tasks—equivalent to roughly 6% of revenue. If the coordination burden is reduced by 10%, profits could potentially increase by around 20%.
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