The Competitive Moat That AI Can't Replicate

I'm probably in the minority, but I do not want a "connection" with a business. I want transactional interactions that actually work.

That is something that AI is not giving us today. By design. Companies are not switching to AI customer service because it's better or cheaper for the same service. They are choosing to replace customer service with AI chat bots that simulate the customer service experience without actually providing the service part.

An AI written post talking about the importance of human connection in the age of AI is hilarious.

This is great advice, as long as you remember you need both hospitality and service. At some point a warm relationship doesn’t compensate enough for a bad product.

I love that the staff at my little neighborhood bank remembers me, and was so warm and helpful when I had to open an estate account when my mom died, and sometimes I bring my favorite teller a latte on my way back from the coffee shop.

But I still switched my business account to Chase, because my little neighborhood bank’s website is stuck in about 2005, and I just couldn’t put up with it any longer!

> If every company uses the same AI tools to optimise the same metrics, the optimisation itself becomes commodity. Everyone has the same chatbot, the same personalisation engine, the same churn predictor. The floor rises for everyone simultaneously, which means relative advantage disappears. The only remaining differentiator — the actual moat — becomes the irreducibly human: genuine empathy in a crisis, a person who actually cares, a brand that feels run by real people who listen.

Yes, this is what every article proclaiming AI will be the end for human jobs completely misses. Ultimately businesses must compete and things that become scarce or harder to attain, such as human connection, will become their real differentiator. Businesses are still selling to humans at the end of the day.

This article was great and provides a lot of wonderful examples of how to build high touch businesses. It reminds me a lot of Delivering Happiness by the late Tony Hsieh and his experiences building a high touch culture for Zappos to differentiate with the ecommerce businesses he was up against who all resorted to bad customer support, poor return experiences. A famous example being Tony calling into Zappos' support line pretending to be a customer ordering a pizza as a joke, and his customer support actually caring enough to ensure a pizza was delivered to him. Probably a book more relevant than ever

> He called the restaurant. He was put on hold for thirty minutes. When someone finally answered, they were apologetic but firm — the restaurant was fully booked. No warmth. No conversation. Just a long wait and a closed door.

> In trying to humanise the process, he’d made it worse.

> Here’s where most stories would end with “so they moved everything online and fired the reservation staff.” That’s not what happened. They did move to online booking, but they kept the entire reservation team and repurposed them. These people now spent their days learning about the customers coming in that night. Who was celebrating a birthday? Who was on a first date? What had a regular not finished on their plate six months ago?

I have questions...

a) how does moving to online reservations help with "it's fully booked" if it's booked even before then?

b) what was "the entire reservation team" even doing that a phone call takes 30min to service and then just results in "nope we're full"?

In a lot of businesses, online reservations or tickets are scalper-prone, so I can absolutely see a desire to avoid that, and would be fully supportive of moving those things to phone or in-person. But that doesn't seem to be the case here, the story is just "He wanted the ritual of a human voice, the small exchange about an anniversary or a first date, the warmth of being recognised."

Which is plausible enough, but the details don't seem to add up. Is it even a true story? (Or is it the sort of plausible-but-internally-inconsistent thing you might get if you told an LLM to generate such a story about a restaurant?)

One thing I have a question: what about business that doesn't have hospitaly/B2C? Many exemples relies on the F&B business, which is quite special in the fact that one of the core value proposition is directly hospitality, so we could argue that "adding more hospitality" is actually their core business already.

But what about a company which is more in B2B, and where procurement will be more rationalized (e.g RFP, which is often regulated)?

One thing as well: this is moat from an organization point of view, but unfortunately not for the individual: soft skills are often easier to get than hard skills, and there is so already a competition on the job market for the client-facing roles, even before AI arrival: like Sales / Business Developers / Account Managers (or more internal roles to try to build something that the client would need, like Product Managers)

Why can't AI replicate that?

Because it's not reliable enough to let it do anything which might cost the service provider. This is the cost of hallucinations. You can't let the customer service AI issue refunds, or upgrade someone to a better room. Not yet, anyway. Agentic AI systems with any real power generate minor disasters on a regular basis.

I agree. AI and some of these type of digital platforms are making interactions more efficient, maybe ..less costly but efficiency isn’t the same thing as a real connection. Instead of investing in AI/digitization maybe it's better to invest in employee training and growth.

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