When people talk about artificial intelligence, they almost always start with the models.
GPT versus Claude, Gemini versus Mistral, parameter counts, token limits and benchmark scores. It sounds technical and impressive, but beneath that vocabulary, something more fundamental is changing.
The model world is becoming a commodity.
The real game is no longer about which foundation model you choose. It’s about how deeply you integrate intelligence into your domain, your data, and your decision rhythm – how you translate abstract capability into differentiated context.
Once the data is clean, the models connected, and the processes instrumented, the real question begins to surface: where does differentiation come from?
That question doesn’t get talked about enough.
The Shift from Models to Context
In the early days of AI adoption, building or licensing a model felt like a competitive advantage. The technology was scarce, the expertise rare, and the results impressive. Today, the opposite is true. Models are everywhere. APIs are cheap, and performance parity is growing. You can’t simply slap a wrapper on an API and call it innovation anymore. Everyone can access the same intelligence layer; what separates one company from another is the context that surrounds it.
Context is the new moat. It’s what happens when intelligence is trained on proprietary data, tuned to the rhythms of a specific industry, and constantly refined through feedback loops that only you can create.
A logistics model that understands weather volatility, port congestion, and labor strikes in agriculture is more defensible than a generic one trained on synthetic data. The same goes for a financial AI that understands the seasonal cash flow of a farmer versus one that sees only accounting entries.
This is what we mean by vertical integration of AI. It’s not just about embedding models into workflows; it’s about teaching those models to think in the language of the vertical, to make decisions shaped by the realities of that world. That’s where the invisible playbook begins.
When Tech-Enabled Becomes AI-Enabled
For years, investors avoided what they called “tech-enabled services.” These were businesses that used software but depended heavily on people for customization and delivery. The model was functional but hard to scale because every new customer meant more labor. Revenue was linear, and margins were limited.
But something subtle is happening now. AI is quietly transforming what used to be a constraint into a strength. When intelligence becomes part of the delivery layer, customization stops depending on people and starts depending on computation. The cost of personalization falls. The feedback loops tighten. The more the system operates, the smarter it becomes.
Consider the world of food and agriculture. A generic optimization model can predict yield or price volatility, but it cannot reason through the trade-offs between weather risk, capacity, and transportation. Vertically tuned AI systems fed by years of proprietary data learn those trade-offs natively. Over time, they stop automating plans and begin reasoning through uncertainty, recommending network configurations or logistics choices that reflect live conditions.
That is vertical intelligence in action and it turns a tool into a competitive moat. That is the invisible playbook at work.
AI as the Scalability Layer
The promise of agentic AI is not just efficiency; it’s scalability without uniformity. Historically, scaling a service meant standardizing it. You built templates, scripts, and workflows that ignored individual nuance in favor of volume. AI changes that logic. If intelligence can learn at the edge, you can now scale differentiation itself.
Imagine two businesses using the same application. Over time, as AI becomes better at writing software, both applications start adapting to their users. The logic refines, the preferences embed, and the experience evolves uniquely for each person. What used to require armies of consultants and custom code can now emerge through use. The system becomes a reflection of its environment.
That’s what we mean when I we say AI could enable tech-enabled services. It can finally make them scale.
Building Moats in a Commoditized World
When everything looks like software, the question becomes: how do you build a moat?
The answer lies in the feedback loops that connect data, decisions, and outcomes.
In a service model, every customer engagement consumes capacity. In an AI model, every engagement creates capacity. Each new customer interaction generates more examples, more edge cases, more refinement. The intelligence compounds.
That’s what separates an AI platform from a service business. The key question to ask is simple: does your system get smarter with scale, or just busier?
If the answer is smarter, you have a platform. If it’s busier, you still have a service.
Moats are not built from models; they’re built from learning velocity. The faster a system can adapt to new data, feedback, and context, the harder it becomes to copy.
From Automation to Understanding
Most of the last decade in AI has been about automation ie doing familiar things faster, cheaper, and with fewer errors. Then came prediction – using data to forecast what might happen next. The next era, the one we are entering now, is about understanding.
Agentic systems are not content with prediction. They reason. They act. They self-correct. They connect outcomes to intent.
Think about a supply chain optimization problem. A predictive system can forecast delays. An agentic system can understand why delays happen, simulate options, and execute the best path forward while learning from the outcome. It doesn’t just automate the process; it absorbs the logic behind it.
That is the inflection point between applied AI and agentic AI. Applied AI accelerates operations. Agentic AI transfers cognition.
The Organizational Shift
Technology alone will not get a company there. The invisible playbook also applies to leadership and structure.
In most organizations, data, operations, and decision-making still live in silos. AI breaks those silos whether leaders want it to or not. The most successful companies are reorganizing around feedback loops instead of departments.
Data feeds insight. Insight drives decisions. Decisions create outcomes. Outcomes feed back into data.
When that loop is short and disciplined, learning compounds. When it is slow or fragmented, AI becomes a reporting tool instead of a reasoning partner.
The difference between companies that use simply “bolt on” AI and those that become AI-drivenfully integrat AI lies in how tightly those loops are connected. One gets faster. The other gets smarter.
The Leadership Question
As AI grows in capability, the role of leadership is changing. The question is no longer “What can this system automate?” It’s “What decisions are we willing to delegate to a machine, and how do we define the boundaries of its reasoning?”
The future CEO will spend less time managing operations and more time orchestrating decision architectures. They will think in terms of systems, not silos; of outcomes, not activities. The challenge is not control but clarity i.e. how to encode values, priorities, and tradeoffs into systems that act autonomously but align with intent.
In that sense, leadership becomes an act of design. AI forces leaders to articulate what good judgment looks like, not just what good performance is.
From Boring to Bold
The boring work matters. It gives you clarity and reliability. But it only gets you to the starting line.
The invisible playbook is about what happens next: how you turn structure into strategy, and how you build systems that learn faster than your competitors can imitate.
In this phase, the advantage belongs to those who know their vertical intimately, who can translate domain complexity into data patterns and data patterns into autonomous reasoning.
The differentiator is not who builds the flashiest demo but who captures the feedback loops of a living industry and converts them into compound intelligence.
That’s what vertical AI truly is: not a narrower version of general AI, but a deeper one. It is intelligence with context, judgment, and memory.
The Future of Differentiation
If the last decade belonged to those who could digitize processes, the next one will belong to those who can contextualize intelligence. The companies that thrive will be the ones that integrate AI not as a layer of convenience but as a core of cognition.
They will understand that AI does not replace expertise; it scales it. It doesn’t erase human judgment; it encodes it.
And they will recognize that being a “tech-enabled” business is no longer a weakness if the technology itself can learn, reason, and evolve faster than humans ever could.
The Quiet End of the Model Wars
At some point, the world will realize that the model wars were a distraction. The real competition was never about the models; it was about who could apply them in ways that created compounding learning within a domain.
You cannot copy that kind of intelligence. You can only earn it.
That is the invisible playbook for AI.
- It begins with the boring but ends with the bold.
- It starts with clean data and ends with differentiated cognition.
- It teaches that APIs alone are not moats and that automation is not strategy.
What creates enduring advantage is the way intelligence learns to carry your intent into the world, to make better decisions the longer it lives inside your ecosystem.
That is not a tool. That is a living system.
And that, finally, is where differentiation really comes from.
