Why investing in the leaders of tomorrow will be more important than ever in FY26–27

AI-powered automation is a game changer, but businesses that use it to replace up-and-coming talent risk dealing themselves out of the game in the long term, writes Andrew Foot.

That an extraordinary surge in AI spending is currently taking place is not in dispute. Done well, AI-powered automation can deliver businesses an extraordinary efficiency dividend, eliminating repetitive manual tasks across almost every area of operations and enabling them to contain headcounts and overheads.

In today’s challenging and uncertain times, doing the latter is a critical imperative for Australian enterprises. Finding new ways to “pull in the belt” has emerged as the key driver behind many decisions.

The Australian Industry Group sums up the status quo succinctly in its Australian Industry Outlook for 2026 report, published in January 2026.

“Industry leaders go into 2026 with one big worry on their minds: rising business costs. While economic conditions have slightly improved over the last year, they remain subdued by historical standards. However, cost pressures on businesses are still growing, posing difficult challenges that are reshaping business strategy,” the report said.

Going all in on AI

Against that bleak backdrop, the race to embrace AI has assumed additional urgency.

Businesses are understandably anxious to keep up with the competition, to avoid ceding mind and market share to ahead-of-the-curve counterparts that have harnessed AI’s power to optimise their operations and elevate their customer experience and service.

Here in Australia, data entry and document processing, generative AI assistants, fraud detection, marketing automation, and predictive analytics were the most popular AI applications in early 2025, according to the federal Department of Industry, Science and Resources’ AI Adoption Tracker.

The retail, trade, health, and education sectors were in the AI adoption vanguard, while construction, manufacturing, and agriculture indicated less awareness of the value of adopting AI solutions at that time, the August 2025 Adoption Tracker report revealed.

Putting people before platforms

But, irrespective of the size or nature of the enterprise in question, deploying new AI-powered platforms and models without a parallel plan for investing in human assets is a shortsighted strategy. It risks stymying innovation and destroying morale even as it delivers the short-term cost savings senior leaders and shareholders are seeking.

Taking this tack could all too easily come back to bite businesses that go “all in” on automation while de-prioritising the recruitment and development of high-calibre personnel.

Because, no matter how transformative AI-powered platforms and models may be, they can’t replicate many of the most important elements of a high-performing team.

Curiosity, flexibility, resilience, and creativity are uniquely human attributes. So is judgement – the ability to come to sensible conclusions and make measured decisions that consider all the factors in play for businesses operating in complex commercial landscapes.

Thus, businesses that aren’t nurturing a pipeline of talent are doing themselves a major disservice.

Investing in your greatest asset while you build AI capability

The extraordinary technological innovation of recent years notwithstanding, the best way to do so is the same as it ever was: providing early-career workers with opportunities to learn, experiment, and grow. It’s a journey that may well involve the use of AI, but as a problem-solving tool, not a substitute for human judgement.

Mentorship still matters too, as much, if not more, than it ever did. Done well, it should see senior leaders purposefully guiding and supporting high-potential employees as they move up the ranks, into positions that entail greater responsibility and challenge.

Businesses that make a genuine investment in this space can expect to reap the rewards in the form of engaged employees, productive teams, and a can-do culture that will support them to navigate whatever challenges today’s uncertain times throw up.

Building a strong foundation for success in the AI era

While AI-powered digital infrastructure may supercharge efficiency and productivity, it’s no substitute for an engaged, high-performing team. Australian businesses that strive to build both stand the best chance of surviving and thriving in the upcoming financial year and beyond.

Andrew Foot is the regional vice president, ANZ, at Dynatrace.

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