The notion that artificial intelligence (AI) will inevitably lead to mass job displacement is a widely accepted yet fundamentally flawed perspective. This chapter challenges what we term the Automation Fallacy—the oversimplified belief that AI functions primarily as a job killer that will systematically eliminate human work from the bottom up. By examining empirical evidence and contemporary case studies, we demonstrate that AI’s true impact is more nuanced, involving the transformation of work rather than straightforward elimination of jobs. The chapter introduces the AI-Competency Paradox, which reveals how AI disrupts competencies before it disrupts jobs, with the greatest impact on structured, rule-based knowledge work rather than following the presumed bottom-up pattern of displacement. Drawing from case studies including Tesla’s manufacturing automation missteps and Toyota’s successful human-AI integration, we establish that organizations viewing AI as a simple workforce replacement tool consistently underperform those that strategically realign human capabilities. This challenges businesses to reconsider their approach to AI adoption, workforce development, and competitive strategy.