As each producer becomes expert in his specialisation and the use of his tools, a productive limit is reached until further specialisation and better tools are created.

Imagine a primitive Hunter Gatherer. He may find it difficult to catch many fish with his bare hands. If he could make a net, this would substantially improve his fish production. A farmer who uses a plough pulled by an ox to work the land would be able to accomplish far more with a tractor and a large multi-bladed plough. A singer could sing to a larger audience if he could use an amplifier to increase the volume of his voice. Or a cook who has access to a ceramic pot for cooking food will be able to produce many different type of meals, compared to what can be cooked without the pot.

An individual who has already specialised, say a software engineer, but who learns to use a new tool such as an AI Assistant, may become more narrowly specialised in his field. He might only take on work in which the AI assistant can help him, because his productivity in this more narrow field is greater than his colleagues.

There are cases in which using a tool changes the final product for consumption and in other cases there is no difference in the final product. The singer using an amplifier is actually producing a different experience than that without an amplifier. But wheat from a crop harvested with a scythe and manually thrashed is likely no different from wheat harvested by a mechanised harvester.

Tools often lead us to even more different opportunities to meet human needs. A boat, which might have been produced by a fisherman to assist in his fishing, does not need to only be used for fishing. It could be used for travel instead or ferrying people or cargo from A to B. This leads to new opportunities to meet other human needs.

In a broad sense any new technique is a technology. If a man who repairs punctures finds that lining up a whole series of wheels before starting to repair multiple punctures, is able to work faster with this method, then in a broad sense, his new technique could be considered a new technology. A tool is an example of a capital good as well as a technology. The tool is a physical object and must be created before the final product can be produced. A factory which is used to produce cars is a very sophisticated tool, which itself is an assembly of a myriad of other tools, all of which are created by people who wield another enormous array of tools.

Almost all products are produced by using tools. A man may be able to catch fish without a tool of any sort or he may be able to pick berries to assuage his hunger. But these needs are simple and clearly the productivity is low. When a tool is used to produce a different good, then this can be considered to be a more roundabout method of production. The tool must be created first, so that it can be used to make the consumer good. The more tools, processes, methods or systems that are involved in the production of a good, the more roundabout the production can be considered to be. This is often not obvious, because it is often assumed and it is a grave error to make the assumption that these capital assets just exist. A failure to properly maintain the capital assets, the tools, or a failure to build the correct tools has significant implications for the producer. It is a mistake to produce traps for catching animals if there are no animals to be caught, but instead there is an abundance of fish to be caught in a nearby river. The tools must be appropriate for the goal being pursued.

So specialisation helps to improve productivity and specialisation coupled with an appropriate tool further enhances productivity. Specialisations can lead to better tools, which can lead to further sub-division of labour, which can then lead to better tools and so on.