The Pace Problem
Are we transforming fast enough to keep pace with AI?
Reality isnt what it was
Increasing macroenvironmental disruption, not least the rapid development of AI, is putting CEOs and their leadership teams on the back foot.
Most organisations are already pursuing some form of transformation programme in response to weaknesses in the existing operating model. Typically, these are multi-year efforts designed to move the organisation from point A to point B.
The problem is that the world, and AI in particular, is moving at a much faster clock speed.
By the time the organisation reaches point B, the environment is unrecognisable. What once looked like a desirable destination will turn out to be an operational cul-de-sac. Or worse still it will seem like the leadership team strategically planned a destination optimised for catastrophic organisational failure.
What makes matters worse is that many of these so-called business transformations are in fact an attempt to masquerade profitability by using IT to drive down costs. Same old business, just digitalised and dehumanised. Thus point B is likely to:
Irritate customers because now they must do everything via the website and engage with a very agreeable, untrained chatbot.
Ensure the demise of the organisation because the automation of the key processes has in effect ossified the existing, and failing, business model.
Be great news for the legal sector.
The IT vendor / service provider will highlight that their solution is state of the art. But this exercise is the equivalent of lubricating a sausage machine.
So whilst the question du jour is whether we are transforming fast enough to keep up with AI (PWC July 2026). The real question is whether transformation can keep up with reality.
Why this matters now
Some organisations may even have launched AI transformation initiatives. This is the equivalent of smearing the sausage machine with brain tissue. And even if some sort of mechano-biological miracle takes place you would at best have an intelligent sausage machine, which in an increasingly disruptive world is not a model optimised for viability. Sausage machines are a good example of what adaptiveness doesn’t look like.
The technology players have convinced leaders that all problems can be solved by sprinkling AI across the organisation. And thus AI transformation and business transformation have become synonymous. Given AI is ‘simply’ a new technology paradigm, this marketing sleight of hand has established that business and IT transformations are essentially perceived as the same thing.
If you as a leader have bought into this then point B awaits. Mercifully, on AI steroids it will arrive much sooner.
Don’t blame AI
This is not an attempt to take down AI. It has transformative potential but only if it is woven into a business model that is already optimised for increasing disruption. Even with a highly adaptive business model, introducing AI is an exercise in neurosurgery and not carpentry.
In any case, AI can deliver competitive advantage, but it requires a very different and more surgical approach than just considering it to be a ‘bolt on’ to ongoing IT change initiatives.
In many respects, the slowness of traditional transformation is delaying the associated existential crisis. Again shoehorning AI into any change initiative will be like loading up an elderly raver with ‘fresh from the lab’ amphetamines. It won’t end well.
The executive tension
Leaders therefore face an uncomfortable tension. Do they let the existing transformation run its course. Who knows it might work. And anyway, do they have the bandwidth to dismantle their transformation office and reverse out of the associated vendor contracts.
Another option is to run the AI transformation as a ‘parallel universe’ initiative. The reconciliation of both initiatives can be handled by a subsequent AI integration initiative. This feels like a good idea as it will show the shareholders that they are embracing AI with the same vigour as the competitors.
Early indicators suggest that AI is failing to scale and deliver the strategic value that was initially expected (IBM - April 2026). Fast and slow followers might use this emerging reality to draw breath and rethink the extent to which technology can future-proof their organisations if the operating model is trapped in a bygone (industrial) era.
It is also an opportunity to consider the governance implications of embracing AI and the associated work / culture implications. People are part of the solution. The vendors would have us believe that they are part of the problem.
Better questions
Leaders are encouraged to ask what needs to change structurally and systemically before they can seriously think about embracing AI.
In respect of AI, it is worth asking whether AI can add value in respect of the organisation’s products and services. Using AI in specific offerings exposes the organisation to AI’s potential, whilst limiting the damage it might do. Conversely, using AI to turbo charge the underlying old school business processes will likely have catastrophic consequences.
A better question is how do we make our organisation more adaptive. This has implications for leadership, governance, innovation, talent and technology. Superficial transformation programmes will need to be replaced by a new operating model. In short, transformation moves from being a programme to becoming the operating model.
Perhaps the most important question is how do we keep track of what is happening in the market given the internal organisation flux and the leadership attention it is requiring. This is a serious problem, as increasing volatility can radically and rapidly change your market. If you are not paying attention, you will likely miss the pre-shock signals.
It’s unsettling
Not all leaders are technology savvy and so in respect of current transformation initiatives they are sitting in the back seat. Senior executives need to take the steering wheel, recognising that technology and AI are part of the solution and not the solution.
Whether you are an experienced leader or a newly minted business school grad, you have a lot to unlearn. Say goodbye to playbooks and mechanistic operating models and say hello to sensing and probabilistic wayfinding.
Leadership will feel much more precarious, but it will be exciting. Most of all it will play to your people’s humanity. Humans have a long track record of navigating hostile environments. That’s why you and me are here today. The industrial era, and the agricultural era, steered us off course. But after this 12,000-year hiatus, disruption is getting us back on track.
We need to build an adaptive organisation, rather than launch another ‘Hail Mary’ transformation. AI matters, but as an enabler of adaptiveness rather than the reason for it.