The value problem
How do we turn AI investment into measurable business value?
That don’t impress me much
AI creates measurable business value when it changes outcomes. Now that we have AI are we faster, cheaper and / or smarter? Capability is not performance. Licences purchased, AI pilots launched or staff trained strongly imply AI adoption, but again this isn’t performance.
Just because your AI tools have saved each member of staff five hours per week, are these five hours being recycled into creating organisational value?
Who cares?
In this respect it is useful to think of organisational value creation as the mechanism for increasing the chances that your organisation matters. Think corporate epitaph. How many would turn up to the funeral?
The more stakeholders that receive value from your organisation the more likely they are going to ‘have your back’ and thus reduce the likelihood of demise. This is the primary reason why stakeholder capitalism trumps shareholder capitalism.
Creation versus accumulation
Organisations create value. Most obviously for buyers and investors. But there is a whole ecosystem of actors, including:
Employees
Regulators
Professional bodies
Competitors
The planet
Local communities.
Competitors is a little controversial. Intelligent organisations value competition as it raises the bar, and thus the value return, for all parties.
But an organisation can create value without accumulating any value. An organisation that just about breaks even will not be able to accumulate the financial reserves to buffer it through increasingly disruptive times.
Value leakage, or poor value capture, can occur for many reasons, including:
A poor understanding of the market rate
An inefficient use of resources
A leadership preoccupation with building an AI arsenal
A toxic culture
Being locked into inflexible contracts
An inability to detect shifts in the market
A poor decision-making architecture.
Once these leaks are addressed then we are into the Sir David Brailsford marginal gains zone. And this is where the accumulation of value starts to really take off.
AI has a role to play in value creation, capture and accumulation.
Is it all about scale?
Unfortunately a paper from MIT in 2025 caused the market to believe that the only way to assess AI’s value performance was through the lens of scale. It highlighted that across seven out of nine major sectors, GenAI pilots have had little to no structural impact.
This has largely led to scale being seen as the bottleneck to yielding value from AI.
Simplistic thinking
I would suggest that this failure to scale is a blessing. Thinking around AI, particularly in the media, seems to suggest that simply ‘adding AI’ will solve the organisation’s problems, and future-proof it from an increasingly volatile world, like a ‘once only’ vaccination.
This is the equivalent of sitting in a rowing boat caught in an ocean tempest and thinking, if only I had a cagoule. Some might think more broadly, if only I could swim better. This would at least be a systemic improvement. What is needed is a highly adaptive vessel that can cope with whatever weather comes its way.
Given the major macroenvironmental forces that are bearing down on your organisation, a preoccupation with AI puts you squarely in the cagoule category.
And to quote the MIT paper, having a structural impact requires changing the structure rather than p(ai)nting it. This is not so much a criticism of the paper and more the lack of thinking on those that are promoting AI adaption as a scale issue.
Viva la resistance
My theory is that failure to scale is the organisation’s antibodies reacting to this blunt approach to business process improvement. The business is falling apart at the seams as it was never designed for the level of disruption we are witnessing today.
Those that are trying to keep the organisation on its feet, despite its out-of-date operating model, recognise that adding steroids to broken process flows will not end well. As I have mentioned before, this is not dissimilar to testing the latest synthetic amphetamine on an elderly raver. The antibodies aren’t Luddites. They are the organisation’s immune system.
The 3Vs
So leaders need to think less about AI absorption and more about creating an adaptive, and thus intelligent, organisation. In an increasingly chaotic world, viability is the primary issue – how can we survive. But value is why we exist, so how can we matter more.
The path from survival to mattering is vitality. Vitality provides the energy to create more value – how can we thrive. This is where cognition is harvest. And this requires a very different approach to talent management.
These all require structural and systemic change, which will be unachievable for most traditional organisations unless the leadership team are willing to unlearn its industrial era practices and think more in terms of biological systems.
AI has a critical role to play in this. But again you don’t paint the house until you have completed the repairs.