Leadership Approaches for Delivering Business Value with AI

In this, the second of a two-part series, Dan Roberts, host of the "Tech Whisperers" podcast and CEO of Ouellette & Associates Consulting, explores how CIOs and other IT leaders can gain traction to lead with clarity, confidence and conviction in the AI era. Also see part one, in which Roberts leads a panel to share insights about moving from “the messy middle” of stalled AI initiatives to drive value while managing risks and building profitable enterprises.

Artificial intelligence has rapidly become the defining force reshaping business strategy, competitive advantage, and organizational design. Yet despite surging investments, most companies remain stuck in what Martha Heller calls the messy middle of AI: pilot purgatory, siloed initiatives, and stakeholder skepticism.

Part one of this series tackled the messy middle from the perspective of three CIOs-turned-board directors. To explore how CIOs and tech leaders can break free, I sat down with two trusted voices at the intersection of technology, strategy, and leadership: Dr. Lisa Palmer and Ashwin “Ash” Rangan. These two former practitioners have both recently published highly relevant books that shine light on how to lead with clarity, confidence, and conviction in the AI era. 

Palmer’s book, Show AI—Don’t Tell It: Build Buy In with Visual Storytelling, focuses on how to lead differently and win support faster by translating complex AI into clear results. Rangan’s book, Governance in the Age of Gen AI: A Director's Handbook on Gen AI, which he co-authored with Dean A. Yoost, a retired PwC partner and corporate governance veteran, provides a practical lens to the most important questions and emerging challenges with generative AI and explores how to stimulate creative and critical thinking in the boardroom. Both books offer a grounded, actionable, human-centered approach for leading, navigating, and succeeding in this moment.

It's a critical need. As companies continue to pour billions upon billions into Gen AI initiatives, a new MIT report reveals 95% of the pilots from the organizations it surveyed reported zero measurable return on investment. While the 5% are reaping the value, the vast majority are stuck in the messy middle, with little to show for their efforts and no measurable P&L impact. The problem isn’t the technology; it’s the strategy. Today’s leaders must embrace new roles, new mindsets, and new muscles to meet this moment.

Dr. Palmer, Rangan, and I kicked off our conversation on a recent episode of the Tech Whisperers podcast, digging deep into why so many AI initiatives stall out and what leaders can do to reignite progress. We continued the dialogue for this article, highlighting additional insights and practical takeaways for CIOs, C-suite leaders, and boards seeking to lead AI from experimentation to enterprise value.

Dan Roberts: At a broad level, what are some signs that your organization is going to get stuck in the messy middle?

Dr. Lisa Palmer: If you’re an organization that punishes failure, you’re going to struggle. If you're an organization that is wildly siloed, and people protect and hoard information, you’re going to struggle. If you’re an organization that does not actively manage or care for your employee experience, you’re going to struggle. These are examples of some of the red flags that point to systemic issues you’re going to have to deal with, because they are going to surface when you pursue AI.

Lisa, you’ve written a lot about the talent component. What are some of the red flags to be aware of, both from the company side and from the candidate side, in terms of building a talent matrix that can thrive in the age of AI?

Palmer: The first thing is that people have got to stop looking for unicorns and start building them. I read some of these job descriptions for AI leaders, and I think, my goodness, what planet are you planning to find this person on? You’re looking for the skills that you need for your organization, and your organization is going to need different things than another organization does. Your culture, organizational design, and risk appetite will tangibly impact who excels leading AI for you.

When people are considering a move to a new company and wondering if it would be a good fit for them, one of the things I counsel them to do is look at the job descriptions the company has posted. Say it’s a supply chain job. If they want 20 years of experience in the same exact job, that is a bad indicator. It says they’re not embracing change, they’re not embracing AI, and they’re not changing their business process. They’re not understanding that someone who has what I call a “jungle gym” career background versus a career ladder in the same area is actually going to have more to bring to the table to help you to go through the core changes that need to be made to be successful with AI, as opposed to someone with one deep area of expertise.

So look at the job descriptions, and if they’re not shifting, it’s a cultural indicator that the role that you’re going into as an AI person is going to experience extreme cultural resistance.

Companies are investing heavily in AI initiatives, but budgets don’t always tell the whole story. How do you know if a company has the strategic readiness and cultural commitment this requires?

Ash Rangan: Every company has indicators of whether they’re progressive in their culture or whether they tend to look back and hang on to their prior successes. A simple question for the CIO would be, “Give me a breakdown by percentage of how much you invest in running versus growing versus transforming.” If the answer is single digit in transformation, that tells you about the culture of the company right there.

It's quite common to find in IT budgets that 80% or more is consumed just running the shop, so to speak. That tells you that the emphasis from the business is not on transformation; it’s only on keeping the lights on and making sure that things are not breaking. That’s a necessary but not sufficient condition for success.

Palmer: AI investments are often bifurcated. The business side gets significant budget to drive initiatives aimed at delivering value, but in supersized organizations, IT has to partner with the business to make those efforts safe and scalable.

If leaders shift budget toward the business but don’t also fund IT to harden and scale those ideas, they set themselves up for disappointment. When IT is left with only 5 to 10% of its budget for innovation, the company stays stuck in the messy middle—pilot purgatory. To break through, leaders must fund both sides: the business-facing innovation and the IT engine that scales it.

Rangan: And these are artificial divisions, because at the end of the day, the end customer, the shareholder, they see the whole company. They don't see IT versus business-facing versus something-else facing. They just see the entity as a whole.

So these are games that are being played in the C-suite, and that talks to the culture. Because if the CEO is not able to look past these divisions and say what’s the right and best thing for the entity and make an entity-wholesome decision, then they’re fostering a culture of internal competition and creating an artificial scarcity at their own risk of detriment.

I think the progressive organizations are the ones that are able to see from the outside in and say, “The right thing for us is to do this,” and have that more holistic perspective, and then create the cross-teaming as a matter of natural process. 

On that note, there’s a lot of discussion that our current operating models are not set up to deliver measurable impact. What are your thoughts on that?

Palmer: I absolutely think that’s true, and my research bore that out. The reality is that organizations have a history of being extremely siloed. The larger the company is, the more intense the challenge is. The biggest opportunities lie in cross-functional understanding of the art of the possible, and it’s very difficult to build cross-functional operational change when you are organizationally designed in a way that isn’t supportive of that.

We need to see massive shifts in organizational structures as companies learn more about what works. Right now, many are relying on cross-functional task forces to stitch together the “connective tissue” across silos. That works in pilot mode, but it’s also why so many stay stuck in the messy middle. Once the pilot ends, trying to shoehorn the pilot process into the siloed structures that aren’t built for scaling a completely different business process doesn’t work. That handoff—from a highly collaborative pilot to a fragmented organization—is one of the biggest barriers to moving from prototype to fully scaled solutions.

Rangan: The most customer-centric organizations will, in the long term, survive, because at the end of the day, the only thing that matters is whether the customer who pays that invoice is happy with the product or service. If every structure inside the organization is geared toward that customer, that customer will continue to reward you for the services and products you offer them.

It’s when we bring in the textbook from the 1960s in business school that says, you need to have a finance function, you need to have an operations function…I understand we need to have all those functions, but we don’t have a company because we have these functions. We have a company because we have a customer, and these functions are subservient to the customer and fulfilling their needs. And in a dynamic world, their needs are equally dynamic. Even more so as the customer base is becoming digital natives. They intuitively understand the power of technology, even though they may not be able to articulate it. If the company is trying to tell them, you don't understand how difficult it is to make our technology work for you, they have no patience. They’ll go somewhere where they can find it. 

Ash, what are some signals that a company is ready for real change and has the kind of culture that will enable it to innovate and thrive?

Rangan: When I was with Rockwell International, I had the opportunity to have some conversations with Peter Senge, who wrote The Fifth Discipline. Peter emphasizes the learning organization and the ability of an organization to react to the environment, and he would say that the most important thing for an organization to thrive is to understand, contextually, its position relative to the universe. Not to lose sight of its strategy, but to make sure that the organization understood that the universe changes no matter your strategy, and the only survival mechanism left is learning and adaptation.

You can’t say, we are this, and therefore we choose not to fill-in-the-blank. The universe has more variables than you comprehend, and your reaction to the universe is the only thing that matters. That speaks to a cultural element that’s really important. We could look at Meta and the outrageous pay packets they’re offering for artificial superintelligence and pooh-pooh the idea, but that’s their reaction to the reality of their understanding of the universe. They’re saying, something like this is inevitable, so how do we get a piece of that so that we survive through that inevitability?

It's not about saying, we’re Google, we’ve got search. It’s about saying, we’re Google, and we can be a part of the AI revolution. It’s about saying, we’re Microsoft, and we’ve got hegemony going here, but we need to be part of the AI revolution and start Microsoft AI.

I think every company has that same choice to make now. This is happening, whether we choose to or not. The question is, what are we going to do about it? And how quickly are we going to do whatever it is that we choose to do? There will be takes and puts there, and that needs to be the conversation in the boardroom: Is it safe to put? Is it safe to take? How much of it is safe to put and take? Let’s understand the puts and takes. Let’s be very thoughtful about it and deliberate about it and not just be drawn into it. Otherwise, every company has a potential Kodak moment in the future, where they say, we invented the technology, except we didn’t bring it to market.

What’s your advice to CIOs and other executives about how they need to think about AI and the business so they can escape the messy middle once and for all?

Palmer: I talk about five things: You’ve got to focus on business value creation first and foremost. Next, as Ash said, you’ve got to be customer-centric in your decision-making. There are lots of things that you can do with AI; I’m going to encourage you to focus on doing what makes things better for your customers and your employees. The third is you’ve got to create a collaborative teaming environment, which ties directly to number four, which is culture—you need to embrace failure and learning, and apply that learning to the next iteration. And finally, data, data, data. You can’t be successful without it.

Rangan: The served customer is becoming incredibly important. There is an emphasis on technology in the age of AI, but I think it still comes back to the human connection. What is it doing for me? The fact that it’s AI is kind of an interesting parlor trick, but how does it materially change and impact my needs, positively or negatively? I need to be educated about the negative, but I should be made aware of the positives so that I can embrace it and make it my own.

There’s often talk about a distortion field capability that Steve Jobs exhibited so well, which was his ability to connect at a human level with his served audience and anticipate how they would interact with the technologies he brought to market. I think that’s going to be the key that determines those businesses that succeed from the ones that will keep falling behind, not understanding what’s happening.

When you can create a resonant message and live the message every day and change the culture to reflect that message and make the technology bend to the will of that message, then you’ve got a magic formula. To use the flywheel example, the customer is saying, I like this, I want more of it, and they come back to it. And you do more of it, and they say, I like this even more, I want more of it, and they come back again.

I don’t think consumers and customers are reluctant to spend money. They just want to spend money on things that materially make a difference in their life. So the question is not about, will they give you money? The question is, are you offering things that make it compelling enough that they don’t even think about the money.