Should You Stop Investing in AI (for Now)?

The conventional wisdom—AI is the future; keep investing—is pushing corporate leaders to spend and scale, faster, faster, faster. Leaders around the world are greenlighting massive investments in AI. The International Data Corporation (IDC) projects that global spending on AI will reach $632 billion by 2028. There’s good reason to be bullish about the long-term potential of AI to change how businesses work. A pivotal third wave—agentic AI—is here, and it has the potential to shift the way companies unlock value. But most companies aren’t on the right track to achieve that value. Despite AI’s growth, 51% of companies lack mature capabilities, and only 4% leverage AI for competitive advantage. Companies aren’t generating ROI on their AI investments because they’re still thinking about AI as a siloed, piecemeal solution instead of the data, software, and process foundation for a completely different way to power a business. Leaders urgently need an approach to help them make smarter, value-focused decisions about AI—one that will help them avoid throwing money at new solutions and hoping something will stick. Instead, they must ensure they’re investing in tomorrow’s core value-driving areas to build competitive advantage. Our prescription for every business is simple. Stop to Reflect Few businesses are creating value or disrupting their sector using AI today. That’s why we recommend stopping further investment in AI that could be eroding value. If you’re investing in areas that aren’t your company’s value core for today and tomorrow, you’re just spinning your wheels. If you’re investing in solutions that massive tech companies are already building, you’re duplicating efforts. Instead, wait. The market will evolve and create solutions for you. In the near future, you’ll probably be able to buy a solution for much less than you could build it now or maintain it in the longer run. We worked with a global company in the chemical industry that was experimenting with AI here and there around the organization, doing small-scale tests but not committing to a clear strategy. Their actions showed they were thinking about AI as an interesting ad-hoc solution, not an industry game-changer. To develop a more strategic stance on AI, the company’s leaders stopped spending AI dollars on random experimentations. They realized that even if some of the tests proved valuable, most would fail, eating up time and resources. They needed to stop chasing tech solutions and start investing in the game-changing business outcomes they wanted to drive. Reflect to Reframe Industries are going through value migration, and in most cases they are not linear in nature. Leaders must understand those shifts to always have one eye on what’s next, why, and where that will come from. Think about how your sector will evolve in the next three years. What trends can you observe now? What scenarios are most likely? Then, consider how you can invest in or build to compete and win in the future against your peers. The key is investing in tomorrow, not optimizing yesterday. Value creation is non-linear, so you must think tomorrow-first, then work backward to make the right investments in areas where your organization can leverage disproportionate value. If you already have a competitive advantage in your supply chain, don’t assume that your AI investments should also be in the supply chain. Instead, consider future areas that will drive the most return in the market for your sector and for you as a company. Ask: What is our core competitive differentiator today? How will that change over time? What will possibly be the biggest differentiator to win in the future, and why? What are some adjacencies and forces that will play out, and how do those suggest you should play differently? After they paused current spending, the global company we worked with reflected on the future of the chemicals industry. They identified a few key predictions: Their industry would become more cost-driven, and customers would pay for differentiation. To win the cost game, they needed to focus on supply-chain efficiency—however, they also realized this would become table stakes over time. AI-driven R&D would be an important differentiator, critical for diversification and growth. R&D would need to balance product/service innovation with engineer-to-cost and time-to-market expectations. How the company relates to customers and delivers what they truly need would amplify their positioning and create real market differentiation. Reframe to Focus Once you’ve stopped the free-flowing investment in all things AI and paused to consider future market opportunities, you can invest in the areas that will assure value and differentiate your positioning. Double down on investments in those core areas that will guarantee you a first-mover advantage, and use AI to unlock tomorrow’s value. The companies that will win in the next era of AI will invest in people and processes as well as tech. Investing solely in solutions is definitely not enough. The chemical company we worked with reframed their strategy to ruthlessly focus on value by investing in AI-powered innovation in R&D and commercial. They adopted a VC mindset, which means they stay agile, build on success where they see positive outcomes, and aren’t afraid to pause or kill a project or idea if it isn’t working. They considered how to invest in people + process + technology to design a transformation that brings people along and gets the most out of their current workforce. They recognized that AI is a game-changer, not an incremental change. Therefore, their strategy needed to be much bigger than chasing a point solution. . . . The reality is clear: AI-innovation will keep coming, bigger and faster. The time to establish a strong foundation for that world-rocking business transformation enabled by AI is now. Every leader needs a clear-eyed strategy in order to leave their company better than they found it, with AI investments that will drive value, not distraction or destruction. No matter what industry a company is in, it’s time for leaders to flip the conversation on AI investment. The most successful leaders will move from a spend-speed-scale mentality to a smarter, more value-based approach.

Should You Stop Investing in AI (for Now)?

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