Significant technological shifts historically create distinct winners and losers, where a few organizations operationalize breakthrough ideas and the rest lag behind. AI is likely to follow a similar course. The risk facing today’s C-suite is that leadership teams throughout their organization get so caught up in generating near-term operational efficiencies that they miss the broader, more transformational strategic opportunities.
As businesses spend hundreds of billions of dollars on AI services this year, adoption is rising and productivity gains are beginning to emerge. But faster execution, greater efficiency, and broader adoption are not replacements for industry-defining growth strategies. Leaders who orient productivity gains toward broader organizational goals and steer their organizations toward breakthrough innovation are poised to see the best outcomes.
To do this, executives must foster leadership mindsets and behaviors that maximize what AI can do for their businesses. Leaders who engage the creative imagination of their teams while also leveraging what AI makes possible, can discover entirely new ways to create value and improve performance.
The Building Blocks of Breakthroughs
To create a breakthrough, your employees need more than a mandate. They need a clear vision they can believe in. Most organizational leaders, however, are falling short.
In a FranklinCovey Institute survey conducted last fall, about 25% of workers said expectations for their use of AI are unclear and just 9% of workers said their manager has explained to them how AI will help their business grow. More recent FranklinCovey data (to be released this fall) deepens the picture: employee engagement with and curiosity about AI has grown but inspiration remains in short supply, and workers still aren’t getting the clarity they want and need from their leaders.
When AI tools automate routine tasks, they yield a significant dividend: found time. But today, only 35% of the workers we polled said they are reinvesting time saved into innovation, strategic thinking, or deeper client engagement. Lacking a broader goal to give their AI efforts and productivity gains meaning, employees’ energy level may dissipate and their attention gravitate toward job security fears.
Efficiency gains mean little if people do not know what they are working toward. Without that direction, employees become hesitant and uncertain, and can quickly wear themselves down working at cross-purposes. Purpose matters when it comes to unleashing people’s creative engagement. Yet, three in ten of the workers we polled said they feel less motivated than they did a year ago and only 9% say their manager explains how AI will help the business grow. It is up to leaders to help employees feel connected to the organization’s larger goals and create the conditions that enable teams to uncover the next new revenue-generating idea.
Finally, according to our upcoming research, to deeply and sustainably engage an organization or team, a clear vision and purpose must rest on a foundation of trust. When asked what attribute they most seek from their leaders when it comes to leading a successful AI transformation, employees’ number one desire was for a leader who “is honest about how AI will change our work.” And again, most employees aren’t getting what they need: When asked whether their own leaders provided such honesty,, only 36% agreed.
Paradox and Promise
The current phase of AI deployment highlights a longstanding productivity paradox. Throughout history, transformational technologies, even after achieving widespread adoption within an industry or market, have taken time to produce transformational productivity gains, as fear and distrust combine with high deployment costs and the inertia of existing habits and infrastructure to slow the broader economic impact of the technology. For example, when electric lighting was first introduced in factories in the late 1800s, it was layered onto production systems designed for steam power. Factory productivity did not rise significantly until the 1920s, when manufacturers reorganized production around motorized assembly lines.
In the 1970s and 1980s, when companies began spending billions of dollars on personal computers, they initially saw no productivity growth. Economist and Nobel Laureate Robert Solow famously told the New York Times, “You can see the computer age everywhere but in the productivity statistics.” It wasn’t until the 1990s that companies began to realize the PC revolution’s value. By then, companies had moved on from simply using PCs to automating paper processes and then leveraging them to reinvent supply chains, manage data, and connect to the Internet.
These productivity gains did not come from technology deployment, but rather from visionary leaders and organizations that found new ways to utilize the new technology. The same will be true for AI, but the impact for leading firms will be much faster, measured in months and years, not decades.
For example, a National Bureau of Economic Research working paper in February found that 70% of firms across the U.S., U.K., Germany, and Australia are actively using AI, but 80% to 89% reported no measurable impact on productivity over the past three years. At the same time, these firms expect meaningful impacts over the next three years as they mature in their deployment. This is to be expected. Corroborating research from McKinsey and PwC also shows that leading firms are already making significant headway compared to their slower-paced and less-capable peers.
Just as electricity and PC usage became required infrastructure for modern businesses, AI will eventually become part of the new baseline and fade into the background of our workplaces. The advantage will go to those firms that have built the cultural strength and leadership capability to successfully reimagine their operations, transform their performance by bringing together the best of human and technical capabilities, and execute their strategies with excellence.They will be the organizations that create new sources of value for their customers and for the world.
Where Leadership Matters Most
Our research consistently shows that human-led activities are the key to driving organizational performance: mobilizing individuals, retaining top talent, delegating effectively, and building accountability. Moreover, the leaders who are most effective operate at the human level: they create trust and align teams around clearly articulated goals; they build a shared sense of purpose. And those leaders in turn understand that their role is to unlock the power of individual team members’ human capabilities—judgment, independent will, creativity.
Amid AI disruption, a foundation of trust is especially important. It is a form of cultural infrastructure that companies must invest in to deliver breakthrough results.
Leaders looking to gauge whether they are on the right track might ask themselves: When facing uncertainty, how does my team respond? Can they articulate our larger goals? Do they use AI tools to save time or grow our business? When does my team hesitate and when do they charge ahead?
AI transformation has exponential promise, but leaders must challenge themselves to think beyond the short term. Workers aren’t going to put their heart and soul into mere productivity, but they will passionately pursue growth when they are motivated by leaders who articulate a clear vision of customer value and create a culture of trust that allows them to innovate.
