What you need to know about AI transformation

AI is a power tool. It can cut through inefficiency, or it can rip apart your budget. The difference comes down to how leaders choose, deploy, and govern AI inside their operations. Uber burning its 2026 AI budget in just four months is a cautionary tale that deserves paying attention to.

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What is AI transformation and how to ensure its success?

It's simply digital transformation with a focus on leveraging AI for operational efficiency. If it's merely classified as an IT project, it is likely very short-sighted. I say this because I see it eventuate more often than not.

Transformation starts with creating a shared understanding of what value is, how it flows (VSM is a great tool for mapping that), then defining value-add and non-value-add activities, and assessing the ROI of optimisation opportunities. Arbitrarily sprinkling AI and automation (i.e. suboptimisation) to processes has a potential of creating operational waste.

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AI is a commodity, not a competitive advantage

If every competitor uses AI to optimise their operations, no one gains an edge. The baseline has shifted. Leveraging AI strategically to amplify value proposition or service offering is crucial to get value out of it.

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What is AI strategy?

AI is not a strategy per se, it's a strategic ingredient that has a potential (a big one) to boost operational efficiency and value proposition.

Strategy is a set of decisions, not a bundle of tools. For IKEA, it's flat packaging, easy logistics, low cost. For Microsoft, it's enterprise distribution dominance, and sticky ecosystem. It's not AI, LLM, ML, etc.

Real transformation isn't a tech rollout. It's the continuous habit of pulling the right levers to amplify strategic positioning.

Strategy is deciding what to build, not what power tool to use. AI amplifies an existing strategic moat it placed thoughtfully. It doesn't create one from scratch unless you are selling language models. FOMO-driven AI adoption costs organisations a fortune.

Most companies treat AI as an "implementation project" with a start and end date, backed by some strategy decks. True transformation is building an organisational muscle that continuously evaluates new opportunities against core choices, invests in small bets, and exploits where returns show positive signs.

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Final Words

Purchasing LLM licenses and AI‑enabled tools for employees won’t transform businesses; applying them strategically will. Leveraging AI to strengthen strategic positioning and enable new offerings with the freed‑up time is where the real opportunity lies.