As artificial intelligence continues to reshape industries and business paradigms, the need for AI literacy among business leaders has never been more critical. To discuss AI literacy and many other timely topics on AI, the Digital Data Design (D^3) Institute at Harvard and the Harvard Business School (HBS) Club of the Gulf Cooperation Council (GCC) hosted the AI Elevate: From Readiness to Exponential Growth conference in Dubai, UAE, on December 13, 2024. For an introduction to the day-long conference, see the Opening Remarks.
In the AI Is Transformation session, Tsedal Neeley, Professor of Business Administration at HBS, presented an overview of how AI is fundamentally transforming businesses and industries, and the effects on organizations’ strategies and structures.
Key Insight: The Digital Mindset: A Prerequisite for AI-Driven Transformation
[T]he digital mindset is a set of attitudes and behaviors that help you see new possibilities using data, technology, algorithms, and AI in order to chart the future.
Tsedal Neeley
Professor Neeley emphasized that developing a digital mindset is crucial for adapting to technological changes, including AI. The concept is based on the idea that changing how people think ultimately changes their feelings and behaviors, which is essential for organizational transformation. According to Neeley’s research, individuals only need to understand about 30% of AI and digital concepts to contribute effectively in an AI-driven environment.
Key Insight: Aligning Organizational Structure with AI Strategy
AI-first companies are organized by data, algorithms, and unified platforms. It’s not just departments and tasks.
Tsedal Neeley
Neeley stressed the importance of aligning organizational structure with AI strategy. She argued that successful AI implementation requires a fundamental shift in how companies organize themselves, moving away from traditional, siloed departmental structures to data-driven, algorithm-centric models. Neeley described companies organized for speed, scale, and innovation as “change fit” and cited the example of Moderna, which with only 800 employees, was able to compete with Pfizer (100,000 employees) in vaccine development due to its AI-aligned structure.
Key Insight: AI’s Impact on Productivity and Job Satisfaction
[T]hose who write with ChatGPT have 40% higher quality writing output and are faster.
Tsedal Neeley
Neeley highlighted the significant productivity gains and improved job satisfaction resulting from AI adoption. She cited studies showing that AI tools like ChatGPT can dramatically enhance work quality and speed across various tasks. For example, as AI increasingly handles routine tasks, programmers coding with AI reported being 55.8% faster in their work and 50% faster in developing documentation. Plus, 75% noted higher job satisfaction, 73% reported better concentration, and 87% described reserved cognitive effort.
Key Insight: The Challenges of AI-Driven Transformation
Seventy percent of transformations fail—70%. That’s a huge number.
Tsedal Neeley
Neeley described roundtable discussions that she and Professor Karim Lakhani conducted with 100 CEOs. These conversations revealed many common concerns such as fearing disruption, building AI fluency in their organizations, reskilling their workforces, responding to clients, and wondering where to start and how to transform.
In addressing the significant challenges organizations face when implementing AI-driven transformations, Neeley emphasized that transformation is fundamentally different from incremental changes and requires specific skills and strategies to succeed. She listed ten common reasons why such a large number of transformations fail:
- Leaders and teams lack transformation skills
- Leaders and teams resist change
- Insufficient digital and AI expertise
- Not engaging the entire organization
- Not securing buy-in from stakeholders
- Flawed strategy, execution, or both
- Misalignment of systems and processes
- Not dismantling silos
- Not prioritizing responsible use of AI
- Declaring victory or defeat too soon
Why This Matters
Understanding and implementing AI-driven transformation is no longer optional for businesses aiming to remain competitive in the global market. Professor Neeley’s research demonstrates that the impact of AI extends far beyond mere technological adoption—it requires a fundamental shift in mindset, organizational structure, and business processes. For C-suite executives and business professionals, developing a digital mindset and fostering an AI-ready culture within their organizations is crucial. To take advantage of the speed and innovation potential of AI, organizations must confront a variety of challenges, from change management, to aligning technology and organizational structures, to the responsible use of AI.
Meet the Speaker
Tsedal Neeley is the Naylor Fitzhugh Professor of Business Administration, Senior Associate Dean of Faculty Development and Research Strategy, and Faculty Chair of the Christensen Center for Teaching and Learning at the Harvard Business School. Her work focuses on how leaders can scale their organizations by developing and implementing global and digital strategies. Tsedal received her PhD from Stanford University in Management Science and Engineering, specializing in Work, Technology and Organizations. Also see Tsedal.com.