Why 95% of AI Pilots Fail: The Hidden Scaling Problem Killing Your ROI
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Why 95% of AI Pilots Fail: The Hidden Scaling Problem Killing Your ROI
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MIT research reveals 95% of AI pilots fail to deliver revenue acceleration. Tom breaks down why this isn't a technology problem but a scaling failure, and provides three critical questions to identify which pilots deserve investment.
Show Notes
Key Statistics
- 95% of generative AI pilots fail to achieve rapid revenue acceleration (MIT, 2025)
- 8 in 10 companies have deployed Gen AI but report no material earnings impact
- Only 25% of AI initiatives deliver expected ROI
- Just 16% scale enterprise-wide
- Only 6% achieve payback in under a year
- 30% of GenAI projects predicted to be abandoned by end of 2025
Core Problem: Horizontal vs. Vertical Deployments
- Horizontal: Enterprise-wide copilots, chatbots, general productivity tools
- Scale quickly but deliver diffuse, hard-to-measure gains
- Vertical: Function-specific applications that transform actual work
- 90% remain stuck in pilot mode
Three Critical Evaluation Questions
- Does this pilot solve a problem we pay to fix?
- Can we measure impact in terms the CFO cares about?
- Does it require process redesign or just tool adoption?
Success Factors
- Empower line managers, not just central AI labs
- Select tools that integrate deeply and adapt over time
- Consider purchasing solutions over custom builds
- Be willing to retire failing pilots
This Week's Action Items
- Inventory current AI pilots
- Categorize as: scaling successfully, stalled but salvageable, or stalled and unlikely to recover
- Apply the three evaluation questions
- Identify specific barriers for salvageable pilots
Chapters
- 0:00 - The 95% Problem: Why AI Pilots Aren't Becoming Products
- 0:24 - The Research: MIT, McKinsey, and IBM Findings on AI Failure Rates
- 1:49 - Why Pilots Stall: Horizontal vs. Vertical Deployments
- 3:07 - What Successful Scaling Actually Looks Like
- 4:11 - Three Critical Questions to Evaluate Your AI Pilots
- 5:40 - The Permission to Stop: When to Retire Failing Pilots
- 6:45 - Action Steps: What to Do This Week
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