The Dangerous Assumption

Most organizations initiate transformations under a seemingly rational premise: Kickoff a transformation project with objectives, set top-down and an initial plan, then iterate through execution based on outcomes. This approach has proven successful for initiatives, and modern frameworks, such as Agile, further bolster this confidence by enabling pivots and adjustments.

he Reality Gap Transformations are not scaled initiatives managed through iteration. They require synchronized behavioral change across the organization—while maintaining business continuity. Technical decisions, once embedded, become permanent fixtures. Interdependencies surface only during execution, often too late to address without massive rework. What initially seems simple grows exponentially more complex, much like discovering a flawed foundation after the building is half-constructed—forcing a choice between demolition and costly salvage. Most critically, organizations lack the institutional muscle memory for this magnitude of change; their frameworks and capabilities are optimized for incremental improvement, not enterprise-wide reinvention.

Clayton Christensen's "The Innovator's Dilemma" seemed to fade from public consciousness after the dot-com crash of 2000. Many assumed the disruption had run its course and that established players had learned to adapt.

They were wrong.

According to research by WatchMyCompetitor, 52% of Fortune 500 companies have either gone bankrupt, been acquired, or ceased to exist since 2000. The average company lifespan on the S&P 500 has plummeted from 32 years in 1965 to just 21 years in 2020.

Now, as AI reshapes industries at unprecedented speed, we're witnessing the innovator's dilemma play out again. The very strengths that made companies successful—optimized processes, established relationships, proven business models—have become anchors preventing them from jumping to the new curve.

The most dangerous moment? When you feel most confident about your position, you're actually closest to the cliff.

The GenAI Divide: State of AI in Business 2025, a new report published by MIT’s NANDA initiative reveals a critical challenge: 95% of generative AI investments yield no measurable return.  Despite billions invested, most organizations see little impact on revenue or efficiency. Our hypothesis at IST Transformation Partners is that this divide arises from asking the wrong questions about AI implementation. Instead of focusing on technology alone, leaders should consider a shift: productivity comes from designing human-AI teams with clear roles. Here’s how you can lead this transformation in your organization.