Is the AI Honeymoon Over?

Artificial Intelligence adoption is entering a more challenging phase as costs rise, user frustration slowly grows, and CEOs face mounting pressure to prove real value. This episode explores why the initial AI honeymoon may be ending, the qualities tech-driven leaders need to move the needle, and why CEOs must lead in setting clear strategy to leverage AI - from being just a very smart tool into lasting competitive advantage. 

Transcript

Analysts are rethinking organisations in response to three forces reshaping business: technology, geoeconomics and shifting talent dynamics. The moment calls for more than familiar contingency planning; it demands a deeper rethink of how to build resilience.

Artificial intelligence products are being announced faster than companies can understand how to fully make the best use of them.  Just last week, three prominent artificial intelligence developers released new models, each promising greater capability and affordability. OpenAI said its latest offering, GPT-5.6, can complete more work while using significantly fewer tokens, making it more cost-efficient. Grok 4.5, from Elon Musk’s SpaceXAI, also claims to be twice as token-efficient as comparable models, while Meta Platforms says the pricing for its Muse Spark 1.1 model is highly attractive. Costs are now receiving closer attention as business customers question value for money and scrutinise AI spending. Also - in recent months, some companies have imposed tighter usage limits, partly because developers such as Anthropic PBC have shifted from lower-cost flat subscriptions to usage-based pricing.

Boston Consulting Group warns that an initial AI “honeymoon” period may be ending. Its fourth annual AI at Work survey of nearly 12,000 frontline employees, managers and leaders across more than a dozen global markets - suggests early excitement fades unless employees understand the organisation’s AI direction and the strategy beyond simply introducing another powerful tool.   AI developers focused on competition may be missing the key issue: AI is changing jobs faster than companies are redesigning operating models, and long-term success depends on a clear strategy for its wider value and impact.

BCG’s 2026 survey found that though 42% of frontline employees who regularly use AI tools are already saving about eight hours a week, most are still unsure how to turn that time into measurable value. 

BCG says CEOs must lead AI transformation with a broader, more structured approach: clarify the organisation’s AI direction, engage employees, define desired business outcomes and measure value, not just activity, usage or adoption. To realise the full benefits, companies need to redesign core processes end to end, rethink roles and provide further training. Understanding AI’s potential is not the same as having strategic clarity; organisations need clear plans to maximise returns from their investment, even when using basic AI tools. AI will not simply fit into organisations and deliver results without the leadership, redesign and effort required to make it work. As the AI honeymoon ends and frustration grows, I expect greater focus on deeper tech partnerships that help companies maximise value from existing tools, rather than racing to launch ever-more advanced products.

This episode also revisits a previous discussion on how CEOs can become more technology-driven, adapt to rapid change and move beyond blunt cost-cutting to create value despite short-term investor pressure.

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The average CEO is younger; tenure has fallen from nine years in 2021 to seven years in 2025. For tech-driven CEOs, it is now about six years and could drop below five within the next decade. Already, around 40% of CEOs are likely to leave within five years. Tenure also varies by industry: banking and finance CEOs, for example,  may remain in post for up to 11 years – where perhaps stability is more valued, while leaders in newer technology sectors tend to have much shorter tenures. Overall, the trend is clear: CEO tenures are getting shorter.

In this new era of AI-driven transformation, the CEO role is also becoming even more complex. Leaders are expected to drive AI reinvention, manage a growing number of powerful and unpredictable stakeholders, and still deliver solid quarterly results—all while operating within governance models designed for a 1990s corporation. It should not be surprising to see around 15% of CEOs forced out - citing inability to adapt to AI-led transformation strategies that demand a reinvention mindset.  The question now is  "can you rewrite the rules before the rules rewrite you?"

It is therefore also no surprise that, over the past 18 months, we have seen a record wave of CEO departures at companies such as BP, Nestlé, Boeing, Starbucks, Peloton, Amazon Web Services, HSBC and others—often in circumstances that appear far from voluntary.

Markets now appear to be rewarding reinvention and quarterly performance at the same time, rather than stability alone—and boards are being forced to respond. Layoffs are also rising as business models come under pressure, and CEOs are not exempt from the growing demand for change. 

A short- to medium-term focus can clash with the longer-term horizon needed for true transformation. Governance rules and business models designed to preserve established norms are often poorly aligned with the ambition for technology-driven reinvention, making the CEO’s job increasingly difficult.

Consider former Starbucks CEO Laxman Narasimhan, who was pushed out after barely a year amid concerns over mediocre performance. In any major change curve, performance can dip before improvement takes hold, but many CEOs may not survive that initial downturn. New leaders often inherit problems created by their predecessors and need time to repair them; in many cases, their actions may take at least two years to show meaningful results. That creates tension when boards and investors expect faster outcomes. CEOs must manage market expectations, activist investors, social media scrutiny, financial performance, and organisational health—often across indicators that analysts may overlook or misread. Activist investors can be especially short-term in their push for cost cutting, sometimes forcing decisions that damage morale and weaken strategic advantage in ways difficult to reverse.

It is also worth noting that companies sometimes bring in cost-cutting CEOs with generous sign-on bonuses and a short expected tenure, often around three years. Their mandate is to cut very aggressively, boost the share price, and create gains for activist investors, who may then sell and move on to the next opportunity. The “unloved” CEO may also leave for another role, collecting another bonus and promising another turnaround. In the short term, markets, investors, and CEOs may all benefit, while corporations and remaining employees are left to pick up the pieces. 

Some CEOs also leave because they are financially secure. After years of high pay and bonuses, they can afford to retire earlier and choose to spend more time with family or pursue other interests. Health is another under-discussed factor: working almost around the clock for 18 months can take a serious toll on physical and mental wellbeing.

Yet the biggest reason CEOs are leaving may be that markets now demand a new culture and a technology-driven mindset that many old-guard leaders lack. Today’s CEOs are often reluctant to dismantle the organisational dinosaurs they built and still take pride in. Boards recognise this shift and may offer an easier exit. The new TikTok-era culture is real: some companies now have roles such as Chief Enthusiasm Officer and Chief Heart Officer—positions that would have seemed unthinkable only a few years ago.

A recent MIT Sloan Management Review article, “Five Traits of Tech-Driven CEOs” by Chanmugam, Lyman and Daugherty, identifies the qualities that enable CEOs to use technology for real strategic advantage—not just cost cutting. These are the leaders most likely to thrive in the next decade. 

The first quality of successful tech-driven CEOs is active learning. They do more than maintain a basic familiarity with emerging technologies; they use them to improve their own work habits, decisions, and processes. They recognise that technology is no longer a backroom function but a foundation for strategy, operations, and growth. By investing time in continuous learning, CEOs set the pace for the C-suite, energise the organisation, and give employees permission to experiment with reinvention. Satya Nadella captured this shift at Microsoft by moving the culture from “know-it-all” to “learn-it-all.” The successful CEO of the future will be a committed learner.

Second, tomorrow’s CEOs will win by reinventing business models through bold technology bets. This can of course be risky, but it is also where real growth begins. By using new technologies to rethink business from first principles, CEOs can unlock new possibilities, create fresh engines of growth, and move far ahead of the competition.

Third, the new CEO will treat data as a strategic differentiator, not merely an input for decision-making. This shift puts data strategy in the C-suite rather than burying it in the organisation or delegating it to poorly sponsored roles. A reimagined data strategy can drive future revenue by creating the foundation for agility, innovation, and automation that accelerates growth.

Fourth, tech-driven CEOs become magnets for technology talent by taking a visible, personal role in attracting and retaining top people. They engage deliberately in technology forums, build relationships with senior tech leaders, and stay close to the talent market rather than leaving it solely to an HR or CIO role. This matters because exceptional technology talent will be a critical source of competitive advantage.

Finally, tech-driven CEOs understand that strategic reinvention requires more than vision; it demands strong technology partnerships. Serious technological innovation rarely succeeds in isolation. By engaging potential partners—and, where appropriate, pursuing technology acquisitions—CEOs can build shared visions and unlock new go-to-market advantages.

In short, as Sloan Management Review argues, we are now in the age of the tech-driven CEO, where mastery of AI, data, and automation is essential to lasting leadership. In a world of rapid disruption and volatility, CEOs must stay ahead by building technology-based strategic moats—defensive capabilities that competitors cannot easily overcome. Traditional advantages such as scale and balance-sheet strength may matter less in an environment that rewards agility, speed, adaptive architecture, and continuous learning. Boards will pay a premium for CEOs who can move AI from pilot to profit within 24 months while building the data, structures, talent, processes, and trust needed to pull years ahead of competitors in ways that are difficult to replicate.

Cost-cutting CEOs still have an important role and will continue to earn market rewards, but leaders with a reinvention mindset look further ahead and may prove far more valuable in the decade to come.

Well that’s it on this special episode of global business insights. We are now on Spotify, Apple, YouTube podcasts and most popular platforms where you get your podcasts from. Remember to select the notification button if you subscribe on YouTube. Thanks for watching. Bye Bye.