Why AI Transformation Is Non-Negotiable For Executives

Forbes

7 hours ago

Greg Genung is CEO and founder of Snowfire AI, a pioneer in AI signals and decision intelligence technology.
There are two types of executives in this new era of AI. The first is an executive who's still using antiquated systems to run their business, mainly on intuition. The second is an executive running an AI-transformed business, fully leveraging automation and real-time intelligent analyses that augment their intuition.
There's a massive shift happening in the executive layer in companies worldwide. And based on my industry experience, I've found that a delay in AI transformation is a dangerous game. So, to help support executives in overcoming their unpreparedness, I built an AI transformation ROI formula that helps determine the financial impact of AI implementation—or, looking at it another way, the cost of inaction. This formula offers a way for C-suite executives, private equity or venture capital managers, portfolio companies and founders to measure AI's impact and take steps to help improve growth, margins and retention in the age of AI.
The Stakes: What You Lose By Waiting
Inaction is a death spiral. Competitors wielding AI are capturing markets, slashing costs and securing customer loyalty while you're mired in outdated systems. CEOs sometimes see AI as a threat to their positions. A Dataiku and Harris Poll survey shows that 74% of CEOs globally said "they could lose their job within two years if they don't deliver measurable AI-driven business gains." No one escapes this transformation. Executives and employees are all aware that AI is disrupting their roles.
This isn't just a skills gap; it's a mindset problem that stalls progress and inflates costs as inefficiencies mount. The transformational impact that AI is having across the C-suite is creating quite a bit of discomfort for executives. Our data shows that only 15% of organizations say their C-suite has high AI proficiency. This is a red flag when nearly 30% believe the CEO's role will be the one most transformed by AI. Without executive fluency in AI and the role it plays in business transformation, businesses risk missteps that cede ground to rivals. Hesitation costs money.
The ATI ROI Formula: How To Measure AI's Transformative Power
To quantify what's at stake, I developed a return on investment (ROI) formula to determine how AI platforms can impact the entire business—the AI transformation impact (ATI) formula:
AI transformation impact = (Revenue Growth * Margin Improvement * Retention %) / (Total Headcount / AI Efficiency %).
In short form: ATI = (RGI * MEF * CRF) / (HC / AEF)
RGI: Revenue And Growth Index = TR * (1 + % Revenue Growth) * (1 + % Market Expansion)
MEF: Margin Efficiency Factor = 1 + (% Gross Margin Improvement - % COGS Increase)
CRF: Customer Retention Factor = 1 + (% Retention Rate Improvement - % Churn Increase)
HC: Headcount (e.g., 100 employees)
AEF: AI Efficiency Factor = 1 + % Productivity Gain
Example: A company with $10 million in revenue and 100 employees adopts AI, achieving 20% revenue growth, 10% market expansion, 15% margin improvement, 5% COGS (cost of goods sold) increase, 10% retention improvement, 2% churn increase and 30% productivity gain. RGI = $13.2 million, MEF = 1.1, CRF = 1.08 and adjusted headcount = 100 / 1.3 ≈ 76.92. ATI = ($13.2M * 1.1 * 1.08) / 76.92 ≈ $203,923, dwarfing the pre-AI performance of $100,000 per employee.
Delay AI, and you're stuck at the lower figure, hemorrhaging millions to competitors. This formula reveals what inaction sacrifices: revenue, margins, growth and loyalty.
The Risks Of Delay
For executives, the burden of inaction is personal and punishing. CEOs face relentless board pressure to deliver growth, but without AI, they're blindsided by market shifts, eroding their credibility as missed opportunities pile up. Across the C-suite, inaction means longer hours, tougher scrutiny and the constant threat of being outmaneuvered. The research underscores the following key areas of focus for executives:
• C-Suite Knowledge Gap: With only 15% of organizations reporting high C-suite AI proficiency in our survey, executives are ill-equipped to lead transformation. This gap risks strategic missteps, like the competitor who ignored AI market analysis and lost 10% revenue.
• Data Integration Gaps: AI demands unified data from CRM and ERP systems, marketing, the supply chain and support teams. Gartner researchers estimate that, through 2026, 60% of AI projects will be unfinished due to poor data.
• Rising Costs: Inaction compounds inefficiencies, inflating COGS and delaying ROI. Manual processes drain budgets while rivals optimize.
Urgent Steps To Act Now
From my experience and research, here are critical steps to take to avoid costly inaction:
• Unify data immediately. Integrate CRM (sales), ERP (financials), marketing (customer insights), supply chain (operations) and support (retention) data to power AI. A client unified these to spot demand trends, boosting margins by 12%. Delay risks silos that cost revenue—start mapping data today.
• Launch a pilot. Test AI in one area, like pricing for CFOs. A client's finance team gained 10% margins in three months. Waiting cedes profits to competitors.
• Upskill the C-suite. Invest in executive AI training—15% proficiency is a liability.
• Set up governance. Form an AI ethics committee to prevent bias and build trust. Late governance cost one firm a key client due to flawed AI pricing.
Inaction Risks Irrelevance
The cost of inaction can be devastating. For executives wary of numbers, it's simple: AI means selling more (new markets), keeping more (higher profits) and holding customers close (less churn), with your team working smarter. One of our client's 40% value surge came from acting fast—unifying data, piloting AI and training their team. Their competitor's delay likely cost millions.
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