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Dear Reader,

Air Canada recently learned an expensive lesson about AI implementation. Their customer service chatbot provided incorrect information about bereavement fares, and when challenged, the company argued they weren't liable for their AI's mistakes.

The court disagreed. The ruling was clear: organisations remain accountable for AI-generated decisions.

This case represents a broader pattern being noticed across industries. While 71% of organisations now use generative AI regularly, recent MIT research reveals that 95% of generative AI pilots are failing to deliver expected value. Yet most leaders are still approaching AI adoption without systematic frameworks for success.

The Implementation Gap

The disconnect between AI enthusiasm and results is widening. McKinsey data shows AI usage nearly doubled over 10 months, but user satisfaction declined from 77% to 72% in the same period. Stack Overflow’s developer survey shows an even steeper decline - from 72% to 60% favourable views over two years.

The pattern is consistent: rapid adoption, declining satisfaction, and expensive course corrections. Consider these recent examples:

• Sports Illustrated’s use of AI-generated author profiles created credibility issues
• New York City’s official business chatbot provided legally problematic advice about employment law
• Multiple organisations have had to implement “AI incident response teams” after customer-facing failures

The underlying issue isn’t AI capability - it’s implementation methodology.

A Verification Framework for Potential Success

After analysing implementation patterns across dozens of organisations, three critical factors emerge for AI success:

1. Verification Protocols

Organisations succeeding with AI have built systematic verification processes. Lumen Technologies reduced sales preparation time from 4 hours to 15 minutes using Microsoft Copilot, but maintained human review of all customer-facing outputs. This verification step is what separated successful efficiency gains from costly mistakes.

The principle: AI output quality is inversely related to verification requirements. High-stakes decisions require human oversight; low-stakes tasks can run with minimal supervision.

2. Failure Recovery Systems

44% of organisations have experienced negative consequences from AI inaccuracy. The differentiator isn’t avoiding failures, it’s having systematic responses when they occur.

Successful implementations include:

• Clear escalation procedures for AI errors
• Rollback capabilities for automated decisions
• Communication protocols for customer-facing mistakes
• Regular accuracy auditing and model retraining schedules

3. Build vs. Buy Decision Framework

McKinsey identified three AI implementation approaches: Takers (off-the-shelf solutions), Shapers (customised implementations), and Makers (built from scratch). Success rates vary dramatically:

• Takers: 67% success rate
• Shapers: 45% success rate
• Makers: 33% success rate

Organisations building custom AI solutions face 1.5x longer implementation timelines and significantly higher failure rates. The most successful approach is often the least exciting: proven vendor solutions with established track records.

The Regulatory Reality

While technical implementation challenges dominate internal discussions, regulatory requirements are creating external pressures. The EU AI Act imposes penalties up to €35 million or 7% of global revenue for non-compliance.

Key compliance deadlines:

• August 2025: General-purpose AI model requirements for EU markets
• August 2026: High-risk AI system regulations take full effect

Currently, only 18% of organisations have enterprise-wide AI governance councils. The remaining 82% are operating without systematic oversight frameworks—a significant compliance and operational risk.

A Practical Implementation Approach

Based on analysis of successful AI deployments, here’s a systematic approach to AI implementation:

Phase 1: Internal Process Optimisation Start with low-risk / high-value internal applications. Brisbane Catholic Education achieved 9.3 hours per week in teacher time savings through AI-assisted lesson planning and administrative tasks. These applications build organisational confidence while delivering measurable value.

Phase 2: Vendor Solution Evaluation Prioritise proven vendor solutions over custom development. The 67% success rate for off-the-shelf solutions reflects established implementation methodologies and ongoing support structures.

Phase 3: Systematic Scaling Organisations attributing 10%+ of EBIT to AI focus on business outcome measurement rather than technical benchmarks. Success metrics should directly correlate with revenue impact, efficiency gains, or cost reduction.

Implementation Checkpoints

Before any AI deployment, establish clear answers to these verification questions:

• Accuracy Validation: How will you verify AI output accuracy in your specific use case?
• Error Response: What’s your systematic response when AI makes mistakes?
• Compliance Framework: How does this implementation align with current and pending regulatory requirements?
• Success Metrics: What specific business outcomes will determine ROI?

Moving Forward Systematically

The current AI adoption phase requires disciplined implementation approaches over enthusiastic experimentation. Organisations achieving sustained value from AI treat it as a systematic business capability, not a technological experiment.

The winners in AI adoption won’t be the earliest adopters or those using the most advanced models. They’ll be organisations that built proper verification frameworks, maintained realistic expectations, and focused on measurable business outcomes.

What systematic approaches are you taking to AI implementation in your organization?

I’m particularly interested in verification frameworks that are producing measurable results.

Until next time,

Jim

PS: Know someone else who's tired of AI hype? They might appreciate joining the newsletter themselves - please forward it on!

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Signal Over Noise is weekly, reader-first publication on AI "without the hype" published by Jim Christian. Subscribe for free: signalovernoise.at​

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