Risky Bet: Why AI Won't Solve Middle Market Innovation Problems Without One Important Shift
Republished from the Transform Operations & Leaders newsletter on LinkedIn
The AI Innovation Paradox
While 60% of middle market companies are actively using AI and another 37% are in testing phases [NCMM Innovation Report], this raises a the question:
Will this race to implement AI automatically lead to innovation success?
The evidence suggests otherwise. Innovation happens when humans collaborate effectively - full stop.
While AI can enhance efficiency, provide insights and fuel automation, no amount of AI investment will drive success if teams can't work together effectively.
Consider this reality:
- AI can analyze data, but humans must collaborate to act on the insights
- Technology can facilitate communication, but no communication tool fixes fundamental communication problems that stem from lack of trust
- Automation can streamline processes, but humans must align on goals
- AI can suggest solutions, but humans must agree on implementation and act to realize improvements
Most organizations have never taught their people how to collaborate in a professional setting. In fact, they don’t even know how to. This fundamental gap - not technology adoption - is what truly limits innovation potential in middle market companies.
The Collaboration Crisis
The data confirms this disconnect: While 82% of middle market companies cite talent as crucial to growth, only 12% see their people as a key differentiator [Aon Middle Market Growth Report].
Even more telling, only 43% of middle market firms rate themselves as very innovative, despite knowing being in that category represents a 10% or more revenue growth opportunity [NCMM Innovation Report].
The talent you invested in can’t deliver on their full potential without a fundamental change to how your organization collaborates.
If you do nothing, that same talent will get frustrated, leave the company and you’ll be right back in the fight to recruit another bench key talent.
Why not upskill the talent you already have in a way that will make a difference?
Real-World Evidence
Recently, during my executive coaching work, I've observed these challenges firsthand:
Hidden Accountability Gaps As one senior leader explained a collaboration issue an innovation project was facing and it boiled down to defining solutions without clearly articulating who is accountable for them. Without structured collaboration, these types of challenges will continue.
Structural Barriers Another executive revealed fundamental struggles with:
- Undefined meeting standards
- Unclear decision-making authority
- Inconsistent project management approaches
- Lack of formal collaboration protocols
- Time wasted working on the symptoms of collaboration problems vs. the root causes
The Path Forward: What High-Performing Organizations Do Differently
Research shows successful organizations focus on three key areas [NCMM Innovation Report]:
1) Leadership Development
- Documented accountability frameworks and decision-making processes
- Regular collaboration assessments
- Structured communication protocols that minimize interpersonal distractions
2) Systematic Implementation
- Ongoing cross-functional alignment audits
- Clear escalation paths
- Measurement systems to confirm commitment and improvement over time
3) Capability Building
- Formal collaboration workshops and training
- Communication skills development and performance monitoring
- Regular feedback and feedforward
Conclusion: The Human Factor in Innovation
While AI and technology will continue to advance, the fundamental truth remains: Innovation success depends on human collaboration. Organizations that recognize and address this reality will be better positioned to leverage both technological and human capabilities for sustainable growth.
Next Steps for Leaders
Look at your list of strategic initiatives for the year. How many of them are the same or similar to initiatives from last year?
Now consider how many of them will hit the targets you set if nothing changes in how your employees collaborate with each other.
Here’s a simple set of next steps you can take to reduce the risk of losing on the innovation bets you make this year:
- Partner with trusted advisors to assess your current state
- Build your action plan in a collaborative way to model desired cultural changes
- Monitor progress and adjust quarterly
I help high-growth companies translate subpar innovation into predictable cash flow, through structured collaboration and intentional leadership.
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