Why most AI strategies are venture capital theater

Company announces AI-first transformation. Stock jumps 8%. Eighteen months later: one chatbot, three consultants, zero production AI.

The strategy worked perfectly for its real purpose.

Most AI strategies are performances. They’re designed for investor calls and board meetings, not operations teams. While executives present transformation roadmaps, the data still lives in spreadsheets, systems don’t talk to each other, and nobody’s trained to use any of it.

I’ve watched this pattern repeat. The gap between what companies announce and what they actually deploy keeps growing. And it’s expensive.

The performance everyone’s staging

Walk into any board presentation on AI and you’ll see the same production.

Slide 1: “AI-First Transformation Roadmap.” Slide 15: “Strategic AI Partnership with Leading Provider.” Slide 32: “Center of Excellence Launch Timeline.” The presentations get longer every quarter while actual deployments stay flat.

Steve Blank calls this innovation theater - activities that shape culture but rarely ship anything. Companies adopt hackathons, design thinking workshops, and AI labs that look great in press releases but fail to deliver production systems.

Here’s the tell. When you ask what’s actually running in production, you get pivot tables and pilot projects. Ask about the 50-slide strategy deck and suddenly there’s infinite detail.

Why the theater exists

The pressure is real. Nearly 58% of all venture capital in Q1 2025 went to AI companies. That’s unprecedented concentration. Boards see competitors announcing AI initiatives and panic. CEOs face investors asking why they’re not AI-ready.

So they perform.

But MIT Sloan research reveals the problem - 85% of executives believe AI will give them competitive advantage, but only 5% have extensively incorporated AI into their operations. The gap between belief and execution is where theater thrives.

Nobody wants to tell the board: “We spent six months on an AI strategy and learned our data is a mess, our systems are fragmented, and we need two years of boring infrastructure work before we can do anything interesting.”

Much easier to announce a Center of Excellence.

The pilot graveyard

Here’s where the ai strategy reality gets brutal.

Research shows 88% of AI pilots fail to reach production. Another study found 95% of GenAI pilots deliver zero ROI. Think about that. For every 33 AI proof-of-concepts a company launches, only four make it to actual use.

But companies keep launching pilots. Why? Because pilots look like progress in quarterly updates. They generate press releases. They justify hiring Chief AI Officers and creating innovation labs.

Production deployment is hard. It requires fixing data quality, integrating systems, training people, changing processes. Theater is easier.

I’ve seen the pattern at Tallyfy. Companies will spend six months on an AI readiness assessment that produces a beautiful strategy document. Then they’ll spend three more months on a governance framework. Meanwhile, their actual operations teams are still manually copying data between systems because nobody wants to do the boring work of integration.

The theater continues because it serves its purpose - looking innovative without the risk of actual change.

What working AI strategy looks like

Real AI strategy is disappointingly simple.

One practitioner described the format that works: one page with four boxes. The problem you’re solving in 20 words. The smallest solution that fixes it in 25 words. The 30-day proof with a date. The one metric everyone watches.

That’s it. No frameworks. No pillars. No transformation roadmap spanning 18 months with workstreams and governance committees.

Here’s what changes when you focus on operations instead of theater:

You pick one specific problem. Not “transform customer service with AI” but “reduce time to find the right product specification from 45 minutes to 5 minutes.” You build the smallest thing that works. You measure whether it worked. You expand if it did.

The best AI implementations I’ve seen started with problems that annoyed people daily. Someone built a quick solution using AI. It worked. They built another. Then another. No strategy deck required.

Compare this to companies that launch AI Centers of Excellence. Less than 30% have their CEO directly sponsoring their AI agenda, which McKinsey identifies as a leadership issue. They create the organizational structure for transformation without any actual transformation occurring.

How to spot the theater

The warning signs are consistent.

Complexity. Real AI strategy is simple because it focuses on solving specific problems. Theater AI strategy is complex because it’s designed to impress, not execute. If the strategy document is over three pages, question whether it’s meant for implementation or performance.

Missing metrics. Ask what specific number will change and by how much. Theater strategies talk about “transformation” and “competitive advantage.” Real strategies say “reduce processing time from 4 hours to 20 minutes” or “increase accuracy from 73% to 94%.”

Innovation labs without production systems. If the lab has been running for more than six months without shipping something people actually use, it’s theater. Studies show the gap between AI enthusiasm and implementation comes from organizations pursuing innovation activities that rarely deliver deployable products.

Timeline fantasy. The ai strategy reality is that going from pilot to production takes longer than anyone wants to admit. Gartner found it takes 8 months on average, and that’s for successful projects. Theater strategies show production deployments in 90 days.

Talk to the operations team. If they don’t know about the AI strategy or haven’t been involved in defining problems worth solving, it’s theater.

The shift isn’t complicated.

Stop presenting transformation. Start fixing specific problems. Replace the 50-slide deck with a one-page plan focused on operations. Pick something that annoys your team daily and costs you time or money. Build the smallest AI solution that addresses it. Measure whether it worked.

If it did, expand. If it didn’t, try something else.

This approach won’t generate press releases. It won’t impress your board in the next quarterly update. But it will create actual value while your competitors are still in the pilot graveyard, performing innovation theater for their investors.

The companies winning with AI aren’t the ones with the most impressive strategy presentations. They’re the ones that stopped performing and started shipping.