Rethinking Business Models in the Age of AI

By 2023, the average tenure of an S&P 500 company had fallen to just 16 years, down from 61 years in 1958, underscoring the unprecedented pace of disruption and index turnover (McKinsey & Company, 2023).

When digital natives scale globally overnight and AI rewrites competitive rules, incumbents face mounting pressure. Customers expect personalization, immediacy, and value. Meanwhile, startups exploit data and automation to disrupt long-standing industries.

Many CXOs are stuck in what experts call a state of "pilot purgatory,” despite the urgency. According to MIT Sloan and BCG (2023), although 90% of executives believe AI will transform their businesses, only 11% have scaled it across the enterprise. The problem is not ambition or awareness—it is misalignment. Legacy business models, designed for predictability, can’t keep up with today’s non-linear growth. The systems built to support operational stability now stand in the way of transformational agility.

CXOs must rethink how value is created, delivered, and monetized to lead confidently. This blog outlines a practical lens to help leaders move beyond a technology-first mindset toward a holistic innovation strategy.

Rethinking Innovation: Configuration Over Invention

It’s easy to assume that market leadership comes from cutting-edge inventions or massive R&D budgets. History tells us that breakthroughs do not always begin in the lab. Apple did not invent the MP3 player, but it exceptionally transformed digital music consumption through iTunes and the iPod (West & Mace, 2023). TikTok did not create short-form video, but its AI-powered feed recommendation engine changed how content is discovered and consumed globally (Johnson, 2024).

These examples highlight an essential truth: meaningful innovation often comes from reconfiguring what already exists to meet an unmet or emerging need. The competitive edge lies in not just invention, but in integration.

Four Strategic Dimensions to Reinvent the Business Model

To move beyond incremental gains, leaders must challenge the foundational elements of their business model. Reinventing a business model involves identifying which levers will drive sustainable, differentiated growth. These four dimensions offer a starting point:

1. The value proposition is where differentiation begins: What makes an offering truly compelling? Tesla, for example, created more than just a car. They built a lifestyle experience with proprietary charging networks, over-the-air (OTA) updates, and a more extended battery range (Growth Navigate, n.d.).

2. A delivery model is equally critical: How a service is delivered can be as powerful as the service itself. Instacart succeeded not by owning inventory, but by optimizing fulfillment through partnerships with retailers and real-time logistics (Latterly, 2024).

3. Customer focus optimizes the offering: Precision matters. Disney+ didn’t compete with Netflix by trying to be everything to everyone. Instead, it doubled down on family-friendly content and blockbuster franchises, crafting an experience that resonated with loyal fans while driving cross-platform engagement (Chameleon, 2024).

4. Revenue and cost structures can either constrain or catalyze growth: Peloton, for instance, turned a one-time hardware sale into a recurring revenue engine by pairing its premium exercise equipment with subscription-based fitness classes. This hybrid model created stickiness and community, far beyond what a single product could achieve (Datanext.ai, 2024).

Why AI Doesn't Scale?

According to Gartner (2023), 80% of AI pilots fail to scale. However, the issue is not the technology itself. It is the environment surrounding it. Most businesses lack the structural and cultural foundations needed to support enterprise-wide adoption.

Organizations commonly face:

• Strategic misalignment between AI initiatives and core business goals
• Cultural resistance fueled by a lack of executive sponsorship
• Siloed teams and legacy decision-making models
• Poor data governance and unaddressed ethical risks
• Unclear ownership and undefined accountability across functions

These are not technical flaws—they are gaps in the business model. Scaling AI requires structural readiness, not just experimentation.

The SCALE Framework: A Diagnostic for Business Model Readiness

To assess readiness, we propose the SCALE framework—a five-part diagnostic that evaluates how well your organization is positioned to support business model innovation.

1. Strategy Fit determines whether your model offers truly differentiated value or simply imitates competitors. Are you making bold trade-offs that reinforce uniqueness?

2. Customer-Centricity examines whether your operational gains reach the customer or are absorbed internally or by suppliers.

3. AI Readiness asks if your strategic roadmap embeds a cohesive vision for AI, with clear ownership of data, talent, and governance.

4. Leadership & Culture evaluates whether teams are empowered to test and learn and whether leaders actively sponsor innovation in words and behavior.

5. Execution Reinforcement checks for coherence do your strategic activities support one another, or do they compete for resources and attention?

This framework is ideal for a CXO-facing infographic—one that maps each pillar to a diagnostic question to guide executive teams through reflection and action planning.

Conclusion: Adaptability Is the New Advantage

Technology does not create an impact on its own—business models do. The organizations that thrive continuously redesign how they create and capture value, not just once, but as an ongoing discipline.

For CXOs, this means making hard choices. It means aligning teams around a clear purpose, embedding experimentation into the culture, and ensuring that every initiative—AI or otherwise—reinforces the broader strategic direction. Innovation at scale is not about more pilots or new tools. It is about coherence.

Now is the moment to stop treating transformation as a side project and bring it into the core. Resilience is not just about weathering change; it is about becoming the kind of organization that leads it.