In November 2022, AI entered mainstream consciousness. ChatGPT suddenly appeared and gained over 1 million active users in a month. AI is no longer just the preserve of tech giants and scientists, but is suddenly being touted as a transformative force that can be used by everyone. The proliferation of advanced AI models like DeepSeek that reduce costs and ease AI integration will only further increase expectations for what AI can do for businesses.
With growing enthusiasm, many see AI as an essential part of their future. According to some estimates, corporate investment in AI will triple by 2028.
However, it is risky to believe in the power of AI to fundamentally transform business without question. This can lead leaders to make suboptimal decisions that undermine the company’s potential for profitable growth.
Consider Snapchat. Founded in 2011, it quickly gained popularity, especially among Gen Z, due to features like disappearing messages and casual visual sharing. At its peak, Snapchat was one of the most downloaded apps in the world, with hundreds of millions of daily active users.
In 2023, Snapchat introduced My AI, a generative AI chatbot powered by OpenAI. Jumping on the AI bandwagon, the company apparently believed that adding this novel feature would naturally improve the user experience and increase engagement.
Instead, the move sparked widespread backlash.
My AI was pinned to the top of the user’s chat feed by default and I couldn’t easily remove it. Users did not consider it an impressive or novel feature. Rather, they perceived it as something like an unwanted observer, annoying and creepy. The backlash was immediate. App Store reviews were flooded with one-star ratings citing undesirable chatbots, and Snapchat’s rankings and reputation suffered. The app’s iOS rating in the US plummeted to 1.67 stars. Searches for “Snapchat deletion” on Google spiked 488% in the months following the rollout. This reflects widespread user discomfort and dissatisfaction with the service.
It’s not just Snapchat. Nordstrom also learned the hard way that AI is not a silver bullet when it acquired Trunk Club, a personalized styling service for busy professionals, and decided to incorporate AI into its operations to help grow its business. But doing so diluted the company’s core appeal, a high-touch, personalized, high-end experience, leading to high return rates and weak sales. Unable to cover operating costs, Nordstrom ultimately decided to exit.
As the experiences of Snapchat and Nordstrom show, simply adding AI to a product does not guarantee success. Whether it creates value depends on how the company handles it. When companies lead with AI or treat it as the answer, they risk putting the cart before the horse and undermining their strategy and the value AI provides to the market.
But if companies take the opposite approach, starting with strategy, identifying how they can deliver a leap in value to buyers, and then looking to technology as the tool to make that leap, AI can be a powerful catalyst for profits, growth and commercial opportunity.
Consider Yunji Technology’s AI-powered delivery robot. 24-hour immediate delivery is the norm in China. From hot meals to fresh flowers to household items, you can buy almost anything with one click, and it usually arrives within 15 to 30 minutes.
But it created a challenge for hotel guests who wanted to use delivery services to order things like late-night snacks, extra toothbrushes, and chargers for forgotten cell phones.
Hotel security protocols restricted delivery personnel from accessing guest room floors, so guests had no choice but to get dressed and head to the lobby each time their order was delivered. This was a tedious and frustrating process, especially for guests who are used to making multiple orders during an overnight stay. In the rare cases where delivery drivers were allowed to deliver directly to rooms, they lost time, hotels faced security risks, and guests had to open their doors to strangers in the middle of the night.
Recognizing the distinct “last inch” logistics problem, Yunji Technology developed a strategy to create a cost-effective, human-friendly delivery robot that delivers goods directly to hotel rooms, and leveraged AI to make it happen. These cute robots will autonomously travel to your guest’s door and gently announce your arrival with a soft, child-like voice that will bring a smile to your face. Once a guest picks up their delivery, the robot will cheerfully scurry away and even crack some playful jokes at the other passengers in the elevator.
The robots quickly became popular, making life easier and more enjoyable for hotel guests, saving time for delivery workers, and increasing the hotel’s appeal to guests while improving operational efficiency. In fact, hotels using Yunji robots see a 27% increase in daily online travel agent comments. The number of positive reviews for Yunji’s robots exceeds 6 million, with 35% of reviews including user-uploaded images, significantly higher than the usual percentage.
Currently, Yunji robots account for 90% of China’s hotel robot market and are used in 30,000 hotels in more than 20 countries. The company created a strategy to address a real-world problem, deliver a leap in value to all stakeholders, and turned to AI to deliver its solution. Like Yunji, companies need to get the order of strategy, value, and AI right in order to grow.
Another success story is Duolingo. The founders realized that in-person language classes were expensive and had geographic and scheduling constraints. Although online platforms were flexible, their one-size-fits-all approach did not adapt to individual needs, and the lack of real-time interactivity caused many learners to drop out because the program did not capture their attention or meet their individual needs.
So the founders set out to solve these pain points to create a breakthrough in value. Their strategy was not only to make geographic and schedule constraints irrelevant, but also to create a language learning experience that was fun, interactive, and tailored to each person’s needs. Finding the answer in an online platform with customized gamification, the founders leveraged AI to bring their strategy to life. AI is the ideal tool to analyze and gamify user interactions, creating leaderboards to increase engagement while dynamically adjusting language lessons and feedback to each user’s needs.
Therefore, Duolingo can make language learning fun and engaging while simultaneously serving millions of learners and delivering the benefits of customized education at scale. Results: Duolingo’s strategy of providing unique value to the market has attracted a large global user base and profitable growth. By the end of 2024, Duolingo had 116.7 million monthly active users, 960 million total downloads, and over 575 million registered users, making it by far the largest language learning platform in terms of user base and reach. In terms of revenue, the company earned $748 million in 2024, up 40.8% year over year, with net income of $86.9 million. Although Duolingo faced backlash in early 2025 when its CEO said the company would become “AI first,” sparking fears that AI would be embraced over human workers, its revenue continued to grow that year, increasing by 40%.
As technology advances, AI agents themselves are making it clear that it is unwise to invest in AI technology, no matter how flashy, without a clear strategy that delivers compelling value, highlighting the need for companies to prioritize strategy and value over AI.
Research shows that shoppers are increasingly using AI agents like ChatGPT to make purchasing decisions. When answering people’s buying queries, AI scrubs data from sites large and small, far and near, discovering options, summarizing reviews, and assessing the objective value of products. This increases buyer discernment and purchasing options, leveling the playing field between established players and lesser-known companies offering superior value.
As AI agents pull back the curtain on whether their strategies are delivering good value or not, it becomes increasingly important to get the order of strategy, value, and AI right. Smaller, lesser-known companies that previously would have been ignored or not even registered can now easily beat established players and brands by offering compelling value. This increases the need for all companies, large and small, to differentiate themselves with strategies that deliver superior value, regardless of the AI embedded in their operations. The very benefit of AI agents for users, the ability to quickly evaluate all possible options, means that industry competition is no longer just about big brands, market recognition, and differentiation through flashy AI technology.
As AI continues to evolve and reach its full potential, here are four questions every company should ask itself when approaching AI.
- Do we jump on the AI bandwagon out of fear of missing out, or because it offers an objective leap in value?
- Are you deploying AI in hopes of staying relevant, assuming it will bring new growth, without fully considering whether and how it aligns with and supports your company’s strategy and value proposition?
- Are we confusing AI innovation with real-world value? And will customers be convinced by the value AI provides?
- Is AI helping us build a viable and sustainable business model that aligns with our strategy, or is its impact on our value proposition at risk of hurting our profitability?
Ultimately, how you answer these questions will largely determine whether AI opens up new horizons of growth and profitability or leads your business into the common trap of internet bubble-like inflated expectations.
