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Is Your AI Rollout Built to Fail?
Episode 124 • 11th August 2026 • The So What from BCG • Boston Consulting Group BCG
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Kristy Ellmer and Julia Dhar, co-authors of How Change Really Works and founders of BCG’s Behavioral Science Lab, explain why so many transformations fail and what the science says separates success from failure. They break down the “messy middle,” why people resist being changed rather than change itself, and how giving employees real agency turns resistance into momentum.

What You’ll Learn:

Why “false alignment” among leaders, not resistance from employees, derails most transformations before they start.

Why giving employees real ownership, not just participation, turns resistance into momentum.

What makes AI transformations distinct from other kinds of organizational change

Learn More:

Read How Change Really Works: https://on.bcg.com/3SpBPzd

Your AI Change Is Actually a People Change: https://on.bcg.com/3RKUp4J

The False Alignment Trap: https://on.bcg.com/45R9ULH

CEOs Are Betting Big on AI Transformations. Science Is How They Win: https://on.bcg.com/4bGy1jG

We Found the Real Reason 70% of Transformations Fail: https://on.bcg.com/4xqmOMq

Chapters

(0:00) What Is Transformation?

(1:54) Why Leaders Need a New Playbook for Change

(3:42) Where Do Most Transformations Fail?

(5:37) What Does the “Messy Middle” Look Like?

(6:28) What Makes AI Transformations Different?

(9:25) Where Is the "End Point" in an AI Transformation?

(11:51) Why “Just Get on the Bus” Isn’t Good Advice for AI Change

(13:03) When to Walk Away from a Change Effort

(15:42) What Should Leaders Do When Momentum Fades?

(16:49) Why Giving Employees Ownership Matters

(21:06) What Should Leaders Do in the “Messy Middle”?

(22:37) How Do You Make Change Successful?

Meet the Experts

Kristy Ellmer: https://on.bcg.com/4xvpgBg

Co-Author, How Change Really Works

BCG Managing Director & Partner

North American Leader, BCG’s Transform Practice

Co-Founder, BCG’s Behavioral Science Lab:

https://on.bcg.com/4z9WhVs

Julia Dhar: https://on.bcg.com/45ec8Vj

Co-Author, How Change Really Works

BCG Managing Director & Partner

North American Leader, People and Organization Practice

Co-Founder, BCG’s Behavioral Science Lab: https://on.bcg.com/4z9WhVs

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Transcripts

Speaker:

- One of the biggest

myths out there is

2

:

that people just

don't like to change.

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:

In fact, people are quite

positive about change.

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:

They know that to

improve is to change.

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:

What they don't like

is being changed.

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:

- The organizations that will

define the next decade won't

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:

simply be the smartest

organizations.

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:

They'll be the ones that

are the most adaptable.

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:

And adaptability is

something that we can learn,

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:

and you can build it

into the system

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:

that actually creates

the conditions

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:

where people are ready,

willing, and able--

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:

and even excited--

to change.

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:

- Welcome to

"The So What from BCG,"

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:

the podcast looking at the

ideas shaping business,

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:

the economy, and society.

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:

I'm Georgie Frost.

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AI is transforming the

way businesses operate,

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:

and CEOs are under enormous

pressure to make sure

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:

their organizations

don't get left behind.

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:

But history suggests

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:

that most large-scale

transformations fail.

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:

So how can businesses

stay focused

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:

and get to the finish line?

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Joining me today is

Kristy Ellmer,

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North American leader of

BCG's Transformation practice,

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and Julia Dhar,

North American leader

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of People and

Organizational practice.

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Together, they're the founders

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of BCG's Behavioral Science Lab

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and co-authors of

the bestselling new book

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"How Change Really Works:

Seven Science-Based Principles

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for Transforming Your Organization."

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Kristy, Julia, welcome.

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Before we talk about

how change really works,

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let's define,

if you wouldn't mind,

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what we actually mean

when we talk about change

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and transformations

in a business context.

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- We think about transformation

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as in any deliberate effort

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to shift how people do,

get something done together.

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So that can be an AI rollout.

It can be a merger.

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It can be a change in

the customer service.

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The transformation isn't about

changing just the strategy.

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It's actually about changing

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how people show up

on Tuesday morning.

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So think about it as,

are people coming

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and acting differently

six months from now

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in the way that

they do the work

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and the way that

they're operating?

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- Julia, why write

a book about change?

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- There are any number

of books about change.

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We've spilled a lot of words

over the last half century

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about our disappointment

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with the rates of success

in organizational change.

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I frankly think we're not

scandalized enough about

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how frequently change is not

successful in organizations.

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But there were two reasons, really.

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Number one is it is not that

change fails all the time.

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There are successes,

and they're not random.

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They leave clues.

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And we wanted to

systematically put

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those clues together into

a useful body of knowledge

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for our practitioners,

for CEOs,

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for chief transformation officers,

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just for someone trying

to make a positive change

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at their company or

in their community.

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The second is that we have

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an incredibly helpful

body of knowledge,

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in fact, bodies of knowledge,

from the behavioral sciences--

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psychology, economics,

neuroscience,

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customer research--

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about human beings,

about how we change,

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what are the circumstances

under which we predictably

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and sustainably can make

a shift in our behavior.

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20 years ago, a really

treasured friend, colleague,

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mentor, hero of ours, Jeanie Duck,

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wrote a book called "The Change Monster,"

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which gave concepts to what I think a lot

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of people were feeling about

the difficulty of change.

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One of the neatest things

about the last two decades

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about building behavioral

science at BCG has been

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that so many of the

concepts, the propositions

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in Jeanie's book now have science

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that did not exist at the time

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to back them up

and to affirm them.

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- Julia, can you go

into more detail for me

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about why and where

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so many transformations

fall down?

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- I think a number-one error

that we make upfront is

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having false alignment

rather than true agreement--

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not devoting sufficient

time to say,

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do we have the same set

of objectives and intentions

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and measures of success

for the transformation

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among a relatively small

group of executives?

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This is really simple.

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This is like the cheapest

behavioral science hack

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of all time.

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If you're embarking

on this journey,

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if you're midway

through the journey,

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get that group

of people together.

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Give them each a piece

of paper and a pen--

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they can share a pen

if budgets are tight--

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and write down what are the

goals of this transformation

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and how will we know if

we have achieved them.

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You'll be surprised

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by how often you get

wildly different answers.

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The second, in the middle,

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what Kristy always talks

about as the messy middle,

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is assuming that change

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in behavior, commitment, energy

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will just come by default,

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that it will emerge

naturally and spontaneously

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rather than being

something that we plan for.

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It won't. Of course it won't.

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And, and then the third is

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actually sustaining that momentum

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over a really long period of time--

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one of these consistent themes

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from even very tenured executives.

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One of my favorite CEOs,

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who I admire a lot,

said the other day,

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"You know, I'm on my third

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like really significant

transformation

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and turnaround at

my third company.

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And I had forgotten how

difficult it would be.

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I'd forgotten how hard it is

to do something like this.

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I always just thought it

would be a little bit easier."

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Planning for that idea

that there are periods

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where it will be difficult

and boring and painful

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to move through the journey

is really critical.

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- Kristy, the messy middle?

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- The messy middle. The messy

middle isn't dramatic.

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It's actually quite quiet.

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And this is the thing

that leaders need

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to be paying attention for.

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This is when you're in the

middle of the transformation

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and maybe some things are going on track,

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some things are maybe off track,

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but you've been

at it for a while.

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Meetings become updates

instead of decision meetings.

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Initiatives maybe

slip by two weeks.

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Maybe then it's

a couple of months.

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And you start to hear a

lot of reporting increases

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but actually a lot less discussion

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and problem-solving

and challenging it.

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And that is when the, the

leaders should start to worry.

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If you think about momentum,

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momentum isn't something

that disappears overnight.

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It actually leaks.

And in the messy middle,

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that is where the

momentum is leaking.

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And your job as a leader

is actually to say,

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how do I create and maintain that momentum

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throughout the

transformation?

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Because that is where

transformations go

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to live and die.

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- Julia, you mentioned about

your favorite CEO going

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through three transformations.

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- I don't have a favorite

CEO, Georgie.

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- Oh, sorry. One of.

Forgive me.

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- You know, that'd be like having

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a favorite family member.

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- Yeah, sorry. No biases here, of course.

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- I do, I do deeply

admire this one.

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- You mentioned a CEO

who you admire greatly.

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Can I say greatly as well?

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- Certainly you may.

- Excellent stuff.

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You mentioned, Julia,

you mentioned a CEO

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that you admire greatly.

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They've gone through

three transformations.

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I'm just wondering how

similar transformations are

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depending on, I suppose,

what you're transforming.

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And, and with that, AI is of course going

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to be on many CEOs' agendas.

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How fundamentally different

would that transformation be

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from other kinds

of transformation?

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- I think human beings are

beautiful and unique.

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Thank goodness they are

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because this is why I have a job.

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Transformations are equally

beautiful and unique.

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And I say a little bit

of that in jest

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because of course there are ways

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in which human beings

are very similar.

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There are ways

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in which organizations

are very similar.

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This is why benchmarks

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and best practices are

somewhat useful.

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But acknowledging and taking

time to learn about the ways

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in which an organization

is beautiful and unique,

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the beliefs that

people have about it,

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the beliefs that they have

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about the things that

will be difficult or easy

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inside their organization

are really important.

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And I think that's a really

important gesture of respect

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and empathy for

anyone who is trying

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to make change happen

is to understand

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where are people

actually beginning?

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Because it will reveal to

you something really obvious,

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which is that everyone is always starting

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from a, quite a different

starting point than you.

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What's distinct and different

about AI? Probably two things.

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Number one, I think, is

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the degree and

intensity of change.

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I don't think it's

hyperbole to say

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this is highly,

highly likely to be

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the single most disruptive

change that anyone

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of the five generations

currently in the workforce are

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likely to see in

their working career.

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Number two is the way

in which it challenges

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or forces people to

confront their identity.

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So very often in any type of

organizational transformation,

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people are asking,

will I have a job?

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What will I be doing?

Who will I be doing it with?

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One of the things

that is different

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in some AI transformations

is people are asking,

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"If I don't write software code, who am I;

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what is valuable

about being a person

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in this organization?"

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at the same time

as they are asking,

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"What should I advise

my child to do;

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do I think my spouse

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or significant other

will have a job?"

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And so the complexity and

intensity of the emotions

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that people will have

around that are likely

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to be more significant

than in other situations.

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- But with something like AI--

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and I feel we're in quite

a nascent period here--

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what does the end

point look like?

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Do we know? And does that

make it more complicated?

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- No, I, I don't

think we know.

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And I think what we're

working through right now is

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actually understanding what

does the change look like

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and how can we think about

it in sort of chapters.

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And I think one

of the elements

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that we talk about

in the book

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that was really

important to us is

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this idea of endings.

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And the important reason

it matters so much is

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because humans need endings.

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And so one of the

things we recognize

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and we hear from a lot

of our organizations

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that we work with is "my

people are tired," right?

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The organization is fatigued,

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and now you're throwing

all of this AI change in.

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And so how can we

actually get people to

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improve their ability to

sort of take on change?

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And one of the things

that we found is

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companies just keep adding

on to levels of change.

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And I think about it

now that we are actually

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in a change economy,

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meaning we need to constantly be changing.

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But that doesn't mean that

you can't construct endings

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with natural periods to

actually help people see

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the start and the

end of something

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which is actually going to

improve their confidence

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and, therefore,

their cognitive load

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to take on the next change.

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You know, I think, in the AI

age that we're in right now,

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we can draw some inspiration

particularly as well

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as we think about how to

make AI more successful

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from a story that we

tell in the book.

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One of the things that

happened during World War II is

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there was, the US pilots were

having a lot of accidents,

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and they couldn't figure out why.

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And interestingly enough,

the, the government went

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and hired someone called Paul

Fitts, who was a psychologist.

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And what they found

was it was actually

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the, the cockpit design

of the airplane

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that was creating

all the mistakes.

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There weren't natural

human ways in sort of

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how they would use different

parts in the cockpit.

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Think of all the buttons

in different places.

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And so he actually redesigned the cockpit.

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And immediately what they

found was an increase in sort

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of performance from the pilots.

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And so if we think

about that story

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and we put AI into it,

right now we're sort

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of giving people a tool and

we're saying, use AI, right?

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Use it into your workflow.

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And what people are doing

is sort of small changes.

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They're sort of playing with it.

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We actually need to think about

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how do we redesign sort

of the cockpit with AI

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so that people can

engage in it differently.

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And when you start to do that,

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you'll actually get people

more engaged in the process

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versus just giving them the tool.

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- Julia?

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- If your assumption is that

a car is just a faster horse,

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you miss a lot of the chances

to think about the driver.

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We've spent a lot of

the last two years

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hearing from senior

leaders, telling people

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to get on the bus

when it comes to AI.

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And I increasingly think that

isn't very helpful advice.

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Number one, because

people already know it.

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Our research suggests that

close to 90% of employees know

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that they will need significant

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and substantial

retraining, reskilling

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to stay competitive in

their job, at their company,

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in the economy overall.

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But the thing that

really bends me

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out of shape about it is

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the thing about buses is they

usually have a large sign

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on the front that tells you

where the bus is going.

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They have predictable

and planned routes

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and stops along the way that

tell people what to expect.

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So I'd love us to spend

the next six months,

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the next 12 months being a

little bit more introspective

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among leadership teams

and asking,

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how well have we told people

where the bus is going

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and what to expect

along the journey?

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- How do you know when,

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I mean, to use

your bus analogy,

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when the bus is going

in the wrong direction

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and actually is probably best

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just to get off

and start again?

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- Organizations are full

of feelings and facts.

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Feelings are even more

important than facts,

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but a feeling is not

the same as a fact.

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So number one, if

you're an executive,

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if you're leading a change

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and you start to

have a feeling

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that the energy is

coming out of it,

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the success,

attention, focus is

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perhaps not what you

remembered, rightly or not,

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not what you remembered

at the beginning

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or not what you expected,

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first, that's just a feeling.

Let's get some facts.

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A good set of facts would be,

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how are we doing versus

our original objective?

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An equally useful set

of facts would be,

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how do other people feel?

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What measures of the emotion

and commitment do we have

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from other people

in the organization

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who we are expecting

to change?

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Do they believe that

we will be successful?

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How are they feeling about it?

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And let's say, Georgie,

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that your original diagnosis

is totally correct--

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that this effort appears

to have fizzled out,

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that none of the

things that we hoped

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that people would do

have happened,

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that none of the tools

we built are being used.

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We kind of have two choices at that point.

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One is you can look for

somewhere to put that blame,

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and very often you'll end up

with narratives like, well,

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people are not very engaged

or not very motivated

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or they're not

very appreciative

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of all the hard work

that has happened.

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But the alternative--

shout out

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to Katy Milkman, a phenomenal

professor at Wharton--is

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to induce a fresh start,

to just say,

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sometimes it is not that

we need to begin again,

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but let's just declare a moment

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where we can re-begin.

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And one of the things that

Professor Milkman has found is

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that, you know, we're much

more likely to be successful

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in making a change at emotionally

significant milestones

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like the 1st of January,

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your birthday, a Monday,

the start of a month.

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The thing that I love

about this research is,

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as it has continued

to progress,

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is just declaring

a fresh start can be

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psychologically

incredibly powerful.

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And number two, using that

mechanism of a fresh start

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is not an admission of defeat.

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It's sort of how you refocus

everyone to be successful.

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- Kristy, what's your view?

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- I think about momentum

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as something that's actually

a management system.

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So how do I feel ownership

of creating that?

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How do I create

more recognition

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in the organization

to create some momentum,

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even if we're

starting to leak it?

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If I think about how do

I take the initiatives

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and maybe break them

down into smaller pieces,

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so I can start to show some

more wins on the board?

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You know, it's similar

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to when you're doing any sort of activity

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like long-distance

running or something

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and that idea of people

feeling like they're winning

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:

is actually going to create that momentum.

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- If you are only going

to remember one thing,

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I think it would be

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that all of us are

addicted to progress.

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And like the dopamine hit

on progress is so high.

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And being able to

give that to someone

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:

by creating a structure

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in which they will

have made progress,

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:

they get to see that progress,

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you can make it visible

to other people

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and to themselves

is a free gift

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to people doing the hard

work in the organization

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and, by the way, is going to end up being

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a free gift to

the shareholders.

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- I want to dig into

why it matters so much

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:

to give people ownership in

successful transformations.

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:

Why is that so key?

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:

- I think one of the

elements we like

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:

to actually use

the word is agency

401

:

and that idea of I

actually feel some agency

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:

and that I'm in control a little bit more.

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:

And as you think

about an organization,

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:

depending on the size and

scope of your transformation,

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:

you might have

thousands of people

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:

that are actually being

affected by the change.

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:

And so the idea is,

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:

how do you actually create

agency across that?

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:

One of the things that

we saw in the science was

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:

something called

the IKEA effect.

411

:

And basically what

it came down to is

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:

a, a study that was done

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:

that actually had people

build IKEA furniture

414

:

and had others sort of

purchase IKEA furniture.

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:

The people that built the

IKEA furniture actually saw

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:

a 63% increase in

their perceived value

417

:

of that IKEA furniture.

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:

You know, Julia often

likes to say it like this,

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:

that people don't burn down

houses that they build.

420

:

We actually spend a lot of

time designing a system

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:

in a transformation

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:

that actually says we're

creating that agency.

423

:

We're getting more than

just participation.

424

:

We're allowing people to

sort of make micro decisions

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:

or be part of influencing

communities or groups

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:

that are working teams

where they have more say.

427

:

And the more you do that,

you create that more ownership

428

:

in the transformation,

and all of a sudden,

429

:

it's not 10 people rowing

in the boat, right?

430

:

It's hundreds, if not

thousands, all rowing

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:

and rowing in

the same direction

432

:

because they believe in it.

433

:

- Julia, what's your take?

434

:

- All of the hyperscalers,

435

:

all of the model companies

are talking now

436

:

about human agency, which

is so encouraging to me

437

:

because two years ago, when we decided

438

:

to devote a whole chapter to it,

439

:

no one was talking about it.

440

:

And for us, it was a direct

response to, I think,

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:

some really dangerous cliches

in organizational change.

442

:

Things like "we need to

bring people along" made

443

:

my own mental image of

like dragging people

444

:

into something which, by

the way, sounds terrible

445

:

for both parties involved.

446

:

We just need to get

people excited.

447

:

Well, I think the worst

thing that you can do

448

:

in almost any situation

is tell people

449

:

how you think they should

feel about something.

450

:

So telling people that you,

you need them to get excited,

451

:

I think, is a bit like telling

people not to get defensive.

452

:

It's going to produce

the exact opposite result

453

:

that you hope.

454

:

Or when you say, we need,

455

:

generically, some change

champions in the organization,

456

:

well, if they don't have any

ability to act with agency,

457

:

to honestly raise issues and resolve them,

458

:

then they just become

propagandists for the state.

459

:

None of that is useful.

460

:

What is unbelievably

useful, especially when

461

:

there will never be enough

time or money or attention

462

:

to do all the things that

we want to do in a company,

463

:

maximizing the ability for

people to make choices,

464

:

take action, see the impact

of those, have agency

465

:

gives you the chance

to multiply the results

466

:

of what you are going to do.

467

:

A COO, who I also

very deeply admire,

468

:

was once rolling out a big change program

469

:

across a complicated site

470

:

and a very like diverse and diffuse site.

471

:

And I said, "How's it,

472

:

how's it going to work

after we train people,

473

:

and how are we going to make

sure that they do it?"

474

:

Because they have

a lot of independence,

475

:

a fair bit of autonomy in

how they do their work,

476

:

but in a very complicated,

477

:

very safety-conscious environment.

478

:

And the COO said,

479

:

"Oh, I mean, I will

stand in the control room

480

:

over their shoulder and

make sure that they do it."

481

:

And I said,

"Yeah, I hear you.

482

:

Solid plan until the point

at which you have to go

483

:

to the restroom or get a coffee,

484

:

and then the whole change

agenda falls apart."

485

:

And so getting the

human at the center,

486

:

the human who you

have to invite

487

:

and encourage to change,

makes all the difference.

488

:

- Okay, Kristy, so no standing

489

:

over people's shoulders,

490

:

but what are the three things

491

:

that you think every CEO

or every leader should do

492

:

to improve their chances

493

:

of making it to the finishing line,

494

:

getting through that messy middle?

495

:

- So first thing is that idea

of I am creating a change,

496

:

and it is a product and

a service that I need,

497

:

I need my employees to buy into.

498

:

And my job is to create a system

499

:

that makes it easy for them

to change and to buy in.

500

:

So number one is the mindset.

501

:

The second is designing a program

502

:

that makes it very easy for people

503

:

to have agency and participate in.

504

:

So too often in

transformations, we like to look

505

:

at things at sort of

that 30,000-foot level,

506

:

sort of the investor view

if you will, right?

507

:

This is the, the five pillars

508

:

and how we're going to

drive transformation.

509

:

These are the five KPIs

510

:

that are going to, we're going to measure.

511

:

Here's the EBITDA impact.

512

:

And understanding that

513

:

as we think about how does that translate

514

:

to the employees actually doing the work,

515

:

we need to really break it down

516

:

into small, manageable pieces.

517

:

So really as they're

designing a transformation

518

:

with their leadership team,

are they designing it in a way

519

:

that actually is about how

the employees are going

520

:

to engage in it versus how

they want to engage in it?

521

:

And then the third is,

522

:

as they think about kicking

off a transformation,

523

:

they're going to

spend a lot of time

524

:

getting ready, preparing,

building that excitement,

525

:

and then, as soon as it gets

out into the organization,

526

:

you see leaders kind of

scale back a little bit.

527

:

The reality is they

actually need to dial in

528

:

and actually make more time

for change and progress

529

:

and really actually

build a plan around it.

530

:

- Okay. We've covered the so

what. Now it's the now what.

531

:

What are the next immediate

steps leaders should take?

532

:

Julia?

533

:

- Number one, make clear

534

:

and specific requests.

535

:

This works in your personal

life as well, by the way.

536

:

But precise expectations

are a game changer.

537

:

The second is, where you have

a change that is struggling,

538

:

ask yourself earnestly, honestly,

539

:

sincerely, empathetically,

540

:

why would anyone do this?

541

:

Is it likely that they'll

be able to make this change?

542

:

And if your answer to why

would anyone do this is

543

:

because I told them to, that's

none likely to be sufficient.

544

:

And the third is make

progress visible and positive.

545

:

We cannot overpraise

successful progress

546

:

and consistently

seeing the behaviors

547

:

that we would like to have

more of in the organization.

548

:

- Kristy?

549

:

- I think leaders sometimes think

550

:

successful transformation

requires extraordinary people.

551

:

And I don't think it does.

552

:

It actually requires

ordinary people working

553

:

in systems that help them succeed

554

:

in the change that we're trying to drive.

555

:

And have you built a

system and a way of working

556

:

that is actually allowing

people that you have today

557

:

to be better and to change

and do things differently?

558

:

Because what we see with

successful transformation is

559

:

it's not rare nor mysterious.

560

:

It's knowable, it's repeatable,

561

:

and it's really baited based

in that sort of science

562

:

of how humans change.

563

:

- Fabulous. Kristy, Julia,

thank you so much.

564

:

And thank you for joining us.

565

:

If you'd like to get your hands

566

:

on Kristy and Julia's book,

567

:

"How Change Really Works:

Seven Science-Based Principles

568

:

for Transforming Your Organization,"

569

:

you can find the link

in the show notes.

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