Generative AI - The Missing Return on Investment (ROI)

My keynote at the Software Product Management Summit (SPM Summit) North America 2025 at the UC Berkeley on Sep 10, 2025, organized by ISPMA (International Software Product Management Association)

1. GenAI: The
Missing
ROI
Dr. Tathagat Varma
“Theory of Cognitive Chasms: A Grounded Theory of GenAI Adoption”©, 2025
Executive Fellow in Management, Indian School of Business (ISB), India
Global TechOps Executive, Walmart Global Tech, USA

2. Disclaimer
https://eprints.exchange.isb.edu/id/e
print/2340/
Personal Views:
My presentation, comments, and
opinions are provided in my
personal capacity and not as a
representative of Walmart.They do
not reflect the views of Walmart and
are not endorsed by Walmart.
Research Based:
Key ideas are based on my doctoral
research titled “Theory of Cognitive
Chasms: A Grounded Theory of
GenAI Adoption”, © 2025. Available
https://eprints.exchange.isb.edu/id/e
print/2340/

3. My Blog Post Study
•What ROI metrics are used
to determine the financial
returns of GenAI adoption?
•https://www.linkedin.com/
posts/tathagat_roi-copilot-
activity-
7368739029887959040 -
xCeh
•Posted on Sep 3, 2025.

4. Strong interest => High relevance

5. AI Stats
•87% Fail to Reach Production
(VentureBeat '19)
•85% Deliver Erroneous
Outcomes (Gartner '18)
•78% Fail to Scale (McKinsey ‘20)
•75% Don’t Achieve Significant
EBIT Impact (McKinsey ‘22)
•70% Report No/Minimal Impact
(MIT/BCG '19)

6. The GenAI Divide: State of AI in Business
2025, MIT NANDA
•Despite $30–40 billion in enterprise investment into GenAI, 95% of organizations are
getting zero return.
•Just 5% of integrated AI pilots are extracting millions in value, while the vast majority
remain stuck with no measurable P&L impact . This divide does not seem to be driven
by model quality or regulation, but seems to be determined by approach .
•Tools like ChatGPT and Copilot are widely adopted. Over 80 percent of organizations
have explored or piloted them, and nearly 40 percent report deployment. But these
tools primarily enhance individual productivity, not P&L performance .
•Meanwhile, enterprise-grade systems, custom or vendor-sold, are being quietly
rejected. Sixty percent of organizations evaluated such tools, but only 20 percent
reached pilot stage and just 5 percent reached production. Most fail due to brittle
workflows, lack of contextual learning, and misalignment with day -to-day
operations.

7. The Big Questions
Why
GenAI “fails”
often?
What
is
“successful”
adoption?
How
to deliver
successful
outcomes?

8. Theory of Cognitive Chasms© (§8)

9. The GenAI Value Spectrum
Optimize (“10%”)
•Task-level adoption
and process-level
“vertical scaling”
lead to individual
productivity hacks
that might make no
real impact for the
firm, while process
efficiency could
improve the
bottomline.
Innovate (“1X+”)
•Firm-level
“horizontal scaling”
across the entire
value chain leads to
business value
realization and
superior customer
experiences that
improve the topline
better than the
normal growth.
Transform (“10X”)
•Harness the power of
data-informed
algorithmically-
supported “cognitive
decision-making” to
transform the
business model and
deliver exceptional
human experiences
that are order of
magnitude superior.
Evolve (“∞”)
•Industrial and
societal adoption
lead to market
disruptions and
planet-scale
solutions for social
good when applied
judiciously with
appropriate human
controls, but might
wreak havoc when
applied
indiscriminately
without adequate
forethought and
safeguards.

10. Multistage Scaling Strategy (§7.1)
Stage 1:
Explore
Stage 2:
Experiment
Stage 3:
Improve
Stage 4:
Transform
Stage 5:
Innovate

11. Multistage Scaling and Consequents:
Stage 1:
Explore
Stage 2:
Experiment
Stage 3:
Improve
Stage 4:
Transform
Stage 5:
Innovate

12. Cognitive Chasms (§7.2)
GenAI Adoption Failure
Modes
Represent the potential
discontinuities in adoption
4 distinct chasms represent
exponential risks and rewards

13. Hype / Reality
(H/R) Chasm
•"Expectation
s Gap"
•Right
technology
must work
Pilot /
Production
(P/P) Chasm
•“Scaling Gap”
•Pilots must be
scalable
Technology /
Business (T/B)
Chasm
•“Value Gap”
•Business need
must exist
Business /
Social (B/S)
Chasm
•“Safety Gap”
•Societal
interests
sacrosanct
Cognitive Chasms (§7.2)

14. Multistage Scaling and Cognitive
Chasms
Hype / Reality
(H/R) Chasm
Pilot / Production
(P/P) Chasm
Technology / Business
(T/B) Chasm
Business / Societal
(B/S) Chasm

15. The Learning Mindset : Key Principles
(§7.3.1)
Technology is
rapidly evolving
Experimental and
experiential
learning provides
the biggest
opportunities
Learning needs to
be both emergent
and pervasive

16. The Purpose Mindset: Key Principles
(§7.3.2)
Delivering superior
business outcomes is
the starting point and
the end goal with no
finish line
Efficiency
improvements, even
though important, are
just the low-hanging
fruits
The ability to innovate
continuously
constitutes the
necessary end
condition of
successful adoption

17. The Decision Mindset : Key Principles (§7.3.3)
Data forms the
core of decision-
making
Embedding of
GenAI inside the
core value
creation for the
firm
Scaling of GenAI
capabilities
pervasively across
the firm

18. The Human Mindset : Key Principles (§7.3.4)
GenAI systems are
designed to
maximizing the
Human
Experiences (HX)
Firms prioritize
societal safety
over the profit
motive
Humans always
retain executive
control of GenAI
implementation

19. Human Mindset
Decision Mindset
Purpose Mindset
Cognitive Mindsets are sequential,
accretive, and cumulative
Learning Mindset

20. Bridging The Chasm: Multistage Scaling,
Cognitive Chasms and Cognitive Mindsets
Human Mindset
Decision Mindset
Purpose Mindset
Learning Mindset

21. Conclusions from Theory of Cognitive
Chasms (§9.4)
Business
Alignment is key
to realize full
potential of GenAI
Multistage
Scaling Strategy
proposes change
as a process
Cognitive Chasms
describe failure
modes
Cognitive
Mindset can help
reduce adoption
failures
Cognitive
Decision-Making
marks successful
adoption
Human Agency is
core to successful
GenAI adoption

22. Recap
Enterprise-wide Adoption: GenAI is a “general purpose
technology”. To realize its full value, it must be seen as a “horizontal
technology”, i.e., enterprise-wide adoption.
Strategic Value Creation: Successful adoption must strategically
integrate GenAI to a firm’s value chain and deliver tangible value to
the firm. True value of GenAI lies in transforming the internal
capabilities and business model of the firm.
Transformation Roadmap: Theory of Cognitive Chasms provides a
roadmap for firms looking at systematic change management
while mitigating risks and delivering tangible value.

23. Theory
-of
-
Cognitive
Chasms©
Coming in
2025…
Follow updates at: https://www.linkedin.com/company/cognitivechasm

24. References
•Theory of Cognitive Chasms: A Grounded Theory of GenAI Adoption: My doctoral dissertation at Indian School of
Business (ISB): https://eprints.exchange.isb.edu/id/eprint/2340/
•PhD Colloquium at Indian Institute of Management, Bangalore (IIMB), Dec 2024:
https://www.youtube.com/live/UBmkl7Vpr0Q?si=lqw2JJUVhUI8cWL7
•Cognitive Chasms: A Typology of GenAI Failure Modes: My talk at Walmart:
https://www.slideshare.net/slideshow/cognitive-chasms-a-typology-of-genai-failure-failure-modes/279832748
•Theory of Cognitive Chasms: Lecture at Sam Walton College of Business, University of Arkansas:
https://www.slideshare.net/slideshow/theory-of-cognitive-chasms-failure-modes-of-genai-adoption/278463456
•GenAI Value Spectrum – delivering the “true value” from GenAI initiatives: Keynote at IEEE Bangalore Technology
Conference (BTC) 2024: https://www.slideshare.net/slideshow/genai-value-spectrum-delivering-the-true-value-from-
genai-initiatives/273734671
•The role of Cognitive Mindset in GenAI Adoption: Invited talk at Project Management Institute (PMI) Bangalore
Chapter Footprints:https://www.slideshare.net/slideshow/the-role-of-cognitive-mindset-in-genai-adoption-
pdf/274055306
•Managing Fast-Evolving GenAI Adoptions: Invited Keynote at Siemens Agile Conference
2024:https://www.slideshare.net/slideshow/managing-fast-evolving-genai-technology-adoptions/273470070