Why “AI-First” Is Failing Most Companies—And How HI + AI = ECI™ Saves Yours from Becoming a Case Study of AI Failure
The real AI-first revolution is human-powered. Ignore that, and you’re just automating your irrelevance.
By Carsten Krause | May 22, 2025 | CDO TIMES
Welcome to the AI-First FOMO
Everyone wants to be AI-first in 2025. Just like they wanted to be cloud-first in 2015. The term is slapped on LinkedIn bios, investor decks, and boardroom whiteboards as a badge of innovation. But let’s get one thing straight: calling yourself AI-first because your sales team uses Copilot or your developers flirted with ChatGPT over lunch is like calling yourself a bodybuilder because you once walked past a gym.
The real AI-first organizations are not the ones building proof-of-concepts or laying off staff to hire prompt engineers. They’re the ones embedding AI into their digital DNA—and fusing it with Human Intelligence (HI). It’s not about machines replacing people. It’s about humans and machines elevating each other.
It’s about HI + AI = ECI™—Elevated Collaborative Intelligence. If you don’t understand that equation, your AI-first strategy is already DOA.
The Klarna Illusion: AI-First or AI-Confused?
Let’s talk about Klarna.
The Swedish fintech unicorn made headlines for laying off over 700 employees and replacing them with AI tools like ChatGPT. CEO Sebastian Siemiatkowski boasted in interviews that their AI agents were handling tasks with 90% automation. Headlines screamed: “Klarna replaces humans with AI!” Cool, right?
Not really.
As reported by TechCrunch and others, Klarna’s AI-first move was more theater than transformation. Customer experience faltered. Employee morale tanked. And instead of scaling intelligence, Klarna scaled disconnection. What they failed to grasp is that AI is not a plug-and-play replacement for human context, empathy, or strategic thinking.
Source: https://techcrunch.com/2024/12/07/klarna-chatgpt-replaces-700-employees/
Compare that to a company like Duolingo, which didn’t just bolt on AI. It restructured its operating model, integrating generative AI into product development, marketing, and even user feedback loops—while retraining its workforce to harness these tools. The result? A “flipped classroom” AI-first business model with humans and AI learning from each other in real time.
From Cloud-First to Clue-First: What We Should Have Learned
Rewind to 2010. Everyone wanted to be cloud-first. Migration plans were drafted. Buzzwords bloomed like weeds in a venture capitalist’s garden. But reality soon hit: without governance, cloud turned into chaos. Costs ballooned. Shadow IT proliferated. Entire organizations got stuck in “cloud drift”—a limbo of expensive transformation with little business impact.
Fast forward to 2025, and we’re repeating history—this time with AI.
Just like with cloud, being AI-first without a strategy is not transformation. It’s turbulence. The lesson? Without human alignment, leadership strategy, and upskilling, tech-first is just fail-first.
Visual #1: What Happens When You Only Invest in AI (and Forget HI)
Meet the Winners: Who Got AI-First Right
✅ Duolingo
Embedded AI into product delivery, user interaction, and workforce development. Developers were upskilled. Data scientists worked alongside educators. The result: better user retention, hyper-personalized learning, and higher internal productivity.
Source: https://www.wsj.com/tech/ai/duolingo-ai-personalized-learning-2025
✅ Morgan Stanley
Their wealth management arm deployed OpenAI-powered advisors—not to replace humans but to empower financial advisors with instant insights, client-ready reports, and portfolio modeling. The firm doubled down on human + AI augmentation.
Source: https://www.cnbc.com/2023/07/12/morgan-stanley-launches-ai-chatbot-to-aid-financial-advisors.html
✅ Schneider Electric
In manufacturing and energy, AI-driven automation only worked because they aligned it with upskilled talent, sustainability goals, and architecture-led governance. The AI tools were “force multipliers”—not “force replacers.”
Source: https://www.se.com/ww/en/about-us/press/news/schneider-ai-digital-transformation.jsp
And the Not-So-Inspired
❌ Klarna
Replaced staff with AI chatbots. Created headlines, but not harmony. Now rebuilding lost trust—with real humans.
❌ Fast Fashion Retailers
Several “AI-first” retailers implemented ML-based demand forecasting but ignored frontline worker insights. Inventory improved; culture collapsed.
Visual #2: Cloud-First vs AI-First Evolution Curve
Why HI + AI = ECI™ Is the Only Real “First”
Let’s be blunt. If your AI-first strategy doesn’t include humans at the center—your designers, customer service, supply chain, finance, marketing—you’re just automating stupidity at scale. The real transformation starts with aligning:
- HI (empathy, leadership, problem-solving)
- AI (automation, insights, optimization)
- Multiplied by T (Technology Readiness)
- Minus R (Risk, Resistance, and Rework)
My formula:
ECI = (HI + AI) × T – R
Visual #3: Strategic Investment Comparison – HI + AI = ECI vs AI-Only
Executive Playbook: Becoming Truly AI-First
- Diagnose Readiness
Use the ECI toolkit to assess your organizational, data, and process readiness. - Embed AI in Process, Not Just Tools
Deploy AI to rethink workflows—not just automate current inefficiencies. - Upskill HI
Reskill your workforce. Teach them to partner with AI, not fear it. - Measure ECI Outcomes
Track elevated intelligence metrics: smarter decisions, faster cycle times, more human-centric experiences. - Govern Responsibly
Build cross-functional AI governance to avoid bias, misuse, and automation creep.
The CDO TIMES Bottom Line
Let’s stop celebrating AI-first companies that build fast and break trust. Let’s applaud those that build better—with humans in the loop.
The companies that will lead the next decade aren’t the ones who automate first. They’re the ones who elevate first.
“AI-first” without HI is a recipe for ECI failure. The ones winning today—Duolingo, Morgan Stanley, Schneider—understand that true innovation lies in the fusion, not the substitution. They’re not just experimenting with AI; they’re rewriting their DNA with HI + AI = ECI™ at the core.
If your boardroom is still obsessing over which GenAI tool to buy, here’s your next step: buy some humility, upgrade your human intelligence, and build an AI strategy that actually includes people.
Otherwise, you’re not AI-first. You’re AI-fraud.
Explore the full HI + AI = ECI™ toolkit, join our executive assessment series, and pre-order the book at
https://cdotimes.com/eci
— Carsten Krause, Founder of The CDO TIMES
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