Retail Observer

RETAILOBSERVER.COM JUNE 2026 30 O rganizations worldwide invested roughly $40 billion in AI last year. According to MIT research, 95% saw no measurable impact on profit. An NBER survey of executives across four countries found that 89% reported no effect on labor productivity. And yet Gallup's 2026 State of the Global Workplace report finds that 65% of workers inside those same organizations say AI has made them personally more productive. Sit with that. People are doing more, but organizations are getting less. That gap shows up in retail with particular sharpness – in stores, distribution centers, and in the offices of sales and marketing teams. The technology is working, but something human is not. Linda Hill has spent thirty years studying what happens inside organizations when transformation is attempted. Her finding, consistent across decades and sectors, is that the rarest and most consequential capacity a company can have is not the ability to adopt new tools. It is the ability to create conditions where human contribution can actually go somewhere. LINDA HILL CALLS IT CO-CREATION Most businesses, including retailers, that are attempting AI trans- formation have skipped it entirely. The pattern I see is almost always the same in failed transformations. I'm working with two large marketing teams to remedy this. Leaders invest in the hands – the tools, the training, the workflows – without doing the harder upstream work on hearts and heads. Meaning: trust and identity. The inner environment where new capacity either takes root or quietly dissipates. HIGH HANDS, LOW HEARTS IS THE MOST DANGEROUS PROFILE IN AI ROLLOUTS TODAY Retail may be the most exposed sector of all, because the human moment – the associate who reads the room, the manager who holds a team steady through a peak-season surge, the marketer who knows which story will land with this customer – is still the irreplaceable variable. You can automate the content and calendar. You can't automate the creative judgment behind it. The 2026 Gallup report clarifies the data. Employees whose managers actively champion AI are 8.7 times more likely to say their work has been genuinely transformed by it. The manager, not the technology, makes the difference. The human being who made the work feel meaningful enough to engage differently is the linchpin. That's not a technology result. That's a culture result. Here is what the gap looks like on the ground. A marketing team adopts an AI content tool, and output per person triples. But few stop to ask what the team is freed to do with that reclaimed capacity. Does the team have a clear picture of the brand bets that matter now? Do they know what genuine customer connection looks like beyond click- through metrics? When they don't, people work faster toward their own interpretation of what matters. While the individual gains, the organization doesn't. This is a co-creation failure. The people closest to the work were never invited to shape the questions. Leadership handed them an answer and called it empowerment. One more thread in the Gallup data worth naming: global employee engagement just fell for the second consecutive year, something that has never happened in the history of tracking it. Engagement is a measure of psychological attachment to work, to team, to organizational purpose. It is, among other things, a measure of readiness for change. Disengaged organizations can't absorb the gains that AI makes possible, because the people using the technology have already silently stopped believing their contribution is going anywhere worth going. What Hill's research asks of leaders isn't complicated, but it is demanding. Before you accelerate capability, build the conditions for your team to thrive. Run the team-wide conversations before the tool deployment. Ask your people: what does this change? What stays the same? What are you worried about? And create a real forum for those answers, not just an open-door policy nobody uses. The brands getting AI right are the ones where people can locate themselves inside the story of what's being built, where the why is human-and-customer-centric, not just operational. Forty billion dollars' worth of efficiency is looking for somewhere to go. In retail, the only place it lands is in a culture that has created the conditions for it to be received. YOUR AI STRATEGY IS A PEOPLE STRATEGY Steven Morris On Brand Steven Morris is a brand, culture and leadership advisor, author, and speaker. Over his 25+ years in business he's worked with 3,000+ business leaders at 250+ global and regional companies. Discover: https://matterco.co RO

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