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According to PwC’s latest CEO survey, 56% of companies report zero financial return on their AI investments—no revenue gains, no cost savings, nothing. The problem isn’t the technology itself; rather, it’s what entrepreneur Steve Blank calls “Innovation Theater.” This pattern of mistaking activity for progress explains the growing divide between the small group of companies capturing outsized returns on their investments (ROIs) in AI and the majority that are seeing nothing.

Listen and Learn “Why 56% of AI Investments Fail” Deep Dive

More than half of companies are spending heavily on AI and seeing precisely nothing in return. According to PwC’s latest Global CEO Survey of 4,545 executives, 56% of CEOs report zero financial return on their AI investments—no revenue gains, no cost savings, nothing.

Yet, companies investing $10 million or more in enterprise-wide AI deployment are seeing dramatic results. EY’s research shows 71% of these organizations are reporting significant productivity gains. The divide is stark: most companies see nothing while a small group captures outsized ROIs.

Why Most AI Initiatives Fail to Deliver ROI

The PwC survey sheds some light on why this gap exists. When CEOs were asked about their companies’ ability to innovate, only one in four said their organizations could tolerate high-risk innovation projects or knew when to pull the plug on underperforming ones. What’s interesting is that half of these same CEOs say innovation is critical to their strategy, but fewer than 10% have actually put in place the practices that make innovation work.

This suggests that the real issue isn’t AI technology itself; instead, the problem is that most companies just can’t commit to seeing initiatives through to completion. They launch AI pilots without any real plan to scale them, won’t admit which programs should be killed and spend on AI while missing the basic operational pieces that turn experiments into actual business results.

What Is Innovation Theater?

There’s a term for what’s happening here. Entrepreneur and startup advisor Steve Blank calls it “Innovation Theater,” which is when companies engage in activities that look like innovation, but that create little real value. It’s the leadership telling the company that we need to innovate, but there’s no strategic plan in place or someone to take the lead to implement innovation. Or it’s the pilot programs that show promise, but fizzle out because leadership can’t justify the outcomes. Organizations go through the motions of innovation—the workshops, the design sprints, the centers of excellence—while the actual work of turning innovative programs into scalable business outcomes never happens.

When companies talk about innovation, but have little to show for it, it becomes white noise. Employees stop believing it matters. Real innovation—even when experiments fail—creates energy because people see action and then follow-through.

How Innovation Theater Deters AI Adoption

So what does Innovation Theater actually look like when it comes to AI? MIT’s research on generative AI pilots is clear: 95% of AI pilots fail to achieve meaningful revenue acceleration, which means that only 5% succeed in moving from experiment to business impact. Meanwhile, BCG found that just 11% of companies unlock significant AI value—but those that do see 3x higher revenue impacts than companies stuck at the pilot stage.

This isn’t a technology problem; rather, it’s a pattern of behaviors that holds companies back, frustrates employees and dilutes competitive advantage, while rivals capitalize on opportunities. Here’s what that pattern looks like in practice:

The AI Pilot that Never Scales. Companies launch AI initiatives across various departments. Months later, nothing has been launched across the enterprise. Compliance won’t approve it, legacy systems can’t integrate with it, or there’s no budget for the next phase. The activity looked like innovation, but nothing was ever put into action.

Measuring Activity Instead of AI Business Outcomes. Everyone’s focused on which pilots were launched, how many dollars were invested and which departments are participating. Yet, they’re not asking the right questions: How many were implemented? How much revenue have they generated? What savings have been realized? A company can run 50 AI pilots and call itself innovative, while a competitor runs three and identifies real value.

Build Versus Buy Paralysis in AI Implementation. MIT’s data shows that internally built solutions succeed 33% of the time versus 67% for purchased ones. Yet, organizations keep choosing to build because “owning the IP” sounds strategic, while competitors buy, deploy fast and take the market./p>

Innovation Labs Without Business Integration. The “AI Innovation Lab” gets its own space, budget and team. It runs hackathons, generates ideas and produces presentations. Meanwhile, the actual business—operations, sales and finance—keeps running exactly the same way as before. Innovation becomes something performed in the lab instead of embedded across the culture that drives revenue.

The pattern is consistent: companies do things that look like innovation without doing the harder work of changing how the business operates. They start but don’t finish, and incomplete innovation delivers the same result as no innovation: nothing—which is what 56% of CEOs are seeing.

Moving from Innovation Theater to Real Results

I’ve been on both sides of this divide. At a large company, I was part of a digital leadership team tasked with being “digital ambassadors”—educating the company and its clients on why they needed to embrace digital and social. We had the title, the presentation decks and even the workshops. What we didn’t have was a company-wide strategy or staff buy-in on why this shift mattered or what value it would create. We made very little traction. People pushed back, stuck to the legacy way of doing business, and money got left on the table. With the exception of a few clients, the effort essentially failed.

Real innovation looks different. It has a strategy that involves everyone and makes them accountable. It’s not a separate function or a special team; rather, it’s embedded in how the business operates. Theater is what happens when you skip that hard work. It’s announcing the initiative without direction. It’s launching programs without a plan to scale them. It’s investing in AI while avoiding the difficult conversations about what needs to change operationally.

If you’ve read this far, you’ve probably experienced more theater than action. Most of us have. The question is what you do the next time you see it happening. Because theater doesn’t just happen—it gets performed with the tacit approval of everyone in the room who know better, but stay quiet.

Questions that Expose Innovation Theater

The next time someone announces another innovation lab or AI pilot program, ask the questions that provoke real discussion:

• What’s the plan to take this from pilot to production?

• Who’s accountable for outcomes, not activity?

• What are we willing to stop doing to make room for this?

• How will we know if this is working, and what’s our kill criteria if it’s not?

These questions change the narrative. They force the conversation to change from theater to strategy. And in a market where 56% of companies are seeing zero return on their AI investments while a small group captures outsized value, the cost of staying quiet and going along with Innovation Theater keeps getting higher.

These insights on AI strategy and business impact are part of ongoing analysis at scheinerinc.com/perspectives. For questions or to continue the conversation, you can reach me at mike@scheinerinc.com.

As always, thank you for reading and/or listening.