Image: supplied South African businesses are racing to adopt artificial intelligence. Boardrooms are filled with conversations about automation, efficiency and cost reduction. The promise is compelling: do more with less, faster.
But there’s a problem. Many companies are solving the wrong problem.
A new report by the Henley Centre for Leadership at Henley Business School, Redefining Leadership in the Age of AI, suggests that while AI adoption is accelerating, most organisations are stuck in a narrow “first wave” – using AI primarily to cut costs and automate routine work. That may deliver short-term gains. But it won’t transform businesses. And it certainly won’t fix South Africa’s deeper productivity challenges.
In fact, if approached incorrectly, AI could make them worse.
The efficiency trap
‘South African firms are under pressure. Economic growth is sluggish, margins are tight, and productivity has stagnated for over a decade. In this environment, it’s no surprise that AI is being positioned as a cost-saving tool,’ says Jonathan Stock, Director of Open and Undergraduate Programmes and Head of Innovation at Henley Business School Africa.
‘But this is exactly the trap.’
‘The report warns that when organisations focus only on efficiency, they risk “making what they currently do slightly more efficient” without changing how value is created. In other words, they optimise yesterday’s business model instead of building tomorrow’s.’
One of the authors of the report, Professor Bernd Vogel explains that despite rapid advances in AI capability, many organisations lack the internal capacity to translate that potential into meaningful outcomes. ‘The issue is not access to tools, but the ability to use them well for the organisation and its wider stakeholders. In that sense, AI is acting less as a solution and more as a stress test – exposing gaps in leadership, capability and organisational readiness.’
This matters, he stresses, because AI’s real potential is not incremental – it’s transformational. It’s about redesigning services, rethinking customer experience, and enabling better decision-making. Companies that fail to move beyond cost-cutting will fall behind those that use AI to create new forms of value.
For South Africa, where competitiveness is already under pressure, this distinction is critical.
The real constraint isn’t technology – it’s people
Stock says that the deeper challenge for South African organisations lies within organisations themselves.
‘As AI becomes more embedded in everyday work, success depends on whether people can understand it, apply it, and make sound decisions alongside it. Many cannot. Employees feel overwhelmed by the pace of change. Managers struggle to integrate AI into real workflows. And too few organisations have people who can bridge the gap between technical capability and commercial reality.
‘This is where South Africa faces a structural disadvantage. Digital skills are unevenly distributed, access to training is limited, and many organisations underinvest in the skills of the future.
‘The risk is clear: AI could deepen inequality between firms – and between workers – rather than closing it. This is one of the reasons that Henley Business School has introduced its AI Leadership Pathway, a carefully curated series of AI-focused short courses across four levels of skill, from AI productivity and literacy, and AI implementation and transformation to AI leadership strategy and executive AI impact. The aim is to ensure that organisations that recognise the strategic importance of the challenge can skill up rapidly across levels.’
Productivity gains – with hidden costs
There is no doubt that AI can boost productivity. Globally, workers report being significantly more efficient when using AI tools. But the report highlights a less discussed consequence: AI users can be at risk of burnout and disengagement.
This should raise alarm bells, and it demands a more strategic approach. Efficiency without redesign can lead to pressure, not progress. If organisations simply layer AI onto existing workloads, they risk creating faster, more intense work environments – without improving job quality or long-term performance.
For South Africa, where employee engagement is already a challenge in many sectors, this is not a trivial concern.
The leadership gap
‘At its core, this is not a technology issue. It’s a leadership issue,’ says Professor Vogel.
He says that’s because AI forces organisations to confront deeper questions:
- What work can be done by humans versus machines, and, more interestingly, by humans AND machines together?
- How should decisions be made and governed?
- What kind of organisation are we trying to build?
Answering these requires a different kind of leadership – one that goes beyond technical expertise.
‘The leaders who succeed in the AI era are not those who understand algorithms best, but those who can exercise judgement under uncertainty, integrate technology with human capability, build trust, culture, and ethical accountability, and translate complexity into clear organisational action.
‘In short, leadership is shifting from control to sense-making.’
A uniquely South African opportunity
Stock adds that because South Africa is not yet fully locked into legacy AI approaches, it has the chance to leapfrog – to adopt AI in a way that is more human-centred, more inclusive, and more aligned with long-term value creation.
‘That means: investing in skills and digital literacy at scale, redesigning work, not just automating tasks, prioritising judgement, creativity and problem-solving, building AI leadership capability as a strategic asset.
‘Most importantly, it means resisting the temptation to see AI as a shortcut,’ he says.
The bottom line
‘The bottom line is that AI will not fix South Africa’s productivity problem on its own. It will not resolve skills shortages. It will not automatically make organisations more competitive
‘What it will do is amplify whatever already exists – good or bad.’
Stock adds that companies with strong leadership, clear strategy and empowered people will accelerate ahead. Those without will simply automate inefficiency.
‘The uncomfortable truth is this: the future of AI in South Africa will be determined less by the technology we adopt, and more by the leaders we develop. Because in the end, the companies that win in the AI era won’t be the most automated. They’ll be the most human.’ DM
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