Why Being Small Is Suddenly The Ultimate AI Advantage

Business colleagues having a meeting in a boardroom

In the AI arms race, something unexpected is happening. The little guys are winning. While Fortune 500 companies burn through millions on AI pilots, small firms are quietly automating their way to outsized success, proving that agility trumps resources. And their playbooks hold actionable insights.

When I wrote about MIT’s “GenAI Divide” in these pages, I argued the 95% failure narrative missed where success is happening: in shadow AI, in unmeasured productivity gains, in organic adoption invisible to formal metrics. The proof is emerging.

IBM’s Chief Scientist Ruchir Puri cuts to the chase, saying, “much of the value is occurring outside formal pilots.” Translation? The problem is less about AI failure and more about executive myopia. They are counting pilots launched instead of measuring how work actually changes.

But here is where it gets interesting. McKinsey found 78% of organizations now use AI but 1% describe their rollouts as “mature.” Deloitte said only 6% of the organizations reported return on investment under a year.

The outliers may not have bigger budgets or flashier technology. It is something far more counterintuitive. They slow down to speed up.

Small Firm Advantage

Brian Moran’s Chicago-based real estate firm illustrates this. Starting with nearly 297,000 homeowners across Lake County, Illinois, iReal Estate Solutions narrowed to 100,000 viable prospects, then filtered to the top 3% most likely to sell. Over twelve months, those predicted sellers represented over $60 million in closed listings.

Moran’s team spent an entire year codifying manual processes before deploying IBM’s watsonx AI platform. His team produced thousands of emails and follow-ups to test tone, timing, and messaging. They documented everything. Only then did they automate.

“We were a classic example of ‘slow down to speed up,'” Moran told me. What used to take three minutes per message now takes seconds. Agents produce three to five times more outreach in the same amount of time. His firm has expanded from one workflow to four product lines in eighteen months.

This approach directly contradicts what most Fortune 500s attempt. Wharton research shows 88% of enterprises plan to increase AI spending, yet most struggle with deployment complexity. Projects scoped for three months actually require twelve to eighteen. Consequently, they are setting themselves up for failure.

Here is the plot twist nobody saw coming: being small is suddenly an advantage. Smaller companies like iRES move faster because they have streamlined decision makers. Large enterprises must navigate the complex web of internal stakeholders—CISO, CIO, CDO, Chief Risk officers, multiple line-of-business owners. Half of major corporations in an IBM study admit their rapid AI investments left them with disconnected, piecemeal technology.

Meanwhile, small and mid-sized firms are charging along. While only 16% of AI initiatives scale at large organizations, smaller companies are performing better precisely because of their constraints. Resource-limited retailers are using AI demand forecasting to predict what customers want before they know it themselves. Regional banks are automating away 200+ hours of grunt work annually. Healthcare startups are deploying AI diagnostics that rival human specialists in narrow domains.

The Winning Playbook

The successful 5% share three characteristics. First, they weaponize their unique data, especially the messy, unstructured stuff competitors cannot access. Second, they cultivate leadership cultures that reward smart risks over guaranteed mediocrity. Third, they train their people instead of assuming AI adoption happens by osmosis.

Walmart’s fresh $1 billion investment in workforce AI training exemplifies this approach. The retail giant is more than deploying technology. It is fundamentally changing how 2.1 million employees work. That scale of human capital investment dwarfs what most companies spend on AI tools themselves.

IBM’s Vice Chairman Gary Cohn puts it bluntly: “leaders who aren’t leveraging AI and their own data are making a conscious business decision not to compete.” The key phrase is “their own data.” Not generic tools. Not flashy demos. The proprietary intelligence sitting in a company’s system is the new treasure trove.

The next wave of AI success will seldom come from bigger budgets or more pilots. It will come from companies brave enough to slow down, document their processes, and measure what matters to them. McKinsey’s 78% adoption rate combined with 80% seeing no return makes perfect sense when you realize most value happens in unmeasured places.

The AI divide is real, but it is not what is being touted. It is about measured versus unmeasured success. The companies capturing lasting value are not the ones with the flashiest announcements. They are the ones paying attention to how work gets done when nobody’s watching.

Forbes