AI Competency | Essay 1

Last month, I wrapped up my two-part essay on business transformation12 with a conclusion: companies that started early are no longer “transforming”, they are in a state of continuous evolution. Google remains a prime example of how even pioneers must perpetually adapt to stay ahead. Most C-level executives recognize the imperative, yet many struggle to match the velocity at which pioneers like Google, Walmart, and JPMorgan Chase have pivoted in just the last twelve months.

In 2026, the challenge for CEOs is no longer fighting the inertia of “getting started.” The challenge is architecting a culture of continuous evolution, one that sustains momentum long after the initial transformation push.

Coincidentally, the January–February 2026 issue of Harvard Business Review led with “Rethinking Nonstop Transformation.”3 The cover story, by Darrell Rigby and Zach First, challenges the modern corporate obsession with “radical reinvention.” They argue that constant cycles of massive, disruptive change are counterproductive and exhausting. Instead, they advocate for steady, proactive adaptation. The issue’s mantra is powerful:

“The best way to manage transformations is to minimize the need for them.” True progress comes from building a resilient, “regenerative” business model that evolves alongside the market, rather than one that must be broken and rebuilt every three years.

The shift from radical upheaval toward sustainable evolution has fundamentally reshaped my practice at Kai Roses. I have moved away from the traditional, linear path of discovery phases, maturity assessments, and isolated pilots. Instead, I focus exclusively on helping companies build AI Competencies as the primary path to value. This is achieved through accelerated daily and weekly iterations, where we develop multiple model-based solutions simultaneously to surface gaps and opportunities with speed.

Given that AI will radically change how businesses are built and operated, we must first understand the true nature of the organizations we are evolving. This essay, the first in a 12-part series introduces the foundational concept of Competency through a simplified industry lens. In the coming months, we will dive deeper into the core competencies of modern industries to understand how they might leverage AI to build new competitive moats. Along the way, we will define exactly what AI Competencies are and, more importantly, how to develop them within your own organization.

Understanding Competency

In 1990, C.K. Prahalad and Gary Hamel defined core competencies as the “distinctive, often intangible combinations of knowledge, skills, and abilities” that form a company’s unique strengths4.

They famously compared a corporation to a tree: the roots are the core competencies, the trunk represents core products, the branches are business units, and the leaves are the end products consumers buy.

Their research remains as groundbreaking today as it was in the 90s; I highly recommend a deep study of their work, as it fundamentally shifts how one views the structure of a modern business. I am particularly grateful to Professor Vijay Gurbaxani for directing me to this paper during my own research into AI Competency as a Senior Industry Fellow at the UCI Center for Digital Transformation.