The Expectations Paradox in AI Adoption by SMEs: A New Lens for Strategic Leadership and Digital Transformation

While artificial intelligence (AI) holds transformative potential for small and medium-sized enterprises (SMEs), many such organisations experience a recurring cycle of initial optimism followed by rapid disappointment. This phenomenon—termed the Expectations Paradox—describes the widening gap between inflated short-term expectations and the complex, slower-paced realities of AI implementation. As a result, many SMEs either underutilise AI or withdraw entirely from adoption initiatives, impeding innovation and long-term competitiveness. This keynote explores the underlying drivers of the Expectations Paradox, examining both internal challenges (e.g., limited technical capabilities, unrealistic timelines, weak leadership engagement) and external pressures (e.g., vendor overpromising, funding limitations, and policy ambiguities). It introduces a strategic framework grounded in organisational learning, knowledge management, and ethical leadership to help SMEs realign their digital transformation efforts with sustainable outcomes. Drawing on empirical insights, conceptual models, and real-world examples, the presentation proposes a set of practical principles for breaking the paradox—emphasising expectation calibration, collaborative ecosystems, and human-centric leadership. Ultimately, the Expectations Paradox is reframed not as a failure of AI, but as a diagnostic tool to help SMEs and policymakers design more adaptive, resilient, and impactful AI strategies.