Why You Don’t Put All Your Eggs in AI

Spend twenty-five years in financial services and the discipline comes through in how you read technology strategy. The key is the same as it is in investing. Diversification. You do not put all your eggs in one basket, and you do not put all your eggs on AI. It is the most useful reframe I have found for the current rush, because it turns the whole decision from a technology question into a risk question. I first heard it put that way in a conversation with a strategy executive on seeing the whole chessboard.

Think of your technology like an investment portfolio. A financial advisor who told you to put every dollar into one stock would be fired, no matter how good the stock looked. Yet that is exactly what companies are doing with AI right now, pouring the entire budget into one bet as though the bet cannot go wrong. It can. And the way it goes wrong is not mysterious. It is the same way a concentrated portfolio always goes wrong.

Why is betting everything on AI a bad strategy?

Start with the fact that the asset is unstable. Today’s version of AI will not be tomorrow’s version. That matters more than it sounds. If you rebuild your entire operation around the current models, you have anchored yourself to a technology that is changing under your feet. Something else could evolve, a different approach could win, and now you are holding a system built for a moment that has passed. In finance you would call that concentration risk. In technology it has no fancy name, but it is the same trap.

Then add the failure modes. A single-vendor, single-technology stack has a single point of failure. One cyber attack, one security gap, one breach from our friends outside the borders, and the whole thing can collapse at once. Diversification does more than chase upside. It is about surviving the day one piece fails, which in technology is not a possibility but a certainty on a long enough timeline.

What does diversification look like in practice?

I learned this in the least glamorous corner of technology, backups, and it saved me. My backup strategy has three layers, three separate backups from three different vendors. None of them are expensive. If any one of them fails, I still have two. That is diversification at the smallest scale, and it is the reason I still have my life’s work.

I have taken more than 980,000 photographs over my life, along with thousands of videos and 113 books’ worth of manuscripts. I nearly lost all of it once, years ago, when a disk drive died and I had to rebuild it by hand, a nightmare I never wanted to repeat. Recently a disk failed again. This time it was a shrug instead of a disaster, because the data lived in three places and I recovered it. It took a few days, because it is terabytes, but I got everything back. One vendor, one copy, and that story ends very differently. The principle scales all the way up. What protects a photo library protects an enterprise.

Does diversification mean avoiding AI?

No, and this is where people get it wrong in the other direction. Diversification is not a reason to sit out AI. It is a reason to hold AI as one position in a broader portfolio instead of the whole portfolio. Use it where it earns its place, which is real and worth using, as I have written about in Six Places AI Will Break Your Work. Just do not tear out systems that work to bet everything on a technology that will look different in a year.

The organizations that come out ahead are the ones that think in five and ten year horizons, holding a mix, keeping what works, adding the new thing as a measured position instead of an all-in shove. The ones that lose are the ones chasing the crowd, ripping out functioning systems to slap AI on everything because everyone else is. That crowd behavior has a cost, and I traced why these bets fail in Why Most AI Rollouts Fail.

The vendor lock-in trap

There is a second layer to this, and it is about vendors as much as technology. Sticking to one vendor is its own concentration risk, and it is always bad, whatever the vendor promises. When you build everything on one provider’s stack, you inherit their outages, their price hikes, their security holes, and their business decisions. If they change their terms or their direction, you have no move. My three-vendor backup rule is a vendor-diversification rule as much as a technology one, and the logic is identical at enterprise scale.

This is what a transformation done right looks like. Not one big bet on one shiny thing, but a spread of positions chosen so that no single failure takes down the whole operation. I have written about the order of operations that makes transformation work, starting with people before technology, in People, Process, Technology. The through-line is the same as the finance rule. Do not concentrate. Spread the risk, keep what works, and treat every new technology, including AI, as one position and not the whole bet.

There is a fuller version of this argument, including a three-horizon read on where the AI infrastructure race is heading, in this conversation on seeing the whole chessboard. If you are leading technology decisions and want to think about them as risk instead of hype, start with the Digital Transformation Hub, and if the lessons you have learned running real systems belong in a book, my writing services are built for exactly that.

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