How to build a service transformation culture

Key takeaways

• Look for opportunities to foster AI literacy throughout the organization 

• Ask employees what processes need to be eliminated or changed before automating them

• Let IT handle the technology and allow HR to lead the human side of change

The notion that culture eats strategy for breakfast has become an accepted truth for businesses of all sizes. Even the most visionary strategy will fail when employees believe their input is not valued. For mid-market companies making moves in AI, fostering a human-centric culture will be a crucial step in applying AI to transform their service operations.

According to a new Gallup survey, two-thirds of U.S. employees report that AI has improved their productivity and efficiency. Yet only 1 in 10 say using AI has transformed how work gets done within their organization. The World Economic Forum predicts that in 2026 mid-market businesses will begin to fully embrace the technology. But research by Deloitte has found that organizations taking a tech-centric approach are less likely to realize positive returns on their AI investments than those that focus on the human element of transformation.

That’s because AI is not something that can be simply bolted onto a company’s existing processes, or dictated from on high, notes Freshworks CIO Ashwin Ballal. It needs to be imbued throughout a company’s culture at the individual, team, and organizational levels. 

"Most service transformations stall because leaders treat culture as the last mile, not the foundation,” says Ballal. “At Freshworks, we learned early that adoption doesn't follow deployment—it follows trust. That means being transparent about what AI is doing, where it's falling short, and what an employee’s role is in making it better. When people feel like partners in the process rather than passengers, the culture builds itself.”

Create a solid foundation of knowledge

Robert Lyons, CTO for Katz, a subsidiary of iHeartMedia: "When we went to roll out AI support, we made sure we weren’t promoting self-service as, 'We're never going to be here for you again.' It's another channel to get assistance faster. We're also not a 24/7 shop, so we can market it as giving people options after business hours. But before any of that, we ran what I called an AI primer webinar for all employees. The purpose was to give everyone a fundamental understanding of how AI works, so that after this, they could hold their own in any conversation about AI. And I had our research advisory firm present it, not IT, so it's not IT barking at you. A neutral party socializing this makes it land differently."

Read also: How this CTO builds the foundation for AI 

Listen to what your employees are saying

Mark Settle, book author and former CIO at Okta and BMC: "Cultural change may begin at the top of an organization, but without support from below, it will fail. Leaders need to start by listening to their employees instead of dictating to them. No matter how much top-down interest there is in the technology, the people who ultimately have to adopt it are going to have their own views, and may actually introduce efficiencies you haven’t thought of. Management can’t just come down and say, ‘Your life’s going to be so much better once we automate this 17-step process." 

Find your transformation champions

Bob Hutchins, an AI strategist and founder of Human Voice Media: "Creating an AI transformation culture is not just a technological challenge, it’s also an organizational, psychological, and emotional one. Businesses need individuals to take on the role of transformation champions and share their knowledge across the organization. AI needs to be more than just another technology that lets you do the same things you’ve always done, only three times as much of it. You need people who can think through what’s truly important to the organization, and how to do those things better and more creatively."

Let HR take the lead

Theresa Fesinstine, founder of PeoplePower.ai: "HR leaders can play a huge role in AI transformation by empowering employees, alleviating their fears through skill-building initiatives, and exploring how different AI tools can make their work more rewarding. It’s about creating a culture that embraces innovation and continuous learning. That means enabling employees to thrive in a world where artificial intelligence and human ingenuity work hand in hand. While IT may provide the technological expertise, it’s the genius of HR that will ultimately drive AI’s success."

Lean into empathy, not just efficiency

Ashwin Ballal, CIO of Freshworks: "Technology adoption is ultimately an act of trust, and trust is built through empathy, not mandates. When we roll out new tools at Freshworks, I always ask myself: Would I want to be on the receiving end of this experience? If the answer is no, we're not ready. The organizations getting service transformation right are the ones where leaders are willing to sit with their employees' uncertainty instead of rushing past it. That doesn't slow you down—it's what keeps you from having to start over six months later when adoption stalls and your best people are burned out."

Read also: Empathy is a leadership strategy in the age of AI