Motley Fool Hidden Gems Investing - The AI Headlines You Should Be Most Suspicious Of

Episode Date: June 28, 2026

The companies dominating AI headlines right now may not be the ones actually winning. In fact, according to Julie Averill, the loudest signals are often the ones most worth questioning. As former global CIO of Lululemon — where she helped oversee one of retail's most successful tech transformations — Julie has spent decades separating real change from corporate theater. Motley Fool analyst Rachel Warren sits down with Julie, now author of Chief Impact Officer, to unpack what AI washing actually looks like from the inside, why 87% of CEOs say psychological safety matters but only 13% believe their company has it, and what that gap means for the stocks in your portfolio. Host: Rachel Warren Guest: Julie Averill Producers: Bart Shannon, Lauren Budabin Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

there's a lot of change going on and a lot of motion and i don't think anybody has it figured out so any company that looks like they have it all figured out i'd be suspicious of that was julie averill former global cio of lululemon and author of the new book chief impact officer i'm motley fool analyst rachel warren julie joined me to talk about spotting AI hype before it costs you money, why the companies talking loudest about AI may actually be the ones to avoid, and how to tell whether a transformation is real or just a really good story. We hope you enjoy. Hello, everyone, and welcome back to Motley Fool Conversations. I'm Motley Fool analyst Rachel Warren, and today our guest is Julie Averill, a powerhouse technology

executive, author, and board director who has spent nearly three decades leading some of modern retail's biggest digital transformations. She formerly served as the global CIO and executive vice president at Lululemon, where she speared a cultural and technological overhaul that helped scale the company's revenue from $2 billion to over $10 billion. And before rewriting the playbook at Lululemon, Julie pioneered major digital and omni-channel initiatives as the first ever CIO at REI and in tech leadership at Nordstrom. Today, she advises boards, CEOs, and founders at the intersection of AI capability and organizational readiness, the place where most transformations stall. She speaks globally on leadership in the age of AI

and helps organizations build what technology can't deliver. Teams that tell the truth, leaders who can turn pilots into real change, and cultures that sustain transformation instead of performing it. Julie has just released her highly anticipated new book, Chief Impact Officer, Real transformation comes from human, not just artificial intelligence. Julie, welcome to the show. Thank you so much, Rachel, and thanks for that kind introduction. You know, as noted, you spent years leading technology transformations at Nordstrom, REI, of course, famously helped scale Lululemon's revenue to over $10 billion.

You know, for individual investors managing their own portfolios, looking at the public companies they own. What does real sustainable value creation look like on a balance sheet during that level of growth during those types of transformations? I think it's when you're building both the foundation and the growth when you can enable both. And there are tough choices you have to make along the way. But the important thing is to look not just where you're going tomorrow, but also in the future. So for it to be sustainable, you sometimes have to make the tough choices and invest in things that maybe are going to serve you a couple of years from now. And you have to make choices to maybe not turn on that revenue facing feature today,

because you know that you need to, you need to create a future. And another thing that really stood out to me, I mean, just from the title, real transformation comes from human, not just artificial intelligence. Why is human intelligence a more reliable indicator of a company's performance than just artificial intelligence? What is the interplay between those two that you see right now and moving forward? I see companies today making a lot of headlines

around AI, right? It is powerful, it is new, and it has tremendous possibility to lead our companies in many different places. But it is still about the people. The technology is getting easier and easier. And so we're focusing more on the technology than we are on the people. My experience is that if transformation doesn't start with what's the

business problem you're trying to solve, and you're focused more on the technology, you're going to end up buying really expensive technology and not moving your business forward. And so that's my focus area. It's like, what are we trying to solve? And the people who understand the business and are driving that business need to be part of defining that future and helping bring it into reality. Yeah, I want to dig into that concept a bit more. I mean, through your advisory practice, you work with company leaders and boards often coming in where tech transitions stall. And something you've spoken about is this idea of companies performing transformation rather than sustaining it. I wonder if you could maybe tell our audience a bit more

about what is performing transformation look like? What are the signs that a retail investor can look for, whether it pertains to AI or otherwise? Yeah, I think look beyond the headlines. So for example, right, we have seen this concept of AI washing, right, where companies are proclaiming, I'm laying off thousands of people in order to, or because of AI. And then you look a little deeper and it's not because they've actually found the efficiencies to be able to lay these people off, but it's because they overhired maybe during the pandemic and now need to right-size their team so that they can take that money, invest in other things. So performing is declaring, right? Like, what's my AI strategy? And the board comes up and they bless it. And underneath that, you don't have

the individual leaders that are saying, your supply chain leaders saying, here's how AI is going to help me get the right products to the right place when when the customer is there to get it and it's just you know efficiencies out of supply chain so yeah performance is performance is companies that are going for headlines um you know looking to be ai forward without actually doing the work of understanding what ai is supposed to do in their organization and we're seen that a ton today. Well, and something as well that you write about is technology itself is really the hard part. The hard part is really building the human infrastructure around it. You know, trust, decision rights, truth-telling teams. Maybe talk us through that a bit more. And what is

the, you know, the downside? What are the losses that we see if a company lacks that internal culture? Yeah, I bring up a couple examples in my book of where truth-telling is important. One is when we returned to office from COVID, right? And I was part of this, right? We wanted to bring people back into the office three days a week, and we just sold the upside of it, right? It's going to be amazing

to have everybody back in the office together. We'll be able to rebuild our culture, to build connections, to be the company that we used to be when we saw each other face-to-face, the water cooler conversations, et cetera. And I believe that, but without acknowledging to people

that we were disrupting the lives that they had come to build and saying, we're asking you to give up the opportunity to pick up your kid at daycare like you've been doing in order to take care of your parents, then you're only telling half the truth. And people are smart. And so when we go out today as leaders and we say, AI is going to transform our company and we're going to augment, not replace your skills, people are still silently wondering what's in it for me. I just read a report today out from ADP and it said that 22% of people globally feel like AI is not going to replace, threaten their job. So that means that four out of five people are sitting there wondering if AI is going

to replace their job. So if you're asking people to go on a journey with you on AI and they feel threatened that it's going to replace their job and you haven't acknowledged it and spoken the truth about whether that is true or not and how you're going to bring them on the journey, are they going to advocate? Are they going to speak up when something is wrong with the model? Are they going to quietly go silent and potentially sabotage the effort? So this notion of psychological safety that allows people to speak the truth is, in my mind, really fundamental for accomplishing any major company transformation.

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And you've personally managed massive corporate tech budgets. And I think one of the things that would be interesting to think through is when an investor, we're looking at companies, you know, capital expenditures, how can we distinguish between really high impact structural investments from those that are really just burning cash on speculative tech projects? Yeah, it's tough for investors. I mean, inside company, you can pay attention to the ROI on the individual initiatives, which is what I always do, right? When you begin a new project, let's claim what we think the ROI is going to be, how we're going to measure it. And probably harder for an investor because you don't make those things public if we're talking about public companies. But if we're talking about private companies, certainly you can ask to see that. um also i look at pace of change i look at the mindset of the technology organization is this a company that is uh you know especially retail there's a lot of legacy technology in retail and it's advanced to the point where uh you know the top retailers are really top technology

experts but there's still a lot of in a lot of retailers there's a lot of legacy stacks out there that have people maintaining, still investing a lot of money in legacy solutions that aren't really creating innovation platforms for the retailers to be able to scale and grow. Yeah. You know, it's an interesting thing to consider. You have such an expansive background in retail. And obviously, I know you advise a lot of companies in and outside of this space. Where are you seeing some of the greatest efficiency drivers from AI right now and it from your vantage point where we're seeing them is where there are repeatable processes so you know customer service is one example that came out first because you have you know you have

things that you can document and when you know when a customer asks for their order status there's a specific thing that you can do to give them that information where it is more difficult is those things where especially in retail where our processes aren't documented so um how to go to market right a lot of a lot of people in the decision making process of that and so even though you know it may take years to take a product to market and it's very very enticing to try to shrink that down you can't just bring in ai and shrink it down because it's the process of making decisions that needs to change to expedite it so all the people that are in the room can you agree on who makes the decision and can you document how that decision is being made if

so that's a good candidate for ai if not then then no not yet well you mentioned uh briefly the concept of ai washing earlier and i want to talk about that a bit a bit more you know you've highlighted how heavily the market rewards the mere mention of AI sometimes. We've seen this in a lot of different companies, some of which we'll get to in a bit. But how do you officially define AI washing for, say, an individual investor who's wanting to protect their portfolio from some of these overhyped businesses? Yeah. I mean, I think if it's a company that is looking to use the word AI as something to imply value without having actually done the work, I think the companies that are really getting AI leverage are not the ones necessarily out

there talking about it, but they're slowly transforming and doing the hard work. So I'm a little more suspicious of the companies that claim, you know, the big headlines. Sometimes it's signifying investments, which is a good signal. But, you know, I would ask the so that question, right? You're doing this so that what can happen? Do they understand that? Do they believe in the future of the company that's being defined by these AI ambitions? Like I said, AI, incredibly powerful, but yet to unlock the value, there's different

work that needs to be done than just proclaiming it. Well, and I wonder as well, in your experience, how long does a legitimate AI or tech infrastructure implementation actually take to flow down and show up as true margin expansion or earnings growth, for example? Because that's really where we see the proof as investors, right? Yeah. I mean, it can be fast. It can be really, really fast.

If you can carve out a piece of the business and you get alignment, it's like I said, the technology is easy, right? And you can make it go live. But the larger transformations that require people across multiple functions that really changes how people work, those take a long time. And mostly because organizations are slow to move. You know, there's a lot of talk around how AI is actually changing the org charts. Because instead of being modeled, you know, on a department hierarchy, instead, you have to think about how decisions are made.

It's fundamentally different. And those are the things that take time in an organization. I saw in a recent piece you wrote that one question boards need to stop asking their CEOs is what is your AI strategy and that they should instead be focusing on business metrics. I would love to hear more of your thoughts on that. I mean, why are so many corporate boards maybe asking the wrong questions? Well, I think it's very natural for boards to want to know what their companies are doing in terms of AI. And I heard one CEO get asked, what's your AI strategy and how can you forecast the impact that AI is going to have on your business? And his reply was 20% over five years. Like no data behind that. No anything, but just, yeah, we should be able to get 20% over five years. I mean, it's a reasonable guess, but what it does when that happens is that now the focus is on efficiencies. And the reality is that many companies have had gains in, you know, tremendous gains with AI for their business, but it's not yet coming through in terms of efficiency. Something like 3% of companies are actually seeing the efficiencies play out. Now, will efficiencies come? Probably, but that's not what to go after to start with. So when a board comes and says, show me your AI strategy, what happens is the CIO goes back to his or her leadership team and says, we need an AI strategy, appoints one person, right? And that person goes, they collect all of the ideas that are out there and it becomes, again, performative because then that goes to the board. They see a list of all these things. They're happy because all this AI activity is happening, but we don't really know if

any of those are really moving the needle. Maybe the answer is we need one. Maybe that's the right answer. We have one thing going in AI, but here's how it's going to transform the most important problem the business has today. Maybe it's 200, but do you know what all those 200 are doing? So I think it brings a focus on the wrong thing. I think boards should continue to focus on the questions that are important to them, like where are we going in the next three, five years?

And then the follow up question is, how is AI going to help us get there? In a few different industries, we've seen some really interesting case studies of late of companies sort of rebranding to AI businesses, but maybe masking some concerning underlying business realities. And one example is Allbirds, right? You know, they rebranded to New Bird AI. I think the stock jumped some crazy amount, like 700 percent on the announcement. Despite they had closed U.S. stores, they've watched their revenue plummet double digits over the last few years. Maybe talk through that example. But also, what does that tell you about the danger of narrative driven investing? Yeah. So Allbirds, what did they do? They converted their properties to data centers or something. I don't remember what it was, but I mean, they have a plan behind it, but what it signaled to the market was, oh my gosh, these guys are progressive. They're modern. They're going somewhere. They're thinking differently. And it was short-lived, right? It was a short-lived blip. But again, this is the notion of AI washing where the market sees something that's exciting. Everybody's all in, right? Drives the stock up and then the reality hits. So I think that there's, you know, I believe the market is rational in the long term and

this sort of thing will work its way out. I look at those companies that are really creating value over the long term. those are the ones that I would invest in. Yeah, I mean, they transitioned to a GPU as a service business. They sold their assets to the American Exchange Group. So certainly a pivot. You know, another interesting example, a different company in business, you know, we had Snap. They framed a pretty significant layoff as an AI efficiency story, which sort of temporarily pushed the stock But again, this is a business that's seen years of structural losses, a lot of fierce competition within their respective space in tech. I'd like to hear your thoughts about when we're seeing company leaders maybe using AI as a shield to mask these decisions around restructuring or otherwise. What does that tell you? I think it tells you that that's a business that's in trouble.

Right. The real headline is not one that they want to say. So they're using AI as a cover. And the real headline, like you said, might be that we're struggling with our business and we're pivoting because our current runway is not leading us to a sustainable future. So AI is an excuse or a cover for what they actually don't want to say. And then the thing that I also worry about is once you've done that and you're telling your whole organization that AI just cut 20% of our jobs, and the organization knows what the truth is. And again, going back to modeling truth in your organization, you've just lost trust with the 80% that remain, and those are the people that you need with you more than ever.

I also wonder, how should long-term investors view activist tech investors who, you know, build positions in some of these legacy brands that often demand immediate AI adoption or other key changes? How does that impact, obviously, the growth story, but also long-term shareholder value? Yeah, I think it's the question of, do I continue to believe in the business model of this company that I invested in? Or are they trying to force a change, a pivot, because they just fundamentally believe that the business is no longer sustainable? So I think it's different for each one. But if a company is saying fundamentally, we're not going to go down the AI path, that's concerning. But if there is a legacy business, especially, I'm worried about a

lot of the SaaS businesses today that do need to pivot. They need to pivot in their pricing model. They need to pivot and recognize that there's a lot of companies that are coming up right now with their eye on the big SaaS providers because the technology is so much easier. So I don't blame the investors for trying to push that angle. But I think fundamentally, Do you believe in the business model of the company that you invested in or not? And just going back more broadly to this concept of AI transformation and the lessons that you talk about in your book, what do you think are a few things that investors might be missing right now as we are surveying various industries that are going through these different transformations? Nobody has it figured out yet. Right.

Nobody has it figured out. I was just looking at a stat this morning, 87% of CEOs believe that psychological safety is important, yet only 13% important for AI transformation, yet only 13% believe their organization has it. So there's a lot of change going on and a lot of motion, and I don't think anybody has it figured out. So any company that looks like they have it all figured out, I'd be suspicious of. I'd look for learning companies, companies who are talking about what's going right, what's not going right, what they're learning, how they see the future changing for them would be how I would look at an indicator of a company that is going in the right direction.

Are they able to talk about something that they don't yet fully understand? Another thing that I took away from your book, you know, you explained that real high performance and trust only tend to emerge when leaders stop hiding behind corporate masks. And, you know, as long term investors, what are some of the ways we can differentiate between transitory tech advantages that can be copied versus those that are actual permanent structural modes? I think you have to look at the P&L. Do you see changes that actually flow through to the bottom line or is it just, you know, fancy lipstick? Yeah, absolutely. from the overhyped businesses? I think it is about companies that are grounded, that are honest, that are telling the truth about what's happening today

and what's happening in the future. Companies that are focused on culture of a company. I'm more interested in what's going on inside the organization than the headlines that they're producing externally. And companies that have something unique for the market that, you know, that you can uniquely identify and understand because it, you know, it solves a need that they uniquely have permission to solve in the market. What are you seeing right now in corporate AI transformations that genuinely excites you? And this could also be, you know, projects that carry on, of course, into the next five to 10 years.

What most excites you right now as you look at the space? I think speed of decision-making. There is incredible changes happening by companies who are leaning into remodeling how they're making decisions and speeding things up. AI has already made this world so much faster, as we all know in our personal lives. But the same thing is happening in corporations when they are figuring out how to take that new information that maybe was only available to them once a month previously, and now it's available on a real time basis. So how can they change how they make decisions and go faster and through that speed, use

it to be able to innovate and create and unlock the creative potential of an organization? And one final question, something we focus on a lot here at The Motley Fool is we're looking at companies that we want to invest in and add to our portfolios, of course, is leadership. And of course, something that you've written about a lot and we've talked about a lot today is this idea of leadership, accountability and the hallmarks of good leadership. What are a few things that we as investors should be paying attention to, to really separate those visionary leaders from those that may not be able to lead the companies that we own into the success that we want. I think if you have time with your individual CEOs and can understand what are

their values, how do their values translate to the organization? Are they consistent with what they say with what you see inside the organization? Like we've talked about earlier, people know They can smell something that just is a little fishy. And so is that leader true to what they say externally as well as what people internally say? You know, the opportunity ahead, right, is the organization behind them. and really believing that what, you know, what they're saying on a market tour is the same that they would say inside the organization. Same thing that people on the front lines would say is really where they're going. Well, thank you so much for your time today, Julie. It's been wonderful to speak with you. And for those who are listening or watching, check out her book, Chief Impact Officer, Real Transformation Comes from Human, Not Just Artificial Intelligence.

Appreciate your time today, Julie. Thank you so much, Rachel. It's been great. I'm Rachel Warren. Thanks for listening. We'll see you next time.