The role of AI in strategy: current applications and future perspectives

Rolul IA în strategie: aplicații curente și perspective viitoare

The role of AI in strategy: current applications and future perspectives

Artificial intelligence-based tools, have the potential to revolutionize strategy development, helping managers overcome subjectivity, extract deep insights from large volumes of data, and make faster, more informed decisions.

While strategy development cannot be fully automated at present, these tools can bring significant value to various aspects of strategy professionals’ work.

In this article, I invite you to explore the transformative role of artificial intelligence in strategy. We will explore the current applications of AI, the industries that can benefit most from it, its limits and the potential impact on job security.

Artificial Intelligence in strategy

In the context of the strategy-making process, artificial intelligence can be used to collect, automate and analyze data. It is immediately obvious that we are dealing with a broad spectrum of application, to which various meanings can be assigned. The gradual transition away from traditional analytical capabilities and the introduction of AI-based tools to improve human thinking and automate specific strategic tasks is very important. Instead of waiting for artificial intelligence to determine the right strategy, managers should look to it and use it as an extension or complement to their strategy-making expertise.

The current state of AI adoption in strategy

While the adoption of AI in many business functions is more advanced, its adoption in strategy is nascent. Only 7% of managers said they use AI in strategy or financial planning, compared to higher adoption rates in other areas such as marketing, supply chain and service operations. This limited adoption can be attributed to the integrated nature of the strategy, which requires a comprehensive understanding of the business context. Executives appear to be focusing more on the future capabilities of AI, which would make strategic decisions for them, rather than exploring immediate opportunities to improve strategy through AI-assisted analysis.

Current applications of AI in strategy

Artificial intelligence can be applied at several stages of strategy development.

  • The Descriptive stage, uses artificial intelligence for competitive analysis and performance evaluation
  • The Diagnostic stage, where artificial intelligence helps identify the sources and drivers of performance
  • The Predictive stage, which allows strategists to anticipate scenarios and make informed decisions based on market trends and signals

Artificial intelligence excels in the fields of diagnosis and prediction, augmenting human analysis and providing valuable insight. It also enables continuous analysis, rapid exploration of different approaches and objective predictions of future performance. However, trust in artificial intelligence must be accompanied by a proper understanding and validation of its predictions.

Industries and businesses benefiting from AI

Almost every business has the potential to benefit from artificial intelligence. Industries with extensive data sets that can be systematically organized by criteria such as performance indicators, product lines, inventories, and raw materials stand to gain the most from the use of artificial intelligence. Companies facing high complexity can use AI to gain insights and detailed analysis that humans alone cannot achieve as easily. Businesses that rely on a small number of important decisions and limited data may reap less benefit. In addition, the speed of decision-making is a crucial factor. Companies that frequently review and adjust their decisions based on changing business assumptions can significantly benefit from AI’s ability to provide real-time insights.

The role of AI in overcoming subjectivities and social dynamics

Artificial intelligence can play a critical role in addressing the subjectivities and social dynamics that often influence decision-making. By detecting situations prone to bias, such as lack of debate or confirmation bias, AI can alert decision makers and stimulate discussions based on critical thinking. Unbiased analysis by artificial intelligence can provide a point of view contrary to preconceived ideas, encouraging well-informed decision-making. It also helps manage conflicts of interest by relying on systematic data to facilitate neutral discussions on resource allocation. AI serves as a reminder of long-term goals, counteracting the short-term pressures that often influence decision-making.

AI as a tactical tool and its role in providing new insights

Although artificial intelligence can be perceived as a tactical tool, limited to isolated elements of strategy, it can have a profound impact on the components of strategy. Artificial intelligence enables managers to navigate complexity and gain clear insights. For example, artificial intelligence can help identify patterns in consumer behavior, providing strategic advantages to businesses. By leveraging AI in strategy, organizations can gain a significant competitive advantage.

The future of AI in strategy making

The application of artificial intelligence in strategy is still in its early stages and further developments are expected. There are three future stages of AI development: providing recommendations based on analysis, delegating decision authority to AI with restrictions and oversight, and finally fully autonomous AI decisions. However, it is important to recognize the limits and risks associated with each stage. Although automation is widespread in various fields, fears of job loss remain valid if employees do not understand the importance of professional reorientation to become AI’s working partners.

In conclusion

It is clear that artificial intelligence has the potential to revolutionize strategy development by enhancing human thinking and providing valuable tools. While they cannot replace human judgment entirely, they can significantly improve strategy execution. Current applications of AI in strategy are descriptive, diagnostic, and predictive. Industries with extensive data and the need to make real-time decisions have the most to gain. As artificial intelligence continues to evolve, businesses must find a balance between harnessing its potential and ensuring that human experience remains at the heart of strategic decision-making.