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AI is Transforming the Art of Strategy in the Modern Business Era



In today's fast-paced business landscape, the spotlight isn't just on the boardroom moguls anymore. The real buzz? It's about how your everyday computer could become a titan in strategic thinking. While Generative AI (“Gen AI”) has mainly been hailed as a powerhouse for streamlining current workloads, its role is rapidly evolving. It's not just about churning out art or crafting articles; it's about climbing the ladder to higher-order tasks like strategy formulation.


Gen AI isn't just sparking an era of innovation; it's reshaping the very fabric of refinement. Sure, there's been talk about AI replacing human roles, and we've seen its prowess in generating art and writing research articles. But let's delve deeper.


Picture this: An AI-driven system, not just supporting but actively enhancing strategic decisions in a corporate setting – it's like having a digital Aristotle in the boardroom, offering insights that blend centuries of collective human knowledge with cutting-edge computational power.


Redefining Strategy with AI – but What is Strategy Exactly?


What exactly is strategy in the age of Gen AI? It's more than just a plan or a forecast; it's about synthesising data into actionable paths. While the topic of “higher order operations” is the latest thing on everyone’s lips for Gen AI, the concept of strategy in AI isn't new. Remember Deep Blue, the chess-playing computer from 1995 that defeated grandmasters like Garry Kasparov? One of the first glimpses into AI deploying strategy was as old as the dot-com boom.


Whether it's in games, business, or warfare, strategy boils down to leveraging historical data to anticipate and shape the future. It's about thinking ahead, planning, and making informed decisions. INSEAD’s example of using AI to strategically plan the opening of a bagel bakery in Paris, and the bot didn’t just spit out standard answers. It delved into creative territory, proposing ideas like truffle-infused cream cheese to cater to late-night crowds. This isn't mere data analysis; this is AI stepping into the realm of strategic planning. And the best part? The bot took 60 minutes, while the control group of MBAs tasked with the same job took a week for similar results.


There's always a lingering fear: What if AI gets it wrong? But here's the catch - humans are no strangers to errors in strategic decision-making. Research by thinkers like Amos Tversky and Daniel Kahneman has shown that human biases can systematically skew decision-making. AI's strength lies in identifying these biases and prompting a deeper, more critical analysis. Imagine an AI system highlighting potential 'sunflower biases' in a strategy meeting, prompting a more robust debate, and mitigating echo chambers.


The very foundation and principle of strategy that it is, unfortunately, not foolproof, whether conceived by human minds or AI algorithms. The crux lies in understanding that strategy, at its core, is about making the best possible predictions using available data. It's about navigating the inherent uncertainties of the future, and in this journey, AI emerges not just as a tool, but as a collaborator, enhancing our ability to craft more informed, bias-aware, and innovative strategies.


Unveiling AI’s Strategic Potential


The burning question on everyone’s mind is this: will generative AI (Gen AI) supersede human strategists? It's a valid concern, given AI's prowess in processing vast information swiftly and its immunity to cognitive biases that often sway human judgement.


AI excels in areas where humans may falter. It can sift through dense data faster than any human could, and crucially, it's not prone to confirmation bias. This tendency in human decision-making, where analysis often leans towards validating pre-existing beliefs rather than seeking objective truths, is noticeably absent in AI. When AI provides a different perspective, it doesn't seek to please or affirm; it simply presents a data-driven analysis. This capability triggers more substantive debates and challenges entrenched viewpoints.


A common trap for executives is the 'hockey stick phenomenon' – an unfounded optimism about future performance. Here, AI brings an invaluable objective stance. By calculating a 'neutral momentum case', AI provides a baseline prediction based on historical data and current trends, devoid of human overconfidence. This cold, logical approach, reminiscent of Spock from Star Trek, offers a starting point for realistic strategy planning and resource allocation.


Intuition and Innovation: Balancing AI and Human Insight in Strategy


However, the integration of AI in strategy doesn't spell the end for human strategists. AI might be a whiz at crunching numbers and bypassing biases, but it lacks a nuanced understanding of customer experiences and organisational goals. High-level strategic decision-making still requires the human touch – insights that only come with experience and a deep understanding of the business landscape.


In the evolving landscape of strategic planning, the notion of AI replacing human judgement is a misplaced concern. The true essence of this evolution lies in the harmonious coexistence and complementarity of AI and human expertise. AI contributes its analytical prowess and impartial perspective, while humans bring in-depth contextual understanding, empathy, and moral reasoning. This synergy is where the future of strategy lies, with AI enhancing, not supplanting, human capabilities.


Reflecting on the strategic chess world, where AI like Stockfish reigns supreme, we find insights relevant to this discussion. Even though these AI systems outperform humans in many scenarios, there remain instances (as seen with the Nakhmanson gambit) where human intuition and creativity can level the playing field. This duality of strength – AI's computational power and human ingenuity – mirrors the collaborative potential in strategic planning, in chess, and in business.


Stockfish, a significant leap from its predecessor Deep Blue, exemplifies the strides made in AI capabilities. However, despite its advancements, it has yet to replicate the full spectrum of human intuition and understanding. Human intuition often transcends mere data analysis; it's about reading between the lines, sensing the unsaid, and often preparing for the unpredictable. It's a kind of strategic foresight that AI, in its current form, struggles to emulate.


The question of whether AI can fully replicate human intuition remains an enigma. From my perspective, it veers towards the realms of unlikeliness. The insightful experiment by INSEAD with the bagel shop is a testament to how Gen AI can match wits with human consultants, offering competitive intellectual capabilities. Yet, it's crucial to recognize that human ingenuity and intuition hold their own unique value, often surpassing AI in certain spheres as seen sometimes in Stockfish. There's an undeniable magic in human creativity and foresight that AI, in its current state, has yet to capture.


As Gen AI continues its rapid advancement, refining algorithms, and synthesizing data with increasing sophistication, its role in strategy becomes clearer. It's not a path toward replacing human intellect but rather a journey of complementing and enhancing it. To this day, significant strides in replicating the nuanced intricacy of human intuition and ingenuity by AI have been minimal, if at all present. While AI excels in processing vast troves of information and identifying patterns with remarkable efficiency, it still doesn't grasp the full spectrum of human emotional depth and insight. The future, it seems, will be shaped by a synergistic partnership where AI's prowess in data analysis and research pairs seamlessly with the discerning touch of human decision-making – a collaboration where each element plays to its strengths, forging a more holistic approach to strategic planning.

2 Comments


guanlong he
guanlong he
Dec 04, 2023

Headlines of AI outdoing human experts in tasks are certainly scary to read, as they magnify dystopian realities where humans are replaced by the enigmatic and advanced entity of AI.


On closer inspection however, we see that AI is limited by its robotic thinking, driven fully by the historical data and statistics it receives. Humans however, received a far wider and deeper array of stimulus than AI, such as our emotions and five senses that provide a much richer experience than can be translated into words. It begs the question if we would one day be able to better educate AI on the full human experience, and the ethical and technological questions that would inevitably arise.

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Walter Tong
Walter Tong
Dec 04, 2023

The concept of AI becoming greater strategists due to its unbiased nature and ability to analyse vast amounts of historical data is intriguing, because while I believe that while those viewpoints are valuable, I wonder if AI will be able to make truly groundbreaking strategic innovative decisions if they are unsupported by historical data.

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AI is Transforming the Art of Strategy in the Modern Business Era

In today's fast-paced business landscape, the spotlight isn't just on the boardroom moguls anymore. The real buzz? It's about how your everyday computer could become a titan in strategic thinking. While Generative AI (“Gen AI”) has mainly been hailed as a powerhouse for streamlining current workloads, its role is rapidly evolving. It's not just about churning out art or crafting articles; it's abo ....

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