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AI Powered Strategy Formulation

The opportunity for Artificial Intelligence to improve the strategy formulation process and drive productivity for the strategy consultant.

The first big question we want to tackle is how Artificial Intelligence can optimise and automate the strategic development.

Can machines automate strategy development? The short answer is no. However, there are numerous aspects of strategists’ work where AI and advanced analytics tools can already bring enormous value. artificial intelligence is already transforming strategy.


A McKinsey study revealed Strategy as a function is lagging other departments in the adoption of AI, with only 7 percent of respondents saying they use it in strategy or even financial planning, whereas in areas like marketing, supply chain, and service operations, it’s 25 or 30 percent.

When executives think about AI, they think about the futuristic use case where AI would make strategic decisions, replacing the business leader. But the reality is that the opportunity to use AI across the current strategy formulation process could already significantly improve outcomes.

There are six stages of AI development with the first three being deployed today and the final 3 the logical next steps in maturity where we see some experimentation happening now.

  1. Simple analytics, which we refer to as descriptive intelligence. Most companies already use dashboards for competitive analysis or to study performance in different parts of the business that are automatically updated. Some have interactive capabilities for refinement and testing.

  2. Diagnostic intelligence, which is the ability to look backward at the business and understand root causes and drivers of historic performance.

  3. Predictive intelligence: being able to anticipate certain scenarios or options and the value of things in the future based on momentum from the past as well as signals picked in the market.

  4. Strategic Recommendations: AI advising actions for executives’ consideration that would be value-creating based on the analysis.

  5. AI Tactical Execution: Delegating certain decision authority to AI, with constraints and supervision for well defined use cases with clear causality (e.g. if X happens, then do Y).

  6. AI Strategic Execution: Fully autonomous AI analyses and decides with no human interaction. AI is likely to play a supportive role in the initial strategy formulation but would be a powerful ally to monitor variables and drivers, and take action when sudden changes in the market context justify strategic adjustments.


We see early adoption of AI across the strategic formulation process but the most recurring case studies are the following

  • Data-Driven Decision Making: AI excels in processing and analysing immense datasets at speeds beyond human capability. This capability is particularly advantageous for businesses aiming to make informed, data-driven decisions in strategy formulation. This will include more complex scenario planning and simulation.

  • Predictive Analytics for Future Trends: One of AI's most significant contributions to strategy formulation lies in its ability to predict future trends. By employing machine learning algorithms, businesses can forecast market trends, consumer preferences, and industry shifts

  • Customer Insights and Personalization: Understanding customer behaviour is crucial for crafting successful business strategies. AI tools, such as recommendation engines and sentiment analysis, provide deep insights into consumer preferences. This information helps businesses tailor their products, services, and marketing efforts to meet the specific needs and expectations of their target audience.

  • Competitive Intelligence: AI facilitates the gathering and analysis of competitive intelligence, enabling businesses to stay abreast of their rivals' activities. From monitoring pricing strategies to tracking product launches, AI systems can extract valuable insights from diverse data sources.

  • Enhanced Operational Efficiency: AI-driven automation streamlines various operational processes, freeing up valuable human resources to focus on strategic thinking and creativity


Artificial intelligence will have the biggest impact in organisations with a lot of data, that operate in a fast moving industry that require regular strategic decision making. Majority of organisations are still in the phase of organising their data and structuring it in such a way that it can be leveraged for AI powered analysis.

 

In conclusion, the integration of AI in strategy formulation represents a paradigm shift for businesses. The ability to analyse vast datasets, predict future trends, understand customer behaviour, gather competitive intelligence, enhance operational efficiency, and adapt continuously positions AI as a powerful ally for organizations seeking to navigate the complexities of the modern business landscape. As businesses embrace AI-driven insights, they stand poised to not only survive but thrive in an era where strategic agility is paramount.

 

The second big question we want to answer is whether this means the strategy professional, whether consultant or internal, is at risk of losing their job. 

The answer is clearly no, strategy teams should look at AI as their newest team member. The strategy professional will need to be well versed in the AI opportunity to guide the organisation in the adoption of AI. 

For most organisations the next challenge, ironically, is finding strategists or people with business expertise to contribute to the effort of planning how to embed AI. You will not solve strategy problems with AI without the involvement of people who understand the customer experience and what you are trying to achieve.

So what is the opportunity for strategy professionals and what do they need to develop to stay relevant?

Where traditional strategic planning has become overly complex and time-consuming, AI-powered knowledge services like ChatGPT, Bard and ChatSonic are transforming our ability to imagine business scenarios and complete our strategic plans in less time with fewer resources. From simplifying complex tasks and speeding up processes to providing insightful data analysis that deepens our decision-making, below are five ways generativeAI is reshaping strategic planning.

Strategy Consultants will need to have the skills to leverage AI to be more effective and efficient by:

  1. Understanding how to develop the right prompts: The right prompts enable your teams to uncover novel market insights and generate innovative marketing and implementation strategies. This prompt-command approach can simplify strategic planning by generating specific, actionable insights that directly address your company's goals and challenges, reducing time and effort spent on data analysis and idea-generation.

  2. Ability to develop scenarios on-demand: Generative AI can calculate hundreds of potential scenarios or strategic-planning elements with a single prompt. Scenario examples could range from a “stricter government regulation of your best-selling product” or “a natural disaster in China disrupts your supply chain” to “breakthroughs in AI lead to innovations that render your service irrelevant.” Upon reviewing these, teams can generate further scenarios that combine multiple events or outcomes. AI’s capacity for creativity, innovation and future-proofing could reduce the fatigue of strategic-planning sessions — and boost productivity in everyday brainstorms.

  3. Leverage AI to get feedback before presenting to C-suite: Imagine your strategic plan receiving feedback from insightful stakeholders in less than a minute. By directing the AI to assume the role of a customer, competitor or even a regulator, your teams can gain valuable viewpoints that could be overlooked otherwise.

  4. Adopt efficiency tools: There are already a large number of meeting recording tools that will summarise and synthesize meetings, tools that will summarise large volumes of text and solutions that help you write more concise and relevant for specific audiences. It can also be used to help with the creation of visual content to bring the strategic plan to life. New solutions are available every day. It’s the consultant’s job to understand the right time-saving solutions to use across the strategy formulation process.


Adopting AI in strategy consulting is not about replacing human expertise but augmenting it. By integrating AI tools and methodologies into their workflow, consultants can elevate their capabilities, deliver more value to clients, and navigate the complexities of the modern business environment with greater efficiency and effectiveness.

 

Our prediction is that AI will eventually reshape the strategic planning process into a more efficient, effective — and potentially fun experience. It will help democratise proper strategic planning for smaller organisations who today do not have large strategy functions or budgets to hire consultants.

 

At Tightrope, we’re always looking to adopt new AI solutions in how we deliver value for our clients and are helping our clients understand how they too can benefit from embedding AI across their operations. If you want to learn more, reach out for a discovery conversation.

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