Similar to drafting sales or operational strategies, discussions in management circles often revolve around formulating an AI strategy. An emerging perspective, backed by deeper insights and potential efficacy, is positioning AI as a focal point in corporate decision-making processes.
Can AI supplant the intricate and inherently human skill of strategy development?
The Boundaries of AI in Strategic Decision-Making
During an internal meeting, Yuval Atsmon, a senior partner at McKinsey, delineates six stages of AI integration in effective decision-making:
- Descriptive analysis: employing screens to interpret performance metrics.
- Predictive intelligence: scrutinizing historical data to comprehend performance determinants.
- Forecast intelligence: leveraging historical data and market cues to forecast future occurrences.
Atsmon underlines that while these initial three levels are extensively utilized, the subsequent three phases are more futuristic in nature:
- AI offering informed guidance.
- AI being endowed with decision-making authority.
- AI autonomously making decisions sans human intervention.
Hence, although AI can aid in tactical decision-making, it falls short in independently devising strategies. Crafting a strategy necessitates a fusion of analytical prowess and creative thinking—skills that currently remain distinctly human.
Nonetheless, AI can play a supportive role in tactical decision-making through various avenues, including:
1) Enhanced Discourse
In a dialogue with Rob Bier, the author of “Smooth Scaling: 20 Rituals to Build a Friction-Clean Organisation,” we delve into how technological advancements have reshaped three crucial facets of corporate decision-making:
- Data accessibility is imperative for making sound choices. Technological advancements in the realms of the internet, cloud computing, and related fields have addressed this requirement.
- The subsequent phase involves statistical analysis. The necessary logical acumen has been diffused across diverse industries and organizations owing to the surge in MBA graduates and individuals with analogous scientific training over the past two decades.
- However, a persistent challenge looms—the quality of discussions within professional forums and across organizations.
Bier notes that boardroom deliberations mirror the dynamics of any corporate conversation, riddled with issues like bullying, passive-aggressive behavior, social maneuvering, miscommunication, and a dearth of authentic dialogue, culminating in suboptimal strategic decisions. While AI can enhance our data analysis and processing capabilities by identifying patterns, correlations, anomalies, and trends, these enhancements are merely supplementary for humans. Imagine the potential if AI could facilitate more effective and meaningful debates and conversations.
There is a pressing need to mitigate ego, evade the echo chamber effect where participants merely echo each other’s viewpoints, and empower those with lesser authority to voice their opinions candidly to their superiors, in addition to the dysfunctions highlighted by Bier.
To tackle these challenges, Ray Dalio, the founder of Bridgewater Associates, implemented radical transparency, albeit facing criticism for allegedly fostering a culture of intimidation and fear. Is there an alternative approach?
Bier observes our growing comfort with AI note-taking tools in virtual meetings, despite privacy trade-offs. He proposes, “In the near future, AI coaches might join our meetings, offering guidance to encourage quieter members to contribute, enhance empathy, or spotlight key points missed during a presentation. These AI tools are poised to furnish us with insightful feedback on our conversations.
Receiving feedback during a meeting from a peer can be daunting; being advised to ‘read the room’ amid a heated debate is challenging. Will feedback from a machine likely provoke hostility? This hinges on users’ prior encounters and confidence in Language Model (LLM) tools like ChatGPT, as well as the users’ self-assurance. Nevertheless, with the proliferation of AI usage, we are likely to become more receptive to AI viewpoints.
Furthermore, Bier accentuates that AI can function as an impartial voice in discussions, akin to the court jester in Shakespeare’s King Lear, unafraid to challenge the status quo. For instance, AI could spotlight unrealistic projections in real-time, triggering deeper scrutiny and debate.
Bier envisions that by 2025, AI tools will become standard in offering coaching, posing queries, and stimulating deliberations on strategic matters.
2) Democratizing Strategic Decision-Making
Christian Stadler, a professor at Warwick Business School and the author of “Open Strategy,” explores a novel application of AI in strategic decision-making, underscoring its capacity to assess and validate strategies with a diverse internal audience. AI can be instrumental in orchestrating discussions among larger groups, considering its efficacy in steering boardroom dialogues. Stadler harnesses AI to glean insights from 2,000 employees to decipher a 10% revenue decline. This iterative process incorporates varied perspectives for further deliberation, culminating in AI amalgamating these insights to guide the executive team’s strategic choices.
3) Ideation
Both Bier and Stadler underscore the utility of generative AI as a tool for fostering strategic ideation. Strategic decision-makers must familiarize themselves with prompt engineering by formulating precise instructions or queries to optimize AI-generated ideas for maximal benefit.
In essence, while AI can aid humans in decision-making processes, it grapples with mastering the broad skill set essential for strategic planning. Given the intricate nature of strategic decisions mandating the sophistication of Artificial General Intelligence, the notion of AI CEOs remains a distant prospect. Presently, humans possess the opportunity to exercise judgment and sagacity in evaluating diverse options. They can leverage their practical acumen to effectively utilize available tools, thereby enriching the strategic decision-making process, and employ empathy to forge connections with pertinent stakeholders.
