How to build a business strategy in the age of AI?

Article by Niall McKeown, CEO of Ionology, a boutique AI transformation consultancy.

From categorising strategies to questioning timelines with artificial intelligence (AI) integration, this in-depth article from Niall McKeown, CEO of Ionology and creator of Ionology’s Digital Transformation Framework, uses a real-life case study with a mid-sized Irish company to illustrate building an effective business strategy around digital transformation, by emphasising adaptable approaches, leveraging AI’s transformative role, and understanding the power of visionary leadership.

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Perspectives on strategy timelines

In a recent workshop with a mid-sized Irish business, the topic of strategy time-horizon came to the forefront of our discussions. As a consultant working with the company’s senior leadership team, I posed a simple question: “How far into the future should a business strategy extend?”

The responses varied, reflecting the diversity of perspectives within the leadership team. Some advocated for the agility of a one-year strategy, while others favoured a more conservative five-year plan. A few responses leaned towards adaptability, suggesting that strategy duration should be dictated by the size and complexity of a particular project.

Clarifying my question, I emphasised that we were discussing the overarching strategy for the entire business, not the timelines of specific projects or initiatives. After a thoughtful debate, consensus settled around a three-year timeframe. Coincidentally, the company had been implementing a three-year strategy, which was nearing its conclusion.

Evolution of a business strategy timeline through AI

However, what struck me was the team’s candid admission that the strategy had evolved significantly during those three years. As they reflected on its inception, none could recall the exact details of the original plan, now overshadowed by the realities of today’s heavily amended strategy.

If we separate strategy into two buckets: Operational Upgrades and Playing to Win, strategy is very much in the latter. While it depends on operational upgrades, building a new office or moving to the cloud are not strategies. They are operational upgrades. Getting customers to love your product or service more than competitors, that’s strategy!

It begs the question: Why should strategy be any longer than 3 months? This is especially true if you define a business strategy as a plan of action on how to win. The answer is often that it takes 3 months to agree on a strategy.

With artificial intelligence, the timeframe collapses. When viewed through the lens of data-driven decision making, emerging tech, innovation and continuous transformation, strategy is reduced to hours for its creation, not months.

Be stubborn on vision, but flexible on the details

This situation reminded me of a quote from Jeff Bezos: “Be stubborn on vision but flexible on the details.”

The leadership team exemplified a common challenge faced by businesses worldwide. A strategy crafted five years ago could not have anticipated the monumental impact of events like the COVID-19 pandemic, the Russia-Ukraine conflict, geopolitical tensions in the Middle East, tax policy changes in Ireland, the housing crisis, and civil unrest in Dublin, the early death of their founder and the bankruptcy of their anchor client. These events often exert a more profound influence on businesses than factors under their direct control, as meticulously planned within their strategies.

With so much change, should we focus on vision and create much more flexible strategies in order to win more customers and defeat competitors?

Historical events and impact on strategy

Events like pandemics are predictable, with historical rhythms, such as the Spanish flu in 1918, the Asian flu in 1957, and the emergence of COVID-19. Yet, each occurrence catches most of us, even seasoned leaders, off-guard and unprepared.

Similarly, technology epochs, when viewed in retrospect, make perfect sense. Maxwell’s equations in 1861 laid the groundwork for the harnessing of electricity as we electrified businesses and homes the 1890s. Subsequently, quantum mechanics in the 1920s, the invention of the transistor in the 1950s all marked a pivotal moment, leading to advancements like the World Wide Web in 1989 and the mass-market smartphone in 2007. The interconnectedness of these technological milestones is evident, with each building upon the previous, like stepping stones of progress.

It’s worth noting that, just like pandemics, these technology leaps are only discernible in hindsight and not all events are equal in terms of impact. Few businesses in 2007 were prescient enough to anticipate the mobile revolution and pivot accordingly. Most adapted in response to user demand often too late to achieve competitive advantage.

AI and hyper-automation: Transformative forces on business strategy

When I inquired about knowledge of ChatGPT with the leadership team, they acknowledged awareness but hadn’t considered its potential strategic impact. They assumed it was just another tech upgrade. This isn’t unusual; the technology landscape evolves rapidly. Recent years have seen trends rise and fall. Technology trends come and go, some have a more profound and lasting impact on business models than others.

However, AI and hyper-automation fall into a different category. They aren’t merely the flavour of the month; they are transformative forces, reshaping the landscape in which businesses operate.

ChatGPT and competitors mark a new technology epoch unlike any other. While AI has existed for years, it was often the purview of organisations with abundant data, computational resources, technical expertise, and visionary leadership. Usable AI, epitomised by ChatGPT and its counterparts, has democratised artificial intelligence, transforming it from a specialised tool into a ubiquitous force, akin to Steve Jobs’ iPhone.

Yet, the challenge facing modern business leaders isn’t primarily a technical one. Most technologists can deliver what they are asked for. The crux of the challenge is what they are being asked to deliver: the strategy itself. It’s so much easier to invest in operational upgrades than take a risk publishing a roadmap on how we plan to change customer behaviours by innovating leveraging AI. 

Usable AI’s potential in strategic planning

We are in control of operational expenditure and investments. It feels safe, unlike strategy which requires customers change behaviours and that’s a whole other trick. We’re not in control of customers.  It’s why so many established businesses shy away from having a winning strategy. It’s risky. It can make leaders feel exposed. In reality, it’s riskier to ignore this new way of strategic planning than sticking to the old tomb called “The 3 Year Strategy” containing pillars, projects and initiatives.

Usable AI is not like anything we’ve seen before.  It’s not like an upgrade to Microsoft Office or a new ERP system. This technology has the power to radically change business models, operations and customer behaviours and it is the leaders that understand it that will create organisations that will win.

In this context, Jeff Bezos’ advice to “be stubborn on vision” is exceptionally pertinent. The vision serves as the North Star, the guiding principle that remains unyielding. Yet, to “be flexible on the details” means recognising that the details can and should adapt to capitalise on game-changing opportunities.

AI-powered strategy: Navigating the future

As for this mid-sized Irish business, and countless others, not considering usable AI, in their strategic planning would be short-sighted. This isn’t just another technological trend. It’s a leap, a once-in-a-quarter-century technology, perhaps the most significant strategic game-changer since the inception of the World Wide Web.

Leaders responsible for shaping strategy, will not be replaced by AI; however, leaders that can harness usable AI in their strategic planning will replace leaders who stick to 3-year plans. The future belongs to those who boldly navigate the waters of strategy powered by AI while remaining steadfast in their overarching vision.

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About the Author

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Unlock new opportunities with AI-driven digital transformation

As the world becomes more digital, companies must adapt their operations and strategies to stay competitive. Join us on 31st January 2024 for a free webinar with Niall McKeown of Ionology as we help you understand how to build a business strategy, and test new market opportunities, at speed in the age of AI.

If you can’t make the webinar, don’t worry. Simply register and you’ll get access the full recording afterwards and in the meantime use the link below for information on how you can watch back the previous 3x webinars in the series with Niall from November 2023.