Last week, 40 heads of strategy, intrapreneurs, and thought leaders convened in New York City for Outthinker Networks’ Executive Summit, hosted by BNY Mellon. Attendees discussed Leveraging Generative AI for Strategic Advantage and Innovation Portfolio Management/Resource Allocation with special guest Rita McGrath, strategic advisor and Columbia Business School professor. 

Part One: Notes from our Roundtable with Rita McGrath

My mom is visiting Miami, Florida, from Bangladesh this week. I’m grateful to have her here; the house is filled with joy and love. And of course, as with all family member visitors, there’s a bit of disruption to my normal life. During a team call yesterday, my cellphone rang five separate times before I finally picked it up.

“There’s a lizard under the bed!” my mom exclaimed.

I recently moved back to Miami and, after years of living in Connecticut, I’ve gotten reacquainted with the lizards. In a tropical climate, sometimes they make their way from the backyard into places we’d rather not see them. Our au pair has been complaining about the lizard for a few days. First, she could hear scratches in the walls, then the sounds were coming from the mattress. Now, the lizard is out, and it’s become enough of an emergency to interrupt my workday.

Some people (my mom included) are afraid of lizards; others choose to ignore the first rustlings of scratches in the walls and deal with them later. When I get home, I’ll confront the lizard, pull it out from under the bed, and take it outside. A minor inconvenience.

All this reminded me of the experiences companies have with disruption and what I learned from Rita McGrath at an Outthinker Networks Roundtable last week.

Early warning signs

Rita reminded me and the 40 strategists, intrapreneurs, and thought leaders who joined us at BNY Mellon in New York, that, like a lizard scratching inside the wall, the early warning signs of disruption are usually apparent long before the disruption actually occurs. Just as we may ignore the sounds of subtle scratches, companies often overlook the weak signals foreshadowing industry upheaval.

Case in point: This year featured the shock and awe of the release of ChatGPT—AI disruption is here—yet we’ve all known about AI for years, decades even.

A dynamic mindset

Rita emphasized that traditional strategic planning models—which assume industry boundaries are set in stone and that change is an anomaly—are inadequate for today’s rapidly changing technological and competitive landscape. Rather than assuming a static environment, companies need a dynamic mindset that recognizes their current competitive advantage, however strong, is fleeting. Accepting impermanence allows us to continuously seek fresh competitive advantages.

Once I accept that the lizards are going to come into the house, I can prevent it, or at least figure out what I’m going to do about it.

Imagining the future

Instead of a five-year strategic plan that we hesitate to deviate from (we assume no lizards), we should use techniques like scenario planning to envision multiple potential futures, which will reveal leading indicators worth monitoring in the present (lots of lizards). Early signals are faint, so vividly imagined scenarios help us notice them more quickly. Envisioning multiple futures also reduces uncertainty and rallies people to creatively problem solve, without the added pressure of disruption already being at your doorstep.

Responding to pressures

When competitive pressures inevitably arise, our strategies must adapt (just as I quickly removed the lizard). Rita cited that in highly regulated industries, legal protections can prolong competitive advantage. Still, timely responses are crucial when the basis of advantage erodes.

Fostering innovation

Rita’s recent work advocates for “permissionless” structures where innovation is encouraged and freed to happen at all levels. Employees at the edges of the organization are given autonomy to make decisions that will enable rapid response to disruption and service to the customer. Likewise, spotting the early signals of disruption requires vigilance across the organization. Empowered individuals (like our au pair) play a key role in detecting faint stirrings of change.

Focus on the long-term

By concentrating on durable advantages versus short-term gains, we sustain strategic foresight, as ongoing scrutiny helps spot scratches before they become a lizard under the bed. Rita’s insights reveal how organizations can cultivate dynamic strategy, vigilance, and innovation to excel amidst disruption. The principles apply equally to Floridian lizards and competitive threats!

Part Two: Leveraging AI for Strategic Advantage – Working Session Summary

During last week’s working session, strategists and innovators divided into teams, tasked with answering the question: “How can AI help optimize strategic decision-making?”

Guided by Outthinker Networks members Kevin Ilcisin of NI and Darcy Dement of Juniper Strategies, each group was assigned a phase in the strategy workflow to discuss the potential to leverage AI to optimize that phase:

  1. Determining the organization’s ambition
  2. Developing strategy scenarios and selecting one to implement
  3. Implementing the selected strategy
  4. Monitoring and evolving the strategy

Strategy leaders foreshadowed that AI will save time and energy by using modeling to come to an earlier consensus among the executive team so they advance more quickly to the ambition phase. AI will also assist (and is already) in developing strategy scenarios by collecting data and determining what is relevant given the vast amount of information available. AI can help synthesize data and identify meaningful patterns to summarize and distill signal from noise.

Moving toward the execution phase requires organizational alignment and buy-in across all levels. AI can identify key gatekeepers who are most critical for driving change. It can also be leveraged to create effective narratives and communications scripts to help everyone in the organization understand the strategic direction and their role in its execution.

In the future, AI can continually collect and monitor performance data across the organization (some companies like Gong are already doing this today) to ensure alignment between metrics and goals. AI can also be used to assess if culture supports the strategic direction.

To close the session, Michael Schrage of MIT’s Initiative on the Digital Economy referenced statistician George Box’s quote: “All models are wrong, but some are useful.” Leaders should consider risks, including AI model biases, and continually evaluate assumptions when using AI tools to develop strategy.

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Photo by Nilina