How CEOs Are Using Gen AI for Strategic Planning

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How CEOs Are Using Gen AI for Strategic Planning

By Graham Kenny et al., | Harvard Business Review | September 11, 2024

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For business leaders, the idea of applying gen AI to strategic planning is mouthwatering. One manager recently exclaimed that he couldn’t wait for the time when “AI can help identify opportunities that don’t exist yet!”  But is there a chance we’re overestimating gen AI’s capabilities? How do we identify the areas, if any, where gen AI can boost strategic planning? Are all gen AI tools the same, or are some of them more capable in certain scenarios?

To answer these questions, the authors detail two business cases involving activities central to strategic planning. The following insights can be gained from these two cases.

ChatGPT’s underlying large language model, though trained on vast data, lacks access to company-specific information, explaining some omissions. These systems are “non-deterministic,” meaning each response may differ. Asking gen AI tools to simply “provide 10 more ideas” helps create a long list and avoids such blatant omissions.

On a non industry perspective gen AI could help with divergent thinking, a key skill in any successful transformative team.  Can AI forecast future demand for the specific services?”  While gen AI is a sophisticated technology, it cannot predict the future. This is because gen AI tools are loaded and trained on historical data. The question requires looking forward, not backward, for making projections about the bottom line, such as future sales figures or achievable growth.  However, with clever prompting, gen AI tools can provide food for thought. 

Some gen AI tools, such as you.com, offer “retrieval augmented generation,” or RAG, blending large language model outputs with most-current internet data. This approach provides up-to-date information and can potentially incorporate internal company data. However, such capabilities require organization-specific deployment. Public tools like ChatGPT or Claude.ai currently lack this feature.

While gen AI offers significant advantages, it’s crucial that you recognize its limitations for strategic planning. These come from the way gen AI works. It sifts through vast amounts of data and sentence completes as it goes with the most probable next word. While this is remarkable, in essence it’s backward looking.

However, knowing gen AI’s weaknesses allows you to take advantage of its strengths. It can enhance your ability to identify opportunities, mitigate risks, and develop more robust strategy by dropping in some outside-the-box suggestions that may not have come immediately to mind. These must always be filtered with human discernment, but since the tool is so fast and cheap, why not give it a run?  The key is to view gen AI as a tool that augments, rather than replaces, your strategic thinking and decision-making.

3 key takeaways from the article

1. For business leaders, the idea of applying gen AI to strategic planning is mouthwatering.  But is there a chance we’re overestimating gen AI’s capabilities? How do we identify the areas, if any, where gen AI can boost strategic planning? 
2. ChatGPT’s underlying large language model, though trained on vast data, lacks access to company-specific information, explaining some omissions.  Asking gen AI tools to simply “provide 10 more ideas” helps create a long list and avoids such blatant omissions.  On a non industry perspective gen AI could help with divergent thinking, a key skill in any successful transformative team.  While gen AI is a sophisticated technology, it cannot predict the future.  Some gen AI tools, such as you.com, offer “retrieval augmented generation,” or RAG, blending large language model outputs with most-current internet data. This approach provides up-to-date information and can potentially incorporate internal company data.
3. However, it can enhance your ability to identify opportunities, mitigate risks, and develop more robust strategy by dropping in some outside-the-box suggestions that may not have come immediately to mind.

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Topics:  Strategic Planning, Artificial Intelligence, Augmenting, Creativity, Trends Analysis, Scenario Planning