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How AI will democratise strategy for the next industrial revolution

During the transition between the fourth and fifth industrial revolution, strategising must go through a sea change. Intelligent platforms aided by AI/ML will transform the traditional strategy development and execution approach

Published: Jul 20, 2022 10:55:38 AM IST
Updated: Jul 21, 2022 09:57:13 AM IST

How AI will democratise strategy for the next industrial revolutionOrganisations are looking into models where they can predict, as step one, the readiness of a strategy to be successfully deployed Image: Shutterstock

  In the recent period, we have seen considerable interest in the platform strategy of enterprises. However, there has been limited discussion on the "platformization of strategy." Here, our focus is on democratisation and productisation of strategy, enabled by Artificial Intelligence (AI)/Machine Learning (ML)-driven platforms.

Before companies could realise the impact of the 4th industrial revolution, the fifth industrial revolution is almost here. During the transition between the fourth and fifth revolution, strategy, one of the most loosely used words, must go through a sea change regarding how it is developed and executed. Intelligent platforms aided by AI/ML will transform the traditional strategy development and execution approach.

Often strategies are conceived with a particular vision, but during execution, we experience several bottlenecks not anticipated during the planning phase. In a world full of uncertainty, the planning horizon has significantly reduced. Often during the implementation of a strategy, we realise that the business environment and context have changed, demanding a review and iteration of the strategy.

Organisations today are experiencing fundamental changes that include shifts from traditional to non-linear modelling, business, operations, and engineering strategy all in one motion.

Therefore, a strategy should also be relooked from data and design lenses. We increasingly witness organisations launch initiatives that leverage "intelligent technologies" to accelerate innovation. Simply put, the consumerisation of technology is the new trend. And so will be the "platformization" of strategy.

Platformization of strategy

The business has witnessed a heavy volume of research work and strategies to create best practice platforms like extended ERPs (Enterprise Resource Planning), and in the process, backends have been productised. The question on the table is 'how to drive "platformization" of strategy?' In other words, how can we synthesize, simulate, and refine a strategy on a platform before implementing it in the physical world? How can we create a digital twin of a strategy? Can strategy development and execution be productised?

The real challenge

Organisations are looking into models where they can predict, as step one, the readiness of a strategy to be successfully deployed. The strategy synthesis can be standardised. All use cases would follow benchmarking, capability modelling, performance measuring, desirability, viability, feasibility (DVF) analysis, and developing a roadmap. This can be achieved through a prebuilt intelligent platform.

Bringing all these together in a platform and creating a repeatable and scalable AI-based modelling is a unique way of creating adaptability, adoption, and change management in the organisation. The beauty is that the algorithms are standardised though the data sets may differ based on the industry problem under discussion.

Also read: Forget AI; Intelligent Automation is the New Breakthrough

Data is the new kingmaker

Data loyalty is becoming very important as we mature in the data economy. The data lake is no new concept. What is new is leveraging the data to deliver strategic models like causal analysis, roadmap dependencies, risks calculation, and so on. Persona-driven data view and rolling SKU-level data to strategy-level data are in demand nowadays. The good part is that the customers are willing to try something unique and new as the demand soars. One of the largest CPG customers has brought augmented AI to reduce overall sales and operations planning approval lead time. The organisation simulated various scenarios by generating heat maps to see the best option for them to reduce the approval cycle time and which capability is a bottleneck. Finding the root cause in the upstream effects downstream effectiveness, and if this can be done in a platform, then this is a pathway to platformization and consumerisation of strategy.

The bridge is being laid

Strategy and AI have intersected for the solution. Belief is that all the new and upcoming demands can be solved with modern techniques of AI and ML. Creating a pattern against a training data set is critical. This set should contain both inside and outside data. Understanding the personas and their corresponding measures would lay out a rule-based platform. That's how strategy and AI will co-exist; the democratisation of strategy will be a result of this. This is where you will see the wisdom of the crowd at work. Can this wisdom be ported to how an organisation makes decisions or arrives at business strategies? Will democratisation of strategy where everyone in the organisation participates in the decision-making process yield better results? Or will it lead to utter chaos?

Days are over when the boss is right

Traditionally, management has been top-down, where the boss is almost always right. Strategy comes from the top, and those below execute that strategy. This approach has worked well for the armed forces, where soldiers are expected to do whatever the commander orders. But for corporations, it is likely to lead to a blinkered vision and narrow perspective, especially in a world that is becoming increasingly uncertain. The democratisation of strategy opens the organisation to fresh ideas and innovative approaches that a handful of people sitting in a boardroom may not have even considered.
 

Implementing platformation of strategy needs a change mindset

The most straightforward approach would be presenting a problem to the entire organisation and forming smaller groups to brainstorm solutions. Within each group, multiple ideas are discussed and debated—the group votes on the best idea. Then the entire organisation discusses each group's best ideas and is eventually voted upon. Now think through this. Would this be possible without a platform? No. It must break all the silos and bring change through simulations and dependencies. Everyone in the organisation feels involved in the decision-making process and experiences a sense of belonging and empowerment. They are also more enthusiastic about implementing the final solution the management goes with, simply because it came from within their ranks. How about executing this plan on a platform that can run on machine learning and artificial intelligence? After all, two brains are better than one. And if you can scale that up to hundreds, even thousands, of brains in one platform, the results will undoubtedly transform the organisation.

Also read: Martech trends that will dominate India market in 2022 and beyond

When platformation of strategy shows value and money to the organisation

More and more businesses are building revenue models on subscriptions and a robust marketplace, ensuring digital continuity across the value chain. Everyone from large corporate houses to SMBs/MSMEs, startups, and family businesses are aspiring to develop powerful digital platforms to facilitate online transactions and opportunities to create a platform-powered additional revenue stream or service. We need to look at platformisation and strategy-as-a-practice (SaaP) in equal measure, with design elements and other tech tools built in.

Technology-wise, advanced developments in mobility, cloud computing, AI, big data, ML, and IoT are enabling value chain partners to create a more trusted ecosystem play.
 
Platformation of strategy will bring various levers together like never before. The platform can bring coordination at the corporate level by supporting the overall goal and innovation plans of the company. It will cover the entire value chain, which will provide granular visibility into the business capability management as well as business process management. This will ensure transparency and interactive communication with all parties.
 

Platformation with compliance

Once the platformisation of strategy is in place, it is important to have checks and balances in place. Essentially, regulatory bodies keep a worm's eye view on compliance and regulatory guidelines. Platformisation of strategy is becoming a boon for industry captains, especially in the days of ESG reporting. The reason being the BU heads, aka owners of the various platforms, are integrating tools and designs to meet statutory compliance requirements from the government, the industry bodies, and multiple players in the business and IT landscape. Thereby, bringing all the internal stakeholders on a unified platform for encouraging inter-and intra-departmental communication for faster conflict resolution.
 

Conclusion:

Overall, platformisation, democratisation, and consumerisation of strategy are turning a new leaf for all businesses. It is enabling a paradigm shift in the evolving business scenarios and, in turn, its simulation. Besides enhancing transparency and better communication between organisations and the value chain, the platformisation of strategy is becoming a change management synthesizer.

Chandan Chowdhury, Senior Associate Dean and Practice Professor (Operations Management and Information Systems)
and Anirban Bhattacharyya, Chairman and Board Member at Amplo Global Inc.

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[This article has been reproduced with permission from ISBInsight, the research publication of the Indian School of Business, India]

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