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A.I. Accelerated


AI ISN’T MAGIC, AND IT ISN’T A STRATEGY EITHER

You can be strategic with artificial intelligence but don’t confuse it with
having a strategy.

 * 
 * 
 * 

EXPERT OPINION BY LARRY ROBERTSON, FOUNDER, LIGHTHOUSE CONSULTING @LRSPEAKS

JAN 11, 2025

Illustration: Inc; Photo: Getty Images

There was an axiom we used in venture capital that said that the industry had a
memory of only 10 years. Whatever was learned 10 or more years past, in other
words—from what to avoid, to what to prioritize—was said to be forgotten, only
to be painfully re-learned repeatedly at decade intervals. The origin of the
phrase was directly tied to the lesson that the predicted impact of any new
innovation is always grossly overstated. You don’t have to have ever worked in
venture investing to know this to be true. Just flip back in your memory to see.



An eon ago, the fax machine was claimed to foretell the end of physical mail. It
wasn’t, nor years later was email, though it too was unveiled with similar
claims. Desktop computing was boasted to be the demise of large data management
and mainframe computing. To be sure, desktops, then laptops, then smartphones
all dramatically changed how we do what we do; but the cloud and server farms
show the prediction to have been over-imagined.


MOST ARTIFICAL INTELLIGENCE INNOVATIONS ARE SIMPLY TOOLS.

These tools’ actual impact occurs only in the context of the larger purposes,
plans, and strategies they serve. Yet, too often, we speak of the innovation as
strategy itself, as if “using more artificial intelligence in 2025 and beyond”
is enough to represent a strategy. It’s not. It’s also why this latest version
of this repeated lesson isn’t just about overstatement. It’s about confusing
tools and tactics with strategy.

In the last year, my research has put me in touch with many of the organizations
considered leaders in AI, including in determining its uses in and impact on
business. Even those developing the tools feel a sense of marvel at what AI can
do. In turn, they’ve spent much of the past few years striving to put AI to work
as quickly as possible, in part for its speculated promises, and no doubt too
for the assumed rewards AI might bring.

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For the AI developers paying close attention, two things give them pause. The
first has caught most of them by surprise: AI is proving to have power beyond
what even its designers know, and to a degree, none of them can predict nor
control fully. In response to that particular awakening, in 2023, a group of
leading firms suggested that there should be a collective pause taken to think
about the deeper implications of what AI might bring, consider the possible
ripple effects that might result, and jointly explore how shared guidelines
might be followed.

Some, surprisingly quite a few, were willing to sign on to a formal agreement.
Few were prepared to act. The technology’s promises, even unverified, were just
too great not to speed ahead, logic be damned.


THE COST OF CONFUSING AI TOOLS WITH STRATEGY.

The second thing giving leaders in AI pause was more disturbing in its
implications. It was the stark reality that in the rush to embrace AI, an
increasing numnber of organizations suddenly found themselves struggling to
answer seemingly simple questions like: What business are we in? So busy were
they chasing the tool, that they found themselves suddenly having a hard time
remembering what business goals, mission, even strategy the tool was there to
support. Almost without their noticing, their priorities had become
unintentionally inverted, with the tool no longer the supporting mechanism, but
instead the dominant focus. It began firm by firm, but the error of putting AI
ahead of the strategies it should be supporting has quickly developed into a
disturbing, even dangerous trend. As broader evidence, a recent report from
consulting firm McKinsey & Company called this out, and warned of the costs of
confusing tools and tactics with strategy.



“It’s time for a reset,” McKinsey declared. “The initial enthusiasm and flurry
of activity (around AI) is giving way to second thoughts and recalibrations as
companies realize that capturing AI’s enormous potential value is harder than
expected.” More than just a passing observation, McKinsey was blunt. “With 2024
shaping up to be the year for AI to prove its value,” they wrote, “companies
should keep in mind the hard lessons learned … that competitive advantage comes
from building organizational and technological capabilities.” It isn’t that AI
has no role, it made clear, referring specifically to generative AI. But
incorporating it into any organization’s strategy cannot take form as a simple
add-on. To leverage AI effectively means “rewiring the business.”

Any experienced leader with a memory stretching beyond any one innovation cycle
understands that strategy is an ongoing recalculation—a reconsideration,
reconfirmation, and if need be a reorganization—of how all the pieces and parts
that give an organization advantage fit together. Including its tools.
Thoughtlessly adding anything new or blindly jumping on the latest bandwagon in
and of itself yields no lasting advantage. As magical as AI seems right now, it
must be part of this larger recalculation. It is not a strategy in and of
itself. Without a doubt, AI will bring change–it already has–and advantages,
though likely different than those predicted. It will not, however, displace the
fundamental truth that ongoing success requires far greater strategic thought
and effort.



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The opinions expressed here by Inc.com columnists are their own, not those of
Inc.com.

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