The Intersection of AI and Business Strategy: Building a Competitive Advantage.

Can AI develop a comprehensive, actionable, and concrete business strategy? 

Probably not.

However, with its rapidly growing capabilities, the potential of artificial intelligence cannot be underestimated. Although AI cannot automate the process of developing a strategy, there are several other strategic areas where AI solutions can provide significant value for businesses.

We’ve previously discussed how AI can enhance business processes and streamline decision-making. Now, we’re diving into the application of AI in overall company operations and strategy.

AI in Action: Business Applications.

Almost every business can benefit from AI to some extent — not just digital-native companies. 

AI technology enables machines or tools to learn from data, identify patterns, and make decisions based on the gathered insights. By analyzing vast amounts of information, AI helps organizations pinpoint and act on opportunities for success more efficiently. 

In regards to business operation uses, a 2018 article by the Harvard Business Review outlines the three most common AI applications: 

  1. Process automation, which uses AI to automate routine tasks and processes;
  2. Cognitive insight, which applies machine learning to uncover insights and make predictions, and
  3. Cognitive engagement, which uses AI to personalize and enhance customer experiences. 

While AI tools have certainly become even more advanced since then, this distinction remains relevant. Today, we commonly see AI being used in chatbots, tools for predictive analytics, fraud detection, and supply chain optimization, among many other areas. Its applications are only limited by the creativity of the organizations that adopt it.

As long as businesses have an AI-first mindset — which is fairly intuitive if they’re already digital-first — and collaborate with the right vendors, they should be able to effectively leverage AI strategies.

Developing an AI Strategy. 

Before using AI to help with business strategy, it’s crucial first to develop an AI strategy for the business. This requires a deep understanding of the intended applications of AI solutions, as well as the organizational problems that it can help solve. 

Typically, companies can follow a few steps to prepare for AI implementation. 

Foster a Data-Driven Culture.

Organizational change starts with changing culture and behavior. 

Creating a data-driven culture within the organization means building a team with expertise in AI, providing access to data and tools, and ensuring data-driven processes and decisions. But more importantly, it requires team members across all departments to embrace an AI-first mindset and view AI adoption as a shared goal. This culture shift will help maximize the benefits of AI and ensure smooth implementation. 

Build a Strong Data Infrastructure.

Developing the right data infrastructure is critical for successful AI performance.

AI-powered tools must have access to organized and structured data in order to learn from it and gather insights. This requires collecting data that is high quality, accessible, and secure. Organizations should also have the necessary technology to store and process large amounts of information and ensure that the data is collected and used ethically and transparently.

Select the Right Technology.

Businesses should prepare for AI implementation by exploring the most suitable tools and sourcing the right vendors. 

This involves understanding the issue that needs to be solved, then evaluating the capabilities of different vendors and selecting the solution that best fits the company’s needs. At Mäd, we often do this when helping our clients source third-party vendors for development, for example. So the process is quite similar: consider each vendor's experience, expertise, and track record in AI implementation, then tailor it to your organization. 

Building an AI-Enabled Workforce.

People are the driving force of an organization. This is why integrating AI into a business begins with identifying the role of human workers in a (potentially) AI-enabled company. 

As AI becomes part of daily operations, businesses must ensure that their employees have the necessary skills to work alongside these systems. This requires upskilling and retraining team members for roles that require greater technical knowledge and expertise. And it’s the company’s responsibility to provide this support. 

Creating a collaborative culture between humans and AI systems is also important to help employees feel comfortable working alongside these technologies. This can be done by cultivating transparency in the use of AI, open communication, and a focus on collaboration rather than competition between humans and machines. 

Dealing with Common Challenges.

As with any major transformation, organizations implementing AI will face a few challenges. Some can be mitigated with adequate preparation in human resources, infrastructure, and technology, while others will require a different approach.   

Often, older companies that have only recently undergone digital transformation encounter issues when integrating AI (or other new technologies) alongside their legacy systems. These are outdated technologies or software applications that are still in use because they continue performing their original functions. In this case, AI implementation needs to be more thorough and careful to avoid disrupting these fixed systems, and maintain business operations. 

Using AI for business frequently involves a degree of risk and unpredictability. These include the possibility of system failures, potential breaches in data privacy and security, the risk of bias in decision-making, and the danger of cyber attacks. As with everything else, organizations must have a robust strategy and tactics in place to manage these risks and ensure that they are minimized.

Overcoming Limitations.

Strategy is perhaps the most conceptual practice in a business, which is why it’s often overlooked when planning AI integration. 

Unlike certain operational processes, strategy cannot and should not be automated. AI tools cannot conclude and decide what the right strategy is, no matter how much data and insights they gather. It’s also impossible to accurately predict all the risks and outcomes of every strategic scenario. 

Instead, AI should be applied to strengthen the individual building blocks of strategy.  

What Can AI Do for You?

To effectively leverage AI, organizations must identify which technologies are best suited for different tasks, prioritize projects based on business objectives, and create a scalable plan for company-wide implementation. The list below is a good place to start.

  1. Predictive analytics. Because AI is capable of analyzing large amounts of data and making predictions about future outcomes, it can help businesses identify trends and patterns that can inform their strategic decisions. For example, online streaming services like Netflix uses predictive analytics to suggest content to its users based on their viewing history. This is part of their larger strategy to personalize each user’s experience and increase customer satisfaction and retention.
  2. Competitive intelligence. AI can be used to monitor competitors and identify emerging trends in the market, which can help businesses adjust their strategies to stay ahead of the competition. Many innovative retail corporations, such as Walmart, use AI-powered pricing algorithms to monitor competitors' prices and adjust their own prices in real time. This allows businesses to remain competitive and deliver the most up-to-date products and offers to their customers.
  3. Customer segmentation. AI solutions enable businesses to segment their client base and personalize their marketing and communication efforts. For instance, Starbucks uses AI-powered recommendation engines to suggest unique offers and promotions to its customers. In the long term, this approach contributes to a broader strategic goal of improved customer engagement and loyalty, resulting in increased revenue and market share.
  4. Business process optimization. Integrating AI into core business processes can help companies identify opportunities for automation and efficiency gains. In areas like manufacturing, distribution, and logistics, AI can optimize supply chain operations by improving inventory management and reducing costs. For instance, Amazon uses AI solutions to streamline its logistics operations, predicting demand and adjusting inventory levels to ensure timely delivery to customers. 

Final Thoughts.

The intersection of AI and business strategy presents immense potential for companies looking to gain a competitive edge. 

By understanding the various types of AI applications, organizations can make informed decisions about how to use AI tools to improve operational efficiency, gain more insight, and engage with customers and employees. This calls for a strategic approach that considers the unique needs and challenges of each business. 

While AI is not a substitute for human intelligence and cannot fully replace human decision-making and strategy development, it can certainly enhance it. Achieving a successful integration of AI into a business requires a focus on building an expert workforce that is powered by collaboration between people and technology.  

Ultimately, using AI solutions for business strategy is about striking the right balance between technology and human expertise to drive innovation and success. As AI continues to evolve and transform the business landscape, it is up to organizations to embrace it and harness its potential.

If you’re interested in pursuing innovation to enhance your company’s strategy and improve operational excellence, don’t hesitate to reach out to us at

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