McKinsey: AI in Strategy - Beyond the Hype
· Strategy · By Chris Latham, Founder of Optimus Consulting
Only 7% of companies use AI in strategy. That gap is also the opportunity.
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The strategic opportunity
According to McKinsey, only 7% of companies use AI in strategy or financial planning, compared to 25 to 30% in marketing and operations. This represents both a gap and an opportunity.
When executives think about strategy automation, many are looking too far ahead, at AI deciding the right strategy. They are missing opportunities to use AI in the building blocks of strategy.
Yuval Atsmon, McKinsey
Six levels of AI in strategy
- Descriptive intelligence: dashboards for competitive analysis and performance tracking.
- Diagnostic intelligence: understanding root causes and drivers of performance.
- Predictive intelligence: anticipating scenarios and forecasting future value.
- Prescriptive intelligence (emerging): AI advising actions for executives' consideration.
- Delegated intelligence (future): certain decision authority delegated to AI within constraints.
- Autonomous intelligence (future): fully autonomous analysis and decision-making.
AI for cognitive bias
McKinsey highlights AI's role in countering human biases:
Humans get strategic decisions wrong, a lot. Some of those errors are systemic, observable, and predictable.
Sunflower bias: AI can flag when everyone agrees too quickly with the CEO.
Confirmation bias: AI provides neutral analysis that does not aim to satisfy the boss.
Agency problems: AI offers a neutral way to manage debates about resource allocation.
The hockey stick phenomenon
Executives are always overly optimistic. AI can provide:
- A neutral momentum case based on past performance.
- Objective predictions before adding executive optimism.
- A basis for better resource allocation discussions.
Key insight
Competitive advantage will increasingly rest in having executives who know how to apply AI well.
The question is not whether AI will transform strategy. It is whether you will be ahead or behind when it does.
Frequently Asked Questions
How many companies use AI in strategy?
According to McKinsey, only around 7% of companies use AI in strategy or financial planning, compared to 25 to 30% in marketing and operations. That gap is also the opportunity.
What are the six levels of AI in strategy?
Descriptive, diagnostic, predictive, prescriptive (emerging), delegated (future), and autonomous (future) intelligence. Most usable value today sits at the first three levels.
How can AI counter cognitive bias in strategy?
AI can flag sunflower bias when teams agree too quickly with the CEO, provide neutral analysis that does not aim to satisfy the boss, and offer a neutral basis for resource allocation debates. Useful for confirmation bias and agency problems.
What is the hockey stick phenomenon?
The pattern where executive forecasts are systematically over-optimistic. AI can produce a neutral momentum case based on past performance before executive optimism is added, giving boards a more honest baseline.