In the modern era, we are all witnessing first-hand the unprecedented speed at which technological advancement is changing industries. The evolving technological environment creates different business needs and requires new strategies to respond to them, for which often traditional strategic planning alone is no longer effective and it becomes necessary to use various technological advances, including artificial intelligence (AI). Integrating AI into the management and decision-making process of companies gives managers the opportunity to collect, analyze and make decisions based on the maximum amount of data.

Problems of traditional strategic planning

Strategic planning is the process of setting long-term goals, analyzing internal and external factors, and determining how to respond to them, allowing businesses to seize opportunities and overcome challenges in a rapidly changing environment to optimally allocate resources, expand market share, or achieve sustainable growth.

Accumulated consulting experience shows that different businesses vary in their level of adaptation of the strategic planning process, although even the best of them often have significant shortcomings in their strategic planning efforts, e.g.

• Planned events are carried out infrequently (once a year or not at all)

• When making strategic decisions, reasoning is often based only on the intuition and experience of management and does not take into account rational factors of the external environment (market, competition).

• The planning process does not use sufficient, accurate and objective data.

• Once strategies are selected and implemented, progress is rarely monitored.

What does AI offer businesses today?

Currently, artificial intelligence is already actively used at various stages of business management and operations. In its simplest form, it serves a descriptive function and is used to create analytical data such as graphs/dashboards for competitive analysis or to study the performance of different lines of business. More advanced versions of AI have diagnostic intelligence, which refers to the ability to establish cause-and-effect relationships between events and understand root causes and driving forces. Such algorithms can identify patterns and trends in customer behavior, market demand, or competitor strategies by analyzing historical data.

The third stage of AI development and the most progressive stage currently actively used in business is predictive intelligence, which has the ability to create forecasts for the future based on certain assumptions and analysis of past experience. Predictive intelligence is used to create scenarios based on various changes and scenarios, allowing business owners to assess the potential impact of these scenarios on their business and develop customized strategies to respond to them. Predictive intelligence can also identify potential risks, which through ongoing monitoring enable organizations to proactively mitigate their negative impact.

The next levels of AI integration into business include developing analytics-based recommendations, delegating certain decisions to artificial intelligence, and full AI autonomy, although the full integration of these stages into management is still a work in progress and will take some time.

Still, how can AI be used in strategic planning?

Despite the fact that the use of artificial intelligence is characterized by growing trends in such key areas of business management as marketing, human resources, logistics, customer service, etc., the degree of its implementation in the strategic planning process is still quite low, due to important features of this process. Unlike other processes associated with business management, the strategic planning process has a particularly high proportion of human involvement, decisions based on personal experience and intuition, emotions, historical and cultural context, along with rational factors.

Therefore, if we ask the question as follows, is it possible to completely automate the strategic planning process using artificial intelligence, the answer is no (at least in the current situation and the future perspective that can be imagined from this situation). However, observing the current business context allows us to confidently say that artificial intelligence is already transforming certain stages of the strategic planning process, as well as the approaches and thinking of the people involved in these stages.

In the strategic decision-making process, we can think of AI-human interaction as a three-step process, in the first step of which a human tells the AI a problem/asks a specific question that it wants to solve. At the second stage, AI processes and analyzes the database associated with the problem, as a result of which it offers the “customer” several options for solving the proposed problem. After this, the “customer” obviously has a choice - make a strategic decision based on the given options, entrust the decision to artificial intelligence, or modify the problem to accept other options.

In other words, AI can play an important role in the strategic planning process in making rational, fact-based and data-driven decisions, the further review and final evaluation of which is still subject to human influence.

Delegating rational decision-making to artificial intelligence will itself change the specificity of certain positions in organizations and will lead to an increase in employer demand for so-called “strategists” who will be responsible for aligning the recommendations generated by artificial intelligence with the values and goals of the organization . Particularly important in this process are skills that will help you make intuitive strategic decisions. An example of such skills is creative thinking, the ability to analyze not only facts, but also context and abstract thinking.

What benefits does AI bring to the strategic planning process?

Incorporating artificial intelligence into the strategic planning process offers companies several significant benefits, which include, but are not limited to:

• Automating repetitive and manual tasks – reducing the time spent on these tasks, optimizing costs and increasing business productivity and efficiency.

• Optimization of the decision-making process. AI algorithms can provide objective and data-driven insights, allowing business managers to make faster and more informed decisions.

• Increased forecasting accuracy – leads to a reduction in risks associated with strategic decisions, and through constant monitoring allows for the timely identification of various anomalies.

Which businesses will benefit most from using AI in strategic planning?

Let's start with the fact that all businesses, regardless of size and industry, have the opportunity to use artificial intelligence more than today. However, the advantages of artificial intelligence in strategic planning are directly proportional to the presence of a number of prerequisites. Therefore, before you begin this process, questions need to be asked (note: the following are some basic questions, although they are not exhaustive; the readiness assessment process will be much more complex):

• Do you have all the data (internal and external) that can influence your strategic decisions? - Remember, often even minor problems in the environment can have a significant impact on your strategy.

• How good is the data you have? - Remember that the result obtained using artificial intelligence will be of exactly the same quality as the information you provide. Therefore, ensuring data accuracy and reliability is critical for effective AI analysis, which in turn requires additional investment in data management systems.

• How flexible is your business? – AI-generated scenarios and recommendations enable you to develop rapid response strategies in a turbulent environment, but you must ensure that your business processes, systems, structures and your team's mindset support the implementation of these recommendations.

What are the potential risks of incorporating AI into strategic decision-making?

If you decide to incorporate artificial intelligence into your strategic planning process, it is important to remember that there is no universal AI that can solve all your problems. However, it is important to understand that artificial intelligence is not “magical.” Therefore, to avoid unrealistic expectations and poor implementation, it needs to be properly structured and contextualized. In other words, it needs to be “trained” to give correct answers and predictions.

When using artificial intelligence, the issue of ethics must also be taken into account. When making strategic decisions, managers consider various ethical aspects and human values, potential impacts on society and the environment, which may not be integrated into the artificial intelligence system.

Another challenge to using artificial intelligence in strategic decision making is accountability. In fact, only humans, not machines (even intelligent machines), can be held responsible for their decisions. This issue will increase the need for legal regulation of strategic AI decisions in the future. To create a regulatory framework for compensation for damage caused by the operation of artificial intelligence systems, it will be necessary to define the concept of artificial intelligence and its status in civil law relations.

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In conclusion, artificial intelligence has already changed and in the future will even more fundamentally transform the strategic planning process. By using it, organizations can ensure that their strategies adapt to a rapidly changing environment to ensure long-term success. However, organizations must also take care to address the challenges associated with the use of artificial intelligence and ensure that it is used responsibly in critical decision-making processes.