How Private Company Boards Can Unlock the Power of AI for Strategic Planning

At Apollo’s Inaugural Private Equity CEO Conference , the rapid evolution of AI and its implications for strategy was a major topic. A Gartner study conducted a year ago among 200 corporate strategy leaders in North America, Western Europe, Asia/Pacific, and Australia/New Zealand, across different industries, revenue, and company sizes, found that strategists believe that “on average, 50% of strategic planning and execution activities could be partially or fully automated; currently only 15% are.” That was a year ago before AI was as prolific as it is today.? Because time is money, using AI to speed the process and improve the outcome of strategic planning boosts competitive advantage.

AI is rapidly becoming one of the most potent tools in every company’s arsenal. This will be especially true for privately held companies. Why? Because privately held companies often have more flexibility in decision-making and can adapt faster to market changes.? As a result, they are better able to harness the power of AI to remain competitive, stay agile, and be forward-thinking.? One key area of focus for every company, and especially private company boards, is strategic planning, a critical process for decision-making.? As a growth consulting firm that facilitates many strategic planning sessions and collaborates with customers to create strategic plans, several of our customers recently asked if they should use AI to optimize their strategic planning processes and if so how.

From understanding the basics of AI to practical implementation strategies, we will guide you through the journey of incorporating AI into your board's strategic-planning and decision-making processes.

An Overview of the Evolution of AI?

Before we dive into the ways private company boards can utilize AI, let's make sure we’re all on the same page and start with a brief overview of what artificial intelligence is and how it's transforming various industries.

You can hardly go anywhere these days without the topic of AI coming up.? And if you’re like me, your email is being bombarded with AI in the subject line. So, I imagine by now, most everyone knows that artificial intelligence is a branch of computer science that focuses on creating systems and machines capable of performing tasks that typically require human intelligence. These tasks include problem-solving, learning from experience, understanding natural language, and making decisions. AI encompasses a wide range of technologies, from machine learning and natural language processing to computer vision and robotics.

Many large companies have been leveraging the power of AI. But with the increase in computing power and data it is now possible for companies of all sizes to tap AI. As a result, we are seeing AI use cases emerging in various disciplines, from recruitment and finance to manufacturing and marketing. And for a variety of applications, such as customer service assistance using chatbots, assisted driving functions, predictive maintenance, predictive fraud, process automation, and personalization.

5 Ways AI-Enabled Strategic Growth Planning Changes the Game?

The Balanced Scorecard Institute defines a strategic plan as “a document used to communicate with the organization the organization’s goals, the actions needed to achieve those goals, and all of the other critical elements developed during the planning exercise.” That takes us to strategic planning. Gartner defines strategic planning as “the process through which enterprises, functions, and business units identify the roadmap of initiatives and portfolio of investments that will be required in the medium term to achieve long-term strategic objectives.”??

Who is responsible for this process and the plan?? The Harvard Business School would say, leaders and board members.?

A key value of a strategic plan is in the process of creating it. Because time is money, the value of AI is in its ability to help speed the process of strategic planning not the creation of your strategic plan.? Here are five ways privately held company boards and leaders can effectively use AI to support strategic planning:

1. Crunching data: AI excels at processing and analyzing vast amounts of data.? Smaller and medium-sized companies often do not have a team of internal experts who can quickly analyze large amounts of data. AI can quickly sift through financial data, market trends, and performance metrics to identify patterns and opportunities that may not be apparent through manual analysis alone to more efficiently allocate resources where investments will yield the highest return.?
2. Analyzing scenarios : Effective strategic planning requires an understanding of various scenarios and their potential outcomes. If the prompts are set up correctly, AI can quickly simulate different scenarios, helping boards anticipate challenges and opportunities. Boards can use this information to explore how different strategies may affect a company's performance under different conditions.
3. Assessing risk: AI is particularly adept at-risk assessment. By analyzing historical data and market conditions, AI can help private company boards identify potential risks and develop mitigation strategies. This is crucial for creating robust and resilient strategic plans.
4. Analyzing the market and competition: Private companies often operate in highly competitive markets. AI is well-suited to gather and analyze data about competitors and market dynamics. Keep in mind if you are using a free version of ChatGPT, it may not have the most up-to-date data. For this use case, having a paid version will be better to gain a comprehensive view of the competitive landscape.?
5. Monitoring customer behavior. Customer behavior is fluid and preferences and needs evolve. Boards and leaders can use AI to monitor customer behavior in real-time. Again, you will want a paid version.?

Spotlight: 4 Current Cautions When Using AI In Strategic Planning?

As with any new and transformative technology, it’s good to know where and when not to use it. Here are 4 key areas where caution is required:

1. Each of these requires quality data.? If the available data is inaccurate, incomplete, biased, or overly dependent on short-term data, AI models may produce unreliable results. Strategic planning relies heavily on data, and decisions based on flawed data can lead to misguided strategies. If your organization operates in a highly unpredictable environment where historical data may not be indicative of future trends and as such AI models will not be useful.? Keep in mind the output from an AI model or prompt is based on the input.??
2. AI can inadvertently perpetuate biases.? We recommend avoiding or limiting the use of AI in strategic planning aspects that involve sensitive issues such as social responsibility, diversity, or environmental impact. And the same for industries with strict regulations or legal constraints.? Be careful how you use AI for these considerations.? Human oversight is crucial to ensure legal and regulatory requirements compliance.
3. While data-driven insights are very valuable, innovation involves thinking beyond data.? Humans are still superior at generating novel ideas or strategies. Strategic planning involves judgment, creativity, content, and human experience.??
4. Building and maintaining strong customer relationships often require empathy and emotional intelligence, qualities that AI lacks. While AI can provide value data-driven insights, it is not currently able to comprehend the broader context or consider intangible factors that are often crucial for strategic decision-making. If your organization is committed to customer-centricity for growth, human understanding, cultural nuances, and contextual factors are extremely important. These are beyond the current realm of AI.?

6 Steps to Embark on the Practical Implementation of AI?

1. Invest in Data Quality Management: High-quality data is the foundation of effective AI. Invest in data quality management and ensure that your data is accurate, up-to-date, and easily accessible. To fully leverage AI, private companies must have robust data collection and integration systems in place. Ensure that you can access and consolidate relevant data from various sources, such as financial records, customer data, and market research.
2. Select the Right AI Tools: There is a wide array of AI tools available, so choose the ones that align with your objectives. Some AI solutions are designed for data analysis, while others focus on natural language processing or predictive modeling. Consider working with AI experts or consultants to make the right selection.
3. Ensure Data Security and Compliance: Data security and compliance with regulations such as GDPR and HIPAA are paramount. Ensure that your AI implementation adheres to data protection laws and best practices. Remember, never put company confidential information in a public AI tool.?
4. Provide Board and Leadership Training: To make informed decisions about the use of AI, board members, and leaders need a basic understanding of how AI works and its potential applications in strategic planning and beyond.
5. Start Small: As with any AI initiative, take a pilot approach. Identify one area where AI can make an immediate impact on your strategic planning process. Starting small allows you to test the waters and gradually expand AI integration as your board becomes more comfortable with AI usage.
6. Monitor and Evaluate Regularly: AI is not a one-time implementation; it requires regular monitoring and evaluation. Boards should regularly assess how close to the mark the use of AI was in the strategic planning process and plan.?

The Bottom Line on Using AI in Strategic Planning

AI is a powerful tool, but it's not a magic wand. Set realistic expectations for what AI can achieve and the timeframes involved.? The field of AI is rapidly evolving, and it behooves all of us to stay informed about the latest developments as they may impact your strategic planning efforts. The integration of AI provides a significant opportunity for how private company boards approach strategic planning. Embrace this change with a growth mindset and a commitment to learning and adaptation.

If your strategic planning can’t wait until the BOD and Executives come up to speed on AI, and you would like to leverage my AI expertise for your growth strategy, consider investing in our advisory services for your initial project to reduce risk and optimize results.?

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