How CEOs Use Gen AI for Strategic Planning

For business leaders, especially at smaller companies, the potential of applying generative AI (gen AI) to strategic planning is highly appealing. This article examines both the opportunities and limitations of using AI in developing business strategies.

The business world is abuzz with excitement over the potential of generative AI tools like ChatGPT, You.com, and Claude.ai to revolutionize decision-making. Sam Altman, CEO of OpenAI, has even suggested we are on the brink of a “golden age of human possibility.”

For many leaders, the idea of leveraging AI for strategic planning is enticing. One manager eagerly anticipated the day when “AI can help identify opportunities that don’t exist yet.” However, are we potentially overestimating AI’s capabilities? How can we pinpoint where AI might genuinely enhance strategic planning, and are all AI tools equally effective?

To address these questions, we explore two business scenarios involving strategic planning.

Business Scenario #1 - Overcoming Blind Spots and Predicting the Future

Keith, CEO of Trident, a commercial agricultural research organization with 120 employees, is a leading player in its field. Trident conducts trials to improve cereal, vegetable, and fruit cultivation. During his annual strategy retreat, Keith and his team evaluated key strategic issues such as competition, branch locations, human resources, and product pricing.

Keith recognized that their perspective might be limited and wondered if generative AI could offer insights beyond agricultural science. He posed two questions: Could AI provide a broader viewpoint? And could it forecast future demand for their services?

How Gen AI Can — and Can’t — Help

Keith’s first question addressed bias and the limitations of the team’s industry-specific knowledge. By using a generative AI prompt, we sought to identify strategic issues beyond those the team had considered. While the AI offered some new insights, it missed items like branch locations and profitability, highlighting the limitations of AI in capturing highly specific or company-centric details.

On the positive side, AI introduced valuable areas such as technological advancements and regulatory changes, which the team had overlooked. This suggests that AI can assist with divergent thinking, offering fresh perspectives that might otherwise be missed.

For Keith’s second question about forecasting future demand, generative AI struggled, as it relies on historical data rather than predicting future trends. However, by framing the prompt around factors affecting future demand, AI provided useful considerations like sustainability and changing consumer preferences, which can help guide strategic thinking.

Business Scenario # 2 - Addressing Trends and Developing Scenarios

Angeline, CEO of Fitzroy Cemetery and Crematorium, organized a two-day strategic planning session with her team and board members. The goal was to identify industry changes and trends such as the shift from burials to cremations and increased demand for high-quality facilities.

Angeline questioned whether Gen AI could validate their list of trends and explore future industry scenarios, given challenges like land shortages and environmental concerns.

How Gen AI Can — and Can’t — Help

When asked to review the trends list, the AI suggested additional considerations like aging demographics and regulatory changes, providing valuable insights that complemented the team’s findings. 

For future scenarios, AI offered creative but impractical suggestions, such as launching cremated remains into space. However, it also proposed viable alternatives like multi-story burial facilities and memorial forests, which could inspire innovative strategies.

Some AI tools, such as those with “retrieval augmented generation” (RAG) capabilities, can integrate up-to-date information and industry-specific data, potentially offering more relevant insights. Unfortunately, most current public tools, including ChatGPT, lack this feature.

Next Steps

Generative AI holds considerable promise for strategic planning, offering new ideas and perspectives that can enhance decision-making. However, it is essential to recognize its limitations, such as its reliance on historical data and potential gaps in industry-specific knowledge. AI should be viewed as a complement to human judgment, providing additional insights rather than replacing traditional strategic thinking. Its speed and cost-effectiveness make it a valuable tool to augment, not substitute, strategic planning processes.