The AI Strategy Core: Defining your AI Strategy
What is the AI Strategy Core?
In the Five Forces of Enterprise AI model, the AI Strategy Core is the dynamic heart of the enterprise. It is not merely a static output derived from analyzing external forces; it is the active engine that drives internal transformation. A robust Five Forces strategy functions as a continuous feedback loop: it sets the aspirational "North Star" that forces Leadership, Culture, and Technology to evolve, while simultaneously adapting to the rapid feedback of AI-enabled execution. It is the mechanism that allows the modern enterprise to finally realize the promise of true Agility.
Why traditional strategy models fail in the AI era
Traditional strategic planning—linear, heavy, and set in stone—cannot survive the velocity of the AI era. The Five Forces model argues that AI Strategy must be treated as software: iterative, scalable, and constantly deploying value.
AI offers an unprecedented opportunity to supercharge methodologies like Agile and Lean. By lowering the cost of execution and accelerating feedback loops, AI allows organizations to move from "planning to do" to "learning by doing." The AI Strategy Core is designed to harness this shift. It demands that you stop viewing strategy as a document to be filed and start treating it as a living operating system. Whether your goal is aggressive cost leadership or radical innovation, this engine forces you to align your internal reality with your external pressures.
The Feedback Loop: Input vs. Driver
The AI Strategy Core operates on a bidirectional flow that connects the external world to your internal reality:
As an Input (The Sensor): A dynamic strategy requires dynamic data. You cannot steer a high-velocity AI strategy using static, annual reports. The Five Forces model posits that the agility of your strategy is directly proportional to the speed and fidelity of your internal feedback loops. Real-time inputs from your market and your operations prevent the strategy from drifting into science fiction.
As a Driver (The Engine): The strategy acts as a forcing function for transformation. By setting an aspirational future state that exceeds your current grasp, the Strategy Core creates a constructive tension that compels your internal capabilities to evolve. It demands that your Leadership, Culture, and Technology upgrade themselves to meet the new standard, rather than simply optimizing what exists today.
This interplay validates the Idea-Execution Dynamic: the strategy demands execution, the execution reveals gaps, and those gaps refine the strategy in real-time.
The three dimensions that drive the engine
An effective AI strategy is not a document you write; it is a set of dynamic operating [although “operating” makes me a little uncomfortable, because it sounds like “operations”] cycles [are the dimensions actually cycles or loops? I did already contend that they are dimensions of an approach to strategy that itself should be conceived of as a loop—but it might be a little harder for readers to conceive of the dimensions as loops]. Leaders must tune these to match how they see their place in the market:
1. The Idea-Execution Dynamic:
The Loop: You must continuously Generate, Execute, and Measure.
The Choice: Are you tuning this cycle for Efficiency (doing the same things faster) or Differentiation (doing new things)?
2. Automation vs. Augmentation:
The Loop: You must continuously Assess, Deploy, and Check. [I’m not sure we need these “The Loop” items because they are just synonyms of each other.]
The Choice: You can prioritize Automation to drive down costs, recognizing the risk of commoditization. Or, you can prioritize Augmentation to unlock unique human value. The Five Forces model ensures you make this choice with your eyes open to the risks. [
3. Strategy Time Horizon:
The Shift: AI moves faster than annual budget cycles.
The Decision: You need a dual-track approach. Are you solving for immediate operational impact (0-12 months) to fund the journey, or placing long-term bets (2-5 years) on foundational transformation? A strategy that ignores either horizon will fail.
Defining your destination: Commodity or Capability?
The Five Forces analysis reveals that while AI lowers the barrier to entry for everyone, it also raises the bar for differentiation. The Strategy Core forces you to choose your lane:
The Efficiency Play: Using AI primarily for Automation and Execution. This path offers immediate P&L relief but risks a "race to the bottom" where you become indistinguishable from competitors using the same tools.
The Human-Centered Play: Using AI for Augmentation and Ideas. This path builds the Human-Centered AI Enterprise—an organization designed for resilience, adaptability, and unique value creation.
The model does not dictate your choice, but it demands that you align your Internal Capabilities to support it. You cannot build a Human-Centered outcome with an Efficiency-only culture.