Dr. Gerald Khoury is the founder of The Strategy Framework and a seasoned strategy consultant with over two decades of experience advising some of the world’s most iconic brands and government organizations. He has held key leadership roles at Gartner and IBM, focusing on strategy, enterprise architecture, and technology planning across industries. Gerald’s mission is to simplify strategy, providing leaders with the tools to develop clear, actionable, and persuasive strategies. Through his workshops and consulting, he helps organizations harness their unique strengths and transform strategy into a powerful force for innovation and execution. A widely published author and sought-after speaker, Gerald has written for numerous leading business and technology publications and has served on corporate and academic advisory boards. He frequently speaks on strategy, innovation, and leadership to industry groups worldwide.
With AI acting as a tipping point, pushing us into a highly unpredictable future, does strategy still hold any value?
AI is not just another technological advancement; it presents a tipping point that has created a fundamental break — a discontinuity — in the evolution of IT. This makes it impossible to predict the way that technology will disrupt business and society.
As AI accelerates technological change beyond predictable patterns, existing strategies are being relegated to the dustbin, and traditional strategy setting approaches have lost relevance. The only way forward is to adopt a new mindset of radical experimentation, ideation, and adaptability. Instead of trying to predict and plan, organizations must navigate uncertainty using heuristic approaches to explore and iterate.
This article delves into why AI’s role as a tipping point into a discontinuous future, challenges our approach to strategy, and how businesses can respond by fostering a culture of radical innovation.
Break Point: How AI Progress Tipped the World into a Discontinuity
Relatively small but continual advances in AI capability over several decades have been building up – to breaking point. In the same way that geological tensions and cracks lead to sudden, unpredictable earthquakes, AI developments have tipped us over the gen-AI threshold and unleashed a world-wide technological tsunami.
In the world of mathematics and graph theory, these seismic shifts in behavior are referred to as discontinuities: moments of profound change where a system shifts drastically, often unexpectedly. This results in a “jump” or “break” in the function’s trajectory. Discontinuities represent a departure from smooth, predictable change.
The maturity and impact of GenAI isn’t a gradual evolution but a dramatic shift, creating impacts that defy linear extrapolation from past trends. Consequently, past performance is no longer useful in predicting future results. The rules of business strategy fundamentally change in the pre-AI versus post-AI landscape. It’s as if the fundamental laws of physics no longer apply and we must start again with basic observational experiments to work out how the new laws operate.
Strategy Assumes Predictability
Strategy makes a big assumption: what we know and understand about the past is useful for modeling, testing and making predictions about the future. Over the past decade this assumption has been strained by the increasingly rapid rate of business and social change that we’ve experienced. This phenomenon has been characterized as the age of VUCA: Volatility, Uncertainty, Complexity and Ambiguity. However, while VUCA introduced a wildcard into the strategy equation, the rules of the game still held. We could play our hand knowing that, while the stakes and level of uncertainty were higher, the same skills that allowed us to win in the past would continue to be good predictors of success in the future. VUCA caused the tech disruption curve to steepen wildly, straining our business models and approaches, but it didn’t break them: our assumptions, models and equations still held true.
AI changed that. The AI discontinuity has created a schism that decouples future success from past predictors of success. Our assumptions about products, services and marketplaces can no longer be relied upon to work in the future. Without these assumptions in place, we cannot possibly strategize for the future. It’s like trying to imagine a universe where our laws of physics don’t apply. Should we then, simply give up on strategy?
AI Differentiates: Products and Services become mere Commodities
Any strategy that relies upon assumptions about the past to make predictions about services, products and marketplaces, is obsolete! AI decouples the future from the past.
Yet, there are some bets that AI guarantees! Everything is new again, making it a relatively level playing field; we’re all building from scratch. The winners in the future world of AI will be the players who are the fastest to learn, reimagine and innovate. Once AI technologies reach what Gartner calls the “Plateau of Productivity” , the race will be on to productionize and monetize AI. Those who come up with the best creative, out-of-the-box thinking will smash the slower moving behemoths.
However, attempts to productionize new ideas too early (in the Peak of Inflated Expectations1), will encumber organizations with additional technical debt, providing greater opportunity for more nimble organizations and startups to play leapfrog.
Does this mean you should delay implementing AI-driven projects? Absolutely not. In fact, the ability to rapidly define, launch, and deliver AI initiatives is a crucial skill for the future. It also provides a valuable opportunity to gauge how your stakeholders and customers respond to these new AI-powered approaches.
However, be mindful that many of these early-stage projects may fail to deliver significant business value or could soon be outpaced by more advanced technologies and platforms. We’re in an era of rapid experimentation where the landscape will be littered with new entrants and immature solutions.
Jumping at quick solutions will offer only fleeting advantage. True sustainable strategic advantage can only come from cultivating the ability to innovate rapidly and radically. Consider the concept of “autonomous innovation” — a groundbreaking, post-design paradigm that redefines how we imagine, create, and launch new products. In this new era, competitive advantage no longer hinges on having the best product, but on the capacity to generate new products at scale. In other words, the companies with the most effective automation engines will lead the way. As the technological disruption curve unfolds, one thing is certain: traditional product and service companies will disappear, and every successful company will have evolved into a tech company.
Developing a strategy today that fails to recognize and address the AI-driven discontinuity will put you in a position from which recovery may be impossible. It risks perpetually playing catch-up, scrambling to avoid becoming yet another case study on how market leaders failed to respond to disruptive change.
Strategy in a Time of Uncertainty
How do we prepare for the discontinuity? By focusing on the skills, behaviors and governance structures that we do know will be essential in the future. Effective innovation relies on generating lots of ideas (imagination and creativity), identifying the best ideas (open mindedness and a growth mindset), leveraging contributions from the whole workforce (inclusivity and motivation) and the ability to take ideas to market (good governance). The goal is to focus on creating the foundations and mindset that prepare for long term success, and strategies must pivot from a focus on goods and services to deciding how to marshal resources to become great innovators.
To thrive in this new era, organizations need a highly flexible and adaptable strategy framework. A heuristic approach designed for uncertain environments provides exactly that, allowing for rapid learning and adjustments. The elements of this framework include:
- Continuous Iteration: Adopting short planning cycles that allow for rapid adaptation.
- Radical Experimentation: Fostering a safe space for testing bold, unproven ideas.
- Scenario Planning: Preparing for multiple future states, knowing that none can be accurately predicted.
- Collaborative Ecosystems: Proactive development of a wide range of alliances and partnerships to thrive in an AI-driven market.
The Path Forward: Rethinking Strategy in the Age of AI
To succeed in an AI-driven world, organizations must fundamentally rethink their approach to strategy. AI has tipped us into a discontinuous future where predictions based on past experience are unlikely to be useful.
Strategies must evolve into fluid, dynamic systems that can adjust in real time to the rapid pace of change. Embracing uncertainty, rather than fearing it, is key. Organizations need to shift from a mindset of control and predictability to one that welcomes ambiguity, uncertainty and disruption as opportunities for growth.
This new paradigm demands a relentless commitment to experimentation and a willingness to take bold risks. Market failures are inevitable, but they should be viewed as learning opportunities rather than setbacks. The companies that will thrive are those that can rapidly test, iterate, and scale new ideas.
In the age of AI, competitive advantage will come, not from having the best products or services, but from cultivating a deep capacity for continuous innovation. Radical change is the only path forward. By embracing the AI discontinuity and fostering a culture of adaptability and creativity, organizations can turn today’s disruption into tomorrow’s strategic advantage. Those who move quickly and embrace this new reality will not only survive but lead the way into the future.