Rise of the Strategy Machines

While humans may be ahead of computers in the ability to create strategy today, we shouldn’t be complacent about our dominance.

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An MIT SMR initiative exploring how technology is reshaping the practice of management.
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Editor’s Note: This article is one of a special series of 14 commissioned essays MIT Sloan Management Review is publishing to celebrate the launch of our new Frontiers initiative. Each essay gives the author’s response to this question:

“Within the next five years, how will technology change the practice of management in a way we have not yet witnessed?”

As a society, we are becoming increasingly comfortable with the idea that machines can make decisions and take actions on their own. We already have semi-autonomous vehicles, high-performing manufacturing robots, and automated decision making in insurance underwriting and bank credit. We have machines that can beat humans at virtually any game that can be programmed. Intelligent systems can recommend cancer cures and diabetes treatments. “Robotic process automation” can perform a wide variety of digital tasks.

What we don’t have yet, however, are machines for producing strategy. We still believe that humans are uniquely capable of making “big swing” strategic decisions. For example, we wouldn’t ask a computer to put together a new “mobility strategy” for a car company based on such trends as a decreased interest in driving among teens, the rise of ride-on-demand services like Uber and Lyft, and the likelihood of self-driving cars at some point in the future. We assume that the defined capabilities of algorithms are no match for the uncertainties, high-level issues, and problems that strategy often serves up.

We may be ahead of smart machines in our ability to strategize right now, but we shouldn’t be complacent about our human dominance. First, it’s not as if we humans are really that great at setting strategy. Many M&A deals don’t deliver value, new products routinely fail in the marketplace, companies expand unsuccessfully into new regions and countries, and myriad other strategic decisions don’t pan out.

Second, although it’s unlikely that a single system will be able to handle all strategic decisions, the narrow intelligence that computers display today is already sufficient to handle specific strategic problems. IBM Corp., for example, has begun to use an algorithm rather than just human judgment to evaluate potential acquisition targets. Netflix Inc. uses predictive analytics to help decide what TV programs to produce. Algorithms have long been used to identify specific sites for retail stores, and could probably be used to identify regions for expansion as well.



An MIT SMR initiative exploring how technology is reshaping the practice of management.
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Comments (5)
Alistair Gray
There is still life in the Grand Strategist, aided by their strategy machines. Phew!
E Stewart
Humans may be better at Big Picture thinking and planning but humans are also better at ignoring it. Big Picture thinking needs to be expected and valued beyond the executive and strategic level. It needs to happen at the tactical level where humans are creating the code and machines, and designing how they will be used. Unfortunately, the traditional hierarchy model doesn't support this and in some cases is down right hostile to it. These organizations need to be put on the spot for the (potential) negative consequences if the Big Picture is ignored in favor of the short term win or incremental gain. Ideas, innovation, and creativity aren't exclusive to the C-suite. If humans are the only source for big picture thinking, we need to make sure we include as many humans as possible in creating that picture.
Does this mean that eventually machines will be dominating "in territory" thinking while human will still be far better in connecting territories or "beyond territory" thinking? or eventually, given time, machines will eat up human piece by piece?
Dr. Ganesh Shermon
Completely agree. In 2009, in ROI of Human Capital, Jac Fitz-Enz wrote, '“An organization that seeks to change its nature and be something different focuses on four requisites: vision, culture, strategy, and commitment. These four issues are interactive rather than additive. If one is missing, the multiplicative power is severely diminished" Reckon today Machine is today a critical mix to the four...But machine without the intellect ?  In my forthcoming book, "Digital Cultures - Age of the Intellect", I have attempted to converge using references from your works, Sir and other authors how Intellect brings together many facets including the machine into the digital business and its culture mix.
Giovani Di Gesu
Very good. Challenging, relevant management subject.