Watching another AI webinar through the lens of my clients reaffirmed a major concern: AI is undoubtedly a powerful external force, but if I were in their shoes, I'd be completely confused. Let me explain why...
A widespread "AI anxiety" currently exists among managers, particularly within Engineer-to-Order (ETO) and Make-to-Order (MTO) type companies. While these managers recognize the necessity of AI implementation, they are often uncertain about the best starting point or method. I suspect that current resources, such as webinars, frequently raise more questions than they answer for this audience.
Artificial intelligence (AI) represents an external force poised to reshape the organizational landscape with an impact closely mirroring the upheaval caused by the Covid-19 pandemic. This parallel is evident in several crucial dimensions, demanding immediate and strategic attention from every enterprise.
First, AI’s influence is systemic and ubiquitous, affecting every component of the business ecosystem. Just as Covid-19 was a crisis that transcended specific industries or departments, AI’s integration touches every stakeholder in the value chain. This includes suppliers who must adapt to AI-driven procurement and logistics; customers and end-users whose expectations and interactions are being redefined by intelligent interfaces and personalization; employees who face shifts in required skills and task automation; and critically, regulatory bodies that are rapidly developing new compliance and ethical frameworks. Organizations must view AI not as a siloed IT project but as a foundational change agent impacting their entire operating model.
Second, AI is best characterized as a powerful, uncontrollable, and pervasive force. Akin to the virus's spread, AI's technological advancement and market adoption are occurring at a velocity and scale that individual organizations cannot dictate or halt. This reality renders resistance an untenable strategy. The only viable path forward is adaptation. The essential strategy for survival and success is not to fight the tide but to master the principles of harnessing its power while mitigating its risks. This requires a proactive, flexible, and continuous organizational evolution.
Most importantly, the key to successfully navigating the AI era is an unwavering return to the fundamentals of strategy formulation. This is the most profound lesson learned from the Covid-19 pandemic. Faced with unprecedented unpredictability and disruption, the organizations that thrived during the pandemic were those that had established and anchored themselves in their core fundamentals. This foundation included a clear articulation of their core values, a deep understanding of their value generation methods (how they create and deliver value to customers), and an unwavering clarity of their purpose (their reason for existence beyond profit). This strategic clarity served as an organizational compass, enabling leaders to swiftly and accurately distinguish between critical, long-term issues (such as supply chain resilience or digital transformation acceleration) and mere distractions (short-term market noise or non-essential initiatives).
AI presents an identical scenario of existential challenge and opportunity. The torrent of new tools, applications, and hype surrounding AI can easily overwhelm an organization lacking a clear strategic center. Only those organizations with a robust, well-defined foundation, purpose, values, and value creation model, will possess the necessary framework to evaluate AI technologies effectively. This framework allows them to identify where AI can strategically enhance their core value proposition versus where it is simply a costly distraction. For organizations, mastering the basics of strategy is not just a best practice; it is the prerequisite for converting the unpredictable force of AI into a sustainable competitive advantage.
For a successful jump-start, I propose a completely new strategy, one that is fully addressed by the Entrepreneurial Value Generation Frame I recently finished its development. The Entrepreneurial Value Generation Framework's foundation was established during and immediately following the COVID-19 era. At that time, I was an elevator industry middle manager, responsible for four distinct teams, each facing mutually exclusive challenges. The principles I utilized to navigate those difficult circumstances are now directly applicable to current AI strategies.
For any Engineer-to-Order (ETO) or Make-to-Order (MTO) organization, the initial strategic step would be to map out the organization's tridexterous activities: value exploration, value formation, and value maintenance both current and future. Following this, the focus should shift to identifying the manual aspects within these activities to facilitate a small-scale, targeted implementation of AI. Things are going to change. Your corporate strategies are going to be a lot more crucial. Even more crucial is how you generate those strategies. Speed, time and attention that go into your strategy formulation is going to be just as important as the strategies that you decide to execute.