Rise of the

Strategy
Machines
FALL 2016 ISSUE While humans may be ahead of computers in the ability to
create strategy today, we shouldn’t be complacent about our
dominance.

Thomas H. Davenport

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Rise of the Strategy Machines

THOMAS H. DAVENPORT

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

Editor’s Note: This article is one of a special series of 14 Uber and Lyft, and the likelihood of self-driving cars at
commissioned essays MIT Sloan Management Review is some point in the future. We assume that the defined
publishing to celebrate the launch of our new Frontiers capabilities of algorithms are no match for the
initiative. Each essay gives the author’s response to this uncertainties, high-level issues, and problems that
question: strategy often serves up.

“Within tthhe n next

ext fifivve yyeears, hhoow w
wiill tteechn
hnoolog
logyy cchhange We may be ahead of smart machines in our ability to
the pprac
racttice ooff m
maanagem emenentt in a wa
wayy w wee hhaave n
noot yyet
et strategize right now, but we shouldn’t be complacent
witnesesssed?
d?”” about our human dominance. First, it’s not as if we
humans are really that great at setting strategy. Many
As a society, we are becoming increasingly comfortable M&A deals don’t deliver value, new products routinely
with the idea that machines can make decisions and take fail in the marketplace, companies expand unsuccessfully
actions on their own. We already have semi-autonomous into new regions and countries, and myriad other
vehicles, high-performing manufacturing robots, and strategic decisions don’t pan out.
automated decision making in insurance underwriting
and bank credit. We have machines that can beat humans Second, although it’s unlikely that a single system will be
at virtually any game that can be programmed. Intelligent able to handle all strategic decisions, the narrow
systems can recommend cancer cures and diabetes intelligence that computers display today is already
treatments. “Robotic process automation” can perform a sufficient to handle specific strategic problems. IBM
wide variety of digital tasks. Corp., for example, has begun to use an algorithm rather
than just human judgment to evaluate potential
What we don’t have yet, however, are machines for acquisition targets. Netflix Inc. uses predictive analytics to
producing strategy. We still believe that humans are help decide what TV programs to produce. Algorithms
uniquely capable of making “big swing” strategic have long been used to identify specific sites for retail
decisions. For example, we wouldn’t ask a computer to stores, and could probably be used to identify regions for
put together a new “mobility strategy” for a car company expansion as well. Key strategic tasks are already being
based on such trends as a decreased interest in driving performed by smart machines, and they’ll take on more
among teens, the rise of ride-on-demand services like over time.

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A third piece of evidence that strategy is becoming more for some time. Machines are not very good at piecing
autonomous is that major consulting firms are beginning together a big picture in the first place, or at noticing
to advocate for the idea. For example, Martin Reeves and when the landscape has changed in some fundamental
Daichi Ueda, both of the Boston Consulting Group, way. Good human strategists do this every day.
recently published a short article on the Harvard Business
Review website called “Designing the Machines That Will In a world of smart, strategic machines, humans need to
Design Strategy,” in which they discuss the possibility of excel at big-picture thinking in order to decide, for
automating some aspects of strategy. McKinsey & Co. has example, when automation is appropriate for a decision;
invested heavily in a series of software capabilities it calls what roles machines and people will play, respectively;
“McKinsey Solutions,” many of which depend on and when an automated strategy approach their
analytics and the semi-automated generation of insights. organization has implemented no longer makes sense.
Deloitte has developed a set of internal and client
Executives who see the big picture are able to answer the
offerings
critical questions that will guide their organizations’
involving semi-automated sensing of an organization’s
future: how their companies make money, what their
external environment. In short, there is clear movement
customers really want, how the economy is changing, and
within the strategy consulting industry toward a greater
what competitors are up to that is relevant to their
degree of interest in automated cognitive capabilities.
company.
Assuming that this movement toward autonomous
These kinds of issues and trends can’t be captured in data
strategy is beginning to take place, what are the
alone. It’s certainly a good and necessary thing for
implications for human strategists? As Reeves and Ueda
strategists to begin embedding their thinking into
point out in their article, cognitive capabilities will need
cognitive technologies, but they also have to keep their
to be combined with human intelligence in what they call
eyes on the broader world. There is a level of sense-
an “integrated strategy machine.” Just as contemporary
making that only a human strategist is capable of — at
autonomous vehicles can take the wheel under certain
least for now. It’s a skill that will be more prized than ever
conditions, we’ll see situations in which strategic decision
as we enter an era of truly strategic human-machine
making can be automated. Other situations, however, will
partnerships.
require that a human strategist take the wheel and change
direction. This article was originally published on August 25, 2016.
It has been updated to reflect edits made for its inclusion
Big-picture thinking is one capability at which humans
in our Fall 2016 print edition.
are still better than computers — and will continue to be

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About the Author of Information Technology and fellow of the MIT Sloan Initiative on
Management at Babson College in the Digital Economy.
Thomas H. Davenport is the Wellesley, Massachusetts, and a
President’s Distinguished Professor

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