A Framework of AI Strategy

Abstract

Building a vibrant strategy for the use of Artificial Intelligence (AI) in business is becoming critical for company success in the AI era. To decode AI strategy, this study aims to address three questions: (1) what is AI strategy? (2) what are the key elements of AI strategy? (3) how can AI strategy be applied and impact a business? We define AI strategy and propose an AI strategy framework consisting of three layers: AI strategic competency, AI use cases, and AI enabling factors. Based on published cases that describe early applications of AI, we identify a bottom-up approach typically used by Small and Medium-sized Enterprises (SMEs) in building AI strategy and a top-down approach typically used by big tech firms and traditional incumbent firms. We also find differences in the core of the AI strategies that are initiated by the three types of enterprises: SMEs: survival oriented; big tech firms: AI ecosystem oriented; traditional incumbent firms: business alignment oriented.