Abstract: Artificial Intelligence (AI) is transforming the fundamentals of organizing and how knowledge as a firm level asset is created and sustained for competitive advantage and thereby the foundations of business strategy. While digital strategy generally emphasizes the primacy of digital objects, their arrangement into service stacks and the positioning of those service stacks or their parts for business value, AI is introducing a new frontier of strategic thinking because AI as a service stack comes with new properties including generative capabilities, agency, autonomy, and multimodal intelligence. In this essay we conceptualize AI strategy, given the unique characteristics of AI providing digital objects, as complementary, not subordinate, to digital strategy. Starting from the concept of digital strategy we formulate a first-principled framework for AI strategy as an element, or additional layer of digital strategy that builds on the core guidance perspective of strategy articulating strategy as minimum set of guiding choices around the scope, value proposition, and functional decisions around how an AI enabled service stack is arranged and used for value creation and extraction. We introduce the AI Stack as a novel strategic architecture to organize AI based service stack with each layer offering distinct leverage points for value creation and capture. We identify semantic embeddings as core reusable digital objects within an AI service stack. We use an illustrative case of JPMorgan Chase AI strategy to demonstrate how the enactment of AI strategy across the stack layers and strategic domains can unfold. We conclude with a research agenda that invites future work on AI governance, embedding adaptation, digital object orchestration, and how to leverage the interplay between human and AI agency during strategic decision-making.

 

 

About Kalle Lyytinen

Kalle Lyytinen (PhD, Computer Science, University of Jyväskylä; Dr. h.c. mult) is Distinguished University Professor at Case Western Reserve University and a distinguished visiting professor at Aalto University, Finland and Research Excellence Fellow in Karlsruhe Institute of Technology, Germany. He is among the top five IS scholars in terms of his h-index (104) and has the highest network centrality. He is AIS Fellow (2004) and the LEO Award recipient (2013) and recipient of the AoM CTO Distinguished Scholar Award (2024), and Global Flexibility Award (2024) from IIT New Delhi, India. He has published over 500 refereed articles and edited or written over 30 books or special issues and won several best paper awards from AoM, AIS/ICIS and other societies. He has served as SE, EiC SE and editor to all IS journals and several leading organization theory and innovation journals. He currently conducts research on digital innovation concerning its nature, dynamics and organization, complex design work, requirements in large systems, and emergence and growth of digital infrastructures.