Strategy in the Age of Digital and AI Programme Onboarding

Digital technologies have already transformed how information is created, processed, and distributed. AI may represent the next stage of this transformation by dramatically reducing the cost of many forms of intelligence. This opening week places these developments in a broader historical perspective and asks what we can learn from previous technological revolutions about the strategic challenges ahead.

You will explore the idea of general-purpose technologies and how major reductions in the cost of key capabilities can reshape industries, organizations, and society. Comparing earlier waves of digital transformation with the emerging AI revolution provides a more disciplined way to distinguish fundamental shifts from short-lived hype and to recognise why the consequences of technological change are rarely linear or predictable.

The week also introduces a central theme of the programme: technology matters strategically when it changes the opportunities for value creation. Through examples of both economic and social innovation, you will consider how new technologies can make previously difficult or costly problems possible to address.

As part of Launch Week, you will also receive guidance on navigating the programme and be introduced to the Action Learning Project (ALP), which provides an opportunity to develop an integrated strategic response to digital and AI-driven change in your own context.

Learning Objectives:

• Explain how major technological revolutions can reshape industries, organizations, and opportunities for value creation.
• Understand what it means to describe digital technologies and AI as general-purpose technologies.
• Use historical patterns of technological change to develop a more disciplined perspective on current digital and AI disruption.
• Recognise how technological innovation can create both economic and social value.

Rapid technological change creates opportunities, but technology alone does not explain why some organizations outperform others. This week begins with a foundational strategy question: why does performance vary systematically both across industries and among firms competing within the same industry?

To address this question, you will be introduced to the FIT framework, the organising logic for the programme. Superior performance depends on alignment between three elements: the external environment, the value proposition, and the organization. As digital technologies and AI reshape customer behaviour, industry economics, and competitive possibilities, existing sources of FIT can erode and new ones can emerge.

The week also introduces the Value Compass, which provides the economic foundation for analysing strategy throughout the programme. You will distinguish between value creation and value capture and examine how willingness-to-pay, resource costs, price, and margin shape performance. Applications to software, SaaS, and AI illustrate how technological change can alter both sides of the value equation.

Finally, you will bring FIT and value together to prioritise digital and AI opportunities. Rather than pursuing technology because it is new or fashionable, you will evaluate potential initiatives according to both their expected business impact and the execution challenge they create. The result is a more integrated and disciplined approach to navigating technological uncertainty.

Learning Objectives:

• Distinguish between industry-level and firm-level drivers of superior performance.
• Apply the FIT framework to assess alignment between the external environment, value proposition, and organization.
• Diagnose how digital and AI-driven change can disrupt strategic FIT and create the need for adaptation.
• Distinguish between value creation and value capture using willingness-to-pay, resource costs, price, and margin.
• Prioritise digital and AI opportunities by balancing expected business impact with execution challenge.

Having introduced the FIT framework, this week focuses on its external environment dimension. In periods of rapid technological change, it is easy to become distracted by new technologies and trends. Strategic discipline comes from understanding where value is being created, how this is changing, and what these shifts mean for market opportunity.

You will begin by identifying the key political, economic, social, technological, legal, and environmental trends reshaping an industry, with particular attention to how they interact. You will also consider what it means for a strategist to be sufficiently digital and AI savvy: not technical mastery, but enough understanding of emerging technologies to assess how they may change industry economics and sources of value.

You will then examine how technological change reshapes the industry value chain, creating new activities, connections, and participants, and altering industry boundaries. The evolution from predictive to generative and agentic AI provides a contemporary illustration of how rapidly industry configurations can change.

Finally, you will connect these shifts to the underlying economics of market opportunity. You will examine willingness-to-pay as the foundation of customer demand, differences in willingness-to-pay across customer segments, and the demand- and supply-side drivers of market growth. Bringing willingness-to-pay together with resource costs provides a disciplined way to follow the value from external change through to the size and attractiveness of emerging opportunities.

Learning Objectives:

• Analyse key external trends and their interactions, and assess their implications for industry value creation.
• Interpret emerging digital and AI technologies through their impact on industry economics and sources of value.
• Map an industry value chain and analyse how technological change creates new activities, participants, and industry configurations.
• Use willingness-to-pay to analyse customer demand, segmentation, and potential market opportunities.
• Assess the demand- and supply-side drivers of value creation and market growth, including substitutes, complements, resource costs, and process improvements.

Having analysed where value is shifting in the external environment, this week turns to the value proposition dimension of FIT. The central question is how an organization can respond to digital and AI-driven change by creating more value than the relevant alternatives — and capture enough of that value to achieve superior performance.

You will begin with the concept of added value as a foundation for understanding competitive advantage. Added value depends on how much more value an organization creates relative to the next-best alternative. You will also extend this analysis beyond the focal firm to customers, suppliers and strategic partners, recognising that value is often created collaboratively across digital ecosystems and then divided through competition and negotiation.

You will then examine how organizations can increase their added value by designing distinctive value propositions. Using Blue Ocean Strategy, value curves, and the Eliminate–Reduce–Raise–Create framework, you will explore how firms can challenge established value–cost trade-offs, reach new customers, and create new market space. Digital technologies and AI provide particularly powerful opportunities to rethink these trade-offs, but only when technological possibilities translate into genuine increases in value creation.

Finally, you will turn from value creation to value capture and sustainability. Porter’s Five Forces provides a framework for understanding how rivalry, entry, substitutes, buyer power, and supplier power shape profitability and how digital and AI can alter these pressures. You will also examine how switching costs and positive feedback mechanisms — including ecosystems, data network effects, and marketplace liquidity — can reinforce an initial advantage and make it more durable over time.

Learning Objectives:

• Explain added value and use it to assess competitive advantage relative to the next-best alternative.
• Analyse how value is created and captured across customers, firms, suppliers and strategic partners.
• Use Blue Ocean Strategy tools to redesign value propositions, including opportunities for digital and AI to break established value–cost trade-offs.
• Apply Porter’s Five Forces to assess how competitive pressures, including those affected by digital and AI, influence value capture and profitability.
• Evaluate how switching costs, positive feedback mechanisms and other elements of industry structure can sustain competitive advantage over time.

Having examined the external environment and the value proposition, this week turns to the organization dimension of FIT. A strategy only creates value if the organization can translate its chosen value proposition into a coherent system of activities, resources, and organizational choices.

You will use the company value chain to identify the critical activities required to deliver a strategy and examine how different competitive positions require different activity systems. The emphasis is on alignment: the organization must undertake the right activities and perform them in ways that reinforce the sources of value creation and competitive advantage identified in earlier weeks.

You will then examine the resources and capabilities required to support these activities and the choices organizations face over what to make internally and what to buy or access through partners. Organizational boundaries are not fixed. They depend on factors such as coordination needs, specialised capabilities, supplier advantages, flexibility, and the changing economics of technology. Digital technologies and AI can therefore shift the relative attractiveness of internal versus external provision.

Finally, you will consider execution as an organization-wide challenge. Digital and AI initiatives frequently fail to deliver their expected value when organizations focus too narrowly on the technology while underestimating the required changes in people, processes, data, capabilities, and ways of working. Support functions such as HR, IT, finance, and risk must also align with strategic priorities and adapt as the organization changes.

Learning Objectives:

• Translate a value proposition into the critical activities, resources, and capabilities required for execution.
• Use the company value chain to assess how activities support value creation and competitive advantage.
• Evaluate make-or-buy choices and assess how digital and AI can shift organizational boundaries.
• Assess how support functions contribute to the execution of business strategy. 
• Diagnose why digital and AI initiatives may fail to deliver expected value and identify the organizational changes required for successful execution.

The previous weeks have examined how to achieve FIT between the external environment, the value proposition and the organization. This final week adds a dynamic perspective: how can organizations maintain and renew that FIT as technologies, markets and competitive conditions continue to change?

You will examine why strategy cannot be treated as a linear sequence of analysis, formulation and execution. In uncertain environments, these activities must interact continuously, with experimentation, feedback, and learning informing strategic adaptation. The challenge is to remain agile without losing the commitment and strategic direction required to build lasting advantage.

You will also develop a dynamic view of resources and capabilities. Strategic resources such as skills, data, brand, reputation, relationships, and organizational knowledge accumulate through sustained activities and investment, but can also erode as technologies and markets evolve. Today’s strategic choices therefore influence not only current performance, but also the organization’s capabilities and strategic options for the future.

This leads to the importance of sequencing. Digital and AI use cases and other strategic initiatives should be evaluated not only for their immediate business impact, but also for the capabilities, learning, and future opportunities they create. The order in which initiatives are pursued can therefore be as important as the initiatives themselves.

Finally, you will examine timing under uncertainty. Moving early can generate learning, switching costs, and positive feedback, while waiting can preserve flexibility and allow uncertainty to resolve. Because competitors are making their own choices at the same time, uncertainty can never be eliminated entirely. The week concludes by bringing these ideas together and identifying common strategy traps to avoid when leading in the age of digital and AI.

Learning Objectives:

• Explain why strategy should be treated as an ongoing process of analysis, formulation, execution, and learning.
• Use experimentation, feedback and learning to support strategic adaptation under uncertainty.
• Analyse how strategic resources and capabilities accumulate and erode over time, and how technology can reshape which resources matter.
• Sequence digital and AI use cases and other strategic initiatives to build capabilities, deliver near-term impact, and create future strategic options.
• Assess when to move early and when to wait by considering uncertainty, competitive dynamics, switching costs, positive feedback, and the organization’s resource base.
• Recognise common strategy traps in the age of digital and AI and apply a dynamic FIT perspective to avoid them.

During these weeks no new course content will be released.

Take this opportunity to complete any outstanding activities and ensure you have earned enough points to meet the passing threshold for course completion points. You should also use this period to finalise and submit your Final Assignment by the deadline listed in the calendar. If you miss the deadline, you will not be able to participate in the Peer Review and will not be eligible for an INSEAD certificate for this programme.

The Peer Review process begins two days after the Final Assignment deadline and is an essential part of the learning journey.