When AI agents join us at the table

For years, a popular lens to view strategy has been that of competition. The intent of strategy, we were told, is to out-compete - to outsmart our competition, to outpace them, and when the environment changes beyond what our forecasts can compensate for, to practice agility, in our decision-making and in execution efforts, what has become known by many as the 'sense-and-respond' approach to strategy.

Such focus on competitive strategy has helped us develop several muscles. We got to regularly scan our external environment for material shifts, using tools such as PESTLE, Perceptual maps, and increasingly over recent years, Horizon scanning. We got to recognize that our internal environment was changing, as well, at greater pace, using tools such as the 'good old' SWOT (and others). Attributed to Stanford Professor Robert Franklin Stewart as far back as 1959, tools such as SWOT helped executives and strategy team members to share their perspectives about what they knew to be true when it comes to competitive dynamics...though less so about what we did not know well enough, about what lies beyond conventional forms of competition. In 1979, Michael Porter introduced his 5 Competitive Forces model. It helped identify where power lies in our immediate ecosystem, when tipped against direct competitors, as well as the power that new entrants can wield, the bargaining power of suppliers and the growing threat of substitution. We've built some muscles since...

That said, when asked about the role of trust in competitive strategy management, it was often delegated to having a secondary role e.g.

Trust is needed to secure alignment amongst role-players, so that effective execution can follow. Once we were able to outsmart and outpace all others in our strategic planning efforts, trust was recognized as an ingredient in aligning the many others we need to support our execution efforts. That perspective, I must say, never sat well with me, given what I saw in working with executive teams, across the world. What I saw was rather trust being an essential ingredient in strategy making as much as in strategy execution. In envisioning and in learning from our execution efforts, and as our efforts require collaboration among various role-players, I have come to realize what an essential ingredient it is across the entire strategy management process.

You see, with higher levels of trust, our horizon scanning efforts can be bolder, we can place controversial facts on the table (without fear of consequences), we can name and follow unconventional paths. A trust deficit in strategy management often makes us unable to draw on a broad ecosystem for talent, we find ourselves restricted from accessing new capabilities and having our own teams wonder whether we will have their backs, as they execute, adapt and learn.

Here's a case in point. Nissan is one of the world's largest automakers. Yet it is a company in trouble...and I mean real trouble. To quote a 'senior official' at Nissan very recently...'We have 12 or 14 months to survive. This is going to be tough.' As many other automakers did, Nissan highlighted the development of Electric Vehicles in its 2030 strategy, one that was unveiled in November 2021. It had, at least on paper, a decade-long window to transform itself into 'empowering mobility and beyond.' When it came to EVs, Nissan's stated vision was to make electric vehicles accessible to everyone, everywhere (well, that sounds a bit like Coca Cola back in the 1950's, but here they are referring to mobility solutions that are 100's of times more expensive...).

As part of Vision 2030, Nissan's goals reflected a significant ambition in the making e.g.

a. "Nissan will introduce 27 new electrified models, including 19(!) new EVs by fiscal year 2030"

b. "Partner with governments, energy providers, and other stakeholders to build a comprehensive EV charging network and support policies that promote sustainable mobility."

c. "Invest in new technologies, such as autonomous driving and connected car systems."

By October 2024, the company admitted that it was in real trouble. Their H1 2024 Revenues were down, and Net Profits nose-dived by about 90%, compared with the comparative period in 2023. In a brief statement, it promised to 'ensure diligent execution of its Arc business plan, enhance investment efficiencies and product competitiveness through strategic partnerships with Renault Group, Mitsubishi and Honda'. In short, it was signalling that it was time to go back to basics. The strategy to realize their vision 2030 was in many ways over, and no more capital would be poured into its execution.

Was this a foregone conclusion or the result of a trust-deficit that affected their strategy management? What would a 'Trust-Full' strategy management at Nissan been able to deliver differently? Let's take a look...

1. Trust in your own ambitions - Back in 2021, when Nissan's Vision 2030 was first announced, several market analysts pointed to its lack of ambition. It was a strategy that looked good on paper but has largely been tried and abandoned by other automakers by that time, due to mediocre sales volumes it was able to generate - and since then, competitive pressures in the EV sector have grown markedly. This points to Nissan executives not trusting that their strategy would be distinctly different and avoid prior, unsuccessful attempts by their peers. It was as though they agreed not to lose...but also not to win! Engendering trust in an ambition that is a stretch and clearly differentiated, would have saved Nissan from adopting a strategy which was hopeful of catching up but rather short on how this could be realistically achieved in a market that was heating-up. Crafting an ambition that is strategically sound and trusted by its key role players would have gone a long way to avoid a me-too approach, however bold on paper it was made to look, back in 2021. As harsh as it may sound in retrospect, an authentic ambition requires more strategy, less PR.
2. Invest in your capability network - This is so you can more effectively challenge your current perspectives. For example, Nissan decided to place a big bet on solid-state batteries, so they could bring down the cost and weight of EV battery packs while making them safer (at the time, Lithium-ion batteries were at higher risk of catching fire than today). The company committed to investing approximately $1 billion into developing its own solid-state chemistry, with a pilot factory planned for 2024, and followed by a commercial introduction by 2028. In retrospect, the race towards cost-effective, high-performance solid-state batteries is being led by auto industry newcomers, such as QuantumScape (who partnered with VW Group), China-based CATL and several others, while the risk of batteries catching fire was addressed by Lithium-ion battery manufacturers, by improving chemistry, charging and energy management. Nissan was linking two sets of signals that were distinctly different i.e. fire risk that was readily addressable, and solid-state battery technolgies that were still emergent, to motivate for a rather risky investment well beyond its capability set.
3. Cultivate trust with non-traditional role-players - my advice would be to cultivate trust with every role-player, yet it is your non-traditional role-players with whom you can deepen trust and accelerate learning, often in surprising ways, that are crucial to the success of your strategy. Nissan was adamant that the world of mobility was changing rapidly (It still is!), and the company's mission was to make mobility more accessible and innovative for everyone. That's a big ask and truly focusing such an ambition would have revealed role-players in Nissan's ecosystem (or within its reach) with whom trust could be built, deepened and leveraged for innovative outcomes. This is where the least is known about Nissan's efforts. We know that collaborations with its parent company (Renault) opened the door to testing an EV charging network with the regional government of Castilla, Spain - but that was announced more than a decade ago, back in 2011. What partnerships were forged since their latest strategy was launched in 2021, we know little of. The challenge this presents is a rather human one - facing scant information, we humans tend to assume the worst, and trust levels drop, as an early defense mechanism. I suspect that Nissan's lack of a clear and focused ambition and little communication (beyond vehicle sales and financials, that is) made it more difficult for others to trust in the company's efforts or to see where they could distinctly participate and contribute towards win-win outcomes.
4. Your future narrative - It outlines what you foresee could be created with others. As such, it is as important, if not more than your narrative of the past. Nissan's future narrative was glaringly missing, and so were its deep, trust-full partnerships.
5. That brings us to a final point, in discussing the role of building trust in strategy - the non-human component. With Gen AI widely applied in research, scenario building, even AI agents that can take on a particular role in the strategy development process, can AI help engender trust among role-players in the strategy process? or would AI amplify the opposite i.e. mistrust, partial information sharing, holding back?

AI agents, in our experience, could rapidly generate ideas, connect patterns across different trends and evolutionary paths. Such AI agents can pose questions, tapping into our reservoir of great human minds (through the use of CustomGPTs), and trigger out-of-the-box thinking. Such AI agents can help us hold creative tension, a necessary ingredient to strategic discovery. AI agents can also support the development of “what if” scenarios and provide logical reasoning for any developing insights, that emerge from these.

These are all valuable outcomes, and under the right guidance, each of these can serve as a trust-building measure among human role-players. So could reasoning provided by AI agents that is grounded in fact, to deepen such trust, as we begin to explore what could happen next.

That said, AI agents can also reverse gains in trust, be it by us over-emphasizing their contribution, providing AI agents with decision-making powers or invalidating human contributions, even if these remain in a liminal space and require further testing i.e. where verifiable information is simply lacking. AI agents, in our view, cannot discern where human strategy contributions excel...not yet.

How do you engender trust in your strategy efforts? Where is the trust-deficit most pronounced? Probing such questions could help discover where human efforts and AI agents could both play a valuable role.

Have a great week ahead.