AI rewrites the playbook: Is your business strategy keeping pace?

Look back to look forward

While companies have historically leveraged technology to help them transform, cut costs and rapidly create value, AI changes the trajectory of what’s possible. AI-driven systems and agentic workflows that can quickly analyze vast datasets, automate complex tasks and enable real-time decision-making at unprecedented scale are changing innovation as we know it.

To understand the magnitude of impact AI brings, it’s useful to look at the last century of industrial innovation. Each decade was marked by breakthroughs laying the groundwork for what came in subsequent decades. In today’s AI era, this linear advancement is no more. The ongoing advancements in AI make it the driving catalyst for a meaningful tech convergence in which the sum is greater than its parts — something PwC has long focused on in our research. Industry-leading AI capabilities, for example, combined in new ways with other technologies can produce powerful solutions to our biggest challenges and unlock possibilities at unprecedented speed and scale. Within a single decade, innovation promises to surpass the progress of the previous 100 years.

Over the past 100 years, each technological innovation has triggered an inflection point at which commercial adoption accelerated as barriers rapidly fell. In the 1920s, innovations like electrification and consumer credit systems took decades to achieve mainstream adoption. By the 2020s, technologies like 5G and mRNA reached mass adoption within a few years. AI’s already at such a point and set to drive an even faster transformation and adoption cycle.

Changes that once took decades now unfold in months. Like previous technological waves, AI is advancing on the foundation of multiple breakthroughs. Over the past decade, rapid growth in compute capacity has led to a dramatic increase in compute power per dollar. In just the last year, the processing cost of frontier AI models has dropped more than ten-fold. Meanwhile, existing global communication infrastructures and distribution networks have made AI technologies broadly accessible, accelerating public adoption.

The idea of a compressed century is a compelling one. We, too, see the early signs of such revolutionary advancement first-hand in the work PwC does with clients across industries.

How winners approach strategy can set them apart. In this new era, critical shifts in strategy emphasize speed more, scale less and innovation most of all. AI accelerates the business flywheel, including the speed of insights, decision-making, capability building and organizational change. AI agents and the rapidly growing digital workforce are redefining work and the competitive field, enabling new entrants or smaller companies to challenge established leaders that relied on scale. And tech innovation is critical — both bigger bets and incremental gains. Above all, organizations need to be nimble, change ready. The companies that grasp not just what AI can do but continually reassess strategy and evolve what that means to their business will lead in the age of AI. Here’s how to get started.

One bold ambition, multiple futures

You may have a deep understanding of current market dynamics and shifting customer demands, but what’s possible with AI’s accelerated innovation? How much more quickly are industry shifts occurring? What scale advantages might be at risk? All of this requires thinking about multiple futures. It also means getting comfortable with uncertainty while best positioning your company by preparing for different scenarios.

Companies might articulate this North Star for each capability area. An insurance carrier, for example, might concentrate on greater efficiency, improved customer engagement, enhanced legal and regulatory compliance, higher profitability and greater personalization. For each area, the company continually reevaluates how to get to its destination as the environment changes — which in the AI age is a constant.

Your company might try different approaches, learn from each and adjust its strategy accordingly. We’ve worked with some companies that take a champion/challenger approach to a process or capability. The insurance carrier might test a new process for claims management that leverages AI agents. Running the new process in tandem with its standard way of managing claims, the company can assess performance and determine where adjustments are needed — and which approach better advances its goals.

Rethinking defensive and offensive strategies

Defensive and offensive moves evolve in the age of AI. While the biggest opportunities are found in new offensive strategies, defensive ones are also critical.

Defensive considerations: How can you safeguard existing market share against disruptions, such as AI-native entrants or AI-enabled competitors that may mute scale as a differentiating strategy? How can you prepare for supply chain shocks, geopolitical shifts, or changes in consumer behavior? What operational challenges, such as integrating AI with legacy systems or managing workforce transitions, are barriers to delivering on new strategies? What happens to our business if we don’t broadly embrace AI while competitors do?

Offensive considerations: Where can you innovate to create new sources of sustainable advantage? How might we engage in creative destruction, disrupting ourselves before competitors can? What unique data and institutional knowledge do we have that can fuel AI-enabled products and services to address unmet needs and capture new revenue streams? What opportunities does AI present to meet — and exceed — evolving customer expectations?

An essential part of this exercise is to evaluate how you allocate capital and measure value. Given AI’s accelerated pace — both in rapidly advancing tech capabilities and market dynamics — you may need to make investments you hadn’t counted on. You may have to scrap current initiatives in favor of new AI-driven ones.

One industrial company we work with, for example, is reevaluating its major programs and assessing how to reallocate spending in light of AI. Similarly, a leader in the technology industry recognized that agentic AI was revolutionizing how work is performed and pivoted to a new offensive strategy. It deprioritized other initiatives in order to allocate capital to its agentic efforts and a new way of serving its customers.

As you assess strategy, you’ll need to consider how AI is shaping workforce economics. Entry-level workers using AI, for instance, may be able to perform on par with more experienced specialists. Reimagining a process to use teams of AI agents may make it possible to shift current staff to other areas.

AI-driven strategy: intelligence meets agility

AI not only expands what’s possible, it also promises to redefine how you set your strategy by forecasting evolving market dynamics and customer demands.

Strategy moves from a periodic exercise and static blueprint to a persistent, dynamic process that continually evolves in real-time based on data and insights. AI-driven strategic planning gathers and analyzes data — real-time market signals, third-party datasets, proprietary business information — continuously, providing up-to-date insights into market trends, customer behaviors and operational performance. It anticipates changes and adjusts strategies proactively rather than reactively, enabling you to respond swiftly to changing conditions and emerging opportunities and adjusting your approach.

This AI-driven approach lets you identify and act on emerging signals. You can test hypotheses, refine approaches and adapt quickly as new signals emerge. You can detect subtle indicators of change, such as emerging trends or shifts in customer behavior, before they become mainstream threats or opportunities.

And acting early on these emerging signals can position you to lead rather than react.

A bank, for instance, might begin by formulating questions to put to AI. How does my trend of deposits for each business segment compare to competitors? What’s the industry benchmark for cost per full-time equivalent for each function? How much do my competitors spend on specific third-party vendors? The answers can inform strategy related to positioning, growth opportunities, vendor strategy, competitive cost structures and so on.

Successfully defending against market disruptions and seizing new opportunities requires dynamic insights from across your organization. Breaking down data silos to become a holistically informed, intelligent enterprise is imperative.

Future-ready capabilities for the AI age

To drive your strategy forward, you need to build and scale AI capabilities. Here are the essential elements to consider.

1. Technology: Do you have the technology and infrastructure to support an AI-driven strategy? What data do you have in-house and what third-party data do you need to create an executive cockpit to inform strategy? What new insights do you want to be capable of uncovering? Do you have adequate compute, power and resources to enable sustainable innovation?
2. New ways of working: How can AI — in particular AI agents — reshape value chains to deliver better results? How should your organizational model evolve to meet future AI-driven demands? Is your company culture ready for this level of reinvention?
3. Responsible AI approach: Are we thinking about Responsible AI as an integral part of strategy? Do we have systematic, transparent approaches to confirming sustained value from their AI investments?

By making AI an intrinsic part of your business — and your strategy — you can expect benefits like new revenue streams, higher margins and greater customer satisfaction. For the average non-financial company in the S&P500, we anticipate each dollar of profit expansion to generate $15 in market capitalization, based upon an analysis of publicly available data as of January 2025. For example, the first wave of AI leaders, including companies involved in building AI infrastructure and capabilities like NVIDIA and OpenAI, have seen substantial valuation increases due to their essential roles in the AI ecosystem.

This means moving beyond pilots and pockets of innovation to fully integrate AI into the core of your operations. By doing so, you can position your company not just to keep pace with the compressed century but to lead it. You can secure your place in the winner’s circle, in which AI advantage is a virtuous cycle. Your business continuously gains more opportunities and continues to pull ahead of competitors.

As we embark on this compressed century of innovation, the time to act is now. By changing your strategic approach, setting a new North Star and leveraging data and AI to consider multiple futures, you’ll be positioned to lead. In the age of AI, strategy isn't just about planning for the future — it's about shaping it.