Strategic Bets

Every institution that adopts AI is making a bet, whether the leadership team recognises it or not.

The bet takes a particular shape. You commit resources, time, money, staff attention, institutional trust, to a particular kind of technology, on the assumption that it will deliver a particular kind of benefit in a particular timeframe. If the bet pays off, you look prescient. If it does not, you have spent capital that cannot be recovered on a thing that did not do what you hoped. In most organisations, this bet is not framed as a bet. It is framed as a strategic initiative, a transformation programme, a modernisation effort, words that quietly disguise the uncertainty involved. Everyone proceeds as though the outcome is under their control, when in reality a large portion of the outcome is being determined by whether the underlying technology matures in the direction they were counting on.

A more honest framing treats these commitments as strategic bets. You name the assumptions. You name the timeline on which you expect to find out whether the bet is paying off. You name the signs that would suggest the bet is going wrong. You name the exit conditions, the point at which the investment would be pulled rather than doubled. This is almost never done, because it feels like admitting uncertainty, which organisations are often allergic to. The alternative, though, is the pattern where institutions pour money into approaches that are quietly failing and cannot bring themselves to stop, because stopping would require admitting that the original bet was wrong. When you last made a major commitment, did you know in advance what would have had to happen for you to reverse it?

Last week we looked at translating personality into something software can act on. This week we look at the bets that organisations make every time they adopt new technology, often without knowing they are betting at all.