11601: When, Not If: Using AI to Navigate the Gales of Creative Destruction

This study explores the conditions under which managers can be better equipped to recognize and respond to disruptive innovation. Prior research in strategic management has identified several factors such as organizational inertia, path dependency, cognitive limitations, and resource allocation biases as contributor to incumbent firms’ failure to effectively perceive and respond to disruption. In this paper, we consider the potential impact of two interventions--Artificial Intelligence (AI) and training on disruption theory—on managerial decision-making in the context of disruption. Using experiments in a business simulation environment, we test whether these interventions enhance managers’ ability to recognize the patterns of disruptive innovation and improve their strategic responses. This study contributes to the literature on disruptive innovation by exploring how managerial cognition—aided by theory and tools—shapes the recognition of disruption, and we show some potential limitations of relying on AI for strategic insight. Furthermore, we contribute to the growing field of AI in strategy by investigating how AI can support decision making to improve strategic insights under conditions of uncertainty presented by disruptive technologies.

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