A McKinsey report warns companies risk slower, poorer strategic decisions despite using AI. While AI speeds up analysis, human judgment lags, as executives struggle to review the growing volume of AI-generated output and verify its assumptions.
Companies risk making slower and poorer strategic decisions despite using artificial intelligence (AI) to speed up analysis, as executives struggle to review the growing volume of AI-generated output and verify its underlying assumptions, according to a report by McKinsey.
The report said AI has accelerated research, data analysis and scenario planning, but human judgment remains essential for interpreting findings, assessing risks and taking responsibility for major decisions.
“Analysis now runs on AI time, but judgment still runs on human time,” the report said, identifying the gap between the speed of AI tools and the time leaders need to make informed decisions as a growing challenge for businesses.
McKinsey cited an example of a strategy team that reduced five weeks of financial analysis to less than two days using AI. However, faster output does not necessarily translate into quicker decisions, as executives may need additional time to understand the assumptions and data behind the findings.
Key Risks for Businesses
The report further identified three risks for companies: prioritising efficiency over the quality of decisions, overwhelming senior leaders with a growing volume of analysis, and reducing opportunities for junior employees to develop the judgment needed for future leadership roles.
It warned that employees build decision-making skills through practical experience, feedback and repeated problem-solving. If AI takes over these tasks without alternative training, companies could weaken their pipeline of future strategy leaders.
Recommendations for Effective AI Integration
To address these risks, McKinsey recommended that companies reserve senior executives' attention for decisions involving greater uncertainty and higher stakes, while allowing AI to support or automate routine decisions within clearly defined limits.
It also called for structured training to help employees understand and verify AI-generated analysis, including the assumptions and calculations behind it.
Companies should assign clear responsibility to individuals for consequential decisions, even when AI tools contribute to the analysis.
The Path to Success with AI
“The winners will not be the organisations that automate the most decisions. They will be the ones that make the best use of AI’s speed while protecting the human judgment that AI cannot replace,” the report said.
McKinsey added that faster analysis could allow businesses to review resource allocation more frequently, including moving from annual reviews to quarterly or monthly assessments.
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