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AI and The Fog of War
- Wing Commander Pravinkumar Padalkar
- Feb 18
- 4 min read
This week, Delhi hosted one of its most important technology gatherings of the decade: the National AI Summit.
Hundreds of enterprise leaders, policymakers, and founders gathered to discuss the AI era. CEOs spoke of rising AI budgets. New GPU clusters and data centre investments were announced. India’s National AI Mission was framed as a strategic imperative.
The mood was decisive. Everyone sounded confident.
No one questioned whether AI matters.
And yet, beneath that confidence remained a quieter reality: uncertainty about the economic model.
Leaders said, “AI is strategic.”
They said, “We are investing aggressively.”
But few addressed the harder question: how margins, pricing power, or profit pools will ultimately change.
We know AI will matter. We do not yet know how its economics will impact business models.
History Rhymes
That gap between technological capability and economic outcome remains elusive. We have seen this pattern before.
During the dot-com era, companies added “.com” to their names and watched valuations soar. The internet was transformative. The enthusiasm was justified. But most early business models were fragile. Infrastructure expanded first and profit pools consolidated later.
When cloud computing emerged, traditional IT models faced margin pressure. Computing shifted from ownership to utility. Over time, value moved decisively toward platform owners.
Every time a new technology emerged, its real impact became clear only after uncertainty settled.
AI today stands at a similar crossroads.
The breakthrough is visible. The capital is flowing. But the final economic structure is still not clear.
And that is where uncertainty begins.
The Paradox of Confidence and Uncertainty
Attend any AI summit today, and you hear certainty:
“AI will transform every industry.”
“AI adoption is accelerating at unprecedented speed.”
“Enterprises are committing large AI budgets.”
And yet, listen carefully to CEOs during earnings calls and investor days.
You hear phrases like:
“We are early in our AI journey.”
“We are moving from pilots to scaled deployments.”
“The real transformation will unfold over the next few years.”
AI model performance has improved at an extraordinary speed. But large-scale, enterprise-wide transformation is still limited. Only a few companies have truly restructured their business models around AI.
This creates a gap between technological progress and economic impact.
And that gap is where uncertainty lives.
And much of that uncertainty lies in the realm of known unknowns.
Known-Knowns, Known-Unknowns, Unknown-Unknowns
Every major technological shift carries three layers of uncertainty.
What CEOs Know
AI will affect almost every industry and function.
AI capability has improved dramatically in a short period of time.
AI can increase productivity in specific workflows.
Adoption is moving faster than previous technology cycles.
Clients want AI-enabled solutions.
Competitive pressure is intensifying.
Competitors are investing aggressively.
Ignoring AI is not an option.
What CEOs Do Not Know
How pricing power will settle.
Whether productivity gains will increase margins or reduce billing rates.
Which industries will see profit expansion and which will face margin pressure.
Which layer of the value chain will capture most of the value infrastructure, platforms, or applications.
How fast enterprises can move from pilots to full-scale transformation.
Whether AI will reduce revenue per employee in services-heavy businesses.
How regulation will evolve in sensitive sectors like finance, healthcare, and defence.
How labour markets will adjust over the next five years.
Whether current AI infrastructure spending will generate durable returns.
What sustainable competitive advantage will look like in an AI-driven economy.
And Then There Are Unknown-Unknowns
A large-scale AI failure that triggers global regulatory tightening overnight.
A security breach that erodes trust in AI systems across industries.
Geopolitical restrictions that fragment global AI supply chains or data access.
A rapid consolidation of power among a few AI platforms that reshapes competitive dynamics.
Social or labour backlash against rapid automation.
Every major technological inflection carries this structure.
The Fog of War
All of this leads to a harder question.
How should leaders act when clarity is incomplete?
The real challenge is not technological.
It is managerial.
In military strategy, this condition is called the fog of war.
A situation where information is imperfect, risks are high, and decisions cannot wait.
Military leaders operate in that fog. They rarely have full clarity. They almost never have perfect information. Yet they must act.
The hardest decisions are made when technology is powerful, capital is abundant, and clarity is incomplete. We are at that stage today.
Corporate leaders today face a similar fog.
Not bullets or borders but capital allocation, competitive pressure, and strategic risk.
They must invest before outcomes are visible.
They must reskill talent before business models are proven.
They must communicate confidence while privately managing uncertainty.
Waiting for perfect clarity is not an option.
But acting recklessly is equally dangerous.
This is the discipline of leadership in periods of structural transition.
AI is not simply a technology upgrade. It is a shift in cost structures, workflows, and value distribution.
And when value distribution is uncertain, strategy becomes judgment.
No CEO knows with certainty how AI will reshape margins, pricing power, or long-term competitive advantage. And yet, decisions have to be made.
They must:
Allocate capital to AI infrastructure.
Reskill and reorganise talent.
Rethink pricing models.
Communicate strategy to investors.
Protect existing profit pools while building new ones.
This is classic known-unknown territory.
The goal is not to predict perfectly but to:
Avoid paralysis.
Avoid reckless enthusiasm.
Allocate capital and effort with humility.
Adjust course as feedback emerges.
The Real Test of Leadership
AI is real. Its long-term impact is inevitable. However, its steady-state economics are not yet known. And in that space between breakthrough and business model lies the true test of leadership.
In a war zone, military leaders do not wait for the fog to lift. They act with incomplete information, guided by judgment, discipline, and experience.
Corporate leaders face a similar moment.
Not certainty. Not perfect forecasts. But structured uncertainty.
The task is not to predict the future with precision.
It is to act responsibly despite ambiguity.
When known-unknowns dominate, wisdom lies in staying within your circle of competence, i.e., allocating capital carefully, adjusting as evidence emerges, and resisting both paralysis and hype.
And most importantly, having the courage to say: “I don’t know ...”
-- Pady
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