Why Corporates Are Buying AI All Wrong: Strategy, M&A, and Procurement Need to Talk

Here's a pattern I keep seeing that drives me crazy:

A telco identifies a critical problem—let's say site access automation linked to AI-powered failure prediction and recovery optimization.

Big problem. Real impact. Technology-enabled solution.

So what happens?

The Traditional Value Chain:

1. Strategy team declares: "Automation is a priority. We need digital twins for asset management."

2. Procurement team gets the brief: "Find us a supplier for this."

3. Procurement searches the usual suspects—the big vendors, the known players, the "safe" choices.

4. They source a partially mature solution from a big tech company.

5. Everyone feels safe. Box ticked. Problem "solved."

Meanwhile, somewhere out there, a scrappy AI startup has exactly the technology you need—more specialized, more innovative, more aligned to your actual problem.

But they'll never make it past your procurement process.

And here's the tragedy:

That same company will then go spend millions acquiring an AI health-tech startup or a media AI company—completely outside their expertise—because M&A rarely talks to Strategy, and neither talks to Procurement.

The Broken Triangle: Strategy, M&A, and Procurement

Let me be blunt: These three functions talk to anyone but each other.

And in the age of AI, that's not just inefficient—it's catastrophic.

Here's what should happen instead:

Step 1: Strategy Defines the Problem (Not the Solution)

Strategy should identify:

• The top 5-10 pain points in the value chain causing serious performance and financial impact

• Which problems are escalated by technology (meaning tech can 10x the solution)

• Which automation opportunities have the highest ROI

Example: "Site failure rate is costing us $X million annually. Recovery time is too slow. Manual access control is a bottleneck."

Step 2: Procurement Searches Beyond the Usual Suspects

Procurement's job changes from "find a supplier" to "find the best technology, regardless of company size."

This means:

• Scouting AI startups and scale-ups

• Looking for specialized players, not generalists

• Evaluating technology maturity vs. strategic fit

• Passing acquisition candidates to M&A, not just supplier contracts to Legal

Step 3: M&A Evaluates: Build, Buy, or Partner?

Instead of waiting for a random acquisition opportunity that "feels strategic," M&A should be actively evaluating the suppliers Procurement just identified:

• Is this a critical capability we need to own?

• Is this startup venture-backable but under-capitalized?

• Could we acquire them, bring them in-house, and solve this problem through our own entity?

• What's the risk of a competitor acquiring them first?

This Has Worked Before (Just Not Enough)

Look at the precedents:

Rakuten Mobile moved from being an operator to becoming an Open RAN supplier—essentially productizing their own internal innovation.

Elisa (Finnish telco) acquired Polystar (a network analytics company)—bringing critical capabilities in-house instead of just consuming them.

Telecoms acquiring network AI startups to solve specific operational challenges—then scaling those solutions globally.

These weren't accidents. They were strategic acquisitions aligned to core problems.

But they're still the exception, not the rule.

The Tragic Alternative (What Most Companies Actually Do)

Here's what I see happening instead—and it's painful to watch:

Scenario A: The "Safe" Play

• Big corporate identifies AI need

• Procurement sources from a big tech vendor (Google, Microsoft, AWS, etc.)

• Solution is generic, expensive, and only 60% aligned to the actual problem

• Company outsources the risk, but also outsources the value

• No competitive differentiation is built

• Everyone feels safe—until the competitors who actually built capabilities start winning

Scenario B: The Random Acquisition

• M&A team, working in isolation, spots an AI startup in health-tech or media

• "AI is hot, we should do AI M&A"

• They acquire a company completely outside their value chain

• Zero synergy with core operations

• The startup dies slowly inside the corporate machine

• Meanwhile, the actual AI problem in their network operations still isn't solved

The Punch Line:

It would feel safer to most corporates to:

• Consume unbacked, immature tech from a big brand

• Outsource the problem to a hyperscaler

• Then go acquire an AI company in a completely unrelated field

Than to:

• Acquire an AI startup directly in their value chain

• Bring it in-house

• Use it to solve their core operational problems

Why? Because Strategy, M&A, and Procurement don't talk to each other.

With AI, This Should Become Mainstream

Here's the uncomfortable truth: Advanced AI use cases are still premature.

That's not a bug—it's an opportunity.

Right now, there are hundreds of AI startups working on:

• Network optimization

• Predictive maintenance

• Digital twins for infrastructure

• Autonomous operations

• Energy efficiency

Many are:

• Technology-ready but capital-constrained

• Proven in pilot but struggling to scale

• Specialized in problems big vendors won't touch

For a corporate with deep pockets and a clear problem, these startups are acquisition gold:

• Lower cost than building in-house

• Faster than waiting for big vendors to mature

• Higher strategic value than random "AI for AI's sake" acquisitions

• Defensible competitive advantage if done right

But it requires a new operating model.

The New Value Chain: How It Should Work

Here's what I'd love to see become standard practice:

Quarterly Value Chain Review (Strategy + M&A + Procurement Together)

Not separate meetings. One room. One agenda.

• Strategy presents: Top 5 problems causing financial/performance pain

• Procurement presents: Scouting report on suppliers and startups addressing these problems

• M&A presents: Build/buy/partner analysis for each critical capability

Decision Framework:

For each critical problem, ask:

1. Is this a core competency we need to own?

• Yes → M&A should evaluate acquisition

• No → Procurement structures partnership/contract

2. Is there a startup that solves this better than big vendors?

• Yes → M&A evaluates acquisition vs. strategic partnership

• No → Proceed with traditional procurement

3. What's the risk of inaction?

• Competitor acquires this startup → We lose competitive edge

• Big vendor locks us in → We lose flexibility

• We build in-house → 3 years, 10x cost, may still fail

4. What's the strategic value beyond solving the immediate problem?

• Can we productize this for other operators? (The Rakuten model)

• Does this become a platform for multiple use cases?

• Does this build defensible IP?

Why This Matters More Than Ever

We're in a weird window right now.

AI use cases are mature enough to deliver value, but immature enough that big vendors haven't commoditized them yet.

That window won't last long.

In 2-3 years:

• Google, Microsoft, AWS will have productized most of these use cases

• AI startups will either be acquired, well-funded, or dead

• The "buy a startup cheap and own the capability" opportunity will be gone

Right now, if you're a telco, energy company, manufacturer, or infrastructure operator, you have a choice:

Option A: Wait for Big Tech to solve your problems (at their pace, their price, their terms)

Option B: Acquire the startups solving your problems today, bring them in-house, and own the capability

Most companies are choosing Option A because it feels safer.

But "feeling safe" and "building competitive advantage" are not the same thing.

The Bottom Line

If you're a corporate leader and you:

• Have a clear AI use case aligned to a real business problem

• See startups addressing it better than big vendors

• Have M&A budget sitting idle or being spent on random "strategic" acquisitions

Stop doing M&A by accident. Start doing M&A by design.

Align your Strategy, M&A, and Procurement functions.

Make them sit in the same room.

Make them speak the same language.

And for the love of competitive advantage, stop acquiring AI health-tech startups when you're a telco with unsolved network optimization problems.

What Needs to Change (Practical Steps)

If you're in Strategy, M&A, or Procurement, here's what you can do Monday morning:

For Strategy Leaders:

• Map your top 10 value chain pain points

• Flag which ones are "technology-escalated" (where tech can 10x the solution)

• Share this with M&A and Procurement in one document

For Procurement Leaders:

• Expand supplier scouting to include startups and scale-ups

• Create a "strategic supplier watchlist" of companies that could be acquisition targets

• Present this to M&A quarterly, not just to Legal for contracting

For M&A Leaders:

• Stop waiting for bankers to bring you random deals

• Proactively scout startups solving your top operational problems

• Evaluate every major supplier as a potential acquisition, not just a vendor

For All Three:

• Set up a quarterly "Value Chain Acquisition Review"

• One room. All three functions. One shared agenda.

• Discuss: What are we buying? What should we be owning? What's the risk of inaction?

A Final Thought

The companies that will dominate the next decade won't be the ones with the biggest AI budgets.

They'll be the ones who moved fastest to own critical AI capabilities while the window was still open.

They'll be the ones whose Strategy, M&A, and Procurement teams actually talked to each other.

And they'll be the ones who had the courage to acquire in their value chain, not outside it.

The question is: Will you be one of them?

Or will you be the company that outsourced your AI to Google... while your competitor acquired the startup that actually solved the problem?

What do you think? Is your organization set up to win in the AI acquisition game—or are Strategy, M&A, and Procurement still working in silos?

I'd love to hear your thoughts, especially if you've seen this pattern (or broken it) in your organization.