{"id":1338971,"date":"2024-10-15T15:30:49","date_gmt":"2024-10-15T13:30:49","guid":{"rendered":"https:\/\/www.ie.edu\/insights\/?post_type=articles&p=1338971"},"modified":"2024-10-15T15:30:49","modified_gmt":"2024-10-15T13:30:49","slug":"how-corporate-purpose-drives-success-in-the-ai-era","status":"publish","type":"articles","link":"https:\/\/www.ie.edu\/insights\/articles\/how-corporate-purpose-drives-success-in-the-ai-era\/","title":{"rendered":"How Corporate Purpose Drives Success in the AI Era"},"featured_media":1339317,"template":"","meta":{"_has_post_settings":[]},"schools":[],"areas":[24],"subjects":[416],"class_list":["post-1338971","articles","type-articles","status-publish","has-post-thumbnail","hentry","areas-strategy","subjects-business-and-finance"],"custom-fields":{"wpcf-article-leadin":["Purpose is a strategic tool for driving innovation, competitive advantage, and addressing AI challenges, writes Francesco Derchi."],"wpcf-article-body":["Since the early 2000s, technology has dominated discussions among scholars and professionals about global development and economic trends, with the first wave of research regarding the internet's impact on firms and society focusing on the enabling potential of technologies<\/a>. The concept of \u201cdigital revolution<\/a>,\u201d as popularized by Nicholas Negroponte, became the new paradigm for broader considerations about the development of the firm\u2019s macro environment, and how businesses could leverage it as an asset for creating competitive advantage. The following wave focused on the convergence of different technologies, such as manufacturing, and included the dynamics of coexistence between humans and machines<\/a>. From the management side, the major challenges are related to defining effective digital transformation practices that could help to migrate organizations and exploit this new paradigm.\r\n\r\nThe current technological focus builds on these previous trends, particularly on artificial intelligence and more recently on the emergence of generative AI. The Age of AI is characterized by technology\u2019s power to reshape business and society on a variety of levels. While AI\u2019s pervasive impact is not new for firms, the mainstream adoption of ChatGPT for business purposes and the response to this ready adoption from big tech players like Microsoft, Google, and more recently Apple, shows how AI is reshaping and influencing companies\u2019 strategic priorities.\r\n\r\nFrom a research perspective, AI\u2019s societal impact is inspiring new studies in the field of ethics. Luciano Floridi, now of Yale University, has identified several challenges for AI<\/a>, characterizing them by global magnitudes like its environmental impact and has identified several challenges for AI<\/a> security, including intellectual property, privacy, transparency, and accountability. In his work, Floridi underlines the importance of philosophy in defining problems and designing solutions \u2013 but it is equally important to consider how these challenges can be addressed at the firm level. What are the tools for managers?\r\n\r\nPart of the answer may lie in the increasing and recent focus of management studies around \u201ccorporate purpose\u201d and \u201cbrand purpose.\u201d This trend represents an important attempt to deepen our understanding of \u201cwhy to act\u201d (purpose framing) and \u201chow to act\u201d (purpose formalizing and internalizing), while technology management studies address the \u201cwhat to act\u201d (purpose impacting) question. Furthermore, studies show that corporate purpose is critical for both digital native firms as well as traditional companies undergoing a digital transformation, serving as an important growth engine through purpose-driven innovation. It is therefore fair to ask: can purpose help in addressing any of the AI challenges previously mentioned?\r\n\r\nPurpose concepts are not exclusively \u201ccause-related\u201d like CSR and environmental impact. Other types have emerged, such as \u201ccompetence\u201d (the function of the product) and \u201cculture\u201d (the intent that drives the business). This broadens the consideration of impact types that can help address specific challenges in the age of AI.\r\n\r\nPurpose-driven organizations are not new. Take Tesla\u2019s direction \u201cto accelerate the world's transition to sustainable energy\u201d \u2013 it explicitly addresses environmental challenges while defining a business direction that requires constant innovation and leverages multiple converging technologies. The key is to have the purpose formalized and internalized within the company as a concrete drive for growth.\r\n\r\nDue to its characteristics, the MTP plays a key role in digital transformation<\/a>. This necessarily ambitious and long-term vision or goal \u2013 the Massive Transformative Purpose \u2013 requires firms, particularly those focused on exponential growth<\/a>, to address emerging accelerating technologies with a purpose-first transformation logic. P&G\u2019s Global Business Services division was able to improve market leadership and gain a competitive advantage over various start-ups and potential disruptors through its \u201cFree up the employee, for free\u201d MTP. This served as a north star for every employee, encouraging them to contribute ideas and best practices to overcome bulky processes and limitations.\r\n\r\nMy research on MTPs in AI-era firms explores their role in driving innovation to address specific challenges. Results show that the MTP impacts the organization across four dimensions, requiring commitment and synergy from management. Let\u2019s consider these four dimensions by looking at Airbnb:\r\n
    \r\n \t
  1. Internal Impact<\/strong>: The MTP acts as the organization\u2019s genetic code and guiding philosophy. It is key for leveraging employee motivation, with a strong relationship between purpose, organizational culture, and firm values. Airbnb\u2019s culture of belonging highlights this, with its various purpose-shaping practices, starting with culture-fit interviews delivered during the recruitment process.<\/li>\r\n \t
  2. Brand and Market Influence<\/strong>: The MTP contributes directly to building a strong brand and influencing the market. It allows firms to extend beyond functional and symbolic benefits to make the impact of the company on society visible. This involves addressing market demand coherently and consistently. Airbnb\u2019s \u201cB\u00e9lo\u201d symbol visually represents this concept of belonging while their MTP features in campaigns like \u201cWall and Chain: A Story of Breaking Down Walls<\/a>.\u201d<\/li>\r\n \t
  3. Competitive Advantage and Growth<\/strong>: The MTP drives innovation and can lead to superior stock market performance. In digital firms, it's key in the creation of ecosystems that aggregate leveraged assets and third parties for value creation. The company\u2019s \u201cbelong anywhere transformation journey\u201d is a strategic initiative that formalized and interiorized the MTP through various touchpoints for all the different ecosystem members. As Leigh Gallagher details in her 2016 Fortune<\/em> feature about the company<\/a>, \u201cWhen travelers leave their homes, they feel alone. They reach their Airbnb, and they feel accepted and taken care of by their host. They then feel safe to be the same kind of person they are when they\u2019re at home.\u201d<\/li>\r\n \t
  4. Core Organization Identity<\/strong>: The MTP is considered part of the core dimension of the organization. More than a goal or business strategy, it is a strategic issue that generates a sense of direction and purpose that affects every part of the organization: internal, external, personality, and expression. This dimension also involves the role of the founder(s) and their personality in shaping the business. At Airbnb, the MTP is often used as a shortcut to explain the firm's mission and vision. The founders\u2019 approach is pragmatic, and instead of debating differences, time should be spent on execution. At the same time, the personalities of the three founders, Chesky, Gebbia, and Blecharcyzk, are the identity of the firm. They were the first hosts for the platform. Their credibility is key for making Airbnb a trustworthy and coherent proposal in a crowded market.<\/li>\r\n<\/ol>\r\nExecutives and leaders of business in the current AI era should embrace three key principles. Be true: Purpose is an essential strategic tool that enables firms to identify and connect with their original selves, decoding their reason for being and embedding it into their identity. Be ambitious: The MTP allows for global impact, confronting major challenges by synthesizing business values and guiding innovation paths to address AI-related issues. Be generous: Purpose allows firms to explicitly address environmental and social issues, taking action on values-based challenges such as transparency, respect for intellectual property, and accountability. By following these principles, organizations and their leaders can maintain their direction and continue to advance in the AI era.\r\n\r\n \r\n\r\n\u00a9 IE Insights."],"wpcf-audio-article":[""],"wpcf-article-extract":[""]},"_links":{"self":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/articles\/1338971","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/articles"}],"about":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/types\/articles"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/media\/1339317"}],"wp:attachment":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/media?parent=1338971"}],"wp:term":[{"taxonomy":"schools","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/schools?post=1338971"},{"taxonomy":"areas","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/areas?post=1338971"},{"taxonomy":"subjects","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/subjects?post=1338971"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}