In today’s challenging world, advancing the leadership of business purpose at all levels of an organization is imperative. This blog introduces the business purpose and ethics of AI and presents the challenges given the decline in human happiness and the importance of augmenting risk management functions to ensure that new operating frameworks link business purpose to ethical AI and happiness economics.
What is the corporate purpose?
The social object is the higher object of a company which goes beyond the only lucrative orientation. The objective is to define and deliver a promise of long-term value creation, either in the local environment of the company or in the global market environment, directly linked to the creation of value of the company .
Leading management thinkers agree that conceptions of the purpose of business and its meaning are changing rapidly. “The purpose of business goes beyond shareholder value, and it is not something that will cost your business, but something that will improve your business,” said Michael Beer, Cahners-Rabb Professor Emeritus of Business Administration at Harvard Business School and director of the Center for Higher Ambition Leadership.
Harvard Research on Business Purpose, sponsored by Ernst & Yonge, found that companies make more money, have more engaged employees and more loyal customers, and are even better at innovation and transformational change when they have a clearly defined and aligned business purpose. It seems to be easier to win the game when you care about the game. This point underpins the importance of bringing more humanity to business and all operating practices.
“A sense of being part of something bigger than yourself can lead to high levels of engagement, high levels of creativity, and the willingness to partner across functional and product boundaries within of a company, which are extremely powerful,said Rebecca Henderson, a professor at John University and Natty McArthur at Harvard Business School. “Once they cross a certain financial threshold, many people are driven as much by intrinsic meaning and the feeling that they are contributing something worthwhile as they are by financial returns or status..”
More than eight out of 10 executivesfor example, believe that a strong sense of common purpose drives employee satisfaction, facilitates business transformation, and helps build customer loyalty. Most frames also include this objective helps businesses navigate a volatile and unpredictable environment and delivers higher and more sustainable performance.
These perspectives are fundamental to aligning all stakeholders. What’s also interesting is that McKinsey’s research found that about 85% of people feel they have a purpose. But only about 65% of them think they can actually articulate that goal, which is a source of concern for leadership and risk management.
McKinsey also found that nearly seven in ten employees were thinking about their purpose because of COVID-19. Employees who say they live their purpose at work are six and a half times more likely to report greater resilience.
This research should prompt all directors and board leaders to ensure that they have a clear view of what the purpose of the business means and to use this basis to guide their decisions. It also means giving employees the opportunity to understand their desired employee goal in the context of their life goals to align visions to create a stronger common purpose to successfully navigate a world of increasingly unpredictable. To strive to accelerate sustainable performance with the energetic force of resilience and inspire everyone to come together around a unifying vision of why the organization exists and how it contributes to the achievement of a common good.
In the case of my company, we strive to end revenue uncertainty with more humanity. We are solving various use cases for AI ranging from more accurate forecasting of forecasts and profits to the more recent integration of permission to feel and correlate human moods (of happiness) to productivity and risk to health. More humanity is how our culture functions and interacts with our positive leadership orientation, but also in our software design practices where complexity is also hidden by simplicity.
I truly believe that more humanity in business practices is essential and declining human happiness is one of the reasons. I’m so passionate about having more humanity in all AI-impacting business interactions and decisions to ensure its AI for good.
When looking at research on the economics of happiness, Martin Seligman, a world expert in the science of happiness, said: “Although economic output has risen sharply in recent decades, life satisfaction has not. . . and there has been a substantial increase depression and mistrust.” Year after year, happiness is decreasing globally, increasing the importance for employees to have a clear idea of their personal purpose.
According to World Happiness Report 2022stress, is higher now than a decade ago in all parts of the world, partly due to Covid-19, but there are many other factors that are increasing stress levels, rising inflation , bank rates, climate change, etc. that in all countries, overall happiness is declining, as the report indicates Gallup World Happiness Poll. Some highlights from their research report:
- In 2021, people around the world felt more worried, stressed and sad than at any time in the past 16 years. They also had fewer positive experiences than in 2020.
- 28% of people said they had felt a lot of sadness the day before, the highest percentage ever.
- 42% of people said they felt a lot of worry the day before, compared to 40% in 2020.
So let’s take a step back and think about these perspectives:
1.) Corporate purpose is fundamental to aligning shareholders and maximizing shareholder value.
2.) Employees and people in general are less happy (see World Happiness Reports)
Now let’s enjoy more facts about my AI area of specialization:
UBS AI Maturing Report predicts 20% year-over-year growth in AI
The rise of AI is accelerating opportunities for employees to improve their digital literacy skills and focus on creative aspects. With the emergence of other disruptive business models like apps or sharing economies most likely in a post-AI era, there will be many changes.
UBS reports that AI as a stand-alone industry may be worth $100 billion by 2030 and $500 billion by 2050, investments made today are likely to pay off significantly in decades to come . UBS’s long-term investment themes of robotics and automation, digital data and e-commerce would directly benefit from these consistently high rates of growth.
What the next 30 years will look like will look like the 1930s and 1940s as each business model evolves more intelligently, impacting many routine jobs that will gradually be replaced by new jobs requiring skills of more creative thinking.
This means that the object of the company must consider the role that AI will play in its business, because AI will be in the majority of investments. Therefore, the risk of not ensuring that there are ethical foundations for AI is a major risk, as the majority of boards do not have an AI risk manager in place. their audit committees. Beyond this point, very few companies have a clearly defined AI ethics and governance policy to govern all procurement practices, as well as new software projects using AI, ensuring that it has a formal risk review to ensure the business objective and AI for good is at the forefront. and center.
In summary, the increased focus on human needs rather than products and services is key to creating a strong business purpose and to protect humans we need to ensure that the data used for AI is used for advance society and protect humans. In the words of Simon Sinek, it is what separates the why from the what and the how.
Brian Chesky, co-founder and CEO of Airbnb, said about it: “This idea that for one actor to win another must lose is, to me, a misconception. I still think like a designer. Design is not the appearance of something; design is how something works, and something works best when it works for the greatest number of people.
Other companies like: PepsiCo and Johnson & Johnson described how they want to benefit each stakeholder group in the context of their overall objective. Apple’s goal is to “allow for creative exploration and self-expression.”
Questions from the director of the board of directors and the CEO to reflect further on the definition of the social object of your company:
1.) Relevance: Does your business have a clearly defined corporate purpose that makes a difference in the lives of all stakeholders?
2.) Credible: Can your corporate purpose be credible? Can it be translated into actionable behaviors?
3.) Authentic: Does it align with what your employees really care about and align with your company values?
4.) Inspiring: Does it have reach and impact and is it imperative to motivate and mobilize your people to take action and deliver the message?
My next blog will connect business purpose to AI ethics and share ethical policies that can be integrated into your company’s business purpose vision, as data is the fabric of modernization and few directors and CEOs are investing in AI data modernization practices that impact business risk. long-term survival.