A pre-pandemic report by McKinsey predicted that AI has the potential to deliver additional global economic activity of around $13 trillion by 2030, or about 16 percent higher cumulative GDP compared with 2018. This amounts to 1.2 percent additional GDP growth per year. This McKinsey survey was published around the same time as Pernod Ricard, one of the world’s biggest wine and spirits companies, identified digital transformation as a priority. It prepared for resistance from its salesforce but the company was surprised with the results. In its case technology added to its experience and knowledge.
The relationship between Artificial Intelligence and Organizational Culture
AI doesn’t just impact business processes or bottom lines but also has a significant impact on Organizational Culture. A 2021 MIT SMR-BCG report found that the benefits of artificial intelligence go well beyond improved efficiency and decision-making. AI can also improve organizational effectiveness and strengthen teams and enterprise cultures. This report was based on a global survey of 2,197 managers and interviews with 18 executives. It identifies a wide range of AI-related cultural benefits at both the team and organizational levels. Among survey respondents with AI implementations that improved efficiency and decision-making, more than 75% also saw improvements in team morale, collaboration, and collective learning.
That brings us to the question can AI actually impact your organizational culture? We’ll start by defining Organizational Culture first.
What is organizational culture
Organizational culture is the way in which people in an organization relate to each other, their work and the outside world, in comparison with other organizations. Your Organizational Culture shows how your organization works: how to things get done, the interactions between people, and employee relationships to their work and the outside world. The best organizations often place equal emphasis on strategy and culture. Such organizations create a culture that motivates their teams. Organizational Culture is what differentiates your business, so it is important to know the various factors that contribute to your company’s culture.
AI is no silver bullet
A study by BCG GAMMA, the BCG Henderson Institute, and the MIT Sloan Management Review found that only 10% of businesses see significant financial returns on their AI investments. The survey points out that companies that succeed recognise that effective use of AI requires a “carefully orchestrated symbiosis between human and machine” leading to greater organizational learning and bottom-line growth. AI’s beneficial effects on culture don’t end at the team level. They can extend across the entire organization, impacting the foundation of business operations, improving assumptions that drive organizational behaviours, and ensuring the pursuit of new KPIs and smarter strategic goals.
For instance, Pernod Ricard fostered trust in its algorithms by using business experts to design them, and by gathering extensive feedback from the first users. The company ensured that the reasoning behind the A.I.’s decisions was communicated clearly to employees, and that its recommendations reinforced salespeople’s pitches.
A column in Fortune authored by François Candelon, Michael Chu and Su Min Ha from BCG believes that the success of AI in realising organization-wide progress is a major undertaking. It involves reimagining business fundamentals and weaving AI into the fabric of everyday processes. They believe that organizations have to find that balance, assign the right collaboration mode between humans and machines and deploy AI innovatively beyond automation to improve existing processes and explore new ways of creating value.
Culture drives an organization’s approach to artificial intelligence
Writing for the California Management Review on the Geometry of AI Culture, J. Mark Munoz and Oliver Degnan believe that an organization’s approach to artificial intelligence is largely dictated by its culture. They believe that organizations may either be Symmetrical or Asymmetrical in their AI culture. Symmetrical AI cultures refer to organizations that have found a sense of harmony and balance in assimilating AI in their organizations. In Symmetrical AI cultures, despite technological disruptions and changes, the firm stays true to its core values and continues to operate in a rational and effective manner. In contrast Asymmetrical AI Cultures refer to organizations that have failed to find a well synchronized platform for the absorption of AI in their firms. When these organizations experience changes, they evolve into a new entity and lose their founding core values, culture and character and consequently their competitive advantage.
We’ve seen multiple companies flounder when integrating technology into their operations and failing to cash in on the benefits that new technologies like AI can bring. The cultural and the financial benefits from A.I. build on each other.
Reach out to us to discuss the challenges faced by your organization.
Hofstede Insights India can help you build an effective Organizational Culture that will enable you to leverage future-proof technologies like AI.