A guide to help businesses use AI responsibly
Research by Polimi highlights that only a minority of companies incorporate their purpose into their decision-making, whilst AI is often adopted without clear objectives and with little organisational preparation
It is a principle in business vocabulary, but it has not always become a concrete criterion for decision-making. This is, perhaps, the main finding to emerge from the research carried out by the Purpose in Action Observatory at the Polimi Graduate School of Management, now in its third edition and presented in early October at a very well-attended event at the Teatro Lirico Giorgio Gaber in Milan.
There are two key figures to consider: 65 per cent of Italian managers who took part in the survey say they are able to articulate their company’s purpose of their company, yet only 27 per cent say they can fully distinguish it from mission, vision and values. This difference is not merely terminological, as Josip Kotlar, full professor of Strategy, Innovation and Family Business at the Politecnico di Milano and scientific co-director of the Observatory, points out: ‘Purpose means why an organisation exists; mission is what it does; and vision is where it wants to go. These are distinct concepts that together form a narrative which explains and shapes corporate strategy.”
The survey, based on responses from over 600 Italian managers, highlights that the problem mainly concerns the transition from words to action – in short, execution. In fact, 38 per cent of the companies surveyed fall into the category of purpose-driven organisations – that is, those that use their purpose to guide decision-making – whilst 35 per cent make only superficial or formal use of it. The first figure has risen over time, but we are still a long way from seeing purpose fully integrated into business processes, given that the third category currently lags behind. The most important insight, Kotlar went on to explain, lies in how this principle is applied: whilst in the most advanced companies purpose guides choices, investments and evaluation criteria, in other cases it remains primarily a statement of intent, with no particularly evident impact on decision-making. The assumption is that whilst many companies know how to articulate their raison d’être, only a minority know how to use it to guide their actions.
Strategy moves faster than organisation
The research identifies five areas in which purpose can take shape and influence the way in which certain initiatives are assessed (thereby going beyond the company’s positioning): competitive strategy, investment, skills, brand and the corporate operating system. The Observatory’s data reveal some concrete implications in this regard, reflected, for example, in the 39 per cent of managers who believe that purpose can strengthen sustainable innovation and digitalisation, or in the 35 per cent who associate it with environmental projects. For 29 per cent, on the other hand, it can be linked to social and community projects, whilst for 24 per cent it can guide investments with lower financial returns but which are capable of generating a greater impact. For purpose to influence decision-making, however, adequate governance is required. ‘Its contribution to the business,’ Kotlar emphasises in this regard, ‘becomes truly effective and pervasive only if accompanied by sound governance.’
Simply defining and stating objectives, therefore, is not enough; structured accountability and evaluation criteria must come into play to link strategic priorities to the day-to-day running of the organisation. Without these ‘requirements’, there is a risk that the purpose will remain at the discretion of individual managers, rather than becoming a shared point of reference. ‘The major issue that is emerging,’ added the Observatory’s co-scientific director, ‘is the organisational impact: essentially, the organisation is not implementing these strategies in the most appropriate way.’ The transformation of priorities set out by senior management is therefore not always accompanied by a change in the skills and tools needed to interpret them and help bring them to fruition.
