In a recent survey by Cisco, 97% of respondents said the urgency to use AI technology at their companies has ramped up in the last six months—with more than half predicting negative consequences if they fail to act. That same survey also reported that only 14% of organizations worldwide are fully ready to integrate AI into their businesses. Despite the urgency, The Institute for Corporate Productivity's (i4cp’s) most recent research on generative AI (GenAI) found that only 22% of responding HR leaders reported that their teams are experimenting with AI and 34% of them have no plans or are not ready to begin utilizing GenAI.
The data makes two things clear: the adoption of AI will transform organizations and industries over the next decade and while the winners and losers are yet to be decided, our research shows that early adopters—those we call AI Innovators—are seeing immediate benefits.
Getting your organization's AI strategy right and building the internal capabilities to support that strategy are essential to thriving through the AI revolution, but our research shows there is something unexpected that is just as important to getting your AI strategy right—your culture. If you get your culture right, you will have an organization that can smoothly transform to meet the needs of GenAI, and whatever disrupts your business next.
The most intriguing data point from the Cisco survey is this one: Respondents report that just 9% of the business leaders surveyed say their company’s corporate culture is fully prepared for the AI transition. What does it mean to have a culture that is fully prepared for the AI transition, and how should the C-Level begin that journey?
i4cp has been researching what it takes to create change-ready cultures for over 50 years, and the lessons that we have learned are even more crucial now than ever.
Let’s start with the first question that leaders ask when we start discussing culture:
Do healthy cultures outperform?
The answer is a resounding yes. According to our research, companies that outperformed the market over a five-year period in revenue growth, market share, profitability, and customer satisfaction are six times more likely to have healthy cultures than lower-performing organizations. Our research also shows that it is no longer only HR that recognizes culture as a fundamental driver of competitive advantage.
Bob Herz, board member at Morgan Stanley and Fannie Mae makes it quite clear that culture is critical to business success. “The way I think about it—is our culture providing a competitive advantage? Is it enabling execution of our strategy? The flip side is risk, particularly risk related to conduct and risk in executing the business strategy. I think risk and strategy are the two sides of the coin—you have to make sure the culture is both driving a can-do attitude of innovation and speed to market, while also providing guardrails to protect against potential downsides”.
Once we recognize the impact of a healthy culture on overall business performance, we get to our second critical question.
Are healthy cultures better at change?
The data from i4cp’s Culture Fitness report is definitive. High performing cultures are 2x more likely to view change as ‘normal, expected, and manageable’. They are also 2.5x more likely to view change as “part of our business model – to be the disruptor
The bottom line is that top companies—those most likely to have fit cultures—simply have different attitudes about change. Like a downhill skier, an inability to adapt to changing conditions can put you out of the race. Conversely, those in high-performance organizations are more likely to view change as expected, as a part of how they operate, and (more importantly) as an opportunity. This is a cultural advantage that plays out every day in the endurance contest that is business, and the fittest cultures are the front-runners in almost any market.
Consider i4cp member Microsoft under the leadership of CEO Satya Nadella, where, experimentation, agility, and learning are rewarded. During Microsoft’s culture transformation under his leadership, the enterprise value has increased from $244 billion to $2.73 trillion and Microsoft has outmaneuvered the competition in the AI race with a significant investment in OpenAI that has cemented their position as an AI leader.
The Microsoft story brings up the third and final question about cultures that outperform during disruption.
What are the most important traits of a change-ready culture?
Our research team surveyed over 400 respondents from large (over 1,000 employees), global companies to identify which cultural traits are common across high-performance organizations and have identified the following 13 distinct cultural traits that have strong, positive correlation with the i4cp’s Market Performance Index®, which distinguishes high-performance organizations from lower-performing organizations.
While every organization and culture differs, when it comes to high-performance cultures, there are common traits that you can nurture to ensure your organization’s culture is ready for GenAI and whatever revolution comes next.
To start, we recommend our Instant Culture Renovation Assessment to help you understand where your organization is in its culture journey. For a more detailed picture of your culture health against our Healthy Culture Index(R) our Culture Renovation Assessment will give you insights into areas of strength and areas of opportunity.
Every organization will be impacted by AI, but the encouraging news from the data is; that a fit culture will help you navigate the AI transformation, the traits of fit cultures are clear, and most organizational cultures are not AI ready. What this means for you is that leaders who follow the data and invest now to create change ready cultures will have a competitive advantage for years to come.
Take the next step in creating a change ready culture.