In 2024, new technologies, emerging business models, societal demands and different ways of working will keep everybody on their toes. National and supranational government regulations may struggle to keep up, and businesses will have to adapt accordingly.
Next year is set to mark a watershed in our relationship with artificial intelligence (AI) – the indisputable trend is towards more, not less, AI in the workplace. Other trends that stand out for 2024 include the increasing importance of environmental, social and governance (ESG) policies and the questioning of ambitious business models like those of FTX and Theranos. These trends, combined with the increased prevalence of hybrid work, mean that business leaders will have to take important decisions. The ability to anticipate and understand future trends will be a valuable skill for executives as they adapt to the new business landscape.
Here, IESE professors identify:
Four key trends in 2024. Insights on the decisions that business leaders will face
1. Artificial intelligence: Say yes to AI
2023 was the breakout year for AI, when everybody suddenly became aware of its potential, but also of the potential problems it presents. 2024 will be the year that AI begins to make a real difference across sectors and companies. AI tools, including large language models and image generators, have become readily available, some even free of charge, enabling a much wider range of applications.
Whether we like it or not, AI will be ubiquitous and its growth exponential in the upcoming year. “This is an unstoppable train,” says IESE Professor of Strategic Management Sampsa Samila. “At this point, the AI genie will not go back into the bottle.”
In 2024, business leaders will have to decide just how much to invest in AI and just how deep their commitment goes.
Prof. Samila has no doubt about the right decision. “They should go all in,” he says.
It is important to stay ahead of the game. He points out that other players – including competitors as well as employees – may already be using AI. In his research, Prof. Samila has seen companies in which workers are employing AI-driven strategies even when the company itself remains hesitant to adopt the technology.
Firms will need to be proactive and implement well-structured AI strategies, according to Prof. Samila. “AI is transformational and will really change the way you do business,” he says. He stresses that it will affect all areas of business, from operations to customer service and employee skills. Understanding and embracing AI will be crucial for business leaders.
2. Business development models: Choose integrity
New businesses promising disruptive innovation and paradigm-breaking advances have often been inspired by Mark Zuckerberg’s famous motto “Move fast and break things”. But this business development model is being challenged by a call for integrity. Recent startup fraud scandals provide timely cautionary tales about the dangers of creating unrealistic expectations for tomorrow’s entrepreneurs.
In 2024, entrepreneurs will need to decide if they want to gain support for their ideas by overpromising (and underdelivering) or by being sincere about what they can achieve.
IESE Associate Professor of Entrepreneurship Yuliya Snihur admits that following a grounded business development model may not be easy, as new enterprises experience a lot of pressure to create legitimacy. But she insists that integrity is the way forward.
Prof. Snihur urges entrepreneurs to remember the importance of creating realistic expectations, especially at the beginning. “Navigating the thin line between fabrication versus achievable goals is particularly important for building a company,” she says. “You want to engage others to follow your vision.”
3. ESG performance: Consider compensation
Environmental, social, and governance policies have now been firmly established as fundamental pillars of companies’ strategic plans. Linking ESG performance to the compensation plans of top executives, however, is a relatively new idea, and one that is gaining traction for 2024. At the beginning of the last decade, this link was almost unheard of. Now it is standard practice in more than 30% of companies, according to a recent study of over 4,000 companies conducted by IESE Professor of Accounting and Control Gaizka Ormazabal.
In 2024, business leaders will have to take decisions about whether or not to tie managers’ variable compensation to sustainability criteria.
The first step is identifying the factors driving the company’s interest in improving ESG performance. Prof. Ormazabal warns against just following others’ lead. “Do not do this because everybody is doing it,” he says. “Do this if you have a clear idea of why you want to: because you are concerned that ESG risks may affect you in the future; because you have a certain type of stakeholder that is pushing really hard for this; or because you have made a commitment and you want this commitment to be credible.”
Decisions such as these should have a clear motivating factor, as companies who commit to improving ESG performance will be in it for the long haul.
4. Remote work: Promote equality
While some offices will continue working remotely, 2024 will see the great return to the office in many cases. However, this will not mark the end of remote work; hybrid work, with some days in the office and others at home, will become the norm in many companies. Although the office workspace may look a bit different as these new models of work become more common, the underlying values of how to manage this space will remain the same.
In 2024, business leaders will need to reaffirm their commitment to creating an environment in which all workers can thrive by designing remote and hybrid work policies that ensure equality in this new context.
When designing these policies, managers need to be aware of possible biases, according to Isabel Villamor, Assistant Professor of Managing People in Organizations at IESE. “For example, there tends to be a stigma,” she says. “If a woman is working from home, we tend to think that she is working from home but also taking care of family, whereas if a man works from home, we assume that he is working.”
Recognizing these biases and evaluating employees on performance – not presence in the office – is essential to designing policies that promote equality. “Step number one is realizing that these are tendencies that we all have,” she says. “If you evaluate people based on performance and not so much on who is in the office and how long they stay in the office, that’s going to promote a more equal environment.”