Enterprise Redefinition Toward an Enterprise Evolution Theory for the Age of AI Naoki Kadowaki Founder & CEO, VURA Capital Innovation Holdings Inc. · Lecturer, Keio Business School ORCID 0009-0009-5295-1506 This version: July 2026 · Working Paper Version 1.0 Abstract Artificial Intelligence (AI) is transforming not only business operations but also the fundamental assumptions of enterprise management. As knowledge, analytical capability, and execution become increasingly democratized through AI, traditional sources of competitive advantage—including scale, information asymmetry, and operational efficiency—are becoming less sustainable. This paper proposes Enterprise Redefinition, a management framework describing how organizations continuously redesign themselves to create sustainable Future Value in the Age of AI. Unlike conventional transformation approaches that focus on optimizing existing organizations, Enterprise Redefinition conceptualizes transformation as a continuous organizational capability involving the coordinated re-examination and redesign of five interdependent dimensions: Purpose, Business, Organization, Capital, and Leadership. Importantly, these dimensions do not change at the same frequency: enduring elements of organizational purpose may remain stable, while the expression and realization of that purpose evolve in response to technological and societal change. The paper introduces the Enterprise Redefinition Framework, the Enterprise Redefinition Process, and the Enterprise Redefinition Capability Model as integrated approaches to continuous enterprise evolution, together with a maturity model and eleven research propositions intended to establish a foundation for future empirical studies. The central argument is that the primary source of competitive advantage in the Age of AI is no longer superior execution of existing business models but the capability to repeatedly redefine the enterprise itself. Keywords: Enterprise Redefinition; Future Value; Artificial Intelligence; Strategic Management; Dynamic Capabilities; Organizational Transformation; Business Model Innovation; Leadership; Future Value Theory 1 JEL Classification: M10, M14, O31, O33, G34, D23 This is a working paper presenting a conceptual framework in development. Comments are welcome. A companion working paper, "Future Value Theory: A Management Framework for Enterprise, Capital, and Society in the Age of AI" (Kadowaki, 2026a), is available at SSRN (https://ssrn.com/abstract=7120980) and Zenodo (https://doi.org/10.5281/zenodo.21255662). 1 Introduction 1.1 The Beginning of a New Management Era Throughout the history of modern management, organizations have continuously sought methods to improve performance through greater efficiency, stronger competitive positioning, superior products, and more effective execution. Classical strategic management emphasized market positioning, competitive advantage, economies of scale, and operational excellence as the principal drivers of enterprise value (Drucker, 1954; Porter, 1980, 1985). These assumptions are now being fundamentally challenged. Artificial Intelligence is rapidly democratizing knowledge, decision support, software development, content creation, and increasingly, execution itself. Activities that previously required years of accumulated expertise can now be performed with the assistance of AI systems. The barriers that protected competitive advantage through proprietary knowledge and specialized expertise are steadily declining. This technological transformation represents more than another wave of digitalization. It changes the very nature of management. If every organization can access comparable analytical capability, generate software through AI, automate administrative work, optimize operations, and accelerate innovation, the traditional sources of competitive advantage inevitably become less durable. The central strategic question therefore changes. It is no longer: “How can organizations execute better?” Instead, it becomes: “How can organizations continuously redesign themselves to create new future value?” This paper argues that answering this question requires a new management framework. Enterprise Redefinition VURA Working Paper Series 2 That framework is Enterprise Redefinition. 1.2 Beyond Digital Transformation During the past two decades, Digital Transformation (DX) has become one of the dominant concepts in corporate management (Vial, 2019; Verhoef et al., 2021). Organizations invested heavily in cloud computing, data analytics, automation, and AI technologies to improve productivity and customer experience. While these initiatives have generated important operational improvements, many transformation programs remain limited in scope. They primarily optimize existing organizations. They rarely question why the organization exists, what future it should create, or whether its current business model should continue to exist at all. In other words, digital transformation often improves the enterprise without fundamentally redefining it. Enterprise Redefinition begins from a different premise. Instead of asking: “How can we digitize our current organization?” it asks: “What kind of organization should exist in the Age of AI?” This distinction is fundamental. Digital transformation changes processes. Enterprise Redefinition changes the enterprise itself. 1.3 Why Continuous Redefinition Matters Historically, major organizational transformations occurred only during periods of crisis. Companies restructured after financial losses. Business models changed after disruptive innovation. Organizational redesign followed mergers or acquisitions. Leadership changed after declining performance. Transformation was episodic. The Age of AI fundamentally changes this rhythm. Enterprise Redefinition VURA Working Paper Series 3 Technological progress now occurs continuously. Customer expectations evolve continuously. Capital markets react continuously. New competitors emerge continuously. As a consequence, organizations can no longer treat transformation as a one-time project. Transformation itself becomes a permanent organizational capability. Enterprise Redefinition therefore describes not a project, but an ongoing management discipline through which organizations repeatedly redesign themselves in response to changing technological, economic, and societal conditions. 1.4 Purpose of This Paper The objective of this paper is to establish Enterprise Redefinition as an integrated management framework for continuous enterprise transformation. Specifically, this paper seeks to: define the concept of Enterprise Redefinition; explain why existing management theories are insufficient for the Age of AI; identify the five fundamental dimensions of enterprise redesign; present a continuous Enterprise Redefinition Process; introduce the concept of Enterprise Redefinition Capability; propose a maturity model for organizational evolution; and develop research propositions for future empirical investigation. Rather than replacing existing theories of strategy, innovation, or organizational change, Enterprise Redefinition integrates these perspectives into a broader framework centered on the continuous creation of Future Value. Figure 0 presents an integrated overview of the theoretical model developed in this paper. • • • • • • • Enterprise Redefinition VURA Working Paper Series 4 Figure 0. An Integrated Model of Enterprise Redefinition (overview of the paper) The model proceeds from the environmental shift created by AI, through the theoretical foundation of Future Value Theory (Kadowaki, 2026a), to the framework, mechanisms, and maturity model developed in this paper, and finally to the outcomes of Future Value and Enterprise Value. The dashed feedback loop indicates that each completed cycle of redesign strengthens the organization’s capability for subsequent redesign. The remainder of the paper elaborates each element of this model. Enterprise Redefinition VURA Working Paper Series 5 2 Literature Review 2.1 Evolution of Strategic Management The history of strategic management can be understood as a continuous effort to explain how organizations create and sustain competitive advantage under changing economic conditions. The foundations of the field were laid by scholars who conceptualized the firm as an administrative and strategic entity: the enterprise as a system of purposeful management (Drucker, 1954), organizational decision-making under bounded rationality (Simon, 1947; Cyert & March, 1963), the co-evolution of strategy and structure (Chandler, 1962), and the firm as a bundle of productive resources (Penrose, 1959). Early strategy theories then focused primarily on external competition. Competitive positioning, industry structure, and market power were regarded as the primary determinants of superior organizational performance (Porter, 1980, 1996). As industries matured and globalization intensified, strategic management increasingly emphasized operational excellence, resource allocation, and organizational capabilities (Wernerfelt, 1984; Barney, 1991; Grant, 1996). Subsequent research expanded beyond market positioning toward evolutionary and knowledge-based perspectives (Nelson & Winter, 1982; Kogut & Zander, 1992), innovation, organizational learning, business model transformation, and dynamic capabilities (March, 1991; Teece, Pisano, & Shuen, 1997; Chesbrough, 2003). These perspectives collectively shifted attention from static competitive advantage toward continuous organizational adaptation—and from formal planning toward strategic learning (Mintzberg, 1994). However, despite these theoretical advances, most management theories were developed before the emergence of generative AI and autonomous decision-support systems. Consequently, many implicitly assume that knowledge, expertise, analytical capability, and managerial judgment remain scarce organizational resources. The Age of AI fundamentally alters these assumptions. When knowledge generation, analysis, software development, communication, and increasingly execution become widely accessible through artificial intelligence, the traditional foundations of competitive advantage require reconsideration. Enterprise Redefinition builds upon previous management theories while proposing that the central challenge is no longer optimizing existing enterprises but continuously redesigning the enterprise itself. Enterprise Redefinition VURA Working Paper Series 6 2.2 Competitive Strategy Michael Porter established one of the most influential frameworks in strategic management by arguing that competitive advantage originates from favorable industry positioning and defensible strategic choices (Porter, 1980). The Five Forces framework and generic competitive strategies provided organizations with systematic approaches for achieving superior performance through differentiation, cost leadership, or focused positioning (Porter, 1980, 1985). Porter’s work remains highly relevant for understanding competition within relatively stable industries. However, its underlying assumptions become increasingly challenged when technological innovation rapidly reshapes industry boundaries. Artificial Intelligence reduces barriers to information, accelerates imitation, and lowers the cost of developing sophisticated organizational capabilities. As analytical capability becomes democratized, differentiation based solely on knowledgeintensive processes becomes more difficult to sustain. Consequently, organizations cannot rely exclusively on defending existing competitive positions. Instead, they must continuously redefine what business they are in, how they create value, and why they exist. Enterprise Redefinition therefore extends competitive strategy from protecting competitive advantage toward continuously redesigning the basis of competition itself. 2.3 Core Competence Prahalad and Hamel (1990) introduced the concept of Core Competence, arguing that sustainable success depends upon unique organizational capabilities rather than individual products or business units. Core competencies enable organizations to enter multiple markets, create customer value, and develop long-term strategic flexibility. The theory represented a major departure from product-centered competition by emphasizing organizational knowledge and collective learning. Yet AI changes the nature of competence itself. Capabilities previously considered rare—including software development, strategic analysis, research, design, translation, and even creative ideation—are increasingly augmented by AI systems. Enterprise Redefinition VURA Working Paper Series 7 As competence becomes increasingly supported by intelligent technologies, organizations cannot depend solely upon existing competencies accumulated in the past. Instead, they require the capability to continuously redefine what competencies will become valuable in the future. Enterprise Redefinition therefore shifts emphasis from preserving core competence toward continuously reconstructing future competence. 2.4 Disruptive Innovation Christensen’s (1997) theory of disruptive innovation explains how new technologies enable emerging firms to outperform established market leaders by serving overlooked customer segments before expanding into mainstream markets (see also Christensen, Raynor, & McDonald, 2015). The theory fundamentally changed how managers understand technological disruption. However, disruption in the Age of AI differs from previous technological waves. Rather than replacing individual products or services, AI increasingly transforms entire organizational functions simultaneously—including research, marketing, operations, finance, human resources, and executive decision-making. The object of disruption is no longer merely the product. It is the enterprise itself. Consequently, organizations require a framework that extends beyond innovation management toward enterprise-wide redesign. Enterprise Redefinition addresses this broader organizational challenge. 2.5 Dynamic Capability Among contemporary strategic management theories, Dynamic Capability provides perhaps the closest conceptual foundation for Enterprise Redefinition. Teece defines dynamic capabilities as the firm’s ability to integrate, build, and reconfigure internal and external competencies in rapidly changing environments (Teece et al., 1997; Teece, 2007). Subsequent research has examined the nature of these capabilities (Eisenhardt & Martin, 2000), their deliberate development through learning (Zollo & Winter, 2002; Winter, 2003), their managerial and cognitive microfoundations (Helfat & Peteraf, 2015), and their application to business model change and digital transformation (Teece, 2018; Warner & Wäger, 2019). Enterprise Redefinition VURA Working Paper Series 8 This perspective recognizes that sustainable advantage increasingly depends upon adaptation rather than optimization. Enterprise Redefinition shares this emphasis on continuous change. However, important differences remain. Dynamic Capability primarily focuses on organizational resources and capabilities. Enterprise Redefinition expands the scope of redesign to include five integrated dimensions: Purpose Business Organization Capital Leadership Rather than asking how firms reconfigure resources, Enterprise Redefinition asks how organizations repeatedly redesign themselves as integrated social, technological, and economic systems. In this sense, Enterprise Redefinition may be viewed as an enterprise-level extension of Dynamic Capability within the Age of AI. 2.6 Organizational Learning Organizational Learning theory argues that organizations improve performance through continuous knowledge acquisition, reflection, experimentation, and adaptation (Argyris & Schön, 1978; Levitt & March, 1988; Senge, 1990; March, 1991). Learning organizations continuously evolve by integrating new experiences into organizational routines, converting individual insight into collective organizational knowledge (Nonaka & Takeuchi, 1995). Artificial Intelligence significantly accelerates organizational learning by enabling rapid knowledge generation, simulation, prediction, and decision support. Yet faster learning alone does not guarantee better futures. Organizations must also determine what future they intend to create. Learning without strategic redefinition risks optimizing obsolete business models. Enterprise Redefinition therefore positions organizational learning as one component within a broader process of continuous enterprise redesign. Learning informs redefinition; it does not replace it. • • • • • Enterprise Redefinition VURA Working Paper Series 9 2.7 Digital Transformation Digital Transformation has become one of the dominant management paradigms during the past decade (Vial, 2019; Hanelt, Bohnsack, Marz, & Antunes Marante, 2021; Verhoef et al., 2021). Organizations worldwide have invested extensively in cloud computing, automation, artificial intelligence, robotics, and data-driven decision-making to improve operational performance (Davenport & Ronanki, 2018; Fountaine, McCarthy, & Saleh, 2019). These initiatives have produced substantial improvements in efficiency and customer experience. Nevertheless, Digital Transformation frequently remains technology-centered. Many transformation programs ask how organizations should adopt AI. Enterprise Redefinition begins from a different question. Instead of asking: “How should organizations use AI?” it asks: “What kind of enterprise should exist because AI exists?” This distinction fundamentally shifts managerial attention from technology implementation toward organizational redesign. Technology becomes an enabler of enterprise evolution rather than the objective of transformation itself. 2.8 Artificial Intelligence and Management: Recent Research (2023– 2026) A rapidly growing body of research examines how artificial intelligence—and generative AI in particular—reshapes management and organization. An early stream analyzed AI through the economics of prediction, arguing that as prediction becomes cheap, the value of human judgment rises (Agrawal, Gans, & Goldfarb, 2018, 2022; Brynjolfsson & McAfee, 2014). Related work described how AIcentered operating models transform the scale, scope, and learning capacity of the firm (Iansiti & Lakhani, 2020), and called for new organizational theorizing about AI in organizations (von Krogh, 2018). Organization scholars have examined the managerial consequences of intelligent systems: the tension between automation and augmentation (Raisch & Krakowski, Enterprise Redefinition VURA Working Paper Series 10 2021; Brynjolfsson, 2022), algorithmic control at work (Kellogg, Valentine, & Christin, 2020), the implications of substituting machine learning for human decision-making in organizational learning (Balasubramanian, Ye, & Xu, 2022), and complementarities between machine learning and human capital (Choudhury, Starr, & Agarwal, 2020). Measures of occupational exposure indicate that AI affects a remarkably broad range of knowledge work (Felten, Raj, & Seamans, 2021; Eloundou, Manning, Mishkin, & Rock, 2024). Of particular relevance to this paper, recent strategy research argues that AI changes the sources of competitive advantage themselves, as capabilities once scarce become widely available through intelligent systems (Krakowski, Luger, & Raisch, 2023). This finding directly parallels the premise of Enterprise Redefinition. Since 2023, field and laboratory experiments have produced systematic evidence on generative AI. Access to generative AI substantially raised productivity in professional writing tasks while narrowing performance gaps between workers (Noy & Zhang, 2023). Among management consultants, generative AI improved performance on tasks within the technology’s frontier while degrading performance on tasks beyond it—a “jagged frontier” requiring managerial judgment about where to deploy AI (Dell’Acqua et al., 2023). In customer support operations, generative AI assistance raised productivity most strongly for less experienced workers (Brynjolfsson, Li, & Raymond, 2025). In a large field experiment with corporate professionals, individuals working with generative AI matched the performance of human teams working without it, and AI eroded traditional boundaries of functional expertise (Dell’Acqua et al., 2025). At the same time, economy-wide evidence suggests that the aggregate labor market effects of AI chatbot adoption have so far remained modest (Humlum & Vestergaard, 2025)—indicating that tool adoption alone does not transform organizational performance. Two implications follow for the present paper. First, the empirical evidence confirms that AI rapidly democratizes individual capability: productivity gains diffuse quickly, accrue disproportionately to less experienced workers, and cross traditional boundaries of expertise. Competitive advantage based on scarce individual capability therefore erodes. Second, the evidence equally suggests that adoption without organizational redesign yields limited enterprise-level transformation. Realizing the value of AI requires redesigning collaboration between humans and intelligent systems (Wilson & Daugherty, 2018; Mollick, 2024), and ultimately redesigning the enterprise itself. Existing research, however, remains largely focused on tasks, individuals, and functions. A framework for continuous redesign at the level of the enterprise as a Enterprise Redefinition VURA Working Paper Series 11 whole remains underdeveloped. This is the gap that Enterprise Redefinition addresses. 2.9 Research Gap The literature reviewed above provides significant insights into competitive strategy, innovation, organizational learning, capability development, and technological transformation. Collectively, these theories explain how organizations compete, innovate, adapt, and improve performance. However, an important conceptual gap remains. Few existing frameworks explicitly conceptualize the enterprise itself as the primary object of continuous redesign. Most theories assume that organizations optimize existing structures, capabilities, or business models. In contrast, the Age of AI increasingly requires organizations to repeatedly reconsider their purpose, organizational architecture, leadership model, capital allocation, and strategic identity. This paper proposes Enterprise Redefinition as an integrated management framework addressing this gap. Rather than treating transformation as an exceptional event, Enterprise Redefinition conceptualizes continuous redesign as a permanent organizational capability essential for sustainable Future Value creation. 3 Enterprise Redefinition: Conceptual Foundation 3.1 Defining Enterprise Redefinition Artificial Intelligence fundamentally changes how organizations create value. Historically, enterprises achieved sustainable growth by accumulating knowledge, improving operational efficiency, expanding scale, and strengthening competitive positioning. These approaches assumed that competitive advantage could be maintained through superior execution of relatively stable organizational structures. The Age of AI challenges this assumption. Knowledge can now be generated instantly. Analysis can be performed automatically. Enterprise Redefinition VURA Working Paper Series 12 Software can be developed collaboratively with AI. Decision support has become widely accessible. Execution itself is increasingly automated. As these capabilities become broadly available, competitive advantage derived solely from execution becomes progressively less sustainable. Consequently, organizations require a new source of long-term competitiveness. This paper argues that this source is the capability to continuously redesign the enterprise itself. Accordingly, Enterprise Redefinition is defined as follows: Enterprise Redefinition is the continuous process through which organizations re-examine and, when necessary, redesign their Purpose, Business, Organization, Capital, and Leadership in order to create sustainable Future Value. Continuous redefinition does not imply that every dimension changes at the same frequency or intensity. Some elements, particularly the core purpose and identity of the enterprise, may remain relatively stable over long periods. What changes more frequently is the interpretation, expression, and organizational realization of that purpose through business models, organizational systems, capital allocation, and leadership practices. This definition emphasizes five important characteristics. First, Enterprise Redefinition is continuous rather than episodic. Second, it concerns the enterprise as an integrated system rather than isolated functions. Third, redesign extends beyond business models to include organizational purpose and leadership. Fourth, AI serves as a catalyst rather than the objective of transformation. Finally, the ultimate objective is the creation of Future Value rather than merely improving present performance. 3.2 Enterprise Versus Organization The distinction between “organization” and “enterprise” is important. Organizations generally refer to formal structures through which people coordinate activities. Enterprise Redefinition VURA Working Paper Series 13 Enterprises encompass a broader system including strategic intent, business architecture, capital allocation, governance, culture, stakeholder relationships, technological capabilities, and societal purpose. Consequently, redesigning an enterprise requires substantially broader intervention than reorganizing departments or introducing new technologies. Enterprise Redefinition therefore operates at the highest level of organizational design. It asks not merely how organizations should improve, but what kind of enterprise should exist. 3.3 Continuous Rather Than Episodic Transformation Traditional corporate transformation has typically been reactive. Organizations restructure after declining profitability. Business models change following market disruption. Leadership transitions occur after strategic failure. Transformation is frequently treated as a temporary project designed to restore performance. Enterprise Redefinition rejects this episodic perspective. The pace of technological advancement, AI capability development, geopolitical uncertainty, demographic shifts, and capital market evolution implies that organizations must continuously adapt. Continuous redesign therefore becomes a permanent managerial responsibility rather than an exceptional intervention. In this view, organizational stability no longer results from resisting change. Instead, stability emerges through the capability for continuous adaptation. Continuous transformation should not be interpreted as uniform or simultaneous change across all dimensions of the enterprise. Enterprise Redefinition recognizes temporal differentiation among dimensions. Business models, organizational systems, and capital allocation may require frequent adjustment, whereas core purpose and organizational identity typically evolve over longer time horizons. Continuous Redefinition therefore refers to continuous managerial attention and periodic reassessment, not constant alteration of every organizational element. Enterprise Redefinition VURA Working Paper Series 14 3.4 Future Value as the Objective Enterprise Redefinition differs from conventional transformation because its objective is not optimization. Optimization seeks better performance within existing assumptions. Redefinition questions those assumptions themselves. This distinction becomes particularly important under conditions of technological discontinuity. Organizations focused exclusively on efficiency may become increasingly effective at executing obsolete business models. Enterprise Redefinition instead begins with a different question: What future should this enterprise create? Future Value therefore functions as the guiding principle for enterprise redesign. Purpose, business architecture, organizational systems, leadership practices, and capital allocation are redesigned according to their contribution to future value creation rather than short-term operational performance. This relationship positions Enterprise Redefinition as the practical implementation framework of Future Value Theory (Kadowaki, 2026a). Future Value Theory explains why future-oriented management is necessary. Enterprise Redefinition explains how organizations continuously realize it. 3.5 The Five Dimensions of Enterprise Redefinition Enterprise Redefinition consists of five mutually reinforcing dimensions. Rather than functioning independently, these dimensions interact dynamically as an integrated management system. Purpose Purpose defines why the enterprise exists. In the Age of AI, purpose becomes increasingly important because technology alone cannot determine desirable futures. Purpose provides the normative direction for organizational decision-making and guides enterprise evolution beyond financial performance. Business Business concerns how value is created and delivered. Enterprise Redefinition VURA Working Paper Series 15 Enterprise Redefinition recognizes that business models must evolve continuously as AI reshapes customer expectations, industry structures, and competitive boundaries. Organization Organization refers to the design of structures, processes, culture, governance, and collaboration between people and intelligent systems. Rather than replacing people with AI, Enterprise Redefinition seeks to redesign organizational systems that maximize complementary capabilities between humans and artificial intelligence. Capital Capital extends beyond financial investment. It includes the allocation of financial resources, technological assets, intellectual property, data infrastructure, partnerships, and organizational attention. Future-oriented capital allocation becomes essential for sustaining enterprise evolution. Leadership Leadership represents the capability to define future direction, manage uncertainty, orchestrate organizational redesign, and make strategic decisions under conditions where AI increasingly contributes analytical capability. Leadership therefore shifts from directing execution toward designing the future. Enterprise Redefinition VURA Working Paper Series 16 Figure 1. Enterprise Redefinition Framework Figure 1 illustrates the conceptual structure of Enterprise Redefinition. Future Value occupies the center of the framework because it represents the integrating objective of all five dimensions. None of the dimensions independently creates sustainable competitiveness. Competitive advantage emerges through their continuous alignment toward future value creation. 3.6 Enterprise Redefinition as a Dynamic System A defining characteristic of Enterprise Redefinition is that it should not be interpreted as a checklist. The five dimensions are not sequential stages, nor are they independent organizational initiatives. Instead, Enterprise Redefinition functions as a dynamic adaptive system. Changes in organizational purpose influence business design. Business redesign affects organizational structures. Organizational redesign requires different leadership capabilities. Leadership decisions reshape capital allocation. Capital investment enables new strategic possibilities, which may ultimately lead to further refinement of organizational purpose. Enterprise Redefinition VURA Working Paper Series 17 Enterprise Redefinition is therefore recursive rather than linear. Continuous interaction among the five dimensions enables organizations to evolve in response to technological progress while maintaining strategic coherence. 3.7 Theoretical Contribution This paper contributes to management theory in three ways. First, it conceptualizes the enterprise itself—not merely products, resources, or capabilities—as the primary object of continuous redesign. Second, it integrates strategic management, organizational transformation, leadership, and capital allocation into a unified framework centered on Future Value creation. Third, it positions continuous enterprise redesign as a core organizational capability for the Age of AI, extending existing theories of dynamic capability and organizational adaptation. Accordingly, Enterprise Redefinition should be understood not as another transformation methodology but as a comprehensive management framework for sustained enterprise evolution. 4 Five Dimensions of Enterprise Redefinition 4.1 Purpose Redefinition Among the five dimensions of Enterprise Redefinition, purpose occupies the most fundamental position. Historically, corporate purpose has often been treated as a statement of organizational identity, corporate philosophy, or mission (Drucker, 1954; Collins & Porras, 1994). In many organizations, purpose serves primarily as a communication device intended to motivate employees or strengthen corporate branding. Recent research, however, demonstrates that purpose is far more consequential: clearly articulated purpose is associated with superior long-term performance (Gartenberg, Prat, & Serafeim, 2019), and purpose has become a central topic of management research in its own right (George, Haas, McGahan, Schillebeeckx, & Tracey, 2023). Purpose also anchors the enterprise’s relationships with its stakeholders (Freeman, 1984) and its contribution to society (Porter & Kramer, 2011). Enterprise Redefinition assigns a substantially broader role to purpose. Purpose determines the future that an organization intends to create. Enterprise Redefinition VURA Working Paper Series 18 As Artificial Intelligence increasingly assumes responsibility for analysis, optimization, prediction, and execution, organizations must increasingly differentiate themselves not by what they can automate but by what future they choose to pursue. Purpose therefore becomes the origin of strategic direction rather than merely a declaration of values. In this framework, purpose performs three essential functions. First, it provides normative direction under conditions of technological uncertainty. AI can recommend optimal decisions according to specified objectives, but it cannot determine which objectives society or an organization ought to pursue. Purpose therefore defines the desirable future toward which AI should contribute. Second, purpose integrates organizational decision-making. Business redesign, capital allocation, organizational architecture, and leadership all derive coherence from a shared understanding of organizational purpose. Without such alignment, technological optimization may produce local improvements while weakening long-term strategic consistency. Third, purpose enhances organizational adaptability. Organizations possessing a clearly articulated future-oriented purpose are better able to redesign their businesses without losing strategic identity. Products may change. Markets may change. Technologies may change. Purpose provides continuity amid transformation. Stability and Adaptability of Purpose Purpose Redefinition does not imply frequent replacement of the enterprise’s identity or reason for existence. Excessive changes in purpose may weaken employee identification, stakeholder trust, strategic coherence, and brand continuity. Enterprise Redefinition therefore distinguishes between two layers of purpose. Core Purpose represents the relatively enduring reason why the enterprise exists. It provides continuity, identity, and normative direction across periods of technological and organizational change. Enterprise Redefinition VURA Working Paper Series 19 Purpose Expression refers to how the enterprise interprets, communicates, and realizes its Core Purpose under changing technological, market, and societal conditions. Core Purpose should generally remain stable unless fundamental changes make the enterprise’s existing reason for existence no longer legitimate, relevant, or achievable. Purpose Expression, however, may evolve more frequently as the enterprise develops new businesses, organizational forms, technologies, and stakeholder relationships. Purpose Redefinition therefore involves three possible managerial actions: reaffirming the existing Core Purpose; reinterpreting its meaning in a changing environment; or fundamentally redefining it when the existing purpose has lost strategic or societal relevance. This distinction enables enterprises to preserve identity while adapting how that identity is translated into value creation. Consequently, Enterprise Redefinition begins with the re-examination of Purpose. In most cases, this process reinforces or reinterprets Core Purpose rather than replacing it. Fundamental Purpose Redefinition should occur only when the enterprise’s existing reason for existence no longer provides legitimate or strategically relevant direction. The central managerial question becomes: Why should this enterprise continue to exist in the Age of AI? Organizations incapable of answering this question risk becoming increasingly efficient without remaining strategically relevant. 4.2 Business Redefinition Business Redefinition concerns the continuous redesign of how organizations create, deliver, and capture value. Traditional strategic planning generally assumes relatively stable industries in which firms seek sustainable competitive advantage through product differentiation, operational efficiency, or market positioning (Porter, 1980). Artificial Intelligence significantly reduces the longevity of these advantages. Software development cycles shorten dramatically. Knowledge diffusion accelerates. • • • Enterprise Redefinition VURA Working Paper Series 20 Customer expectations evolve continuously. New competitors emerge from adjacent industries with unprecedented speed. Consequently, business models become increasingly temporary. Enterprise Redefinition therefore rejects the assumption that organizations possess permanent business models. Instead, business architecture becomes continuously evolving. Business Redefinition extends beyond introducing AI-enabled products. It asks more fundamental questions. What value should the enterprise create? Who benefits from this value? How should value be generated? Which assumptions underlying the current business model remain valid? The objective is not incremental improvement but continuous reconstruction of value creation itself. Importantly, Business Redefinition also expands the concept of value. Traditional management has often prioritized financial performance and shareholder returns. Enterprise Redefinition recognizes Future Value as encompassing broader dimensions, including technological capability, organizational learning, societal contribution, ecosystem development, and long-term sustainability. Business models are therefore evaluated not only by current profitability but also by their ability to generate future opportunities. 4.3 Organization Redefinition Artificial Intelligence fundamentally transforms the nature of organizational design. Historically, organizations evolved to coordinate human labor efficiently. Hierarchical structures, standardized procedures, functional specialization, and managerial supervision reflected limitations in communication, information processing, and decision-making. Many of these limitations are rapidly disappearing. AI increasingly performs analytical tasks, knowledge retrieval, documentation, software generation, and decision support. Enterprise Redefinition VURA Working Paper Series 21 Consequently, organizational design should no longer assume that all knowledge resides within human specialists. Enterprise Redefinition therefore reconceptualizes organizations as adaptive humanAI systems in which people and intelligent technologies perform complementary roles (Wilson & Daugherty, 2018; Raisch & Krakowski, 2021). Rather than asking whether AI will replace human workers, Organization Redefinition asks: How should organizations redesign collaboration between humans and intelligent systems to maximize future value creation? This perspective moves beyond automation. Organization Redefinition includes redesigning decision-making processes, governance mechanisms, communication structures, performance evaluation systems, and learning architectures. It also recognizes that organizational culture becomes increasingly important. As technical capabilities become democratized, organizational culture may become one of the few remaining sources of sustained differentiation. Organizations capable of learning faster, collaborating more effectively with AI, and redesigning themselves continuously will possess greater adaptive capacity than organizations relying exclusively on technological investment. 4.4 Capital Redefinition Capital has traditionally been interpreted primarily as financial resources allocated toward productive investment, and resource allocation has long been recognized as a central strategic process of the firm (Bower, 1970; Maritan & Lee, 2017). Enterprise Redefinition expands this definition. Capital includes financial assets, technological infrastructure, proprietary data, intellectual property, organizational knowledge, ecosystem relationships, human capabilities, and managerial attention. These forms of capital collectively determine an organization’s capacity to generate Future Value. Artificial Intelligence fundamentally changes capital allocation. Historically, organizations invested heavily in physical assets, manufacturing capability, distribution infrastructure, and operational scale. Enterprise Redefinition VURA Working Paper Series 22 In contrast, competitive advantage increasingly depends upon investments in digital infrastructure, AI capability, proprietary data, organizational learning, and strategic flexibility. Capital Redefinition therefore emphasizes future-oriented resource allocation rather than historical asset optimization. An important implication concerns managerial attention. Executive attention itself becomes a scarce strategic resource (Ocasio, 1997). Organizations allocating disproportionate attention toward short-term operational efficiency may underinvest in opportunities capable of generating substantial Future Value. Capital allocation should therefore reflect anticipated future value creation rather than exclusively current financial performance. 4.5 Leadership Redefinition Leadership represents the integrating capability connecting the other four dimensions. Historically, leadership has emphasized planning, coordination, supervision, and decision-making (Drucker, 1999). Many of these activities are increasingly augmented by AI. Consequently, the primary role of leadership evolves. Rather than functioning primarily as decision makers, leaders increasingly become designers of organizational futures. Leadership Redefinition therefore emphasizes four capabilities. First, leaders define purpose. Second, leaders orchestrate enterprise redesign. Third, leaders manage uncertainty rather than eliminate it. Fourth, leaders cultivate organizational capability for continuous adaptation. Importantly, Enterprise Redefinition does not argue that AI replaces leadership. Instead, AI increases the importance of uniquely human leadership capabilities. Artificial Intelligence can recommend optimal actions. It cannot determine which future society should pursue. It cannot establish ethical priorities. Enterprise Redefinition VURA Working Paper Series 23 It cannot inspire collective commitment. Leadership therefore shifts from possessing superior knowledge toward exercising superior judgment. The central question becomes: What future should this enterprise intentionally create? Answering this question remains fundamentally a human responsibility. 4.6 Integration of the Five Dimensions Although each dimension has been discussed separately, Enterprise Redefinition views them as an integrated management system. Purpose provides direction. Business determines value creation. Organization enables execution. Capital provides resources. Leadership orchestrates continuous redesign. Failure within any single dimension weakens the effectiveness of the entire enterprise. Conversely, sustainable Future Value emerges when all five dimensions evolve coherently through continuous redefinition. The five dimensions differ not only in function but also in their expected rate of change. Purpose provides the most enduring source of continuity, while Business, Organization, and Capital generally require more frequent adaptation. Leadership connects these different temporal horizons by determining what should be preserved, what should be reinterpreted, and what should be redesigned. Enterprise Redefinition therefore requires both continuity and change rather than change alone. This integrated perspective distinguishes Enterprise Redefinition from existing management frameworks that focus primarily on isolated aspects of organizational change. Theoretical Proposition The discussion in this chapter suggests the following proposition: Enterprise Redefinition VURA Working Paper Series 24 Proposition 1. Organizations that maintain coherence between a relatively stable Core Purpose and the adaptive redesign of Business, Organization, Capital, and Leadership are more likely to generate sustainable Future Value than organizations that either preserve all dimensions unchanged or redesign them without a stable source of strategic identity. 5 The Enterprise Redefinition Process 5.1 From Transformation to Continuous Evolution Conventional transformation frameworks typically describe organizational change as a sequence of discrete initiatives. Organizations recognize a problem, design a solution, implement changes, and eventually stabilize under a new operating model. Transformation is therefore regarded as a project with a beginning and an end. Enterprise Redefinition adopts a fundamentally different perspective. In the Age of AI, technological progress, market expectations, competitive structures, and societal demands evolve continuously. Consequently, organizations cannot assume that any redesigned state will remain optimal for an extended period. Transformation therefore becomes continuous. Enterprise evolution replaces transformation as the central managerial challenge. Accordingly, Enterprise Redefinition is conceptualized not as a temporary intervention but as an ongoing organizational process through which enterprises repeatedly redesign themselves while creating Future Value. 5.2 The Seven-Stage Enterprise Redefinition Process Enterprise Redefinition consists of seven interconnected stages that together form a continuous cycle of enterprise evolution, illustrated in Figure 2. This sequence builds upon the practitioner-oriented process developed in the author’s companion volume (Kadowaki, 2026b) while emphasizing its recursive nature rather than a onetime transformation. Enterprise Redefinition VURA Working Paper Series 25 Figure 2. Enterprise Redefinition Process Each stage performs a distinct managerial function while preparing the organization for the next cycle of evolution. 5.3 Stage One: Recognize Enterprise evolution begins with recognition. Organizations must first recognize that the assumptions supporting their current business model may no longer remain valid. Recognition extends beyond identifying operational problems. It requires detecting emerging technological shifts, changing customer expectations, geopolitical developments, regulatory change, capital market signals, and broader societal transformations. Artificial Intelligence enhances organizational sensing capability by processing large volumes of external information. However, recognition ultimately depends upon managerial interpretation. Leaders must distinguish between temporary trends and structural shifts that require enterprise redesign. The fundamental question during this stage is: What assumptions about our enterprise are becoming obsolete? Recognition therefore establishes the strategic context for Enterprise Redefinition. 5.4 Stage Two: Learn Recognition alone does not produce transformation. Organizations must convert observations into understanding. Learning within Enterprise Redefinition extends beyond acquiring knowledge. Enterprise Redefinition VURA Working Paper Series 26 It includes experimentation, organizational reflection, scenario analysis, ecosystem learning, customer interaction, technological exploration, and AI-supported simulation. Learning also requires challenging existing managerial assumptions. Organizations frequently fail not because information is unavailable but because established mental models prevent meaningful reinterpretation. Enterprise learning therefore combines analytical capability with intellectual openness. The objective is not accumulating knowledge but developing deeper strategic insight regarding possible future states. 5.5 Stage Three: Redefine Redefinition represents the conceptual center of the framework. Unlike conventional strategic planning, which primarily selects among existing alternatives, Redefinition questions the assumptions that generated those alternatives. Organizations reconsider: whether their Core Purpose remains valid; how that Purpose should be interpreted and expressed; their business boundaries; organizational architecture; capital allocation; leadership responsibilities. Rather than asking: “How can we improve our existing enterprise?” Enterprise Redefinition asks: What should this enterprise become? This distinction separates optimization from redesign. Redefinition does not necessarily mean replacement. In the Purpose dimension, Redefinition may result in reaffirmation, reinterpretation, or fundamental revision. The appropriate response depends upon whether the existing Core Purpose remains relevant, legitimate, and capable of guiding future value creation. Redefinition requires imagination, strategic judgment, and future-oriented thinking. • • • • • • Enterprise Redefinition VURA Working Paper Series 27 It is therefore the stage in which leadership contributes uniquely human capabilities beyond AI-generated analysis. 5.6 Stage Four: Design Following conceptual redesign, organizations translate strategic intent into organizational architecture. Design includes multiple dimensions. Business model design. Organizational design. Decision-making structures. Governance systems. Human-AI collaboration. Capital allocation. Performance measurement. Technology architecture. The objective is coherence. Each organizational component should reinforce the future enterprise envisioned during the Redefinition stage. Design therefore transforms strategic concepts into executable organizational systems. 5.7 Stage Five: Execute Execution operationalizes enterprise redesign. Traditional management frequently considers execution the most important phase of transformation. Enterprise Redefinition adopts a different perspective. Execution remains essential. However, execution no longer represents the endpoint. Instead, execution functions as an experiment through which organizations test redesigned assumptions under real-world conditions. Execution therefore emphasizes adaptability rather than rigid implementation. Organizations continuously adjust while learning from outcomes. Enterprise Redefinition VURA Working Paper Series 28 5.8 Stage Six: Measure Measurement determines whether enterprise redesign successfully creates Future Value. Traditional performance measurement emphasizes historical financial indicators such as revenue, operating profit, productivity, or shareholder return. Enterprise Redefinition expands measurement toward future-oriented indicators. Examples include: organizational adaptability, AI collaboration capability, innovation capacity, ecosystem influence, learning velocity, capability development, long-term strategic resilience. Financial performance remains important. However, historical performance alone cannot determine whether organizations are becoming better positioned for future success. Measurement therefore evaluates both present performance and future readiness. 5.9 Stage Seven: Redefine Again The final stage distinguishes Enterprise Redefinition from conventional transformation frameworks. Successful execution does not conclude the process. Instead, every cycle generates new knowledge. Technological conditions continue changing. Competitive environments evolve. Customer expectations shift. Capital markets respond. Consequently, organizations immediately begin the next cycle of redesign. This recursive process reflects the principle that no organizational design remains permanently optimal. • • • • • • • Enterprise Redefinition VURA Working Paper Series 29 Competitive advantage increasingly derives from the capability to redefine continuously rather than from the achievement of any particular organizational configuration. 5.10 Enterprise Redefinition as a Learning Loop The seven stages collectively form a recursive organizational learning loop. Unlike traditional project management, where completion represents success, Enterprise Redefinition defines success as increasing organizational capability for subsequent redesign. Each completed cycle improves organizational sensing, learning, decision-making, execution, and adaptation. This mirrors the finding that dynamic capabilities develop through deliberate learning mechanisms rather than through experience alone (Zollo & Winter, 2002). Over time, repeated cycles strengthen Enterprise Redefinition Capability, enabling organizations to evolve faster than competitors. The enterprise therefore becomes a continuously learning and continuously redesigning system rather than a static organizational structure. 5.11 Relationship to Dynamic Capability The Enterprise Redefinition Process extends the Dynamic Capability perspective by operationalizing continuous organizational evolution. Dynamic Capability emphasizes sensing, seizing, and transforming (Teece, 2007). Enterprise Redefinition expands this logic by incorporating: Purpose Redefinition Business Redefinition Organization Redefinition Capital Redefinition Leadership Redefinition within a recursive managerial process. Where Dynamic Capability explains how firms adapt resources, Enterprise Redefinition explains how enterprises repeatedly redesign themselves. This broader scope reflects the increasing complexity of organizational adaptation in the Age of AI. Research Proposition • • • • • Enterprise Redefinition VURA Working Paper Series 30 The Enterprise Redefinition Process leads to the following proposition: Proposition 2. Organizations that repeatedly complete the Enterprise Redefinition Process will demonstrate higher organizational adaptability and greater Future Value creation than organizations conducting episodic transformation initiatives. 6 Enterprise Redefinition Capability 6.1 A New Organizational Capability for the Age of AI The central argument of this paper is that competitive advantage in the Age of AI depends not only on technological adoption or organizational learning but on a higher-order capability: the ability to continuously redefine the enterprise itself. This capability is referred to as Enterprise Redefinition Capability (ERC). Enterprise Redefinition Capability is defined as: The organizational capability to continuously redesign Purpose, Business, Organization, Capital, and Leadership in response to changing technological, economic, and societal conditions while creating sustainable Future Value. Unlike conventional organizational capabilities, ERC does not focus on performing existing activities more effectively. Instead, it enables organizations to determine what activities should exist in the first place. Consequently, ERC represents a meta-capability governing enterprise evolution rather than operational execution. 6.2 Why Existing Capabilities Are No Longer Sufficient For decades organizations invested in capabilities such as: Operational Excellence Innovation Capability Digital Capability Organizational Learning Strategic Planning Project Management • • • • • • Enterprise Redefinition VURA Working Paper Series 31 These capabilities remain valuable. However, they generally assume that the enterprise itself remains relatively stable. Their objective is improving performance within an existing organizational identity. Artificial Intelligence challenges this assumption. Technological progress now affects every component of the enterprise simultaneously. Products evolve. Industries converge. Knowledge becomes democratized. Decision-making changes. Capital allocation shifts. Leadership responsibilities evolve. Organizations therefore require a capability that coordinates redesign across the entire enterprise. Enterprise Redefinition Capability fulfills this role. 6.3 Enterprise Redefinition Capability as a Meta-Capability Enterprise Redefinition Capability should be understood as a higher-order capability integrating multiple organizational capabilities into a coherent system. Rather than replacing existing capabilities, ERC orchestrates them toward continuous Future Value creation. Figure 3 illustrates this relationship. Enterprise Redefinition VURA Working Paper Series 32 Figure 3. Enterprise Redefinition Capability as a Meta-Capability Operational capability determines how efficiently organizations perform existing work. Dynamic capability determines how organizations reconfigure resources. Enterprise Redefinition Capability determines: How organizations continuously redesign themselves. This distinction establishes ERC as a broader managerial construct. 6.4 Components of Enterprise Redefinition Capability Enterprise Redefinition Capability consists of six mutually reinforcing capabilities. Strategic Intelligence Organizations must continuously interpret technological, geopolitical, economic, and societal change. Strategic intelligence extends beyond data collection. It includes sense-making, future scenario construction, and strategic interpretation. Artificial Intelligence substantially enhances analytical capability. However, managerial judgment remains essential for determining strategic significance. Learning Capability Enterprise Redefinition VURA Working Paper Series 33 Organizations must convert external change into organizational knowledge. Learning includes experimentation, reflection, simulation, customer interaction, and ecosystem collaboration. Learning capability determines how rapidly organizations update their assumptions. Without learning, redefinition becomes impossible. Design Capability Organizations require the capability to redesign business models, organizational structures, governance systems, and human-AI collaboration. Design capability transforms strategic intent into executable organizational architecture. This represents one of the least developed capabilities within many contemporary enterprises. Capital Reallocation Capability Future Value depends upon continuously redirecting financial, technological, and managerial resources toward emerging opportunities. Organizations frequently fail because capital remains committed to declining business models.