Now is the time for real leadership

FROM Amazon to Alibaba, businesses around the world are providing Covid19 pandemic support. For instance, Facebook is committing $20m (€18m) toward coronavirus relief. Microsoft has donated millions upon millions in products, services and solutions to frontline workers and hospitals, while the Bill & Melinda Gates Foundation independently announced it would commit another $100m.

Google and Apple teamed up to create a ‘contact-tracing’ app to notify people when they interact with someone who’s infected.

IBM’s Weather Company app is providing local updates on the progress of the virus. Dyson and Rolls-Royce are making ventilators in the UK. Over in the US, they’re being made by Ford and General Motors.

And, of course, nearly all the world’s top biotech and pharma companies are collaborating on the quest for a coronavirus treatment or vaccine.

“The big question,” Fortune magazine president and CEO Alan Murray wrote in his newsletter this past week, remains: “Is this just a temporary response to the crisis, or part of a fundamental rethinking of the company’s role in society? Is it a brief grab for feel-good PR, or a reflection of larger corporate purpose?”

I was so intrigued by Alan’s newsletter musing that I emailed him directly to ask if he would expand on his thoughts for this column.

He graciously agreed and the head of the global media company spoke via Zoom from his home in Connecticut.

Gina London: What is happening with big businesses today?

Alan Murray: “It’s a really interesting question. You’re seeing cross-currents. On the one hand, you’re seeing some examples, and we’re keeping track of them, of companies who are expanding sick pay and doing furloughs instead of laying off employees, and companies keeping their employees on — even if they have no work for them to do.

“Over in the healthcare area, you are seeing companies diving into treatments and cures that are not necessarily profitable for them. Companies working with competitors. You are seeing companies really stepping up.

“On the other hand, some companies are struggling. Marriott furloughed tens of thousands of employees and Macy’s closed all 500 of its stores and furloughed over 100,000 workers. They aren’t making money and can’t afford to keep them on. The cross-currents are hard to interpret.”

GL: So, to the question you posed in your newsletter, are businesses doing this now for PR or purpose?

AM: “I believe there has been — for a decade now — a dramatic change in taking care of employees and taking care of customers, and paying more attention to communities and inclusivity.

“I’ve seen this build since the last recession and there are some fundamental reasons that won’t go away — like the way businesses operate and the way they care about investing in their employees, not to only serve their shareholders.

“There is an increased value of talent in a company and now, especially for an economy that runs on intellectual property, there is a needed shift to investing in human capital.

“Colin Mayer does a good job outlining this with his book Prosperity: Better Business Makes the Greater Good. A professor at Oxford University’s Said Business School, Mayer’s premise in his 2019 book is that a company exists to create something and provide solutions through a defined purpose. That purpose, in turn, should guide all the decisions of the executives, owners and board members.

“He then argues, citing a number of examples, that companies which are run this way tend to become more profitable and longer-lived than others — while simultaneously basking in the goodwill of customers, employees, executives and the world in general.

“People have become more important to business and they need to give them a purpose beyond practice,” Alan summarised.

“This prompts a change into how leadership is getting across. It used to be that you would have a strategy developed and ordered from the top and cascaded to the rest of the company. You can’t do that any more.

The person at the top must embody a style that attracts talent and provides inspiration. Companies

need to motivate and excite their workforce. The focus on social issues is part of that.”

GL: Is there another reason why businesses are performing with more purpose?

AM: “The third piece in this is in response to a breakdown of our political systems. I saw a real increase in this in 2016. Brexit happened over in the UK and even though we have Trump now, we also saw Bernie Sanders, a self-described socialist, taking momentum in an arena that had never happened before.

“The general chaos of western governments prompted business leaders to realise that they have to step up for their own survival. There’s a big change, prompted by young people who don’t believe in capitalism.”

GL: Will these more purpose-guided business efforts affect the way governments are run? AM: “No. Business leaders are by definition problem solvers because businesses need to produce results to survive. Political leaders do not. Businesses’ reaction is, ‘we have to’.”

As I say: A crisis doesn’t forge you, a crisis reveals you.