During the early months of the global pandemic, we frequently heard and used the expression “in a post-COVID-19 world” when thinking about the future. Now, after four months of sheltering in place and no clear path to a new “normal,” we’re beginning to hear the phrase “life in a COVID-19 world.” While we can say this literally knowing that COVID-19 will be around for a long time, to us the phrase connotes a more universal concern: global pandemics and other major disruptors that we are ill-equipped to respond to will assuredly be a part of our future. At the same time, this pandemic has revealed how interconnected we really are, underscoring the fact that we must hold this mutual dependency in higher esteem than we have in the past.
What began as a public health crisis quickly evolved into an economic crisis, and together those crises shine a spotlight on racial inequities, health disparities, and economic insecurity, just to name a few. Viewed as a whole, it’s clear that the systems in place prior to the pandemic were broken – as others have noted, it will not be enough to restart those systems but rather this moment demands a reset in service of a more fair, resilient and sustainable future.
So what does this mean for the role of business going forward and what does the private sector need to do to build for greater resilience in anticipation of an uncertain world?
In late 2019 and early 2020, we began to see a significant shift as business leaders from the US Business Roundtable and the World Economic Forum each declared their commitment to stakeholder capitalism. The 2020 Edelman Trust Barometer showed that more than 50% of respondents believe that capitalism does more harm than good; nearly 90% believe stakeholders, not just shareholders, are critical to a company’s long-term success; and more than 70% believe business can increase profit while also improving social and environmental conditions. These trends, along with the effects of the global pandemic, are calling for a redesign of the social contract in real time.
Leading with Purpose
As we look towards our future society and what will be required to create greater resilience and stability for all, we will be calling on the private sector to play an important role. One way they can do this is to lead with purpose — a purpose that seeks to address societal needs while it advances the business. Many companies have carefully polished purpose statements that were put out long before the onset of COVID-19 – even before the recent increased calls for stakeholder capitalism. Simply publishing a statement is not enough, however, if a company does not have meaningful strategy and culture built around their purpose. With the idea of a great reset in mind, it’s imperative that leaders go back to those purpose statements and evaluate them against four criteria we believe are essential. If the private sector is to play a role in creating a more equitable and resilient society, companies must have a purpose worth having which we define as being:
- Significant – By making a meaningful contribution to an unmet societal need (e.g., SDGs, local social problem)
- Authentic – By reflecting the company’s core values, being visible in the culture, and guiding decision-making
- Profitable – By driving measurable value for the company
- Serious – By increasing accountability across the company, particularly for senior leaders and managers
One of the best ways to lead with purpose is to leverage Shared Value, a practice that enhances the competitiveness of a company while simultaneously advancing the economic and social condition in the communities in which it operates. While Shared Value is not and should not be the only practice to deliver on a company’s purpose aspirations, it is one of the most powerful ways to create positive societal impact because it leverages the core business, which allows it to create impact at scale and tap into the company’s innovation platform. To learn more about how your company can leverage Shared Value, we invite you to explore the Purpose Playbook.
New Models of Cooperation
Stakeholder capitalism, by definition, demands that the private sector partner and collaborate in new and unexpected ways with a range of stakeholders including customers, employees, the communities in which companies operate, government bodies, and civil society partners. Given its access to resources, business has long been the loudest and most powerful voice at the table. A great reset will challenge business to invite others to the table and step back to give voice and power to those stakeholders that are often left out of the conversation. This new approach to cooperation and partnership will show up throughout the company in myriad ways including:
- Opportunities Identification – When identifying and prioritising social and environmental opportunities that are core to a company’s purpose, it is vital to engage with a broad range of stakeholders to really understand the needs of the population they are trying to serve. By employing approaches like design thinking, which takes a human-centred approach, companies can create products, services, and processes that have greater impact and commercial success than if they were developed without stakeholder input.
- Open Innovation – Just like identifying areas for impact cannot happen in a vacuum, innovation also relies on the ideas of many. Enel, an Italian utility company, recognised that innovating to solve global problems sustainably can’t be done alone. The company created the Open Innovability—Innovation + Sustainability — platform to crowdsource ideas, and has since collaborated on thousands of the most innovative solutions to transform the energy sector with renewables, scaling them within regions and across new markets.
- Talent Acquisition – There is overwhelming evidence demonstrating that having a diverse team leads to stronger business results. Employees with diverse backgrounds bring their own ideas, expertise, and lived experiences, which can lead to companies being more resilient, effective, and innovative. Starbucks recognizes the value of a diverse talent pool and has committed to hiring opportunity youth, veterans, and refugees in stores around the world. By working with an array of community partners the company is able to build a strong talent pipeline while also better understanding the unique supports and benefits each employee group needs to be successful in their roles. Starbucks offers healthcare benefits to part-time employees, extends 100% tuition reimbursement through the Starbucks College Achievement Plan, and achieved 100% pay equity across race and gender for its U.S.-based employees in 2018 with goals to do the same globally. That is just a small sample of the efforts leaders attribute to the company’s annual turnover rate of ~65% which compares to a 130-150% annual turnover rate for other fast-casual restaurants.
The Path Forward
Uncovering new ways to partner and collaborate is just one way that companies can live into their purpose and deliver Shared Value. To emerge from the COVID-19 crisis well-positioned to tackle current and future challenges, the world needs a collective commitment to resetting our long-standing economic, political, and social systems as we strive for a sustainable and just future. We will be looking to business, with its ability to mobilise, innovate, and collaborate, to lead the way.
How are you thinking about your company’s purpose in the midst of the great reset? What will you do differently to create positive impact for stakeholders beyond shareholders?