STEPPING UP AND MEETING THE MOMENT
If there were ever a year where extraordinary leadership was necessary, 2020 was it.
A Call to Action
As raging wildfires in Australia gave way to a revolution in Hong Kong right into a global pandemic and rounding out with a cry for social justice in the US and around the world, book ended by more historic fires across the American west and a record-breaking Atlantic hurricane season that brought devastation to Louisiana and Nicaragua (sending climate refugees headed for the US border), people around the world looked to their political and business leaders to guide them and, in many instances, were severely disappointed. With climate change, public health, social justice, and economic fallout all coming to a head simultaneously, many of those who were supposed to be in charge abdicated their responsibilities and shrank in the face of the challenge. We watched the brand of strong man, top-down leadership crumble before our eyes.
There have been rays of light in each of these instances— people confronting the difficulties and inspiring others to do the same. Heroes, like the frontline workers who met the raging pandemic head-on; millionaire athletes protesting arm-in-arm with community organizers, leveraging their platforms to make calls for racial justice unignorable; and elected officials standing up to petulant and fraudulent calls to undo the will of the people, who did not shrink from their responsibilities and did not complain about acting in service to their countries, communities, and comrades. Because they did not back down, they helped motivate and permeate a sense that we could overcome these long odds together.
This hierarchical reversal happened in real time, as those with power retreated, and those without power did their jobs. With such upheaval in the status quo, it is unlikely that the people will accept a return to the days where rewards and benefits disproportionately went to the top of the house while unrealistic demands and overwhelming tasks trickled down the line. I previously wrote about this shift in The Servant Leader’s Manifesto, but it seems that the events of the past year have accelerated this movement even more than I (or anyone else) had originally anticipated. Even so, it’s still not happening fast enough to meet the needs of the moment nor to lead toward a more just, equitable, and prosperous future.
Converging Trends
A series of macrotrends is converging and pointing the way for modern leaders looking to not only respond to challenges like those we faced in 2020, but to thrive regardless of the situation and circumstances. The Civil Rights Movement of the 1960s has evolved into many movements around the world, like Black Lives Matter, seeking the dismantling of systemic racism. Environmentalism of the 1990s grew into the sustainability movement of the 2000s that evolved into today’s ESG (environmental, social and governance) management and investing practices. Like increasingly intense hurricanes, sustainability has gained energy in the face of existential threats, such as the climate emergency and the Earth’s 6th mass extinction, and its practitioners now link social with environmental justice, as they call for reforms to capitalism. They are joined by leaders in the business and investment communities like Larry Fink, CEO of BlackRock, calling for ambitious corporate action on climate; Ray Dalio, founder of Bridgewater Associates, warning about the dangers of inequality; and Ursula Burns, former CEO of Xerox and Board Director of Uber, Nestlé, ExxonMobil and Datto, calling for a shift in diversity and inclusion in corporate America, through her work with the Board Diversity Action Alliance.
Stakeholder Capitalism
Stakeholder capitalism (which aims to balance the influence and expectations of shareholders against those of employees, communities, customers, and the environment) is spawning greater calls for business involvement in social justice, equity, diversity, and inclusion initiatives. The transparency brought on by social media and the Internet is requiring companies to tighten the links between corporate purpose and how that purpose is executed in the real world. And the profit motive alone is leaving potential employees and customers checked out and looking for the real thing.
Stepping up and meeting the moment has become a clarion call-to-action across many industries looking to buck against the status quo and reinvent themselves for the mod- ern age. The triple bottom line approach of valuing peo- ple and planet, along with profit, was introduced by John Elkington in 1997. The triple bottom line sparked a new way of thinking. In 2006, that line of thinking led to the launch of the B Corp Certification. Certified B Corporations are businesses that are able to link and verify achievement of standards of social and environmental performance, public transparency, and accountability to balance profit and purpose. What began as a way to codify the triple bottom line philosophy into the DNA of a company has since become a global movement. Some of the best-known B Corps are Patagonia and Ben & Jerry’s, but there are thousands, ranging from small businesses, to a growing number of publicly traded companies like Natura and Danone North America.
At their 2019 Forum, the Business Roundtable continued the momentum by drafting a new purpose statement for corporations. Signed and ratified by nearly 200 CEOs across various industries, the purpose states:
“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:
❒ Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
❒ Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity, and respect.
❒ Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
❒ Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
❒ Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.”
Once again, this is a document signed by the world’s top business leaders fully recognizing the need to look beyond profits alone as a measure of business success. It’s an extremely powerful statement and line in the sand, indicating a need to modernize and align the WHY behind business with the HOW and the WHAT, to reference Simon Sinek’s Golden Circle of organizational purpose detailed in Start With Why, which simply states that, in order to connect with the public at large, businesses need to first identify why they do what they do, then how they accomplish this purpose, and finally what they ultimately make.
Accountability
As a leader reading this new purpose statement for corporations, I found myself simultaneously inspired and skeptical.
I wasn’t alone in my inspiration and skepticism. The co-founders of the B Corp movement wrote a response to the announcement in Fast Company, calling for actions over words, and recognizing “a significant sign of our shifting culture” that the leaders of some of the largest US companies revised their definition of purpose. CEOs of some of the best known and influential B Corps took out a full-page ad in the New York Times the following Sunday, challenging the Business Roundtable CEOs to step up and work together to drive meaningful changes to capitalism.
Fortunately, there are organizations stepping up to be the mirror for change these companies need.
JUST Capital, an organization that defines itself as “capitalists committed to stakeholder capitalism,” is the only independent nonprofit that tracks, analyzes, and engages with large corporations and their investors on how they perform on the public’s priorities. In service of this purpose, they have curated a top 100 companies list since 2018 of how the top 100 publicly traded companies perform on the issues that matter most in defining just business behavior today.
In the 2021 list, they considered the following stakeholders: workers, communities, customers, shareholders, and the environment, weighted 41%, 21%, 15%, 15%, and 9% respectively in the ranking. Some of the key issues applied to rank company performance were as follows (for the full list please check the JUST Capital website):
Workers:
❒ “Companies should foster a diverse and inclusive workplace, and they must not discriminate when it comes to pay or opportunity. Race, religion, gender, age, ethnicity, sexual orientation, and disability status should not be factors in the determination of employee salaries.”
❒ “Companies should provide opportunities for advancement, skills development, and educational attainment to employees.”
Communities:
❒ “Companies should be transparent about their efforts to address child labor, forced labor, and other abuses of people in their supply chain, and require suppliers to uphold basic human rights standards.”
❒ “Companies should foster strong relationships with the communities in which they operate by prioritizing local, diverse, and veteran suppliers, using local products and resources, and supporting educational programs.”
Customers:
❒ “A company’s products should meet high standards of quality, and products and services should be beneficial and non-harmful to health, the environment, and society.”
❒ “Companies should communicate responsively, provide clear sales and return policies, offer rewards programs, and stand behind their products and services.”
Shareholders:
❒ “Company executives and board members should behave ethically and take responsibility for all company-related issues.”
❒ “Companies should create value not only for shareholders but for all stakeholders, including workers, customers, communities, and the environment—and should prioritize the needs of all their stakeholders.”
Environment:
❒ “Companies should minimize the harmful impacts of their operations on the environment—including those that affect human health—as well as clean up any environmental damage they cause.”
❒ “Companies should have environmental management policies and systems in place to protect the environment, reduce carbon emissions, and ensure best practices across all operations.”
To develop the issues for the ranking, JUST Capital asked a representative sample of more than 110,000 Americans to compare 19 different business issues on a head-to-head basis, producing a reliable hierarchy of issues ranked in order of priority. They then assigned each issue to the stakeholder— either workers, customers, communities, the environment, or shareholders—it most impacts. They then applied a full ranking methodology to analyze and rank companies. When looking at their list and analysis, it is clear that the definition of business performance has moved well beyond simply driving profits for shareholders, and, therefore, the bar for leadership is higher than ever before.
New Standards
There have been moments like this one throughout history, upheavals of cherished norms that have led to widespread change. The summation of the Industrial Revolution, Women’s Suffrage, the Spanish Flu, the Great Depression, and World Wars I and II created a society in the US where female and immigrant labor and participation were fundamental to the success of the nation. The aftereffects of the Civil Rights Movement, the Cold War, and the Vietnam War converged to create unprecedented opportunity for African Americans in institutions and companies that would not have considered them previously. Today, the Internet, Wi-Fi proliferation, pandemics, and economic collapse are leading to a revolution in how work is performed, managed, and incentivized around the world.
Necessity is the mother of invention, and this moment calls for a reinvention of expectations for business leadership.
❒ Inverting the role of senior leaders from commanders to supporters.
❒ Eradicating false divides, such as racism and discrimination, barring groups from a seat at society’s table.
❒ Eliminating barriers and obstacles that prevent marginalized groups from receiving equal pay for equal work.
❒ Providing equitable opportunity to everyone to achieve positions long reserved by and for hetero cisgender white men.
❒ Embracing collaboration and diversity over simply driving so-called “A players.”
❒ Dismantling prejudice against people of different races, religions, sexual orientations, gender identities, and individuals with disabilities.
Put simply, traditional leadership isn’t going to cut it anymore. The “boss” archetype must die, toxic leadership must be weeded out, and hierarchies must be inverted. This is the moment for J.E.D.I. leaders to step up and stand out. The pages that follow will reveal what it takes to become a J.E.D.I. leader and how to revolutionize our future ambitions, cultures, management, development, and performance to not only satisfy, but overdeliver, for employees, customers, communities, the environment, and shareholders.
Welcome to the resistance.
