A combination of company clout, people power and global political cooperation will solve the world’s biggest challenges, says a Harvard professor
A popular, though perhaps inaccurate, narrative is that global business is the driving force behind the world’s ills. They pollute the planet, drive economies into boom and bust and hire and fire without thinking twice.
But while companies undoubtedly have more power than ever before – think Google, Facebook and Amazon – so does the average person in the street, partly because of the communications models these companies helped to construct.
In a global environment where hard-fought reputations can be dashed in a day, companies must create trusting relationships with consumers to build loyalty. By becoming purposeful and moving beyond outdated standards of corporate social responsibility (CSR) they can race ahead of rivals.
So says Sandra J Sucher, professor of management practice at Harvard Business School and co-author of the forthcoming book Trusted: How Companies Build It, Lose It, and Regain It. She argues that collaboration is becoming a bigger source of progress than conflict.
Speaking to Change Incorporated after hosting a panel at the Movin’ On Summit in Montreal, she claims organisations have a both a moral and a vested interest in progressing beyond tired CSR models.
“Companies are more interested in their impact,” she says. “They have enormous power and our reliance on them is increasingly clear, but people are making their voices heard through collective action, plus they have a stake as employees.
“So I wouldn’t exclude the notion that business is a willing participant in change. It’s not like they’re always pushing back. There’s a kind of democratisation, driven by a younger generation who want to work for companies that will safeguard things we hold dear.”
Companies only become trusted when they act in trustworthy ways
In the war for talent, companies with the best intentions win many of the best people. In Sucher’s own experience, Harvard MBAs are happy to reject big salaries to join start-ups led by purpose of profit.
Her main area of study is investigating how companies earn trust and, if they make a wrong move, what they can do to earn it back. In this context, a major question companies must answer is why should we trust companies to solve problems they stand accused of causing in the first place?
“It’s a question that gets asked a lot and it’s completely valid. Our research shows that companies only become trusted when they act in trustworthy ways. In other words, they don’t gain it because someone at Total does a good speech or BMW unveils a car of the future.
“It’s about how many electric cars are on the road now. Total say they are investing in electric charging stations. Some of that is just being smart as a business; knowing where the world is going. But some of it is fully understanding the challenges.
“I think we need to cut businesses some slack and give them time to prove themselves. It’s also fair to keep evaluating them along the way, which is what consumers are doing. But it’s through action that we’ll know whether or not a company is sincere.”When it comes to dire concerns over the environment, with CO2 emissions and plastic waste out of control, the clock is ticking. Companies are broadly on board, but consumers and regulators have to play ball too.
It’s a symbiotic relationship in which companies sometimes take the lead and other times people-power forces their hand. But getting everyone – not just woke millennials – to change their habits is a factor too often overlooked.
Here, the cold hand of government can help. When the UK – led by Scotland – legislated that shops had to charge 5p for plastic bags it was enough to reduce consumption by 90 percent. Other nudges like subsidies and tax breaks on fuel efficient cars, for example, have inflated demand in markets and steered people into making better choices.
It’s through action that we’ll know whether or not a company is sincere
“It’s not a question of governments cutting off pathways. If one group starts in one area, others will follow. But one clear issue is global versus local: regulation should be harmonised so companies don’t have to deal with a patchwork of rules in different jurisdictions – that would be a huge facilitator to move this forward.”
This is a tricky issue when politicians rely on voters who look for short-term change and quick fixes. For Sucher, it’s a delicious narrative-switch in which companies, so often associated with quarterly capitalism, are pushing for long-term measures.
“It’s wonderfully ironic that we’re talking about business as the entity with the broad horizons. It’s not quite at fruition yet but when it comes to investment there’s a pretty broad move towards accepting environmental, social and government standards.
“That probably took investors two decades to start thinking about. It’s mostly for smart business reasons of risk management but I think it’s getting fairly well established among the big investment houses.”
But for all the talk of modern principles, the path to responsible business has been walked for decades. Professor Sucher cites the example of James Burke, CEO of Johnson & Johnson during the Tylenol crisis of 1982, in which bottles of the market-leading pain reliever were laced with cyanide.
Burke was lauded for his response, in which the company recalled millions of bottles, replaced them with tamper-proof lids and maintained constant communication with customers via the media.
"It was the first company to do a large-scale recall, so he changed the pharmaceutical industry in the US. Another example is Catherine Graham, publisher of the Washington Post during the Watergate Scandal. She set a marker for investigative reporting. They were both very into what they stood for.”
More recently, she cites Michelin’s restructuring programme in which management worked in partnership with trade unions, as well as Japanese company Recruit Holdings, which recovered from a fraud scandal which brought down the government. Today it is a global tech giant with brands including Glassdoor and Indeed.
Clearly, the world needs more pioneering captains of industry and inspiring campaigners to build on all this progress. The evidence is encouraging, from Greta Thunberg, America’s youthful Congress members and initiatives like Green New Deal.
The more examples of corporate innovation, government incentive and individual passion for change, the more people will agree that equality, fairness and carbon neutrality is the new normal. With fresh impetus, the virtuous circle will continue.