A flight in the dark
“The problem with being a manager,” said Brendan Rodgers, a soccer coach in the English Premier League, “is it’s like trying to build an aircraft while it is flying.”
Rodgers framed in more colorful prose the wisdom of leadership studies pioneer Warren Bennis: “Success in management requires learning as fast as the world is changing.”
And how it is changing. Every generational shift triggers a new dimension to business. Generation X ushered in the computing era; Millennials, mass social media. The Zoomers have again transformed the playing field. Gen Z is at the vanguard of the ESG revolution.
“When I said to CEOs, why are you doing this? Why are you talking about sustainability? Why are you talking about social impact? The first answer I almost always got, was, ‘Because my employees want me to,’” journalist Alan Murray, chief executive officer, Fortune Media (USA) Corporation, and author of Tomorrow's Capitalist: My Search for the Soul of Business, told delegates at our Davos of Human Capital event in late summer.
The transformation has had a long gestation, beginning with Zoomers’ predecessor generation. “I ran the Pew Research Centre for a couple of years, we did a lot of work on Millennials at that time,” Murray said.
“They are a generation that’s much slower to get married than previous generations; much less likely to belong to an organized religion; not big joiners, less likely to be in the Rotary Club, or the Moose Club, or whatever. Their employer was their primary connection to society – so their expectations of their employer were much greater than previous generations.”
We find that customers, increasingly, have similar goals and values to Zoomer and Millennial employees. Yet some organizations have been slow even to accept the shift: “There is a false dichotomy…” Fran Katsoudas, executive vice president and chief people, policy & purpose officer at Cisco, told the Davos of Human Capital audience. “…a belief that you can be good for business, or you can be good for the world; you can play in the purpose space, or you can play in the profit space, but you just can’t do both. And here’s the thing – you can.”
Accepting the transformed landscape is necessary, but insufficient. Like Rodgers’ constructor-aviator, leaders must learn to build an ESG-ready business while already airborne. Several such sorties have been unsuccessful.
Professor Bill Boulding, the dean of Duke University’s Fuqua School of Business and Chairman of Duke Corporate Education, told delegates that just 1% of organizations’ commitments to combat racism in the wake of George Floyd’s murder had been fulfilled. Moreover, companies’ conflation of valued social goals with political activism has backfired, Boulding warned. “Companies talking and doing things in the ESG space are now being attacked from all sides, either as being woke, or accused of greenwashing,” Boulding told the audience. “And you better believe that their CEOs are hearing these attacks. Because a survey of CEOs by Fortune found that 72% of them believe they need to reduce their engagement in political and social issues.”
The event also hosted a panel debate over the measurement of ESG performance, a discipline that, like much else in the sphere, is in its infancy. “There is just so much to be communicated around ESG,” said Michael Fraccaro, chief people officer at Mastercard. “Making sense of it all for the various stakeholders – there’s a lot of ground there. Just as an example, we measure a vast range of different metrics, quantitative and qualitative, but measurement is just the beginning - we need translate what it all means and where we want to be.”
Meanwhile his fellow panelist Lata Reddy, senior vice president, Inclusive Solutions, Prudential Financial, issued a stern demand for more clarity. “We’re at a moment requiring definition,” she said. “Are we talking about inputs or outputs when we’re speaking of ESG? We need to get clear on that.” Fuqua School of Business associate professor Dan Vermeer, executive director of The Center for Energy Development in the Global Environment (EDGE) said that an unlikely alliance of investors and activities had caused a muddling of companies’ exposure to external ESG shifts, such as climate change, and their potential impacts on the wider world.
Yet despite the scale and rapidity of learning required to understand, deliver and measure ESG objectives, the Davos of Human Capital was convinced that organizations must confront the challenge. “Capitalism is nothing more than the sum of individual choices,” our chief executive, Sharmla Chetty, told delegates. “These collective choices must be transparent, accountable – and ethical.”