November 5, 2020
The Elevated CEO
It is time for business leaders to develop enlightened positions on social issues that are also authentic, constructive and on-brand for a new generation of ‘citizen consumers.’
To say that 2020 has been a challenging year would be a gross understatement.
But the unprecedented chaos and confusion, our annus horribilis, has delivered a string of revelations for business leaders – revelations that will have lasting implications.
One of the most profound: Leaders in the private sector can no longer comfortably avoid taking an unambiguous and very public stance on what had been traditionally viewed as “social sector issues” such as climate change, racial injustice and economic disparity.
The reason is simple enough yet – still – not widely accepted: Social challenges are business challenges. From the violent union struggles and workers’ strikes of the late 19th and early 20th centuries; to the Great Depression and Cold War eras; to the civil rights and women’s movements of the 1960s and 1970s; right up to the #MeToo and #BlackLivesMatter protests of the current day, business leaders have, time and again, been assigned a hard but necessary task, and that is to design strategies to respond to wide-scale social conflicts that impact those who produce and sell products and services as well as those who consume them – i.e., people.
There was a time when the C-suite grudgingly stepped up to meet an obligatory commitment to social responsibility simply to stay clear of bad publicity – and to keep the CEO out of the proverbial hot seat. But things have changed – dramatically. There are new, earnest expectations, articulated and memorialized by Business Roundtable in 2019, for businesses to true up on social responsibility in the belief that what is good for the planet and the society upon it is, in fact, good for business.
Therein lies another challenge for business leaders: How does a company effectively develop and communicate a position on key issues in a way that is constructive and not just reactive or performative? And is it even possible to do this while staying on-brand?
Answering that question, nearly a decade after Michael E. Porter and Mark R. Kramer said CSR should be framed as a shared value that will deliver on unmet social needs, is more pertinent now than ever.
“I see this [conundrum] not as a dichotomy, but as a continuum with different poles,” said Caroline Grossman, executive director of the Rustandy Center for Social Sector Innovation at the University of Chicago Booth School of Business. “At one end, CSR is about positive impact on the planet’s most pressing problems, and at the other end it’s greenwashing. Risk mitigation falls somewhere in the middle.”
Getting to a meaningful place on this spectrum is about asking questions, sometimes tough questions – the most interesting of which focus on understanding why this new approach to key issues is, actually, good business.
Drawing from the Past – and Other Industries
Companies, specifically C-suites within those companies, should incorporate key questions as a strategy exercise or strategy reorientation.
This approach has become increasingly common across industries, said Grossman, whose research center supports people committed to helping solve complex social and environmental problems. “Some dramatic examples are companies founded on innovation that itself has the potential for outsize impact.”
Take plant-based meat. Grossman points out that Beyond Meat had a successful IPO last year and, as of this writing, is trading well above the offering price (even after a recent plunge). Impossible Foods, based on current research, is not planning an IPO but continues to attract investors. Both companies are also drawing attention from companies like Walmart, Kroger, Burger King and Amazon, and McDonald’s just announced a new “McPlant” line for 2021.
“I don’t think these retailers and restaurants stock plant-based meat because of CSR but because they think it is good business,” Grossman said.
Tables Have Turned
In the latter part of the last century, the most successful American corporations were uniquely positioned to drive consumer habits. One need only think of Nike, Google and Apple when it comes to what is now socially expected of us when it comes to deciding what athletic shoes we should wear, what email service we should use and what smartphones we should palm.
During the last six months, however, there has been a noticeable shift. After a ponderous and reactive response in the first weeks of the pandemic and then widespread protests, the social – social concerns, social issues, social anxieties – became a bigger influencer of big business.
As a placard at a Black Lives Matter protest in Chicago this summer read: “no justice = no peace and no profit.” [Emphasis added.]
Ideally, however, business leaders are not acting solely out of financial self-interest. Recent events should be spurring them to consider the concept of social responsibility as a vital part of business – an essential, indeed intrinsic, component nested within any for-profit enterprise.
Currently, there is strong support from consumers and investors for positive social/business impact. in Aflac’s 2019 CSR Survey, 82% of consumers said that companies bear responsibility for “making the world a better place,” ahead of the 75% who selected “making money for its shareholders.” Nearly all investors surveyed, unsurprisingly, placed importance on making money for shareholders (93%), but a similar portion of investors said that making the world a better place was important.
“I believe every business is inextricably linked to social responsibility. It is now part of our culture,” said Diane Primo, CEO of Purpose Brand Agency, an award-winning public relations, branding and digital marketing firm. “Even asset managers, investment bankers and financial giants are evaluating companies that do not comply with extensive ESG matrices.”
Primo’s insights reveal something else. Present-gen consumers have awakened to the fact that they hold real power – buying power – and they are quickly giving way to what will surely be a new demo for the 21st century: citizen consumer.
“What consumers care about, and how much they care, is redefining social responsibility,” Primo said. “Shared activism in combination with digital engagement is shifting culture quickly. We witness shifting perceptions as Black Lives Matter and COVID-19 spread and corporate responsibility evolves.”
This “evolution” was one of the reasons GreenHouse and Greentarget, in partnership with LAB/Amsterdam, launched Immediate Frontier. An independent research and innovation initiative, it was designed in part as a model for leaders to better see how to engage with the concept of CSR in a new, more holistic, less compartmentalized way.
Some business leaders are ahead of the curve, Primo said.
“Public companies are already undergoing significant change,” she said. “As powerful consumer action groups team with investment groups to modify sales and reduce capital flows, change will happen – and quickly.”
X (and Boomers) Includes Y and Z Now
The fact that more leaders are willing to tackle issues that would not have seemed relevant to a for-profit entity’s business goals previously seems all the more natural, indeed necessary, as one contemplates another revelation: These social issues, now front and center, are leading the way to entirely new value propositions for corporations – and serving up impressive business outcomes.
But present-gen leaders – Gen Xers and, in some cases, Boomers – shouldn’t bear this burden alone, nor are they capable of taking it on, experts suggest. Next-gen leaders deserve a seat at the table.
Grossman, who teaches a CSR course at Booth, said young leaders take a long view and have sprung into action when it comes to the pandemic and helping Black-owned businesses.
“The next generation is demanding that business does things differently,” Grossman said. “[They’re] challenging leadership to take issues of diversity, equity and inclusion into account.”
Students are eager to jump in to think about social issues in a business context, and vice versa. And, Grossman said, the leaders at companies that sponsor the course at Booth are listening to fresh, new perspectives and straight-up challenges that students bring to the experience.
“It’s critical for me to connect with all of [Rustandy’s] stakeholders – students, faculty, alumni, social sector practitioners and business leaders,” she said. “But it turns out that it’s the students who always ask the toughest questions.”