The role of the CEO as a business or corporate diplomat for their company reflects a reset in politics, business and society. Corporations, particularly international corporations are making changes that are good for their company, business and culture, while also being good for society, This can be impactful in an era of government divisiveness and poorer public purses.
Culture eats strategy for breakfast and a strong sustainable culture is built on listening to those on the front line—the employees who are looking after the customers. Many companies are now adopting a more ethical kind of capitalism where profit is not the only motive, if you like a more inclusive kind of capitalism. Indeed research shows that companies which adopt a longer-term approach to the business reap dividends, not just in terms of employee and customer satisfaction, but profitability, which also pleases shareholders. My last book, Reframing the Leadership Landscape (Routledge, 2015) was sub-titled “Creating a Culture of Collaboration,” a nod to a different kind of CEO leadership, less “hero,” more “servant,” valuing in particular teamwork, diversity and listening to a wider group of stakeholders, based on the need to align vision and values with operations and practices (see, McKinsey Global Survey, 2017).
Culture, Complexity and Connection
CEOs, face common challenges with more political uncertainty, therefore risk, greater complexity, technological changes and demography , evolving values of key stakeholders, declining trust and greater transparency about the business and its contribution to society. CEOs have to provide clarity, connect with people, while balancing short-term demands against a long-term pursuit of social value and consistent financial performance. It’s why BP, while also changing the company’s energy portfolio participates in dialogues on climate change being organized in Rome by the Pope. The World Economic Forum (2018) said that ‘ governments alone cannot get us out of the state we are in’. While in the 80’s it was Greenpeace pressurizing companies to behave better, or it took an oil slick crisis for business leaders to reflect on the costs of a failure to be socially responsible, now environmental activists are being joined by a wider range of groups, who accept that solving poverty, pollution, biodiversity, health care and climate problems is good for business as well.
Economics, Environment and Ethics
With big issues like plastic pollution and modern day slavery making the headlines, the question is not whether companies act, but how. A business purpose must be core to its commercial offering, requiring company- wide transformation if it is to deliver impact. We must move away from “greenwashing,” a superficial or pure promotional approach. Also customizing purpose to local needs will ensure greater impact across different, often culturally diverse communities. So while the focus may be on gun control in the US, In India it’s more likely to be safer birth services or elsewhere helping vulnerable children off the streets into school. Against a backdrop pf activism on the streets, market evolution has already begun a process of natural selection, with a pincer movement of public scrutiny and shareholder pressure putting a squeeze on the charlatans and those CEOs and C-Suites paying lip-service.
Creating Shared Value
According to Anne Gregory and Paul Willis (Strategic Public Relations Leaders, Routledge, 2013) the preoccupation of PR leaders these days are sensitivity to internal and external issues, testing the values of the organization in relation to the vision and significantly explaining the ethical basis of their recommendations and decisions to ensure consistency and credibility. This in turn requires leadership on the part of Chief Communications Officers or heads of Strategic Communications, Corporate Responsibility , Public Affairs, Internal Engagement etc. In an ideal world values should be the touchstone for each and every decision a company makes at societal, corporate, value-chain and business level. Values should be defined, developed, made real and above all integrated into the business strategy and DNA. They should be seen from the perspective of “shared value” for business and society. Harvard Business School’s Michael Porter wrote that companies are key to fixing the problems as part of governance and sustainability mechanisms and reforms requiring leadership accountability. In short we need to move beyond Corporate Social Responsibility to “Creating Shared Value.”
A Tri-sectoral, Collaborative Approach
With greater collaboration between business, government, multi-lateral agencies and civil society, with power more widely distributed among a wider eco-system of stakeholders, partly resulting from digital media, there is even more pressure on CEOs not simply to extol their values and vision, but ‘walk the talk’. This means being judged not simply by their communications, but their actions if they are to be seen as authentic. Even the arch capitalist wealth fund Blackrock recently wrote to each of its investing companies( Jan 18) urging them to produce both financial performance and contributions to society. So this has become mainstream.
But business cannot act alone, so will require a diplomatic and dialogic approach to NGOs, home and host governments , multi-lateral agencies, the financial and research communities etc. Increasingly investors will mark companies on their foreign policy aptitude, which will require on the part of CEOs and their advisers at corporate HQ and locally in key markets a culture of life-long learning and a tri-sectoral mind-set with its implications for new structures, systems and skills, underpinned by corporate vision and values. At a recent CEO Summit in London the CEO of Shell implored fellow CEOs to collaborate with it to reduce carbon emissions to “net zero.” If this isn’t a vision and values based approach I don’t know what is.