The first chief executive I worked with was Henry Schacht, who was then CEO of Cummins Engine, and Chair of the Ford Foundation Board of Trustees. In his oversight role, Hank and other business executives on the Board encouraged those of us working in the Foundation’s “impact investing” unit to understand more about how large corporations create public goods, from enabling economic mobility to community development.
Hank’s guiding question was a familiar one: What’s the business case?
I came to realize then, and still believe, that none of the major problems confronting the globe today—climate, resiliency of natural resources, economic opportunity and poverty, even wise use of technology—can be addressed unless business plays a significant role and puts the health of the commons at the center of the bullseye.
But will corporations prioritize the long-term health of society when the reasons to “step back” are so obvious and compelling?
We are in a race against time to shape business intentions, the mindset of leaders, and to resolve conflicting messages that pull the executive back to short-term gains and stock price management. Long term strategy and vision are no less important in chaotic times, but they are harder to maintain. But the alternative, reacting to every short-term disturbance, sets up an unsustainable and utterly disorienting viscous cycle for a company’s leaders, employees, suppliers, customers and investors. How to square the circle?
When the Business Roundtable landed its statement on corporate purpose in 2019, putting more emphasis on the needs of employees, communities and the planet, one response came from Marc Benioff, CEO of Salesforce, who was an outspoken critic of shareholder primacy. In an opinion piece published in the New York Times, he counseled business leaders to look at the facts:
“Research shows that companies that embrace a broader mission—and, importantly, integrate that purpose into their corporate culture—outperform their peers, grow faster, and deliver higher profits.”
It’s not clear from this statement what Benioff means by “performance,” but his intentions were good. However, here’s the problem: facts rarely influence the priorities of a leader wired for and paid for a different reality. Data may help break through what one of our Fellows called the “mud layer of middle management,” but making the business case rarely builds the courage of key decision-makers setting out on a path that requires real risks in the public domain.
A change in direction or commitment in the public interest is motivated by direct and meaningful experience, not data. Take, for example, Microsoft’s stand-out 2020 commitment to decarbonization. While seizing some competitive advantage might have been a motivator, the company’s commitment to be carbon negative by 2030, and carbon negative for its entire history by 2050, was extraordinary then and even more so now.
Microsoft is in the spotlight today again as the company continues to play offense and stand by its commitment. “We’re at the halfway point,” Microsoft Chief Sustainability Officer Melanie Nakagawa said. “As we enter the second half of this decade, nothing has changed.” Affirming the company’s commitment wasn’t papered over with facts and figures and ROI. It was, and is now, a call to action. This is a moment of real leadership.
The decision of CVS to stop selling cigarettes is another example. Leadership asked a straightforward question: Do our stores enable health and well-being, or not?
Costco and Apple standing up to activists calling for the companies to dump DEI; Delta’s progressive profit-sharing plan announced as the company emerged from bankruptcy and still in force—these are compelling examples of leaders advancing what they knew was right. The business logic was there, but it wasn’t the impetus.
What’s the next move for business leaders? When emotions run high, as they surely are in this moment, the fight, flight, freeze response might kick in, but this isn’t about playing defense. How business responds affects national sentiment and our collective trust in the future.
Chip Heath and Dan Heath , in their best-selling book Switch: How to Change Things When Change is Hard, use the metaphor of the elephant and its rider. The rider is operating from reason; he has the knowledge and the plan. The elephant is all instinct and emotion. Getting started on the path is more about the instincts of the elephant-brain than the reasoning of the rider-brain. Moving along the path of change requires both to work in tandem.
The wake-up call to the CEO may come with an emotional kick in the rear from an aggressive campaign, an encounter with an employee in the cafeteria, a provocative question at the All-Hands or boardroom, or from his kid at the kitchen table. These personal experiences have the power to change what an individual believes essential.
But keeping the system headed in the right direction requires a different set of moves. That’s where the business case comes in.
Rich Hutchinson of Boston Consulting Group (BCG) helped square the circle for me in a recent conversation. Yes, the initial impulse to invest, innovate, break with the norms or take a leap forward is driven by myriad forces and instincts, both proactive and reactive. First the idea germinates and takes root, and then, as Rich says, “you need to make it sustainable and scalable.” That’s where the business case becomes so critical.
For Microsoft to meet its targets requires a league of agents. As they say, sustainability is a team sport. To realize and carry forward the vision of leaders and change agents requires the engineers, managers, and yes, the CFO, the gate keepers of cap ex, and the proverbial bean counters, to get on board, and stay at it for the long term.
Transformation is a long-term game, and this is a transformative moment. Opportunity abounds. It begins with the clarity of leaders. Assuring the vision pays off requires that the business case is tested, proven, and airtight.
This blog post was originally published on LinkedIn. Follow Judy Samuelson for more insights on business and society.