With the build up to COP26 reminders of the environmental challenges facing the world came thick and fast, many linked to deep societal challenges. Along with the trauma of the pandemic, in an era already characterized by technological and market disruption, it is hard to look on the bright side.
Yet there are reasons to believe these challenges can be overcome—some coming from the promise of international government action—many more depending on innovative entrepreneurial business.
However, to be best able to offer solutions to global problems, the business world needs to address a number of systemic internal challenges of its own first—challenges that have been exposed by the COVID-19 pandemic. This is especially important at a time when anti-capitalist sentiment, as exemplified in the manifestos of activist groups pressuring for worthy causes, has been spreading.
A new white paper, from University of Virginia Darden Executive Education & Lifelong Learning, offers expert insight on the way forward in the form of seven short essays examining seven of these systemic issues:
The focus on ‘responsible capitalism’—delivering broad stakeholder value—has grown significantly over the past decade. How can this focus be maintained when economies across the globe have been scarred by the COVID-19 pandemic? Will corporate boards stay focused on staff welfare, diversity, and clean energy, let alone other societal goals when commercial pressures become intense?
Associate Professor Bidhan L. Parmar shows how a commitment to purpose and the demands of eco-conscious stakeholders can help build resistance to negative pressures—not least because, as he notes, “There is an increasing amount of research that shows in certain contexts at certain times there is a connection between taking care of stakeholders and making profit.”
SUPPLY CHAIN RESILIENCY
The chronic shortage of semiconductor chips, pictures of cargo ships queuing outside container ports, and fear that turkeys will be in short supply at Christmas, are some of the headlines resulting from supply chain failures caused by the pandemic. At a time when geopolitical tensions are also threatening stability, companies must prioritize supply chain resilience.
In his essay Professor Doug Thomas observes that “Intentional action led to historical cost efficiencies as well as the vulnerabilities that are being exposed by COVID-19.” For decades companies have sought greater efficiency, sacrificing robustness. Here he considers strategies to build future resilience based on a mix of local and global production.
The commitment to achieving net-zero carbon emissions by 2050, reaffirmed at COP26, is a massive challenge, and one that can only be possible with concerted help from the global business community. What incentive does business have to offer this essential help?
Professor Michael Lenox provides a positive answer. Defying the conventional wisdom, that achieving climate goals could shave 1 or 2 percent off global GDP, he declares that there are net benefits to the world economy. “This isn’t about hampering global growth; this is about capturing the next wave of global growth.” His optimism is echoed in one study that suggests limiting global warming within 1.5 degrees Celsius could result in accumulated global benefits of $20 trillion. Admitting there are difficulties and trade-offs ahead for corporations, he says they should move now and not be caught out by pressure from markets or regulators.
The shock of the pandemic, bringing not only personal and family tragedy for many but also anxiety, stress and fearfulness to others, has left a new realization of the fragility of our working lives. This has in turn created another new challenge for business leaders—a need to take greater account of our common humanity and to account for people’s desire to balance work and life more equitably.
In her essay, Associate Professor Elizabeth A. Powell, calls on leaders to build and apply skills of mindfulness, compassion and leadership communication in response to the evolving shift in work/life balance exacerbated through the pandemic. She explains this as a need to rebalance the leadership attributes of ‘grit’ and ‘grace’.
RISE OF THE MACHINES
In ‘building back better’ after the pandemic organizations need to adjust their strategies in light of the capacity for AI and machine learning to drive business growth—a trend already well established before the crisis which is now set to accelerate rapidly.
Professors Rajkumar Venkatesan and Associate Professor Anton Korinek consider both the outward use of AI—how to maximize its use through data analysis in responding to market movements and the nuanced needs of consumers in order to deliver customer value. And the internal use of AI—how to find the most productive operational mix of humans and machine skills in the workplace.
A HYBRID WORKFORCE
“We’ve turned a corner, and it’s going to be hard to go back to the way things were. There are many things people have come to like about remote working, including the reduced commutes that make it easier to balance their professional and personal lives,” observes Associate Professor Lynn A. Isabella.
On the other hand, many firms (such as US banks Goldman Sachs and JPMorgan Chase) are demanding staff return to the office. The solution must lie in the middle, suggests Isabella, in developing organizational cultures that allow for remote and office-based working. This form of ‘hybrid workforce’, she says, will require a different approach “where leaders become more like coaches and facilitators than command-and-control generals.”
DIVERSITY, EQUITY AND INCLUSION
“The events of recent years very strongly highlighted the issue of equity and the importance of embracing it because it’s the right thing to do,” says Professor Martin N. Davidson. “But that rationale is hard to sustain; there was not enough emphasis on the business case.”
Whatever the moral arguments for diversity, there is also a hard-nosed commercial case. In our ultra-connected digital world, it is crucial that companies stay more attuned than ever to customer preferences. No business that does not have a broad and inclusive view of the world can do this. Furthermore, diversity in the workplace is hugely beneficial in terms of access to talent, innovation, and enriching critical strategic thinking.
While much has been done since the death of George Floyd to address racial equality at work there is still much to do and, with organizations under economic strain due to the pandemic, it is vital momentum is maintained. Davidson emphasizes that for organizations to truly benefit, for the business case to be fulfilled, “You want to have the people you bring in thrive and advance, unencumbered by biases and discriminatory policies.”
Read the UVA Darden White Paper here: ‘Acting in the Present, Shaping the Future: Leaders in Unprecedented Times’