Comment: Andrea Bonime-Blanc draws on lessons from her book Gloom to Boom to provide a roadmap for leadership through the crisis
Before Covid-19 fully hit the world in early 2020, ESG was rising fast and furious in business importance, especially and belatedly in the United States. With the impulse of BlackRock’s CEO, Larry Fink, his CEO letters of the last couple of years and several other key developments, ESG finally seemed to have “arrived” in the US.
And indeed, ESG or what I like to call ESG + technology, or ESGT, has arrived. Witness the microscope under which Boeing was placed regarding its slow-burning mismanagement of the 737 Max crisis. There was criticism far and wide on the weakness of its governance, leadership, crisis response, stakeholder treatment (ie passenger safety), ineffective risk management, software flaws, regulatory capture and lack of empathy and action to correct the underlying ESGT problems (health, safety, quality, whistleblower protection).
This perfect storm of ESGT mistakes and crisis mismanagement contributed heavily to Boeing’s serious financial and reputational losses. And then Covid-19 hit, compounding Boeing’s woes. As I stated in the interview below on the NYSE floor in March 2020, Covid-19 put the crowning touch on Boeing’s already perfect ESG storm.
The Covid-19 represents an unprecedented perfect storm of interconnected ESGT risk gone wrong
Resilient leaders of resilient companies do not allow such slow-moving, deeply rooted, compounding problems to fester over time or to continue to implode once a crisis has occurred. Boeing will long be used as a business case of what not to do in crisis and resilience management.
The Covid-19 crisis enveloping the globe today indeed represents an unprecedented perfect storm of interconnected ESGT risk gone wrong, occurring at a time of already great global turbulence, affecting every business, indeed everyone.
Even before the pandemic struck, first in China and then progressively across the world, we were living in an increasingly challenging and dangerous (as well as promising) world with all manner of major megatrends converging upon us.
Of the 10 megatrends of our turbulent times that I identify in my book, Gloom to Boom, there are seven that leaders should be aware of and get their arms around in their response to Covid-19.
The fourth industrial revolution – We are hurtling through space at the speed of light because of the fourth industrial revolution, which will hopefully help scientists and governments to identify and implement Covid-19 solutions, treatments and cures faster than ever before and apply them more broadly.
Collapse in global trust – We are already living in low-trust times, making it more challenging than ever for stakeholders to trust key institutions like government, media, NGOs and business, though according to the 2020 Edelman Trust Barometer business has higher marks on trust than the other institutions do and thereby an opportunity to lead during this crisis.
Rise in complex interconnected risk – Though Covid-19 is by no means a “black swan” since it was totally predictable and predicted, it most definitely qualifies as a complex interconnected risk. Indeed, WEF has presented this concept of global interconnected risk for a number of years, identifying “infectious diseases” as the 10th most impactful global risk for 2020, with interconnections to several other ESG and economic risks.
The new geopolitical abnormal – The erosion of global governance and rise of a new geopolitical abnormal is on full display in this crisis – including (1) tensions between China and the US, (2) the rise of populism and illiberal democracies with some leaders (like in Hungary) using Covid-19 to garner authoritarian powers, and (3) the omnipresent overlay of increased transnational cyber-insecurity.
The meteoric rise of ESG/business as the new global conscience? – ESG was already riding high for all the right reasons with investors and business recognising its centrality to their strategy pre-Covid-19. Instead of obscuring ESG, this crisis is amplifying and accelerating its importance, partly because of the rise in power of the larger stakeholder ecosystem. Business now has an outsize opportunity to seize the reins of trust and reputation-building by doing all the right things for its key stakeholders.
From hyper-transparency to super-opacity – Coronavirus fake news, misinformation and outright information warfare is being magnified in this age of not only hyper-transparency but what I call super-opacity, when misinformation spreads like wildfire through social media worldwide and deep fakes and lies reign supreme.
Building organisational resilience is a long-term job that requires what I call “responsible” or even “enlightened” leaders, both at the C-suite and board levels. The impulse to do this is not always present during the “good times”. The eight elements of organisational resilience that I outline in Gloom to Boom (see Figure 1 below, which represents best –in-class organisational resilience – the “Virtuous Resilience Lifecycle”) require time, effort, resources and, most of all, tone from the top – the very top. Organisational resilience building is not a cost-centre or a “nice to have”; it is a must have and core to business value protection, preservation and, yes, creation. I believe the global Covid-19 crisis may have provided the single best evidence of this fact.
Below, adapted from Gloom to Boom, is what I call the 10 commandments of resilient leaders:
1. Resilient leaders integrate ESGT issues into their organisation’s strategy.
2. Resilient leaders empower and support a cross-functional team of ESGT experts to run an ESGT value chain approach to issue, risk, opportunity, crisis and value creation.
3. Resilient leaders “walk the talk” supporting ESGT issues not only verbally but substantively, through proper budget allocations and resources.
4. Resilient leaders aspire to become at least “responsible leaders” and at best “enlightened leaders” (see chapters two and eight of Gloom to Boom).
5. Resilient leaders focus on building and institutionalising a culture of integrity.
6. Resilient leaders remain attuned to and savvy about global megatrends that affect their organisations.
7. Resilient leaders understand and cater to their most important stakeholders – not just the most important one, but the top three to five.
8. Resilient leaders allow for mistakes and for a speak-up/listen-up culture to grow in furtherance of continuous improvement, innovation and sustainability.
9. Resilient leaders scan the long-term horizon while minding the store in the short term.
10. Resilient leaders welcome ESGT oversight – whether from a board of directors, governors, trustees or other governmental entity.
Several companies already appear to be doing their best to either preserve or augment their resilience through this crisis. Early exemplars include some of the technology companies (Apple, Salesforce, Twitter/Square via Jack Dorsey, who just announced that he would donate one third of his net worth or $1bn to Covid-19 related causes) as well as others that have been more severely hit by the crisis, like the hotel industry, where Marriott’s leadership under serious duress has really stood out and will serve the company and its stakeholders well in the long run.
This crisis presents a unique opportunity to build resilience and reputation through stakeholder trust. How business leaders treat their key stakeholders now, in the midst of this crisis, will largely determine their ability to build longer-term trust, reputation, value and resilience in a post-Covid-19 world.
Andrea Bonime-Blanc is CEO and founder of GEC Risk Advisory. She is a director on several boards, a former global corporate C-suite executive and teaches cyberleadership and resilience at NYU. Her latest book is Gloom to Boom: How Leaders Transform Risk into Resilience and Value.
This commentary is part of our in-depth briefing Building back better: Ethical Corporation examines what Covid-19 will mean for sustainability