Redefining Business Leadership in a New Environment

By Aron Cramer, President and CEO, BSR

Donald Trump ran for president of the United States as an unconventional candidate, and in the third week of his presidency, it is undeniable that change has arrived.

And while he pledged to “shake up Washington,” in a very short time, he has changed the way we define business leadership, too. To meet this moment—in the United States and beyond—it is time to rethink how businesses lead not only through their actions but also their words. This presents important opportunities and also complexities for CEOs and their companies.

It is important to note that here in the United States, BSR has worked effectively with both Democratic and Republican administrations and other officeholders for 25 years. There are leaders in both parties committed to our core issues of human rights, climate action, women’s empowerment, and inclusive economic growth.

Unfortunately, we—and the business community overall—are not experiencing a policy debate on how to make progress on these issues. Instead, we are seeing early signs of a systematic assault on the foundations for a just and sustainable world: open societies, climate science, transparency, diversity, inclusion, and at its essence, the concept of collaborative global engagement to solve global challenges.

This presents a new situation for companies and CEOs: How do you respond when basic principles are under attack?

The travel ban put all these questions into sharp relief, and the responses from various companies show how complex the new environment is. We have seen companies (e.g., Ford, Google, Microsoft) lauded for standing up against the travel ban, companies (e.g., Uber) pilloried for being seen to enable the ban, and companies (e.g., Starbucks) both applauded and attacked for opposing the ban.

In navigating this environment, there are four core principles that CEOs should keep in mind:

• Values are non-negotiable: Now is the time for CEOs to act on the basis of core values. All the assertions that businesses should have a “purpose” are being tested. No company can survive if principles are either undermined or revealed to be nothing more than words on a website. To put it another way, values are meant to endure over decades; they cannot be abandoned when political winds change.
• Your employees and customers are watching what you do—and say: When 2,000 Google employees walked off the job last week to protest the travel ban, it was the most visible example of how company employees are viewing the current environment. No CEO has a politically unified workforce. But there is growing evidence that employees are indeed watching what their leaders do and acting accordingly—evidence suggests that Travis Kalanick’s resignation from the president’s CEO council was driven by unrest from Uber’s employees and customers.
• There is strength in numbers: CEOs face multiple pressures in deciding how to engage. There are several bread-and-butter economic matters being decided by the new government. No CEO can afford to abandon those interests. Collaboration is more important than ever, because it allows companies to express their values as one voice, while maintaining the opportunity for influence in other matters. The many companies that joined the state of Washington’s lawsuit challenging the travel ban is but one example of that principle.
• Opposition alone is insufficient—it’s time for a powerful, positive vision of progress: Business leaders need to reinforce their vision of the future. In the absence of leadership in Washington, and frankly, with a bleak picture coming from the White House, it is essential that business leaders illustrate what we have to gain through sustainability. Businesses know firsthand that a shift to low-carbon models brings innovations that deliver great value with fewer societal costs. Business leaders know that diverse teams are more creative. Business leaders know that open societies are, in fact, a crucial engine of American innovation and competitiveness (a point that is equally true in every country). The world needs to hear these messages from business leaders, lest we manage and govern from a position of fear and suspicion.

We all know that every company has a mix of interests at stake with the government. Acting in overt opposition to an administration prone to singling out individual companies for abuse is no small decision. But equally so, failing to act when core principles are being eroded presents a comparable problem. At some point, maintaining dialogue with the administration could become irrelevant and counterproductive, and while we are not there yet, possibly toxic.

The stakes are high, and business has a powerful voice. As former U.S. Treasury Secretary Lawrence Summers said in Harvard Business Review last week: “If CEOs who employ hundreds of thousands of people are not in a position to speak truth to power, who is going to be in a position to speak truth to power?”

With basic rights, respect for science, and rule of law being questioned, this is the question: Which companies will meet the moment?

This blog originally appeared on BSR.