We’ve all seen the articles about how society will never be the same again following Covid-19, and it’s true that plenty will change. Home-working might become the new normal, gym memberships a thing of the past, and perhaps we’ll learn the value of quality family time and creating less hectic schedules for ourselves.
We’re also learning the value of connections, of scientific evidence, public service and reaching out to the vulnerable and isolated. Yes, some are hoarding essentials and flouting the guidelines designed to protect the vulnerable, but others are sharing – their skills (stand up Joe Wicks), their compassion and their time for the good of others.
This behavioural dichotomy is mirrored in corporates’ responses to the crisis. We see the downright crass – low-paid staff not being paid or retail chains being slow to close their doors – to the genuinely inspiring, restaurants feeding NHS staff and hotel chains housing them. I like to think that commercial organisations who responded well at a time we were at our lowest ebb will reap the rewards by earning the loyalty and respect of their staff, customers and suppliers.
But to do this, they need to think in a different way. At a time when the stock market and the economy is tanking, maximising shareholder return can no longer be the guiding principle for senior execs. Instead, they need to be judged on their ability to meet the needs and protect the welfare of their staff, customers and the communities they operate in. Arguably, achieving this is the best investment strategy an organisation can adopt during these times, and perhaps beyond. This could be a positive longer-term outcome of the corona outbreak.
The debate, and controversy, about the purpose of business stretches way back. Milton Friedman’s espousal of profit maximisation and shareholder value isn’t everyone’s cup of tea, and the American Business Roundtable of leading CEOs’ statement that firms exist to serve all their stakeholders, not just focus on investor returns, raised eyebrows and hackles in many circles.
I’m an optimist. I like to think that the Covid crisis will influence this debate as organisations discover a broader social purpose and the returns for society become more tangible. There are potential longer-term commercial gains – beyond enhanced reputation – to be had as well, as organisations learn how to be more agile by flexing their products and services to meet emerging demand.
Next up, my thoughts on what this crisis is telling us about how business can create genuine stakeholder value.
Jon
