A new kind of social capital ecosystem is the antidote to a COVID world
The Covid pandemic has disrupted all aspects of business, organisation and consumption – in fact all aspects of life. Virtually no exchange is untouched. Business plans are out the window. It is back to the drawing board for many as they prepare for a new type of world. Most pressing question of all right now is, how will we survive?
Many businesses are getting through on some type of government assistance or subsidy. But when these stop, what next? Where will the revenue come from? Or do you just keep cutting away to oblivion.
On top of this is a more existential crisis. Covid is the planet saying enough is enough. Humanity has been threatened in a way that hasn’t happened for a long, long time. The millennial bubble has been burst. Humans are not omnipotent after all. The psychological impact across all societies is deep. It has changed everyone’s priorities whether we like it or not and it has brought a new level of scrutiny to everything we do as individuals and as businesses.
The deficiencies of current institutions and structures are now clear. The excesses of society and consumption have helped create a volatile and uncertain world; resources are scarce; supply chains are precarious and complex – and easily disrupted; and we face unprecedented environmental challenges. The complexities of the world exceed our ability to maintain balance and order and ensure safety and security for all. It’s just not working.
Yesterday’s models won’t work. We are beyond sponsorships, corporate giving, social responsibility. Triple bottom line and sustainability programs don’t cut it anymore. While all well-meaning, they too easily reduce to mere lip service or what is now known as some form of green-washing, purpose-washing or social-washing. Just not good enough anymore.
Covid calls upon organisations to re-evaluate their role in society and to deliver benefits for all. How do organisations measure up against this new idealism? How do they even start to get to grips with what they need to do? How do they stay ahead of all stakeholder expectations and stay relevant? Assuming oblivion is not the answer, what is then?
Business, social and cultural context. A clear purpose. Smart leadership. Strategic clarity. Authentic engagement. It’s a communications ecosystem built on the principles of social capital and it’s an antidote to a Covid world.
An ecosystem built on the principles of social capital
How businesses and their leaders act has always been important. Now it is even more important as stakeholders and society are looking to businesses and organisations to get us out of this mess. They expect more and they are applying an ever-greater level of scrutiny. The growing influence of their voices cannot be underestimated.
As has always been the case, it’s about building an environment of deep understanding, trust and integrity with all stakeholders so organisations can get on with their business with absolute confidence. There is nothing new in that. This is what we call building social capital.
Put simply, social capital is the stock of goodwill that supports or impedes the business’ strategy. It helps businesses earn public trust, protect reputation and preserve their license to operate. It is not an image. It’s about understanding the social context in which you operate and the expectations of your stakeholders. It’s about articulating your purpose, sharing your values and explaining your strategy.
What is new is the expectation that more than ever businesses and organisations will be part of the solution. People do not see governments and public policy as providing all the answers. Businesses have a role to play in creating a world where business, people and the planet can all exist and thrive in natural balance. After all, we are all in this together.
Being on purpose
Climate change, growing inequality, political instability and other social and environmental crises are causing people around the world to demand a paradigm shift in the way current economic systems work and how companies operate. Covid served to heighten our general unrest with everything.
There is a large and growing body of evidence that consumers are placing increasing scrutiny on the values and purposes that drive businesses and are calling for greater accountability in company practices.
Enabled by a digitally hyperconnected world, people today want to know more about the businesses they buy from and are demanding more from them in terms of transparency, integrity, and responsibility to communities and environments in which they operate. When companies don’t meet their standards, consumers are more willing than ever to cut them off permanently.
Two years ago, in 2018, BlackRock CEO Larry Fink cautioned CEOs in his annual letter to demonstrate greater responsibility to all stakeholders as the climate crisis would bring about a “fundamental reshaping of finance”, a significant departure for the world’s top asset manager with significant interests in fossil fuels. This year’s Davos Manifesto 2020 continued in the same vein, calling for “a better kind of capitalism” where “a company serves not only its shareholders, but all its stakeholders – employees, customers, suppliers, local communities and society at large”. We were on the road of unrest before Covid. Covid just sealed the deal.
What businesses and organisations do today, matters tomorrow. It sets them apart. It puts them on the right side of history. It sets them up for success and earns them the right to win. It’s all about understanding the social context, leading with purpose, explaining the strategy, engaging authentically, creating connections that matter and making a difference for everyone.
It’s sustainability in the broader humanity sense
Over the last decade or more, well-meaning corporate environmental programs have morphed into the most over-used term in recent corporate history – sustainability (soon to be replaced by this year’s favourite, pivot). Sustainability goes without saying. Sustainability is the ability of something to be maintained at a certain level. Sustainability is about keeping on. Yes we have to keep on keeping on. It’s a must, not an option. And it’s not about saving the planet – it’s about saving ourselves from ourselves.
We have morphed into something we don’t much like and it’s time for change
If you can’t figure out how to do your business in a way that doesn’t deplete the world and its people – then you will be out of business. If you can’t figure out a way to do your business in a way that actually brings some benefits to the world and its people – then you will be next to be out of business. It’s as simple as that. Stop doing bad stuff. Start doing stuff that is good for everyone.
This goes far beyond environmental sustainability and climate change. We are looking at things through a broader lens. It’s also about social injustices, social infrastructure, equality, inclusion, diversity and accessibility. It’s how we treat our world and how we treat each other. It’s about humanity.
Embedding a clear sense of purpose throughout an organsiation, aligning all activities to be on purpose, making environmental, social and community commitments part of the business and engaging internally and externally with authentic communications on what you are doing to make a difference and why is the game-changer between surviving Covid and not. The green-washers, social-washers and purpose-washers won’t be here tomorrow.
The smart money is on purpose
Companies often translate their purpose into a series of environmental, social and cultural commitments and that becomes their story. There is nothing wrong with that. It’s a good basis to work from.
Smart companies know that this broader approach to sustainability – this commitment to deliver on a clear humanity-inspired purpose – is not just a driver for corporate reputation, it’s a driver for growth.
Customers and consumers both expect and demand to know how products are produced; what actions and decisions are made through supply chains; how workers are treated; how materials are sourced; and the carbon footprint of a product and its journey.
Companies themselves want their own suppliers to meet standards to protect the integrity of their own claims; employees want to work for companies that are aligned to their values; and investors are increasingly looking to direct money into investments that are reducing negative impacts on the environment and on society.
In 2018, an online survey conducted by global measurement and data analytics company, Nielsen, revealed that 81% of global respondents feel strongly that companies should help to improve the environment. This passion for corporate responsibility is shared across gender lines and generations. Millennials, Gen Z and Gen X are the most supportive, with their older counterparts not far behind.
Companies have seen employees walk out over climate issues, and today around two-thirds of millennials take a company’s social and environmental commitments into account when deciding where to work.
Environmental and social programs can reduce costs, for example by improving energy or water efficiency, or more efficient operations due to restrictions on travel. The list goes on.
Want to cut cost? Want to reduce waste? Want to increase productivity and efficiency? Lead with purpose, create strategic clarity, engage authentically and create real connections.
Where to from here? Creating a social capital ecosystem for our times
I want to thank the very clever @JaneHadjion for some excellent leadership on creating purposeful organisations. An article she wrote recently on purpose has further inspired my thinking. She highlighted a piece Paul Polman, the Co-Founder and Chair of Imagine, wrote for the World Economic Forum, stating that “business leaders who back moral statements with practical action will stand out.” It’s about building robust systems to ensure businesses and their leaders are walking the talk every step of the way.
- As we now slowly start to venture out from our homes again, it is the opportunity for businesses to take exceptional steps to be part of the solution in a post-covid world. Polman goes on to point out that responsible companies should do whatever they can to “protect their people, meaning employees, customers and supply chains.”
- It all starts with a deep understanding of business, social and cultural context. We were once tone deaf. Not anymore. Awakened companies will be listening and paying close attention to all their stakeholders.
- Develop a clear humanity-inspired purpose statement and make your purpose your true north. Make your purpose part of every decision. Identify what you need to do every day as a business to live that purpose. Involve everyone in the process.
- Smart leaders will walk the talk, live the purpose, create clarity around the strategy, inspire and connect to what people do.
- Authentic engagement internally and externally will create an exchange of trust and value and long lasting connection.