The Changing Face of Corporate Responsibility
In 1899, an aging man in a turban walked into the Pittsburgh offices of Charles Page Perin, one of the U.S. Steel industries most respected consulting engineers and made him an offer. “I want you to come to India with me, to find suitable iron ore and coking coal and the necessary fluxes. I am going to build a steel plant in India. Will you come?”
Perin’s guest was Jamshetji Tata, the patriarch of Tata & Sons, and one of India’s emerging industrialists. Perin was dumbfounded by the audacity of the request from this unknown caller, but he was struck by “the character and force that radiated from Tata’s face. And the kindliness, too.” He said yes on the spot and the Tatas were on their way to much more than a steel plant. They were on their way to the creation of India as an industrial state that could build its own powerplants, coal mines, and steel mills; and, later, its own railroads, cars, and trucks.
The Tata’s saw their responsibility very clearly: for India to gain independence, it would need its own industrial infrastructure. And because they planned all their business ventures to support that strategic purpose, they became known as “industrial Gandhis.” That’s a powerful sense of corporate responsibility.
Today, the Tata Group, founded in 1868, sees itself as India’s only value-based corporation. They see their mission – their “original intent” – as the improvement of quality of life in the more than 100 countries in which they operate. (For more on this remarkable company, read Nanovation: How a Little Car Can Teach the World to Think Big by Kevin and Jackie Freiberg and Dain Dunston.)
It is a cliché to say that the only thing leaders of global corporate entities care about is this quarter’s numbers. Organizational leaders are human beings with diverse interests that may enlighten their personal decisions. But it is true to say that recent efforts by business leaders to guide their organizations to take public positions reflect a new evolution of leadership thought.[i]
[i] The Creation of Wealth, R.M. Lala, Penguin Portfolio, 1981
Leading in a World of “Theoretical Warfare”
The father of one of the authors is an émigré from Soviet Union, a businessman who settled in Pittsburgh, Pennsylvania. He describes the “Cold War” between the US and the USSR as a “theoretical war,” a mindset war based on theories that were variously demented or mis-informed: conspiracy theories, societal theories, economic and historical theories.
Today, we are in a similar situation, with governments, political parties, and large populations devoted to theoretical views of reality which are driving policy in directions that seem to be having the effect of destabilizing our global social and economic orders.
How do leaders of business, healthcare and educational organizations respond to this crisis-laden environment? How do they communicate their direction and their commitments to stakeholders and the communities they do business in?
A Press Release is Not a Stand
In the wake of the killing of George Floyd in Minneapolis in the spring of 2020, many leaders of public and private institutions felt a need to speak out in support of minority populations – particularly Black – in their communities. They promised to commit to fairness toward employees, customers, and their communities. For many, if not most, of these leaders, the statements were genuine. Many major US corporations and institutions have been talking about diversity for decades. Some have made significant progress in providing better opportunities for women and minorities, and most have a long way to go.
The responses varied from simple posts on social media to emails to customers and employees to CEO videos decrying the state of racism in America and pledging to take variety of steps to combat systemic racism. But beyond the communications, it is unclear what changes were actually put into action.
What was the public reaction to corporate messages on race? In a June 2020 survey by JUST Capital and The Harris Poll, 84% of respondents favored CEOs and other high-profile business leaders communicating a stand on ending police violence and condemning killings of unarmed Black people by the police. Only 16% opposed such corporate statements.
But beyond releasing statements in support of ending systemic racism, did U.S. companies take action?
Many companies announced specific actions: Quaker Oats announced they were discontinuing their Aunt Jemima brand, an action many observers felt was long overdue. Simply ending the brand without an announcement might have been a more effective message than reminding the public of the inherently racist nature of their branding. Similarly, Mars Inc. said “the time was right” to evolve the visual branding of their Uncle Ben’s product line.
The most common commitments to action involved pledges to hire more Black executive. PepsiCo announced they planned to increase Black managerial positions by 30%, as did Adidas. Many companies made similar statements, but some companies took even more substantial, definitive action. Perhaps most dramatically, NASCAR banned images of the Confederate flag at their races. And further concretely, JPMorgan Chase committed $30 billion over a five-year period to address the racial wealth divide and reduce systemic racism against Black and Latino people.
When a crisis like the nationwide outrage following the Floyd death (and other killings) occurs, what kind of internal and external responses are necessary from the organization’s leadership? And what is the most effective way to think about how to lead through communication and example?
The Root of Responsible is Response
The Japanese teachings of Zen contain a story from 9th Century China regarding a student who asked an aged monk, Yunmen Wenyan, “What is the lesson of an entire lifetime?”
“An appropriate response,” the teacher replied, meaning that the core of responsibility is to know what the moment calls for. The word “responsible” comes from the Latin respondere, meaning, literally, “to pledge back to.” As early as the 1500’s the word was used to connote “answerable” or “accountable.” The word conveys the sense of “obligation” to offer the correct response to any situation.
But what is an appropriate response to a crisis? And what are the consequences, either of responding or of remaining silent? We suggest organizational leaders can identify the right response when they think in terms of three questions.