'Oh shit' moment for leaders at Davos
A calibrated panic emerged from Davos 2019. There was partying, but no party spirit of celebration. This gathering of those at the top ended with a collective ‘oh shit’ moment.
Global disruption and the resulting public push-back against traditional politics and corporate reputations moved mountains here. The way things have been cannot survive.
“It was extraordinary,” one top executive told me. “I never expected anything like this.”
Why did he and others say that? Cautious leaders suddenly became bold. They then slipstreamed the waverers in behind them. A high-speed engagement to counter customer and public push back in many parts of the world has suddenly left the station of complacency. It picked up big speed, both for political and business leaders.
I did not expect to be writing with such optimism when the train brought me here through deep snows on Monday.
But something unexpected happened. Away from the public sessions taking place inside the World Economic Forum’s Congress centre and the almost vulgar one-kilometre string of companies and countries promoting themselves along Davos’s icy main street Promenade, the scale of global resentment against almost all of the top people gathered here has hit home.
One leader who attended the closed New York Times dinner told me of some executives coming clean with admissions to failure. As Alan Murray, editor at Fortune, wrote after he hosted a similar dinner for 35 leaders: “The conversation was clear evidence that a growing group of well-intentioned leaders are eager to demonstrate the power of business to address the problems fuelling social unrest. But as one CEO put it: they face an urgent need to translate that intent into action and results.”
Over four years, our work into why leaders have struggled and been fearful of Thinking the Unthinkable has long been privately encouraged at the highest levels, but publicly sniffed at. That has suddenly changed. Now all we have reported has become a public issue and is being confronted full on.
“You were right all along,” one senior executive generously told me. “Now they are listening, but almost too late.”
It is thankless and tough being pioneers, well ahead of the curve!
But this week’s PWC CEO Survey laid out the threat to corporate credibility. The Edelman Trust Barometer revealed the new public expectation that corporates must be a new beacon of trust. For those at the top that means listening to those – the employees and customers – who now want to trust them rather than other leaders.
Politicians watch out! There is an existential threat to the traditional parties, systems and values that you believe you should represent. Expectations are changing hugely.
In business, everything is being questioned and has to justify itself. “People are coming around on the issue,” said Halla Tomasdottir, CEO of The B Team, which was set up by a small number of top executives to embolden leaders to lead differently. “Business as usual is no longer an option.”
Aspirations for greater purpose and values were shouted ever more loudly. A partnership of Allianz Insurance, Ernst and Young (EY) and NASDAQ announced new ways to measure precisely what many fear could otherwise be a woolly repeat of Corporate Social Responsibility (CSR) which became all talk and window dressing, but with little impact.
The President and CEO of NASDAQ Adena Friedman said: “It must be made relatively easy, or companies will not do it.” EY’s US chair Kelly Grier said: “If something does not include our purpose, then we do not do it.” Mike Romoff from LinkedIn said: “The closer to the top, the more active the discussion of purpose and value.” He added: “The world is more divisive than ever before. People are looking for leaders to transcend that.”
The YPO group of once young global leaders who are now successful CEOs concluded there is a ‘massive cultural shift about the role of business leadership’. They must know. They employ 22 million people and generate $9 trillion.
The 22,000 YPOers confirmed: “Employees, colleagues and children are the big new influencers.” These will be the next push-backers if leaders here lose their nerve and go cold turkey in the coming weeks and months. I have to believe that the scale of threats to all they lead is now so great that this is inconceivable. That train is picking up speed!
Yet there are limits and likely tensions. I heard a senior figure in a huge global investor say there is “demand for a socially responsible investment (but) which does not give up profit”.
Time is short. The NextGen are impatient and frustrated. Many don’t want to work for companies represented here. They don’t like their values and what they represent. Like the UN Secretary General Antonio Guterres who came here to warn that the climate is deteriorating faster than any measures which can halt it, the NextGen are scared about what lies ahead.
Not only is our planet moving closer to frying and overheating. The glue holding together our social structures, assumptions of societal stability and a steady upward path to wealth creation is fraying. New economic tensions and the realities of artificial intelligence are both destroying and creating new jobs. This means a hollowing out of the middle class leading to new frictions.
Suddenly the imperative to be socially responsible instead of having the priority to make money (corporates) or stay in power (the political class) is under intense pressure.
That hit in the face most here in Davos.
So did the superlative doomsday briefing by the eminent naturalist Sir David Attenborough, chatting with (a remarkable sight) the UK’s Prince William. There must be no complacency. Whether from plastics or carbon, planet earth is under threat. None of us should dare delude ourselves or shut our ears and eyes.
So the screw of both danger and crumbling credibility is turning on multiple fronts. After so many initiatives that seem to fizzle out after previous Davos meetings, even a sceptic like me hopes and believes that the sombre mood here at Davos 2019 will pick up speed and deliver.
Paul Polman, for 10 years CEO of Unilever until the New Year, is becoming a serial galvaniser on both confronting climate change and reversing leadership’s failings. I heard him ask at one breakfast briefing: “Are you willing to take the journey?”
My conclusion is that the answer is far more positive than anyone thought possible just five days ago.
That is good news in an ever darker world.
At Thinking the Unthinkable we will keep you regularly updated on key developments and analysis. Stay with us here.