Throughout modern history, societies around the world have been led by the state, administered by some form of government — democracy, republic, constitutional monarchy, etc. Corporations typically have significant influence — backing leaders, shaping policy, lobbying for special rules — but the state is the focal point for the decisions and policies that affect our lives.
In that model, corporations are understood to be “in it for themselves” while the government is supposed to balance various broad interests for the greater good. Over the past ten years, however, the government has shown cracks and gaps in its ability to meet important societal needs. Meanwhile, corporations are increasingly developing a sense of societal responsibility and extending their influence into areas outside the business.
Like everything else, COVID is accelerating this trend. It is possible this will lead to a major shift in how society works.
The Corporate Response to COVID
Some nations are now managing the pandemic better than others, but governments around the world were, in general, slow to react to COVID-19. Corporations, in contrast, seemed to grasp the need for countermeasures more quickly.
Even before government travel bans, quarantines, and stay-at-home orders, mandates, or guidelines were issued, many large corporations began pulling back. Very quickly they:
· Cancelled or pulled out of large conferences and meetings
· Reduced / restricted business travel
· Adopted flexible work-at-home policies and upgraded video technology
Even as hospitals still struggled to get coveted personal protection equipment for clinicians, many corporations were giving at-risk employees equipment and putting social distancing features in place in stores. For example, plexiglass for counters, taping on floors. Other companies, knowing that the market for their goods had dried up overnight, pivoted operations to produce ventilators, masks, hand sanitizers, etc..
Early on, only a few notable political leaders emerged as public figures who communicated needed information and adequately captured the stress, worry, and uncertainty of the moment. Among them, Andrew Cuomo, Governor of New York; Justin Trudeau, Prime Minister of Canada; Angela Merkel, Chancellor of Germany; and Jacinda Arden, Prime Minister of New Zealand.
In contrast, corporations were very quick to put out sober, reassuring messages to their employees and customers.
In the US, mask-wearing has become more of a political issue than a medical one, as President Trump and many Republican congressional leaders and governors derided their use, refused to issue mandatory orders, or even sued cities that did so. Yet, major corporations, some of which serve very conservative customers, have recently issued mandatory mask-wearing for all employees and customers.
In this phase of the pandemic, testing and contact tracing has become important. Once again, corporations (Walmart, Target, Whole Foods) are often leading the way on a measure that could dramatically help limit the spread of the virus, though, reinforcement of policies has proven difficult.
As economies open up, while anticipating the next wave, testing and contact tracing are becoming critical. Many governments do not seem to have the resources or the capacity to institute adequate testing or develop the technology to perform contact tracing.
Why Corporations are Taking Charge
For many of us, government responses to COVID have been bafflingly slow, inflexible, and insufficient. The government often does not seem to have the resources, innovative ability, agility, or coordinating capacity to manage this crisis. Even more frustrating, some governments, particularly in the US, do not seem to be acting rationally about fundamental challenges.
In contrast, corporations seem to get it. Retailers and for-profit schools are issuing mask mandates and investing heavily in speed-up testing. Tech companies are taking the lead in developing contact tracing tools. Drug manufacturers and testing companies are innovating like it is the wild west.
Of course, there is a heavy profit motive behind all this activity and direction. Corporations cannot make money if people can’t work or buy because they are sick or fear the virus. But shouldn’t that also be the fundamental concern of governments?
I believe there are four reasons why corporations are taking charge of their own response:
1. They rely on the marketplace
Corporations recognize the fundamental link between physical health and economic health.
2. They have a fiduciary responsibility
Corporations have direct legal and financial accountability to customers, employees, and shareholders. Political leaders and bureaucrats, ironically, do not feel that same direct responsibility and responsiveness to voters and citizens.
3. They are global, they have the scale
States are primarily responsible for what happens inside their own borders. Pandemics are global by nature. Most large corporations operate globally and have a broader perspective.
4. They are technologically savvy
Governments are notoriously slow on technological adoption. Corporations are often leading the cutting edge. They are more nimble, adroit, and flexible in solving problems and using the right tools for the problem.
The Business of Purpose
I am not trying to make the case that corporations are selfless do-gooders concerned only for the welfare of humanity. They are motivated to grow revenue and market share through relentless competition.
This COVID-19 response tracker is a good collection and assessment of ongoing efforts. Many companies have put aside business-as-usual decisively to adopt practices that will help employees, customers and society meet the COVID challenge. Yet, many are also now reverting to modes and practices that optimize margins and performance like before.
But for the past decade corporations have begun to link their sense of purpose to their business model. This awareness of unmet market needs has helped them increasingly connect to their employees, customers, and other community stakeholders while also driving innovation. They have a massive opportunity now to align their purpose with the surge of new market needs through innovation that can help improve lifestyles, save lives, and transform the world.
The ability of governments and international organizations to handle this crisis and other global crises is increasingly limited. 100 years ago, we tried with the League of Nations to end the war. Another world war later, we launched the United Nations to enhance global collaboration and problem-solving — with very mixed results. International bodies like the World Bank and the World Health Organization have been noticeably unable to handle pandemic or other problems like economic inequity, climate change, and the refugee crisis. Even NGOs like Doctors without Borders struggle to alleviate suffering rather than end it.
Some of the biggest philanthropic successes of recent years have come from the foundations of tech billionaires, the Bill and Melinda Gates Foundation first and foremost. The application of business principles to human problems can have a big impact.
But unless these efforts align with business growth, I worry about their sustainability. That is why I think the organizational purpose is so critical now for meeting our growing global needs.
CT Aug 2020