June 22, 2024

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Covid-19 is a chance for business leaders to rework their pact with society

A message appeared this week on the Notify NYC text feed, New York City’s official source of information about emergency alerts and city services; it was squeezed in between an update on how students can pick up grab-and-go meals at the entrance of their local school and the latest advice on containing the virus:

If you’re a small business owner in NYC affected by COVID-19, visit nyc.gov/covid19biz or call 311 for info on grants, updates & more.

*If* a small business is affected by Covid-19?

If there is anything I know for sure in this moment, it is that every business, large or small, is affected.

Yet, even in these moments, we can count on businesses to find the opportunity where others experience only crisis. I see it in my own neighborhood, where essential retailers and my local green market have quickly converted to “we will pack for you” services to limit the handling of products by potentially contagious hands. ChowNow, a company dedicated to “helping local restaurants thrive,” now supports takeout and home delivery. The Walgreens chain is expanding prescription-delivery services to more of its drugstores.

These are only minor adjustments, however, in a world that is likely to see massive change in business and beyond.

A time to rethink the business agenda

Just like 9/11 created new ways of thinking about our place in the world and about risk, we are now hearing the call for a fresh agenda—even as the usual fault lines appear over bailouts for businesses versus direct support to the people suffering the most.

As executives pause now to take inventory of key assets, they will find the talent and the knowledge of system design we need to set us on a better path when we emerge from the chaos. But critical questions remain. Yes, business is the wealth creator, but for whom? Yes, pivot the business model, but to what end?

Rather than tweak the old rules to help business stem loses, what if our business leaders use this opportunity to develop new decision rules—to enable a more resilient and generative relationship between business and workers, business and communities, business and natural systems? What if this is the opportunity we have been waiting for?

Here’s what the business picture already shows:

Businesses built on extensive global supply chains have to move to Plan B. The shock to the system from the coronavirus, on top of years of deteriorating trade conditions, could force a revaluation of the “take, make, dispose” model and allow, at last, a shift to the decades-in-the-making business design principles of a circular economy. Teams inside our most capacious companies are impatiently waiting for the chance to design products and business models that actually work for the planet.

There is no wisdom in managing the stock price. The striking example of American Airlines seeking a bailout on the heels of spending 96% of its positive cashflow on stock buybacks is a cartoon version of the need to rebalance priorities.

The Business Roundtable’s updated statement last year on the purpose of corporations and the acknowledgement of the multiple stakeholders who exist alongside shareholders opened the door for new ideas. Will supportive protocols (and regulation) follow? Will share buybacks be regulated as stock manipulation, and will tax avoidance schemes that undermine local infrastructure and services finally become intolerable? Will companies redirect their government relations teams to prioritize the health of the commons?

Investment—both public and private—to fix a crumbling healthcare system and build the green infrastructure of the future must rise to the top of the priority list. Shareholders will benefit too, over time.

Massive layoffs only *seem* inevitable. Executives need to get interested in the alternatives. Attas Tarki, Paul Levy, and Jeff Weiss explain how it’s done in this piece in Harvard Business Review. Executives who truly put their workers first, as so many companies claim to, can expand the list of options—from voluntary furloughs to more democratic salary reductions. These choices will build rather than squander trust. Listen to employees. Share the pain. It was never more important than now, if we are going to avoid a real meltdown.

Finally, we will see massive change in boards. The demands on boards in this moment are extraordinary. The average age of corporate directors in the S&P 500 is 62—and for all public companies it is closer to 68. How many boomers and beyond are questioning their commitment to constant travel and ever-more-urgent conference calls? I agree with the forecast of a seasoned public company director I spoke with this week: one consequence of Covid-19 will be major turnover on boards as we emerge from the crisis. This will make room, at last, for the breadth of our talent pool and a new generation of leaders willing to rebalance priorities and prioritize the long-term health of society. This change, in and of itself, will make much more change possible.

The role for leaders—and the rest of us

Business resilience and productivity, over time, is a function of caring for the inputs to the business—employees, but also contractors, suppliers, government services. Rule of law. The ecosystem that supports us all.

Real change in business priorities will always face headwinds, but that’s where leadership comes in. And we all, in fact, have a role to play, as investors, as consumers, as citizens. As the journalist and social activist Dorothy Day was known to say, “No one has a right to sit down and feel hopeless. There is too much work to do.”

The starting place requires taking advantage of this moment, and making decisions that will serve us well long after it has passed.

Judith Samuelson is executive director of the Aspen Institute Business & Society Program and author of the forthcoming book “The Six New Rules of Business: Creating Real Value in a Changing World” (January 2021).

Editor’s note: A previous version of this story incorrectly stated the average age of board members. The error has been fixed.


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