For the last 20 years (or more), “legacy” businesses have been struggling to keep up with the rate of technological change.
First, they said it wouldn’t happen.
Then they said it was a fad.
Then they asked their leaders why they couldn’t be more like Company X-dot-com.
Then they hired a consultancy, then a chief digital officer, and then still weren’t where they needed to be.
Then they realized that digital business transformation was a whole-of-company effort, and the CEO’s job.
At that point, companies were forced to reckon with what “business transformation” really means; running a business that you expect to still be around in 10 years and the sum total of the decisions you make to keep up with the rate of change.
Then they saw the positive impact on their share price.
What we now know is that technological change (and change in general) is perpetual. Any business, if it expects to be successful, will always need to understand the role technology plays in the context of nearly every decision, from supply chain management to employee and customer satisfaction to advertising and marketing.
But while companies get rewarded by investors for how quickly they can exploit technology, they have also been rewarded by how much they exploit people.
And people don’t have to accept that anymore. So they aren’t.
With more access to technology, voices have been lifted; the truth revealed. What is laid bare isn’t always pretty. There is a major gap between what companies say, and what they do. As John Wooden once put it, “The true test of one’s character is what they do when no one is watching.” Well, we’re all watching now, so business beware.
While words are important, especially when it comes to destigmatizing things, when companies feel the urge to speak up and out on societal issues, they run the risk of drawing attention to their hypocrisy on those very same issues in the mini-societies of their organizations.
Even in just the first few months of 2021, we’ve seen companies acting on the stage of public perception rather than taking the actions necessary to earn the public’s trust. And while nobody—and no company—is perfect, it’s becoming more clear to everyone what “action” is, and what is just “acting.”
Back in the early days of digital business transformation, companies raced to buy domain names and build websites—not for transactions, mind you, but because of what their shareholders would think if they didn’t. It wasn’t until later that they realized that the website didn’t do anything for them if it didn’t do anything for them—and that the website was only the front door to their house of [analog] cards. While they were busy remodeling, new companies were busy building. It took a while, but we’re seeing the fallout from not being a digital-first organization.
Today, we’re seeing the consequences of what happens when you aren’t “accountability-first.” And even though companies reflexively apply window dressing, this time it’s translucent.
The Covid-19 pandemic has shown us that many of our societal ills are intersectional and that organizations, without self-awareness, will be a mirror of our society. When businesses, as brands, speak out about social issues it invariably will draw attention to their own behaviors; and the reflection is rarely flattering. And that’s ok, as long as they have begun their transformation to an accountable organization.
With more access to information about companies than we’ve ever had before, accountability is coming. It’s inevitable. It’s up to each and every business leader to decide whether they are going to play offense or defense on their accountability journeys; whether they will take accountability, or whether they will be held to account. Either way, they need to be prepared.
The people are demanding it. According to Porter Novelli, 38% of Americans would stop doing business with a company to get it to change its ways. Edelman’s most recent Trust Barometer study indicates that 86% of people expect CEOs to publicly speak out on challenges including pandemic impact, job automation, societal issues, and local community issues. They also report that “business” is the last remaining trusted American institution. We also know that leaders who build more inclusive organizations have teams who are more effective, more productive, more innovative, and are just plain happier.
The strongest companies of the next decade and beyond will face accountability head-on and play offense on their accountability journeys. With technological adoption as table stakes, companies must refocus their innovation on how they will redraft the contract that exists between their leaders, their employees, their communities, and our planet. In fact, it’s hard to argue that this isn’t now a core responsibility of every CEO.
CEOs will be faced with questions like: What will the new standards of accountability be? What will the future of ESG reporting look like? How will new industry coalitions be formed? What does a more accountable future of giving/philanthropy look like? How will companies functionally partner with nonprofits? Will companies step back from politics and into the issues?
Accountability is not a fad. It’s the next battlefield for innovation and should become the culture of every organization. The companies that innovate on new methods for accountability will win—and so will we all.