May 21, 2020 • Jason Dressel
September 11 and the Great Recession were crises to be sure, but the COVID-19 pandemic is the first true 21st-century crisis. The virus quickly became a pandemic in large part because of two defining characteristics: global transiency, and a polarized political and media environment that’s given rise to a reluctance to trust, much less heed, expert advice.
The huge strides we’ve made in our ability to process and analyze information over the past decade—“Big Data”—will be of major importance in controlling the virus and flattening the curve. Mobility, technology and the global supply chain—as well as the demographics of those suffering and the stress being put on our health care system—are among the threads that make up the 21st-century fabric of our situation.
For business leaders, COVID-19 offers an opportunity, albeit an unwelcome one, to write a new chapter in their history that reflects the diversity of their people, their contributions to communities, and the ways they adapt to challenges. Inevitably, our future holds more challenges that will likely have similarities to the crisis of today. The history that corporations are making today will be the great lessons learned for tomorrow.
Even as they’re reacting to the crisis in real time, forward-thinking leaders also understand that their response to the pandemic is a history-in-the-making moment that will transform many aspects of their business. Although the challenges are daunting and, in many ways, unparalleled, many corporations came into this war well-armed. Their balance sheets were strong. Most benefited from a decade-long economic expansion and from historically low tax and interest rates.
Technology is also aiding the corporate response to this crisis and will accelerate a transformation as never before in peacetime. The speed at which many companies have been able to transition their workforces from the office to the home is one small but remarkable example of this infrastructure at work. Microsoft CEO Satya Nadella recently said, “As COVID-19 impacts every aspect of our work and life, we have seen two years’ worth of digital transformation in two months.”
Imagine how different life would be if this pandemic had occurred just 12 or 15 years ago, with no smartphones, far less bandwidth and cloud computing, and limited access to data and analysis. Companies have been able to cope far more effectively because of these tools and resources—as have governments, institutions and NGOs that have used technology to track the virus and make projections more effectively.
Many global enterprises also came into this conflict with a renewed definition of value creation and a sense of leading for the common good. Purpose, corporate social responsibility (CSR), and higher environmental, social and governance standards have become mainstream ideas in support of a “triple bottom line.” Last year, the Business Roundtable modernized its principles on the role of a corporation. The CEOs of more than 180 of America’s largest companies amended the Roundtable’s Statement on the Purpose of a Corporation and urged “leading investors to support companies that build long-term value by investing in their employees and communities.”
While many governments around the world have been dysfunctional, inconsistent and highly polarized, many companies have responded faster and more forcefully. Business leaders have mobilized resources, allocated funds and made adjustments to their operations to both improve public safety and to fill gaps in the medical supply chain. This explains why, early on, people trusted their employers’ information on coronavirus more so than their governments’. Even as many states try opening back up, many companies are being far more stringent and cautious.
The sustained pressure will inevitably create hard choices and tradeoffs for leaders as they balance their commitment to building long-term value with immediate challenges. Some companies are already seeking immunity from employee lawsuits. The airline industry has asked for the easing of environmental regulations while countries such as France and Austria are pursuing emission reductions as part of subsidizing airlines.
BlackRock, the investment management firm that has been a leader in driving investment in companies committed to CSR, noted in its April report that companies were being forced to make near-term trade-offs in these “uncertain times,” but went on to say that “given our long-term approach to stewardship, we will continue to monitor company disclosures and expect a return to companies focusing on material sustainability management and reporting in due course.” BlackRock’s statement is, in essence, a shot over the bow, reminding corporate leaders that the world is watching.
When the coronavirus crisis recedes, the big challenges we were already facing will still loom. Climate change and the need to decarbonize our global economy haven’t gone away. Nor have cybersecurity risk or income inequality. At a time when trust of institutions across the board is low, the crisis gives corporations and other enterprises the opportunity to earn more credibility through their actions—and create a new playbook for how to respond to the crises of the future.
The enterprises that adapt and survive will have a new chapter in their history, filled with stories of loss and sacrifice, but also of agility and resiliency. There will be best practices and case studies written about those corporations that survived while upholding their purpose, mission and values (as well as those that fell short). As Linda Rutherford, Southwest Airlines’ senior vice president and chief communications officer, has said, “We need to be dealing with the current crisis, but we also need to have a view to the future and how we ideally want to reflect back on this moment in history.”
By and large, companies aren’t great at preserving their history. They don’t tend to dwell on the past. But in this moment, investing the time to capture today’s history will yield a rich return. Absent these efforts, today’s history will be at best a shadow of what actually happened. At worst, today’s history will be lost to the next generations and provide no guidance on the crises they will face.