Paul Laudicina: I am Paul Laudicina, chairman emeritus of Kearney and founder of its Global Business Policy Council, and this is Coronavirus: a world transformed.
We’re recording this on Friday, May 15.
These past months have been a time like no other that I’ve experienced in my 40-year career, and I expect the same is likely true for all who are listening to this podcast. While I’ve been walled up at home, I’ve had a lot of time to talk with business leaders on virtually every continent, including those who have been good enough to join me for previous episodes of this podcast. All these leaders are trying hard to navigate this period of profound uncertainty, ambiguity, and undeniable massive change … even as much of it has not yet come into clear focus. One of the only things that is clear to me is that the post-coronavirus world indeed will have been fundamentally transformed by this pandemic. One illustration of this growing realization is from a multidisciplinary post-COVID-19 task force that I’ve been working on which just released its report, entitled “Never Normal.” As our report observes, not only will the world have changed, but global conditions will continue to change so fundamentally that we will likely never know “normal” again.
Obviously, most of the world was ill-prepared for this pandemic and the decisions that would be required of us all in order to cope with an invisible enemy who respects no physical barrier or demographic divide. Try as we might, after almost five months of battling this pathogen which has scaled the gates of our global community, we still don’t have the upper hand. And it appears likely that we won’t for some time, with this contagion continuing to inflict pain and suffering until an effective vaccine is developed, tested, produced in volume, and broadly administered around the world.
In the meantime, much of the often-heated dialogue has been about the measures that need to be taken in communities around the world to understand, evade, and fend off this common enemy, while trying to determine when it’s safe to sound the all-clear and how best we should then emerge from our foxholes. Meanwhile, unemployment soars, families continue to be subject to tragic sickness and death, incredible hardship and strain, deprived of income and any sense of security and assurance about the future, while businesses teeter on the edge, supply chains become strained, and anxiety grows. And sadly, under such circumstances, for some it appears easier to look for scapegoats than solutions.
As I mentor CEOs and leaders at companies around the world, I hear concerns and questions about what the world will look like in the next months and years ahead, with a plea for guidance and examples of leadership best practice. We all know that the most fundamental and powerful human impulse is the survival instinct. When threatened, we do what we believe is necessary to survive. And this preservation instinct is no less true for business. But it’s especially difficult for a leader to know what he or she needs to do to survive, let alone thrive, when the nature, duration, and ultimate consequences of the existential threat are so indeterminate.
Under these circumstances, it becomes critical to clearly articulate the principles which guide our decision-making, even if the actual decisions are not yet evident. And I know how difficult it can be for any leader to admit they don’t have the answers at the ready. But honestly, employees, suppliers, shareholders, business partners in today’s environment of uncertainty would welcome insight into the principles guiding decision-making even if the decisions themselves require more time to develop.
The sine qua non, however, for all of this will be developing an environment of trust, something which the Edelman Trust Barometer tells us has eroded pretty dramatically for business leaders over the last few months since the pandemic has struck. And in my view, even though we have only one blunt word in the English language for this all-important value, I believe trust needs to be understood in three separate dimensions, the combination of which engender genuine, sustainable trust.
First, for a leader to be trusted, he or she needs to be authentic, saying what he means and meaning what he says, being truthful no matter how painful it might be. But this is mere table-stakes for trust … no truth, no authenticity, no trust. Period. Essential as authenticity is, it’s simply not enough to engender trust. For a leader, or anyone for that matter, to be trusted, they also have to be capable of delivering on what they promise. For me to assert I will do something, no matter how earnest and authentic I might be, if I simply don’t have the demonstrated ability to deliver on what I am attempting to do, then I will not be trusted.
Finally, I will only be trusted if I am reliable. Why should anyone trust me, no matter how authentic and capable I am if I have not reliably delivered on what I have promised in the past or can likely deliver in the future?
So, in a world as unsettled and laden with anxiety as this one surely is, I believe an effective leader needs to first, articulate clearly the principles guiding one’s decision-making, and second, build a foundation of trust by communicating truthfully and authentically while demonstrating the capability and reliability to deliver on what you promise.
Beyond these simple fundamentals of effective leadership, we can see a few other attributes that are especially central to leading in the kind of crisis-laden environment challenging us today, hopefully while inspiring others to emulate these same values.
First, collaboration is acutely important. It’s ironic that while we’re physically quarantined to protect human health, we need precisely the opposite kind of consistent and diverse professional engagement and collaboration to rid ourselves of the contagion. In the interest of making progress against this disease as quickly and effectively as possible, we’re seeing unprecedented acts of global collaboration tear down walls that have long been insurmountable, and have impeded progress. We’re seeing how traditional silos separating scientific and medical disciplines and institutions, competitive barriers impeding corporate collaboration, intellectual property and regulatory walls, and limitations on supply chains and manufacturing—we’re seeing how these barriers can and must be overcome to achieve a common goal. Those traditional barriers have given way to the kind of collaborative, round-the-clock, no-holds-barred efforts being employed these days to develop effective testing, therapeutic interventions, and vaccines to defeat COVID-19. And every day, from those on the front lines in our communities, we are inspired by countless selfless, collaborative acts of generosity and sacrifice for the common good.
Second, we’re seeing a surge of bottom-up leadership emerging as we confront an unprecedented threat to our physical, social, and economic well-being. When governments fail to take decisive action, we see how a fact-informed, public health-conscious populace is prepared to sacrifice, embracing initiatives like social distancing and quarantining, even when authorities confuse, obfuscate, or otherwise drop the ball. So out of these dark, cloudy days comes the silver lining of inspired and inspiring behavior that we can all learn from.
What other trends should we be watching as the crisis unfolds? What questions should we be asking, and what frameworks should guide our decisions? On this special podcast episode, we’re bringing you highlights of the leadership advice offered by some of those distinguished guests who have taken the time to talk with me for this podcast.
Clips from guests
Paul Laudicina: First, I talked about the global economy with Martin Wolf. Martin is chief economics commentator at the Financial Times of London, and he is one of the longest-standing thought leader contributors to the Global Business Policy Council. I asked Martin how individual business leaders can act now to weather the storm of the pandemic and mitigate damage.
Martin Wolf: For individual businesses, there are very difficult questions. Do you take loans, which will ultimately have to be repaid to remaining being as you will? Do you sort of shutter yourself and hope you can restart again? And I think that will depend a lot on the actual granular detail of individual businesses: How dependent are you on your specific trained workforce? Can you replace it? If you demobilize it, will it come back?
All these very, very difficult questions, and they’re going to be, I think quite business-specific and quite country-specific. And for multinationals, it’s going to be a complex combination of this.
But the central aim of major businesses must be to survive, take advantage of the help they have and preserve their core capabilities and core human physical capital so that they can restart when it’s over. And that must be the aim: survival as a viable entity, even when the business activity itself slows dramatically.
That’s going to be much easier for businesses with low debt and much more difficult for businesses with lots of debt. But they’re going to have to find some way of restructuring the debt. I think that’s likely to happen very soon. There’ll be lots of bankruptcy processes, which is fine.
Now, the future. And that really comes down to the question of, one, how strong the recovery will be, which we really don't know. But I suspect it might in this situation be relatively strong because it’s going to be like switching the economy back on again.
And then the question is, are there going to be permanent changes in the pattern of human consumption? Will people go back to being tourists? Will they go back to traveling airplanes or cruise ships? Will they go back to going out to restaurants? Will they go back to local shops? And the answer to that is they will go back to a lot of this, but there are some trends that will continue. The trends toward virtual activities will continue. I suspect that the trends towards people working in a more dispersed way have been accelerated permanently.
Paul Laudicina: When I talked to Jurgen Hambrecht, chairman of the board at BASF, I knew he would have compelling advice for leaders who are facing difficult choices.
Paul Laudicina (from recording): You have led your company through difficult times before, and you are one of those rare leaders that’s always been driven by purpose and principle and passion, if you will, balancing the need to deliver broadly to shareholders as well as, at the same time, looking at the stakeholder community and questions of social value and how you managed to achieve both of those purposes as a leader. Are there some universal leadership lessons that anyone, private and public sector leader alike, trying to lead through this crisis should bear in mind that would be useful for you to share?
Jürgen Hambrecht: I have a triangle I always have in my mind if it comes to leadership, and this is first, authenticity, second respect, and the third is empathy. If you have these three, in your mind, I think you are most probably handling things appropriately.
However, as we are living now in a world with dynamics of media which are outstanding, immediate, very direct, emotional. And as we are living in volatile societies with a lot of uncertainties, especially now with this virus crisis, this makes people nervous and leads very often to radically and quickly changing positions.
Here, I think comes one thing on top of this triangle, and this is you need to communicate more immediately, more directly. You have to give guidance, where you are heading to, it has to be understood by all of your people you are responsible for, and you will take care of, and you need to follow up. You have to build on trust. So, reliable, comprehensive, and transparent acting; it has to be understood. You have to be a role model.
Paul Laudicina: Paul Bulcke, chairman of the board and former CEO of Nestlé, the largest food and beverage company in the world, shared with me his encouraging insights on the state of the global food supply chain. But I also wanted to hear his advice for leaders who are making judgment calls in uncertain and ambiguous times.
Paul Bulcke: We’re living in an increasingly ambiguous world. That means that there is not really a right answer. It depends on what angle you see things. And there is no textbook answers again, for this, there is no mathematics that will help you to get to a solution. There is no black and white. It’s ambiguous.
And there again, being stronger on explicit values, and understanding the references of values and how you judge. So leadership is going to increasingly be linked with the capacity to judge. So action is important and, and driving and defining your strategy—that's all important.
The capacity to judge—and I think boards in general—are going to be much more asked to help management to have that multi-angle judgment capacity. And that’s why a crisis like this—look, there’s no real answer because you’ve never seen that before. And you have different angles to get to solutions. Some countries do confinement firm, others do more relaxed, others are doing nothing. So you can have your personal opinion, but these are judgment calls or lack of judgment calls. But the capacity to judge is always based on having a very good understanding of principles and values.
So yeah, value-based leadership is needed to make the right calls through a very increasingly, pretty much increasingly ambiguous world.
Paul Laudicina: For many years, Nestlé leaders have used the principle of “shared value” to guide their decisions, and I think it’s a very inspiring and enlightened approach to engaging Nestle stakeholders. I asked Paul to explain what “shared value” means.
Paul Bulcke: Look, this concept of creating shared value is so fundamental. It is to be part of society. We are part of society, we think about all stakeholders, and we are fundamentally convinced the company can not be successful over time if it doesn't create value for shareholders and all other stakeholders at the same time.
That is just normal for us, normal natural behavior of understanding what industry, what economic activity should do; it should be a force for good. You have to care and be efficient and be successful as a company—shareholder value. But you do that by keeping also an eye on creating value for society through good products, good salaries, good conditions, working conditions, working with our partners, farmers etc.
I mentioned it before: the fundamental mindset of us is in this crisis, care about your people, but stay as close as possible to normal, also. I think leadership (in companies and also political) should stay calm, maintain perspective, go for the facts.
Paul Laudicina: And our final leadership insights come from the renowned author Moisés Naím. Moisés and I had a fascinating conversation about power, true leadership, and the demand for truth from leaders. His advice for business leaders? Start with creating a sense of solidarity, compassion, and community. And always stay focused on the truth.
Moisés Naím: It’s very important that people working in companies feel that those who run the company understand their situation and that of their families, that make life easier for them, that are willing to forego some margins in order to support the community, that at the end, a company is a community and the community needs to really rely on leaders that are compassionate, that show solidarity and stand with them and not in a way that is felt like abusive, exploitative, or dangerous.
And that brings me to one thing that now is very much a priority, and that is truth. And that is also applicable to leaders in government. People want the truth. People don’t want tricks, don’t want slogans, don’t want manipulation, fake news, and lies. And we live in a world in which these things at the beginning may be very confusing and very difficult to discern what’s truth and what’s not. But at the end, the truth emerges. So the leaders—the corporate leaders that think they can get away with lying or obfuscating or confusing or just hiding information will not do well. And the same applies to people in charge of governments.
Wrap-up (Paul Laudicina)
Thank you to all of my guests who have shared their insights and advice with us. We still clearly have more tough days ahead of us. But like generations before us who were tested by the major challenges of their day, if we are open-minded, guided by truth and principle, and prepared to act with the same spirit of collaboration and generosity we see all around us every day, we will emerge from this dark tunnel stronger, more united, and better equipped than ever to handle whatever future challenges may come our way.
As we develop future episodes of this podcast, envisioning a post-coronavirus world, I’d love to hear from you. What’s on your mind? What questions would you like us to explore? Please share your thoughts with me—by email at [email protected] or on Twitter @paullaudicina.
We’ll be back with new episodes of Coronavirus: a world transformed soon. So stay tuned. Stay well. More is coming.
About Paul Laudicina
Paul Laudicina is the founder of the Global Business Policy Council and previously served as its managing director.
He also served as managing partner of Kearney and chairman of its board, guiding the firm through an extraordinary turnaround after it regained its independence in 2006. Paul has worked extensively with leaders of corporations and governments across a range of strategic, corporate, and public policy issues.
In addition to more than 40 years of private-sector experience, Paul has also served in the public sector, including with the United Nations and as legislative director to then US Senator Joseph R. Biden, Jr. He is the author of numerous articles and books on global strategic issues, including Beating the Global Odds and World Out of Balance.
Paul was twice named to Consulting magazine’s annual Top 25 Most Influential Consultants and is the 2020 recipient of Consulting’s highest professional distinction, its Lifetime Achievement Award. He serves on a number of advisory boards, authors a regular leadership column for Forbes, and hosts the podcast Coronavirus: a world transformed.