For a decade we have talked about accelerated change. More than any other factor, the pace of change in technology, the economy, and society are reshaping the future of work.
Yet even as forward-thinking leaders have pondered effects of accelerated change on their organizations, actual transformation has been, paradoxically, slow.
That is, until now.
If the future of work requires restructured workplaces, redefined roles, rapid learning, and reserves of trust—and it does, organizations are being challenged to do all that and more as they address the coronavirus pandemic. While we have long spoken about VUCA (volatile, uncertain, complex, and ambiguous) environments, we are finally and undoubtedly facing one. In the span of a few weeks, the world’s economy traveled a path from cautious observation and common-sense health advisories to massive cancelations, business shutdowns, and work from home mandates. JPMorgan, AT&T, Google, Amazon, Nike, Facebook, among many, many more are hustling to virtualize business operations as social distancing continues to be the best practice to “flatten the curve” of contagion.
Coronavirus, it turns out, might be the great catalyst for business transformation.
In fact, where we once saw the future of work unfolding over years, we now believe that with coronavirus as an accelerant, everything we’ve predicted about the future of work will unfold in months.
Even in these early days of social distancing and sheltering in place, we’re seeing changes that affect work, learning, and daily life, changes that will become a new normal and that take place against a backdrop of four fundamental shifts:
● Business Finds Its Purpose In People
● Culture Is The Backbone Of Resilient Companies
● Work And Leadership Reconfigure Around People
● Humanity Unites To Pass This Century’s Third Moral Test
The Purpose Of A Business Is People
In August 2019, the Business Roundtable made a stunning turnaround when the CEOs of America’s largest businesses acknowledged that all stakeholders—workers, communities, partners—were as valuable as their investor shareholders. The announcement backtracked on the long-standing assertion attributed to Milton Friedman’s 1970 directive in New York Times Magazine that “the business’s sole purpose is to generate profits for shareholders.” Nearly 50 years later, the Roundtable declared, “We commit to investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.”
It was a compelling statement greeted by many with a blend of cautious optimism and doubtful cynicism. In recent weeks, the coronavirus delivered the opportunity for these CEOs to prove they meant what they said. Amid unprecedented business disruption, a growing list of businesses have vowed to pay their employees while their business operations are temporarily suspended. Many have committed resources to local agencies to support education initiatives while schools are closed. Some are reimbursing employees for their local restaurant and coffee shop purchases, knowing that these small businesses have been profoundly impacted by mandated and voluntary closures. We have seen businesses scramble to secure both technology and training to enable employees to work remotely. We have seen businesses alter their business processes, methods, and hours of operation to prioritize the health and safety of their employees and their customers. Forbes Senior Contributor Shama Hyder is keeping a growing list of companies that are emerging with bold initiatives that prioritize both employees and customers in these trying times.
Last Saturday evening, Rachel Romer Carlson, CEO of Guild Education, and Ken Chenault, chairman and managing director of the venture firm General Catalyst, posted a letter on Medium calling for bold corporate leadership. That letter, now signed by 1,500 CEOs, commits to #stopthespread of the coronavirus by encouraging corporate leaders to establish an immediate work from home policy and discourage gatherings. Since then, their effort has expanded to include a #payitforward initiative to encourage larger companies with stronger balance sheets to pay small and medium sized companies immediately rather than in 30 days, protect front line workers with educational programs so they know how to protect themselves and their rights, and invest in community programs, particularly those focused on childhood hunger to help children who are not getting lunches through school programs.
It is impossible to imagine that the Business Roundtable had any idea that they would face a test of the magnitude of the coronavirus pandemic, and they should be applauded for living up to their recently revised statement of purpose.
Culture Is the Backbone Of Resilient Companies
Two years ago, Chris Shipley and I proposed that in a world of accelerated change a company is, at its essence, is culture and its capacity to innovate, create, and adapt.This position grew from the observation that many of our clients were distracted by brand impressions and product cycles, typically understood in the context of their competitors rather than their consumers. We posited then, and believe even more strongly now, that businesses needed to shift from a production modality to a creation mentality. To do that, companies need a clear and strong culture to guide their paths.
There’s nothing like a global pandemic to make the case. The very survival of a company in the age of the coronavirus is dependent upon a culture that can withstand seismic disruption.
A company’s culture can be understood in the answers to three fundamental questions: 1) Why do you exist? (Mission) 2) How does the world look differently because you exist? (Vision) 3) What will and won’t you do to achieve your mission and fulfill your vision? (Values).
As the pandemic spreads, companies are doubling down on cultures that embrace their commitment to humanity, often at the expense of typical measures of production—in fact, in their nimble responses, they are expanding their capacity. Luxury brand LVMH Moët Hennessy, for example, is refitting many of its perfume production lines to make hand sanitizer. Likewise, L’Oreal, one of the world’s largest beauty products companies, is not only shifting production capacity to make hand sanitizer, they are also freezing all debts for small and medium size businesses customers, and donating $1 million euros to those disadvantaged by the economic crisis. Distilleries are stepping up and shifting production to make hand sanitizer and in some cases giving it away for free. Multiple telecom companies have signed on to the Keep America Connected Pledge and for the next 60 days have committed to continue any residential or small business service regardless of ability to pay, waive late fees, and open up all public hotspots. Microsoft, Google, Zoom and others are making their software free to use during this crisis. Amazon recently announced it will increase hourly wages from $15 to $17 an hour and will seek to hire displaced restaurant workers in a bid to hire 100,000 more workers and will stop accepting non-essential shipments to their warehouses to dedicate space for the distribution of medical and household essentials. Last Mile Health CEO Raj Panjabi has proposed we should now reskill our jobless workers in the United States to work as community health care workers as he has done in developing countries. And in Pittsburgh, Eric Chaffin, managing partner at the law firm Chaffin Luhana, spearheaded a coalition of small businesses and public and private agencies in a coordinated effort to prepare and distribute 10,000 sandwiches to school children and families who have suddenly gone without as Pennsylvania schools closed as a virus containment effort. These are just a handful of the thousands of examples of businesses stepping up, living their purpose, and along the way, through adaptation, expanding their capacity.
Each of these examples reveals a purpose that lives far beyond the bottom line. They put culture on clear view and demonstrate these companies’ ever expanding capacity to respond to this crisis because those cultures are strong. The demands of the coronavirus pandemic were not answered in the production mentality of these companies, but in the nimble capacity to respond in inventive ways, from hiring workers from adjacent industries, training classroom faculty to teach online, equipping employees to work remotely or leveraging expertise to shift production from one product line to another in order to provide the supplied so desperately needed. This demonstrates a new leadership imperative to focus on inspiring human potential rather than simply driving productivity. It is a shift from focusing on what you do to why and how you do it.
Work And Leadership Reconfigure Around People
At the same time as businesses are adapting production capabilities to match the challenge of the coronavirus crisis, they are rapidly responding to the necessary constraints of their workforces. The advisory that began as an abundance of caution quickly grew to a mandate as health officials recognized the greater risk of “community spread” of COVID-19: practice social distancing by working from home. Overnight, giant corporate campuses became ghost towns. Workers turned to Slack, Zoom, Skype, and Hangouts to meet, collaborate, and in many cases just to vent the understandable stress brought on by so much uncertainty. Still, in companies large and small, work goes on. Bosses are learning that out of sight does not mean out of mind. Workers are juggling deadlines and responsibilities even as family responsibilities become ever more present. Colleagues talk, in many cases even more, and more effectively. And with no other alternatives, managers are trusting their people to do the right thing.
Some companies will make the move to virtualization more seamlessly than others. Google and Microsoft, for example, have long relied on tools like Hangouts and Teams, respectively, to conduct business across offices and time zones. Pipedrive, a young software company with a footprint in both the U.S. and Europe, was able to become a completely virtual company inside of 24 hours. Others will struggle with policies that mandate where and how data can be processed, employee access to reliable high-speed bandwidth, and cultures that prioritize presence over productivity, among other obstacles.
Still, this forced experiment is demanding that companies adapt, and when this crisis recedes, we suspect many organizations will find that they can be highly efficient – and cost effective – with distributed teams. They will alter policy and procedure to make remote work more available and in doing so recognize that they can tap a global pool of highly skilled workers. Layers of management will disappear along with very expensive physical plants, while investments in office perks can be reallocated to salaries or (more likely) the bottom line.
We Pass The Third Moral Test Of My Lifetime
While this global pandemic accelerates us towards digital transformation, our human transformation comes into crystal clear focus. In the last half century, we have faced three moral existential challenges:
Climate change. The first earth day was in 1970. Thirty-two years ago this June Dr. James Hansen, then director of NASA’s Institute for Space Studies testified before the Senate proclaiming, “the greenhouse effect has been detected, and it is changing our climate now.” The five hottest years on record were the past five years and ten of the hottest years on record occurred over the past fifteen years. We have experienced unprecedented wildfires, superstorms, floods, and droughts, yet we have not changed our behaviors. We have simply failed to react with appropriate speed and may not be able adapt quickly enough to significantly forestall an environmental catastrophe. The global pause created by this global pandemic affords us an opportunity to rethink how we restart the economy as in the absence of our usual human activity.
Income inequality. Following the market crash of the 1920s, the U.S. had a much more equitable distribution of value created than it does today. In the shadow of the great depression we built the middle class but since the 1970s, the Gini Coefficient – a statistical measure of income distribution across a population – has shifted dramatically toward the rich. A Gini Coefficient of 0 means absolute equality and a coefficient of 1 means absolutely inequality. In a capitalist society, income will always be unequal as we favorably reward our entrepreneurial risk takers and investors. Now, however, we have a Gini Coefficient of .49 (2018) which rivals the 1920s before the depression. We simply need a strong middle class with greater income distribution to keep our economy strong and to fairly distribute created value. Harvard Economist Raj Chetty’s research shows the decline of the American Dream, notably “Most Americans born in 1940 ended up better off, in real terms, then their parents at the same age. Only half of those born in 1980 have surpassed their parent’s family income.” When the richest 1% hold more wealth than the bottom 90% combined, there could be no clearer sign that we are failing to address this inequality. As we consider all the necessary rescue packages to the hardest hit industries and extending a more robust temporary safety net to all workers, we also have the opportunity to rethink how we restart the economy. We could be investing in a robust retraining effort now so when we restart the various idle parts of our economy, we have more folks ready to participate in the 4th industrial revolution (merging of cyber, biological, and physical systems) rather than the second (manufacturing) or third (computerization). Income inequality is not a measure of fairness in my view, but rather, a loss of human potential, which hits us all. Recent research found that if you were born in the top 1% you are 10x more likely to invent and patent that invention, generally leading to value creation. This disparity is not merely a measure of fairness, but rather, of lost potential. Those “lost Einsteins” diminish our collective potential.
Global Pandemic. We’re now in the midst of a global pandemic that most seriously and disproportionately impacts the elderly, those with underlying health problems, our healthcare workers, and the healthcare system itself. While the national response has been far from perfect and is as yet unfolding, we have clearly chosen to prioritize our most vulnerable humans and our healthcare system itself over our economy. We are taking steps to shore up the losses of the least advantaged. We are addressing systemic problems in our care system. Here, we are winning this moral test. This is a moment to reverse the trend that Robert Putnam, author of Bowling Alone: The Collapse And Revival of American Community, has attributed to the rise of “I” over “we” that documents back to 1964. We can take this moment to rebuild social capital.
As companies rapidly adapt to the future of work at an accelerated pace driven by the coronavirus we see them embracing culture and purpose as their north star and handrail to the future. A focus on culture enables the organization to nimbly pivot team operations to enable large scale remote working while expanding their capacity through rapid learning to pivot production lines and processes to meet the changing demands of the day. Leaders no longer have a choice about establishing psychological safety as trust become the only lubricant for the frictions caused by this global pandemic. And, for the first time in my lifetime, we are backing humans, human resilience, and human ingenuity. This is reflected in small businesses which to their financial detriment are shuttering shops to protect their communities and in giant corporations who are foregoing profit and mustering their considerable resources in support of both country and community. These are scary times, to be sure, and we still have so much to sort out and work through. Yet, it is also an incredibly optimistic moment for the future of work for humans. The structural and moral decisions we are making now are a hopeful sign that humans will have a central role in the future of work and humanity. There is a great deal of uncertainty ahead and there is only one way through this; together.
I will leave you with this optimistic note. In my lifetime, we have made our greatest strides in improving the human condition in all of our documented history. We have lifted more people out of extreme poverty, massively expanded literacy, and in the short period of time we have had the Internet, we have connected more than half the globe. It is with this view I remain optimistic (and very thankful we have global connectivity right now).
By Heather E. McGowan
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