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Leading through the Covid crisis

This article was originally published in the Institute of Corporate Directors’ Director Journal in June 2020.

For Canadian organizations, surviving the Covid pandemic will be about more than staying in business. Boards and management must steer an effective response to the harsh realities and social injustices that the global crisis has laid bare, Jaime Watt writes.

In the beginning of Sophocles’ Oedipus Rex, a plague has descended on the kingdom of Thebes that ravages crops, livestock and citizens alike. We find Oedipus, King of Thebes, imploring his subjects to stop praying and instead “act as the crisis demands,” to find a cure. The oracle at Delphi informs Oedipus that the “great pestilence” will only be lifted through an act of justice: The previous king’s murderer must be killed or exiled.

Eventually, Oedipus’s quest for justice — and with it, a cure for the medical, economic and moral devastation of the plague — brings him to the blind prophet Tiresias. Tiresias informs him that Oedipus himself is the killer and that his kingdom was founded on incest and patricide. In the end, the King, no longer blind to his own crimes, gouges out his eyes and stumbles from his palace.

While an imperfect analogy for the challenges of Covid-19, Sophocles’ tragedy bears an important lesson for our time: namely, that pandemics reveal the longest standing, most entrenched and often least visible injustices of our politics and our society. What’s more, no one is immune to these revelations. From dictators and doctors to schoolteachers and presidents, all are doomed if they remain blind to the lessons of our new reality. And that fate extends beyond our halls of government into the C-suite and the boardroom as well.

In short, we all have a role to play in addressing not just Covid-19 but also the underlying issues which it has laid bare. While Canada seems to be successfully emerging from the dreaded “first wave” of the virus, there are nonetheless crucial lessons to be learned from our initial response. But what role exactly should boards and individual directors be expected to play? With the global economy on pause since March, how can directors carve out a place in the response, beyond simply battening down the hatches and working to keep their organizations afloat?

Responding, not controlling

In my view, the fundamental tenet of effective leadership in crisis is a recognition that the popular term “crisis management” is a misnomer, and a damaging one at that. The more productive expression to use is “crisis response.” That’s because, with all the unexpected variables at play, a reactive, responsive stance is more suitable than a “management” approach, which assumes a level of foresight and control that is simply untenable.

The reality is that most crises are made up of far too many unpredictable factors to be managed effectively. And preparing to respond effectively to those “unknown unknowns”— the variables you can’t even know you don’t know — will make or break your leadership in a crisis.

Consider Covid-19. Of course, government and, to a certain extent, business leaders, could and should have anticipated some form of pandemic. But the most critical result of Covid-19 has not been the virus itself — though it has already claimed hundreds of thousands of lives around the world and threatens many more — but rather its accompanying domino effect of unanticipated consequences.

The response to this pandemic has decimated many people’s already crippled confidence in international bodies such as the United Nations and the World Health Organization. In turn, what should be a global response to an international crisis has instead been characterised by parochial self-interest and infighting between China and the United States. As a result, countries like Canada have been left to fend for themselves in a global free-for-all over essential supplies. It is these kinds of issues — unpredictable in the specific but generally based on observable patterns — that leaders must make room for in their approach to crisis response.

New imperatives

Another of these domino pieces and arguably the most important factor for shaping our world post-Covid, is the moral jeopardy it has created. Moral jeopardy, a cousin of reputational jeopardy, comes about when your issue or brand is swept up in a larger societal narrative. The corporate world is full of examples, from airlines caught mistreating passengers to the #MeToo movement. Moral jeopardy is challenging because of the emotional intensity that comes with it and because once your name is attached to a larger story, you have lost control of your narrative.

Covid-19 is rife with moral jeopardy. Business owners have to weigh the burden of closing stores, offices, restaurants and factories, against the risk of exposure for employees who return to work. Policymakers cannot forget that the public health benefits of economic shutdown come with a material toll on the well-being of our most vulnerable citizens. Moral jeopardy exists for well-meaning organizations using their profile to comment on social issues exacerbated by the crisis just as it exists for those organizations that choose not to comment. We are now navigating a minefield of moral jeopardy with massive consequences for business.

I have always said that times of crisis are when directors really earn their keep. That’s because directors are the ultimate inside-outsider: They often have the enterprise-wide knowledge of senior executives without being “too close” to make difficult calls. Directors also bring outside experience which can be hugely important when making decisions with incomplete data.

Before a crisis hits, the role of the director is really to ensure that the organization has a crisis response plan in place. In the thick of it, directors are responsible for monitoring management’s response and must be prepared to take over if management is part of the problem. And when the crisis is over, it is incumbent on directors to ensure the integrity and efficacy of post-mortem evaluations.

We all realize that events of the past few months have turned our world on its head. In the wake of Covid-19, organizations will either stay fixed in their ways or adapt to the demands of our new reality. That means changes to operations as well as a re-evaluation of fundamental principles and a renewed commitment to fulfilling them. Implementing these changes will take the combined efforts of management and directors, in concert with internal stakeholders and external audiences.

In the months ahead, mistakes will be made and real prices will be paid for those mistakes. Crisis response provides an effective tool kit and a productive mindset for organizations and government alike to successfully weather the storm. But more often than not, a boardroom with purpose, clarity of vision and competent directors at the helm will equip its organization well for success in our brave new world.

Purpose of the Corporation

THE COVID-19 CRISIS has revealed a great deal about the character of humanity. It has demonstrated the extent to which people can come together, and it has laid bare the systemic inequalities within our current economic structure and social fabric. As the world looks to governments to lead through a pandemic, corporations are also being asked to assist in tackling the inequalities that have bubbled up to the surface, in order to create a ‘new’ normal.

The public looking to corporations to support societal reform should come as no surprise. There have been discussions happening for quite some time on how to modernize capitalism by changing the purpose of the corporation. A movement is afoot that views the role of business as something different from previous generations – instead of simply focusing on profits or value for shareholders, corporations are increasingly expected to contribute positively to all stakeholders.

For a corporation’s purpose to truly broaden in this way, it must support efforts to address the challenges faced by its stakeholders and the communities in which it operates. Indeed, the drive to rethink the purpose of the corporation is fuelled by the public’s desire to have business assist in overcoming global challenges such as climate change, wealth inequality, systemic racism and the COVID-19 pandemic.

This is a whole new level of responsibility thrust upon business. The days in which a corporation could simply focus on financial metrics, such as margins, productivity or profits, are over. A business now needs to evaluate – and correct when needed – its impact across a whole suite of social concerns, such as the environment, racism, poverty, gender equality, and more.

With these enhanced responsibilities comes an expectation of concrete and authentic action to tackle such important matters within the organization itself. In addition to monitoring and improving a corporation’s impact internally and externally, business leaders are now being compelled to speak out on these matters publicly. The assumption is that when an individual, organization, or government falls short of the public’s expectations regarding a certain social question, business will ‘call out’ or cut ties with the party, or exert some other type of pressure to influence and encourage ‘better’ behaviour and outcomes.

These three layers of the enhanced responsibility business faces are interlinked. A business must use the levers of its impact on communities, the globe, and society; its internal practices which can hinder or advance important and needed social reforms; and its capacity to influence others; all at the same time. As recent weeks have demonstrated, it is a grave public relations mistake for a corporation to speak out in support of an important social cause if it has not yet taken internal action to advance the objectives of that same cause.

 

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Business leaders will undoubtedly need support in meeting their new responsibilities and in ensuring their organizations are purpose-driven and focused on contributing positively to all their stakeholders. The newly created Canadian Centre for the Purpose of the Corporation will offer support to Canadian businesses and organizations as they work to redefine, strengthen, and advance the scope of their purpose and values through their operations, their impact on all their stakeholders, and their ability to influence others to do the same.

It will not be easy for business to meet the evolving expectations placed on them by the public and civil society. Nevertheless, the movement afoot makes it clear that change is on the horizon for capitalism one way or the other. With change comes uncertainty. What is certain, however, is that the purpose of the corporation is more important than ever. Let’s hope that the consequences of the COVID-19 pandemic will provide inspiration for business leaders to embrace a new approach to corporate leadership which would be a big first step towards modernizing capitalism and helping humanity overcome the challenges facing this generation.

Now that’s a purpose worth fighting for.

Letter from the Chairman

IN THE BEGINNING of Sophocles’ Oedipus Rex, a plague has descended on the kingdom of Thebes that ravages crops, livestock and citizens alike. We find Oedipus, king of Thebes, imploring his subjects to stop praying and instead “act as the crisis demands,” to find a cure. The oracle at Delphi informs Oedipus that the “great pestilence” will only be lifted through an act of justice: the previous king’s murderer must be killed or exiled.

Eventually, Oedipus’ quest for justice—and with it, a cure—brings him to the blind prophet Tiresias, who informs him that Oedipus himself is the killer and that his kingdom was founded on incest and patricide. In the end, the king, no longer blind to his own crimes, gouges out his eyes and stumbles from his palace.

While an imperfect analogue for the challenges of COVID-19, Sophocles’ tragedy bears an important lesson for our time: namely, that pandemics reveal the deepest, most entrenched and often least visible injustices of our politics and our society. What’s more, no one is immune to these lessons. From dictators and doctors to schoolteachers and presidents, all are doomed if they remain blind to the revelations of our new reality.

In this edition of Perspectives, the Navigator team sheds some light on that reality and what COVID-19 means for the future of business, issue management and public affairs. We will also look at some of the most important trends in these fields and how they are evolving.

While the pandemic has taken a toll across every industry and walk of life, the response has hardly been even. Certain sectors have proven more agile and less susceptible to the disruptions we all now experience in our daily lives and have cautiously moved to reopen. Others have wildly careened, in the name of economic reward, toward a “back to normal” that surely can no longer exist.

After months of social distancing and shutdown, we emerge to a world which in many ways looks identical to the one we knew before. But looks, after all, can be deceiving and as in Sophocles’ time, the transformative “black swan” is less the pandemic than our response to it.

In the coming weeks, we will release new Perspectives pieces digitally, beginning with a very exciting contribution by Navigator Senior Advisor and former Premier of New Brunswick, Brian Gallant. Brian’s piece examines the drive to rethink the purpose of the corporation and how it will shape business, policy and society. Senior Consultant Jeff Costen has contributed a timely article on the rise of grey media and whether COVID-19 has endowed traditional media outlets with a new relevance.

Some things have not changed. As always, Perspectives will feature interviews with prominent Canadians and Dispatches from our Western and Quebec offices. While the format has evolved to adapt to these times, this edition of Perspectives contains the same level of insight and deep analysis as always, albeit with a new focus. Our hope is as much to arouse new questions as provide answers, and in doing so reveal the opportunities which exist alongside the challenges ahead.

Season 6 Finale

This week, on Political Traction’s season finale, host Amanda and Navigator’s Managing Principal and friend of the podcast Mike Van Soelen unpack the tumultuous year 2020 has been so far, and make predictions for what the rest of the year will bring. From Brexit and railway blockades, to the coronavirus and killer hornets, this year has been a nonstop sprint. The two will also discuss the political leaders who have risen to the occasion, and those who have fallen short.

We are done with COVID-19 but it is not done with us

This article was originally published in the Toronto Star on June 14, 2020.

Though it now seems easy to forget, we remain locked in a battle with the novel coronavirus. It has been 93 days since the World Health Organization declared COVID-19 a pandemic; a declaration that brought with it unprecedented restrictions on our liberties and to our livelihoods.

That we all willingly obeyed those orders is a notion fundamental to a democratic society: the consent of the citizen to submit to the authority of the government.

But the mass protests of past weeks have shown a fraying of this social contract, Prompted by an angry outcry to a long simmering wrong, the Black Lives Matter movement has caught on where the anti-lockdown movement has fizzled out.

The BLM protests are, as I wrote here last week, justified and long overdue and the anti-quarantine movement was never more than a radical fringe. But the outcome and the dangers, vis-à-vis the coronavirus, are much the same.

While it is dangerous to confuse the real medical risk of these protests with their ideological or political value, we have seen public health authorities trip over themselves to somehow sanction them. They seem suddenly desperate to inoculate themselves against the criticism that it remains irresponsible to gather in large groups, even outdoors, even in a mask.

It was just a month ago that irresponsibility was the charge levelled against those who protested the COVID-19 lockdowns. It was only two weeks ago that health and political authorities alike were condemning youth in Trinity Bellwoods park, going so far as to label them reckless and selfish.

But governments have now run into a brick wall when it comes to public compliance. Terrified of losing their moral authority to govern, their power of moral suasion, the tail is, once again, wagging the dog with public health authorities repeatedly contorting themselves or playing catch-up to shifts of opinion and behaviour among the public.

As the social contract frays, the more pronounced this phenomenon becomes, and the more the authority of government will erode.

Public health authorities can issue endless reminders about best practices but now that every leader from the prime minister on down has participated in a mass gathering, the government’s dissuasive power against gathering in large groups has melted like a popsicle in the summer sun.

This fraying will only get worse, I predict. Whether it is because of the warm weather, general quarantine fatigue after three long months, deteriorating mental or financial health, people are simply ceasing to do what the government asks.

And why should they? It is not as if our leaders have modelled good behaviour. If others are not willing to follow the basic rules of the social contract, it is rather easy to understand those who choose to abandon quarantine to join a growing popular protest movement. After all, condemning untold instances of appalling police brutality seems to many a reasonable and necessary thing to do.

Public health authorities like Dr. Anthony Fauci are, of course, of a different view. Fauci sternly warned this week that the protests are the “perfect setup” for spreading the virus. The challenge for governments is that it will take a couple of weeks to see if he is right. And while we wait, it will be difficult for authorities to convince the public that the risk is real when Toronto public health authorities recently quietly confirmed that we saw no such spike after the gathering in Bellwoods.

And so, it is becoming clear that we have collectively decided that, regardless of what we are told, we are done with COVID-19.

But the virus is not done with us — far from it.

And therein lies the challenge facing those who lead our democracy.

What happens when the people decide they have had enough? What happens when the people decide that they will no longer blindly, unquestioningly accept your instructions? What happens when science and instinct and experience leads you in one direction and the people lead you in another?

Those are questions that will preoccupy our leaders through the doldrums of summer. And their answers will live on much longer in the health of our nation and the political fortunes of their parties.