Chairman's Desk

The road to recovery

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

As Canada reopens and rebuilds, we need leaders who will reject old norms and bolster public confidence by embracing new responsibilities, Jaime Watt writes.

On New Year’s Eve, 1999, John Koskinen, the chair of U.S. president Bill Clinton’s Council on Y2K Conversion, boarded a plane bound for New York City. The move was a well-timed stunt to assure a nervous public that global technology systems would not come crashing down because computers had successfully been switched to a four-digit year from the two-digit format the older software used.

Koskinen was certain that after years of planning and billions of dollars of federally funded mitigation efforts, the new millennium would not bring the mass blackouts and damage to critical infrastructure that many had anticipated. He set out to calm Americans’ worst fears and prove that total system failure had been avoided. There would be no apocalypse, and Koskinen would be in the air as the clock struck midnight, to prove that any risks of transportation collapse, among other fears, had been effectively eliminated.

With this act of certainty, the mastermind behind the United States’ Y2K disaster-avoidance plan made a crucial move toward restoring the confidence of the American public. At a time when perpetual doubt and uncertainty instilled widespread fear, Koskinen understood a crucial tenet of crisis communications. Beyond simply steering the country to safety, he had to prove that it was safe for people to engage with this brave new world and bolster their confidence in the measures he had taken. So, he boarded a flight.

Leading like it’s 1999

We find ourselves in a similar situation today to that momentous New Year’s Eve. Much like the lead-up to the Y2K “crisis”, the coronavirus pandemic has cast uncertainty and dread — albeit more valid than in 1999. Many politicians and institutions around the globe have worked tirelessly to keep the virus at bay, and it seems that we may finally begin to see the light at the end of the tunnel. But at this critical juncture, the prescription calls for bold leadership that can bolster public confidence at a time when distrust of both private and public institutions is abundant. We need leaders who realize that it’s time to reject old norms and take into account the interests of stakeholders in new and essential ways. We long for a John Koskinen of our own.

In any crisis, the leadership’s capacity to reclaim stability is vital. Once the crisis has been handled, how will a new sense of normalcy be reached? And how will the leadership survey the changed landscape and adapt its approach accordingly? While we may not yet have these answers with regard to Covid-19, history teaches us that the principles that guide these actions are paramount.

Looking beyond the crisis

As directors, we endeavour to ensure our organizations will remain afloat and competitive on the other side of a crisis. This pandemic has certainly forced many of us to broaden the parameters within which we should be acting and has forced us to chart a course which just months ago would have seemed unthinkable. It has driven us to a new assessment of our purpose and the reasons for our actions.

Re-examining the limited social responsibilities of business is one of the most obvious changes that has emerged from this crisis. Directors must acknowledge that public expectations of corporations have evolved and their purpose can no longer be to solely maximize profits and increase shareholder value.

Economist Milton Friedman’s old canard that the social responsibility of business is to increase its profits rings hollow in the new world in which we find ourselves. This means we must now work toward a more cumbersome end. By laying bare long-overlooked injustices, this pandemic has forced us to acknowledge the inequalities that have been perpetuated in well-meaning institutions, from corporations and government agencies to not-for-profit organizations.

It is our new responsibility as directors to steward our institutions in response to these social concerns. Boardrooms need confident leaders who will set a new precedent and redefine corporate norms. Our role will not only be to reinspire confidence in the economy, but to do so with intention. In other words, we cannot lead for the sake of leading. We must act resolutely toward a new purpose.

Expectations of the private sector have been shifting since before Covid-19. In redefining their purpose, corporations will be held responsible for helping to address exclusionary social structures, profound inequalities and other systemic issues. The Black Lives Matter movement has been a notable catalyst in drawing society’s attention to these problems. Beyond shedding light on structural racism, it has given life to discussions of other entrenched issues of inequality, including issues of gender disparity and economic inequality. Thanks to the protests and grass roots organization of these marginalized communities, conventional stakeholders are finally acknowledging that this isn’t some sort of fringe cause.

Evolving capitalism

As we emerge from the pandemic – whenever that may be – ensuring our organizations are purpose-driven and newly focused on positive contributions for all stakeholders will require support and direction. What’s more, guaranteeing that corporations are progressing beyond virtue signalling, by choosing to mirror their words with appropriate action, will be essential if we are to chart a truly new course. Leading this charge will be organizations and directors who are committed to serious action. People and leaders who, like John Koskinen, understand that leadership of a recovery goes beyond reassurances and planning. It requires uncomfortable and sometimes performative action to prove what form the future might take.

The current landscape signals that capitalism is changing, one way or the other. Boards have an important role to play in meeting this evolution by helping organizations redefine, strengthen and advance the scope of their purpose and values. This change is sure to bring uncertainty, but with it, opportunities.

As the recovery process continues, we cannot shirk the responsibility for the changes needed in our society and economy. We need to embrace them, in the appropriate context for our organizations, and accept the challenge of an evolved capitalism, to help humanity confront the demands, fears and expectations of our post-pandemic world.