Today's guest offers guidance on how to figure out the right thing to do for our companies. She invites us to go back to the first principles about our companies and about the social license to operate that society's grant to corporations. Her answer is both simple and inspiring. Make your core product well, Clean up your messes do no harm and treat human beings with dignity and respect.
Her book offers an indispensable guide to help companies navigate the new era of ethical challenges and risks in a volatile global landscape. It is a pleasure to welcome nyu stern ethics professor and author of this brilliant book, "higher ground: how business, can do the right thing in a turbulent world" Alison taylor welcome to the show.
Thank you so much for having me. It is a pleasure to be here.
Thank you so much Alison is up at six am particularly to the show she's over in vancouver at the moment so i'm very very grateful for you taking that effort as well to get up early, hopefully i'll get back to bed so i won't keep you too long
Ah, no worries. It's really, really nice to talk to you.
so let's jump into part one of the book which is a turbulent world a transparent world, and here you give us an overview of how we got to where we are today i thought that would be a good way to get everybody on the same page.
Yeah. So, I argue in the book and in the opening of the book that it's never been so difficult to run a business. And there are lots of ways we might. be able to think about that. A very obvious way to think about that is that we used to have this idea that came from Milton Friedman that the all you really needed to do to have an ethical business was focused on shareholder value and you don't break the law.
So we treated legal compliance essentially as a proxy for business ethics, and that worked quite well for quite a while. But now we've seen as you I'm sure we'll know the rise of this rhetoric about it's often called stakeholder capitalism, and this really started to emerge in 2018 2019, and it will be one thing, right? If we'd move from this era of shareholder value to stakeholder capitalism, but what I would I would say is it's more like everything everywhere all at once.
The short term shareholder pressures are still just as intense as ever. And now we've got all these new pressures. So the question about how we got here. I think there are three reasons. And I argue in Chapter one. There are three reasons. The first is the increase of transparency in the rise of social media. That's pretty obvious, right? It used to be that the corporation could, to a great extent, control the narrative, use its PR teams, puts messaging out by the media.
Now there's a much more fraught interactive relationship. I'm sure if you're, Trying to figure out where to go on holiday or what to buy. You're more likely to look at other customer reviews than take the company's word for it. So obvious, but really profound. I think that the less discussed element of transparency is this rise of employee voice and strategic leaking.
So very often you get this situation where the company's trying to say one thing from senior leadership about all the wonderful things they're doing. And then employees are undercutting that narrative by saying, they don't really mean it. Here's what it's really like to work here. There've been videos, for example, recently of employees filming themselves being laid off and putting it on TikTok.
The second thing is a little bit more complicated, or the second trend is a little bit more complicated, but basically, I argue that political dysfunction and the fact that we no longer trust governments and trust politicians to get anything done, and that's really true in almost every country in the world, has meant we've turned to business to solve problems we used to treat as policy problems.
And that's very interesting and arguably ironic because it Certainly in the U. S. Business has contributed to this situation by trying to undermine regulation and also have very, very low tax and things like that. And then the third trend, which I think is also obvious and perhaps some of the people listening have have Children or relatives of this age is that young people. And so the undergrads I teach in particular Think very, very differently about these topics.
So there's a really big value shifts, I think, going on across generations. And that means that corporations need to respond to this new set of voices, but all of this adds up to a very fraught cocktail of pressures.
I want to tell our audience, if you're a board member. So for example, Alison, I'm on a board and I'm on the risk committee. And now there's a lot of talk about ESG like there is in most companies. And this book is invaluable. It was so, so useful for me to read the book at the moment. And I have a copy of higher ground up for grabs for the innovation show audience. If you're a member of our sub stack.
You're immediately in the hat and people who are paid subscribers you have twice the chance to win that book but i have a powerful quote Alison i'd love to share and i'd love you to riff on this one and this is just a sample of the writing in the book you say today's corporations are bigger and more powerful than ever.
Yet, they remain so vulnerable that colossal time honored brands can vanish in a blink even corporate value has become less material it once rested in physical assets such as plants, machinery, buildings and cash but by twenty twenty the economist was reporting that.
Sixty one percent of the market value of s and p five hundred companies sits in intangibles such as research and development, customers linked by network effects brands and data the link between the ceo authorizing investment and getting results is unpredictable and opaque. i thought that was. Very important quote.
And you go on then to say, "this in turn has put a soaring premium on trust and relationships inside companies and between companies and their stakeholders that reliance on human capital and brand reputation and the prospect that technological change might upend it all renders some of our mightiest business empires intangible.
I thought that quote sums up so much of what you mentioned there about how difficult it is to be a leader in an organization today, but also how difficult it is to be an organization in the world today.
Yeah, that is really arguably the central quote in the book because they shift from tangible to intangible value. I think it's all sorts of implications. Arguably, this is what has driven the rise of ESG very directly because we no longer can rely on traditional financial accounting and disclosures to measure value because there are all these other factors. So I think investors are finding this less predictable.
The other thing about this is that if value is more intangible and perception based, the way I think about this is, the boundaries around organizations have dissolved. It was always a fantasy really that to argue that a business is cut off from society. If racism is a problem in society, racism, Inside corporations, but I think they used to be more reliable ways to control the message and to control your narrative.
Even we can think about things like confidentiality agreements for sexual harassment and discrimination and now, not becoming viable in the US. So just a lot more is on public display. It's much harder to keep secrets. It's much harder to control by legal documentation, what people are seeing and hearing about you. And so it's like we can gaze into what's going on in corporations and read about them, maybe not reliably, but certainly more powerfully than we've ever been able to before.
And that has all sorts of implications, I think, for how we run companies. And all, even means that the kind of traditional functions we have in companies are more I don't know that they're less effective, but most of the problems companies face cut across functions and cut across issues. So they might be sustainability problems and HR problems, or they might be, Compliance problems and then also problems about political spending, or they might be risk problems and and ethics problems.
So it's you. It's also very hard to delegate problems to one particular person, and certainly very hard to hope that the head of corporate comms or PR is going to take care of it.
I thought that was a key moment and i'm gonna jump around a bit and i just finished it just before we came on air which is perfect timing because it's all fresh in my mind but one of the things you do talk about is that you can't have siloed functions and giving somebody the title of you're in charge of ESG for example is impossible unless they're a polymath and they have deep understanding of supply chain resilience, understanding how to source the supply chain etc etc and
it's that de-Siloing that's so important and by the way all of this mirrors what we see in innovation all the time Alison.
This is a real barrier to innovation, right? Interestingly, I just read a really interesting article about how CFOs often shut down innovative opportunities and they don't mean to, but it's the kind of, it's the way the function's structured and they need to see proof. They need to see proof of returns and the business case and all this stuff that doesn't really exist when you're innovating because you're trying to do something new.
It's really, really interesting article, but I read it and I was like, That's exactly what happens in sustainability and responsible business as well. Like, a lot of the people I work with in that area will go and say, let's use renewable energy or something. And the CFO is like, well, I don't know. And, and, and so there is a lot of kind of stifling impact effect, I think, on on innovation opportunities.
And we can think about sustainability and responsible business as a kind of innovation, if it's done well. And I think we need to be pretty clear that in a big corporation, it can be very challenging to get that stuff done.
Your book was inspire me the way i write my weekly articles is i'll mix together different insights from different people and constant inflow of information from different books and one of the things that i started writing about because of yours was this idea that.
Blaming one person so you talk about this idea of the bad apple getting rid of the bad apple but i often think the same happens to poor souls who are in charge of ESG or innovation for members of our show many of them are these people who have often been ousted by organizations or else gas lit out of the organization making them feel like they fail. Because putting all the onus on them to drive the change is not fair. It's systemic inside the organization. Maybe we'll mention that as well.
I think that's a huge issue. And then there's this issue of kind of if a new problem comes up or there's some, development in society, people are like, Oh, well, we need a chief. something officer, so we need a new chief AI officer or we needed a chief happiness officer, a chief medical officer. This certainly happened with, diversity and inclusion. So, this becomes a huge problem in the U S which is where I'm based in 2020.
And then everyone's like, wow, we'll hire a chief diversity officer and give them a bit of money and have the report into HR. And then 18 months later, it's like, oh, you didn't see that. Solve racism. We're going to fire you. So, that I think as well as a sort of sign of how corporations tend to knee-jerk respond when some problem comes up that doesn't neatly fit anywhere. And it is usually not effective because most of these problems are very cross cutting as we've been talking about.
I wanted to go back to how we got here and explain to our audience why. Controlling the narrative is no longer enough because you can't, and you write in the book, "in 2009, only 1 billion of the world's people had internet access. This is incredible. When you think about this, you understand how there's the democratization of information. 11 years later, almost four times as many were using social media. So 4 billion and adoption has continued to surge in the global south.
This revolution has transformed every aspect of our lives, including how we do business. If you manage a business, one of the most profound consequences of mass internet access is that you can no longer control your narrative. You mentioned, for example, Wikileaks was this moment of change and how organizations, and I'll throw a few.
Alison has so much research and case studies in the book here companies like starbucks companies like coca cola companies like brew dog who are often celebrated as these great companies try to control the narrative and realized the exact effect of the internet. , Alison Taylor: the example I use in class, which people always remember is the doctor being dragged off the United Airlines flight. We all watch that and we're like, Oh, I don't know that I'm going to be flying United anytime soon.
And I think it would have been very different if you'd just been reading a news article after the fact and you'd be like, Oh, that sounds bad. But I think watching it happen, you're like, I want to get on one of those planes. And I think that that is, is something that's happening all the time. Right? So now anyone with a smartphone can capture these real time evidence of what's going on and put it on the internet.
And that has a very visceral power that reading about something after the fact just doesn't have the same effect. You mentioned then trying to control the narrative externally for example, but then trying to control the narrative internally is very very difficult because there's a growing swell of what you call bottom up activity
Yes. In fact, I had speakers in my class this week who have a whole organization. They were undergrads at McGill in Canada, and they have a whole organization helping young people organize, figure out where to work, figure out how to push for change. There's an organization out of San Francisco called Climate Voice, which gets tech employees to get to work. Get together and push company leaders to make various policy moves.
And I think yeah, something I hear in the classroom as well is I could manage my own carbon footprint and what I buy and that kind of thing that would have a little tiny effect, or I could go and work for a corporation and push them to do something on the issues that I care about, and that will have much bigger effect. So I think that's more than understandable. I actually spent quite a lot of time trying to help him help my students think about how to do this carefully. But let's be clear.
This is in some cases presents a set of really unrealistic and unmanageable pressures. And I think if you handle this badly, you very often end up in a kind of internal turf wars over resources. What the corporation should and shouldn't say on what's going on in Israel and Palestine, for example. And that's quite obviously a no win situation.
i will come back to that because you talk later on the book about issues like DEI. You also talk about psychological safety speaking truth to power all these critically important elements in a responsible business but in chapter two you go on to critically examine common cliches myths and misunderstandings about responsible business and why they confuse and paralyze us. I thought we'd share a little bit about this.
So if you're a leader or you're working in this realm inside of business, what are the booby traps that we can avoid?
So chapter two is about this series of, I wasn't sure what to call them when I was writing it. Myths, cliches, tropes, conventional wisdom. So there's this set of things we like to say. So, an example would be, we'll just balance the interests of our stakeholders. Like that's easy or yeah, the we should have zero tolerance for, for doing the wrong thing, like it's easy to implement that. So there's various things people like to say that have come, become conventional wisdom.
And my argument in the book is that those ideas, while they worked perfectly well for a long time, don't work anymore because of all the changes we've been talking about so far. So it's like, the book's called higher ground. It's like, you're trying to hike up a mountain, but you've got rusty worn out tools that don't work anymore. You have a good grip. And so we need to rethink a lot of things is, is my argument.
And then I think partly the way that we've always done things and thought about this in responsible business is fast becoming part of the problem. aidan_1_04-19-2024_140716: One of those things is, and I've noticed this myself from my own work, when I work with organizations and there's somebody who works in say supply chain or they're working on sustainability, they'll often say we are doing our best, say for example, to retailers, but the retailer is neither.
Rewarding us nor penalizing the others that aren't complying or aren't making the huge efforts and financial sacrifices we're making to your point about CFOs. This is so interesting to me because one of the ideas we put out there a lot, right? Is that if you do sustainable things, if you are a sustainable company, like Unilever would be a very good example, then everyone will give you a pass and you'll have a better reputation. You'll have this social license to operate.
You'll have everyone will think you're great and then you'll make more money. Yeah. I wish this were true, but unfortunately isn't. There's quite a lot of evidence that activists, for example, NGOs, they don't target necessarily the worst performers. They'll target the most prominent in a company in an industry or maybe even the leader in an industry, because what they're trying to do is get the whole sector to move.
So if you for example, can get Starbucks to move on unions, which they have just done, then a lot of other restaurants. Brands, a lot of other companies like Starbucks will be pressured to do the same thing. So that's fine. That's a perfectly good theory of change. But what it does mean is that we can't rely on who's getting negative press or positive press to know who's doing a good or bad job.
And very often where the scrutiny hits is is, is even a sign a company might be doing a better job than other companies on this issue. So I'll give you an example because that's a very wonky point, but what you will see out there, right. It's a lot of reporting and a lot of pressure on corporate proprietors. So fast fashion has become a real issue. There was a lot of reporting a few years ago about the cocoa supply chain and deforestation and child labor in West Africa, for example.
That's super interesting to me because as a sustainability former professional, when I'm working with companies on supply chain issues, it's food and apparel companies that are doing a better job than anyone else. So very often where the scrutiny hits, that's because the company has bigger risks in that area, not necessarily because it's doing a worse job.
One of the guests we had on the show, we had a three part series with Yossi Sheffy on supply chains. And he mentioned something that is intertwined in your book in some way, which is that oftentimes as well to the point about putting all the responsibility on one person. In charge of ESG you say it's very difficult to have a ESG expert because of the need know so much including, where their suppliers are getting their supplies how they're treating their workers and sometimes you don't even know
Well, exactly. And then, so there's, there's a really, part of the consequence, I think, of this rise of intangible value is that now we have the idea. And it's becoming legally regulated in the EU that you're responsible not just for your own company, but for your entire value chain. You've got to take responsibility for human rights violations and carbon emissions and all sorts of things. Going on in your value chain.
So this idea of your responsibility and the limits of that have massively expanded. And let's be clear. Yeah, that's really, really, really difficult to do. Well, the second thing that you're talking about that I think is equally important is where sustainability sits and what we're saying it is because sustainability challenges are a real mix of challenges. They're very often innovation and opportunity challenges. There are also risk management challenges. There are also impact challenges.
What is the impact of your business that the externalities on the wider world, and what are you going to do about that? And that, branding challenges and their challenges with your employees because of their externalities. expectations. So we don't know where to put this thing in the company very often, where it should sit, who it should report to. And that's because we're trying to embed these ideas throughout the business. And again, that's easier said than done.
Beyond embedding throughout the organization, outside as well because you describe how to build stakeholder trust you want stakeholders involved as well because. No one person or no one unit or no one business can listen to the entire world all at once. And you say here, listening to stakeholders is a process that invites companies to learn, address their internal blind spots and , build resilient reciprocal networks to tackle challenges for which good solutions don't yet exist.
The question of stakeholder engagement and stakeholder trust is very, very interesting. It's another thing that's come up recently. You hear companies talking about their stakeholders all the time. It's almost become a new sort of form of jargon. But very often what we call stakeholder engagement is really just PR. It's really just messaging. It's really just, how did you feel about this service or, or, or whatever. We can think a very good example would be an employee engagement survey.
And I've worked at companies and I've filled these out how I feel about the benefits and how I feel about my boss and this and that. And one, I'm not totally sure they're anonymous, so I don't feel completely comfortable filling them out in the first place. I'm not convinced the company's listening and really has any intention of changing anything.
And if someone asks your opinion and they've got no intention of doing anything differently, or all they're going to do is spin some kind of message back to you, you're more annoyed than if they didn't ask you in the first place. And I think a lot of what we're calling stakeholder engagement is really just that sort of PR it's messaging. It's trying to manage our perceptions.
But if we actually focused on stakeholder trust and our network of relationships and influence, in the supply chain with our employees, with our customers, seriously, that would mean something very, very different than messaging. And it would mean we consult our stakeholders to understand emerging challenges. There are lots of examples about this actually during the beginning of the pandemic.
So. So Levi's, had this, had this challenge at the beginning of the pandemic that its suppliers would go out of business unless it did something. So it provided financial support. So they would stay in business and they'd have these trusting relationships afterwards. I also really like there's an example in the book of Clorox the bleach company, and we can all remember you couldn't get bleach and couldn't get toilet paper.
And Clorox has this problem because it's got really a lot of strategic retail relationships and Target and CVS and all those companies need the bleach on the shelves for the customers. Clorox knows the higher priority right at that moment is to, is to supply hospitals. So they were able to go and talk to their retailers and negotiate and navigate this in a really transparent way. And that's the kind and manage these trade offs and talk to everybody.
That's a very different thing than a kind of nice message and a nice glossy sustainability report with a happy, smiling children and look at all the wonderful things we're doing. So it's a different thing to have a deep thoughtful conversation where you actually care what the stakeholder thinks, then sending out some survey and then trying to adjust your messaging to make the stakeholder feel better. Those two require a different mindset in approaching them.
And , I argue out there in general that a lot of what we are calling sustainability is just PR and messaging, and that we need to do a much better job given the scale of the, the problems we're facing.
And for our audience, you're a CEO of an organization. You listen to this, you're going on now. And I got so much more things on my list than ever before. It's true. It's difficult. It's so difficult to be a CEO, but in the book as well, Alison gives you a way to identify your priority issues. We won't have time to cover it in depth, but how does somebody even start because you help people to do this,
Yeah, there's a general problem, right? That there are more and more and more environmental and social issues. The rise of this discourse about stakeholder capitalism and how companies need to listen to all their stakeholders and balance their interests has led to more and more and more demands. And it's led to this phase more recently of corporate speaking up, right?
So in the last decade or so, we've seen a lot of corporations taking stands on things like climate change and racism and immigration and gun control, even in the US. So, there's, we've got, I think, into this situation though, where it feels like I think corporate leaders feel like everyone's yelling at you and you've got to figure out when are you going to listen? When are you going to take a position? When are you going to treat this as a priority?
And when are you going to say, I've got to run a business. I can't pay attention to these 50 things that various various people in my wider network care about. So, I think this is all part of the problem. I think it has drawn companies for. very understandable reasons into over promising into ticking the box on 40 things at the expense of saying, we're a yogurt company. We're going to focus on the agricultural food system.
So so that would be a very good example of, focusing on something that's really relevant. But a lot of companies these days, I think, feel forced or pushed or pressured to say and do something about an ever expanding list of stuff. And it's not sustainable. And it is not actually a good idea, either strategically for the business or for the wider world. And so I make a very strong argument that the leaders need to focus on one to three problems that they can actually solve.
They might need to report on more things. They might need to Be aligned with peer companies on more things. But if we're talking about strategic focus, I think the fewer issues, the better,
I'm so difficult even for executives in an organization to speak up to the board and say that we have it's the equivalent to change fatigue we can only do so much at certain times. The cfo i can only fund so many things at one time and one of the mistakes i made working in industry as a changemaker head of innovation was not asking for more resources cuz you always have this kind of dilemma that if i ask you to feels like i'm failing
. and one of the things i thought it was really important that you talked about and this is more to do with wrongdoing with inside an organization like volkswagen and diesel gate for example, is that these engineers were made feel that the organization was struggling and this made them make decisions that weren't the best decisions for the world rather than, they were the best decisions for the bottom line
One of the consequences of this need to have a laundry list of here are the 20 or 30 things we're working on is you'll get these very Diluted incremental efforts, probably none of which will work. Whereas it would be much better to have a big bet on, on a few things and actually have the resources and the planning to make that happen. That would also of course, make it much easier to embed, making those things a true priority in the rest of the business.
Cause if you have too many things that everyone's going to be like, Oh, that's exhausting. We'll just leave it to the sustainability team to write the report and disclose the stuff. And we'll hope everyone leaves. And that's how you get these kind of very unconvincing documents about look at all the wonderful things we're doing.
i'm one of the problems even for as a board member myself is reading those documents. Everybody has to upskill it's not a case of just leaving it to that department is like well i need to know this that's why i felt so serendipitous that i read your book at the moment is that it helped me upskill hugely and i really leaned into reading it. Because there was so much i was unaware of and you can't be because there's so many things you need to be be aware of in this world.
Moving on to one of those other things that you cover in the book is. Things like corruption and found a incredible yesterday i was at the barber you might you might have noticed for those people watching the show i was at the barber yesterday. And he mentioned to me that he had set up, I'm not going to name the country, but he had worked in a different country with his girlfriend for six months. And they worked at a barber there and the barber was run by a foreign national in that country.
And every day the police would come and harass the owner about his papers. Is he tax compliant, et cetera, et cetera, until he learned about I'm doing air quotes for people who are just listening to us. The way things are done around here so not only did he then have to give these police man and their family free haircuts but a little brown envelope when they left the left the barbers as well. To many people that will seem incredible but corruption is rife.
And you talk about this in the book, you dedicate a huge amount of the book to this as well. So you cover every aspect of getting to higher ground
I think the corruption story is so interesting partly because it's such a good news story for corporate regulation. Like if you work in human rights or climate change, your whole thing is they got to regulate disclosure. Things have got to happen. I'm really pleased to see these laws. And so what I tend to say to those people is careful what you wish for, because I felt the same way when, when anti corruption laws really started to ramp up in the early two thousands.
And now any public company has to take this super seriously and we'll have a big kind of compliance program. But as you just said, with your story from the barber, there's quite a lot of evidence Corruption is still alive and well, maybe just taking different forms. So I think the corruption conversation is partly about a conversation about how far we're expecting businesses and big businesses in particular to go to solve these wider problems. that sit in society.
It's also a parable really about the promise and limits of regulation to really change society. So arguably, and many people would argue with me about this, there's this real consensus. Everyone knows they've got to sign these documents. Everyone knows they've got to sign these contracts. We've got enormous compliance departments. We all know what it takes to run a good anti corruption program. But we still got a lot of corruption. So, so how, how useful has this really been?
We, what we regulate really in this world is bribery, which is just one element of corruption. And then there's a lot of other other things that many many of us consider corrupt that are perfectly legal. So tax avoidance certainly in the us lobbying and campaign finance is a really, really big deal. And that those practices are illegal in some countries.
So, the influence of business on politics and vice versa, which is really what, what the story of corruption is in this context is a super fascinating one. So that's why I spent some time on it.
It's a nice segway for this next section because you tell us that kato palazzo, a professor of business ethics at the university of lots on has pondered corporate impact and responsibility for decades during the nineties prominent company started to be attacked for not taking care of their workers. And the workers in their supply chains. Or for causing deforestation. In both cases the proximate cause was efforts by multinational companies to evade local regulations.
By moving into countries with governments unable or unwilling to enforce the rule of law. Early corporate responsibility efforts, pressed corporations to voluntarily fill these gaps in governments. I thought that was really important point to just even explain how that in itself is so immoral.
It's also the story of really the rise of this whole topic, or at least in its most modern iteration, right, was, is to a great extent, the story of globalization. So I don't know how many of your listeners are deep in the kind of ESG or responsible business world. But maybe some of them will have heard of this guy, Tarek Fancy, who quit BlackRock in a big, sort of storm and it's now out there saying ESG will never work. And what we need is regulation.
And I always find that really funny because the original kind of problem is companies globalizing and going to places where the rule of law and, fiscal capacity and things like that are lower. to avoid regulation. And so, it's it's a long time ago, but there was a lot of pressure on Nike and Gap, for example, in the nineties about running sweatshops in Asia. And a lot of pressure then, and all of that led to what became sustainability and ESG.
So I just find it funny that now there are a bunch of people popping up in the 2020s being like, wow, we need to go back to regulation and not understanding that the original problem was about companies. Going abroad to avoid regulation. And, and, and those things are not those and so, you can sit there and say, well, Bangladesh needs to regulate garment workers better, but maybe Bangladesh doesn't have the capacity. And so then the question is, well, what should Nike be doing about
Next up is a primer on business and human rights. And you start this section by saying while far from straightforward and frequently controversial, the best guidance to help companies understand and manage their impacts on the world was created way back.
Well, not that far back in 2011 and comes from the burgeoning field of business and human rights, because this is a relatively new terrain, many corporate efforts are embryonic, but human rights frameworks offer significant advantages over or compliance. And you mentioned here Paloma Muñoz Quick, an associate director of human rights and business for social responsibility.
A sustainable business network and consultancy and she mentioned that ESG is still considered a nice to have a human rights is not and therefore offers an opportunity.
ESG says we prioritize environmental and social issues on the basis they will drive higher returns. Human rights says we've got obligations to human beings. Human beings have rights and we need to think about how we impact those human beings. And the big argument in my book is that we should base our ethical obligations. I'm not saying our entire business model, but our ethical commitments should be grounded on the impact that we're actually having on human beings.
One of the really interesting things about publishing this book has been this, the reaction to this chapter, because I think if you are not deep in the world of responsible business, this strikes you as obvious. Why would you not treat human beings with dignity and respect? Why aren't all companies doing this? it seems obvious. I've even had someone come up to me and say, I can't believe you took seven chapters to make this argument.
But if you are deep in responsible business, this seems it seems as if I'm suggesting something very, very radical, whereas, in fact, I think it is very, very simple. I'm not saying it's easy, but to me, this offers a firm ground and a firm place to rest at least your ethical commitments.
Not least because what human rights frameworks have going for them, and this picks up on the conversation we were just having, is they're clear about here are the limits and remit of your responsibility versus the government versus civil society.
aidan_1_04-19-2024_140716: Okay. we have covered only some of the challenges with all of this and the challenge is great and the challenge is the same as other realms, like people who work in innovation, we struggle with the same things and so therefore if the tools work to build better cultures that are more ethical and effective.
They're the same tools to build more effective innovation so this next part is brilliant and Alison i'll throw it over to you to share just some of the tools that you mentioned for example you zoom into. Leadership compliance. Speaking up and organizational purpose. Will touch them and then i might , pick up a few threads of some great quotes that you mentioned across this part. Yeah. So, let's start off by saying culture is a strategic advantage in a way.
It's always been, but never maybe to this degree. And that is partly because we all see now what is going on inside corporations all the time. So there's all these sort of leaks. You can read all these long reports about, this or that. Town Hall meeting at Facebook or this and that employee rebellion or this and that, a group of people writing this open letter or protesting something. Google's just fired a bunch of people for protesting that it's it's working with Israel, for example.
So all of this is on full display as never before. And that means we need to take culture much, much, much more seriously. And it also means we've got to shift, I think, a whole notion of leadership. Barking orders from the top is one way to think about it. But the traditional notion of leadership when I was young is, you set strategy, you set direction, you design incentives, you you set out your vision and then you sit back and the money rolls in.
And I don't, Come across that idea of leadership as being valid in the classroom anymore. Young people want mentors. They want inspiration. They want to be persuaded. They want to be brought along, and so the, the maybe most useful way we can think about this is that Being a leader has much has changed from setting direction to driving influence, and we can even see this in CEO job descriptions, which have really evolved from technical skills.
We need you to have been a CFO before this to, Can you influence networks? Do you understand sustainability? Do you understand topics like diversity? Can you build coalitions? Can you work with people that have got different values from you? And I, you mentioned your board work a little bit earlier. One of the ways we might think about these topics in general. Is that you should continue to have your core expertise, but topics like sustainability and diversity ought to be minors.
Maybe to your major, you need some facility. You need some confidence in navigating these topics because young people and stakeholders in general care about themselves. It doesn't mean you need to go and be an ESG expert, but you need the confidence to prioritize, you need to understand what's going on, and you need to be have a good game on the priorities that you're going to set. . Aidan McCullen: I loved what you said here about a company's culture.
You said if your company is heading into an ethics scandal, this will frequently show up in the culture of that organizations long, long before the problems ever discovered. The issue isn't so much that concerns aren't visible, but it's that , no one's looking.
I love how you wrote that, but one of the things I wanted to share was the findings from a study you conducted in twenty fifteen with twenty three experts and they all agreed that unethical cultures have several things in common i love you to share just some of them just so if anybody's out there and they can spot them they can start worrying about these things. So this was a an early piece of research I did.
There's actually, I wrote an article in Harvard Business Review at some years old, though, now, called Five signs your organization might be heading for an ethics scandal. And the question I sought to answer, which sort of sounds obvious is, yeah, if a company is heading into an ethics scandal, if there's a problem with ethical issues in the company, can you see it in the culture? Are there like proxy indicators and so on? signs that something is going wrong.
And I found that there were all these experts agreed that there were. So, one of them is growth at all costs. We were talking about VW earlier and the engineers feeling under this pressure and what VW had done was say, we are going to be number one. In in, in, in our sector in America. And so there was this push, you've got to grow, grow, grow, grow, grow. And so the incentives and the pressure really, really built up.
And that's, I think partly how these engineers ended up cheating on these admission tests. Yeah. Siemens. There was a big bribery scandal at Siemens in the early 2000s. And if you read interviews with the executives who were paying all these bribes, or at least signing them off, they will say, we thought we had to do it. Or we'd ruin the company. And so there's very often this sense of kind of existential competitive threat. We've got no choice. We've just got to do it.
And that's a sign that you are heading into an ethics crisis. So it's obviously the design of incentives. I actually wrote an article in 2020 when the last CEO of Boeing was appointed and I said, Oh, look, he's got a 7 million bonus. If he can get the 737 plane back to the skies as quickly as possible. Sorry for where we are. Could not have been more predictable. You'll also tend to see a lot of kind of in jokes and euphemisms. No one ever says I'm paying a bribe very directly.
It's always like I'm doing a favor for a friend, or there'll be like often these kind of metaphors of war and sport and people telling these jokes. Again, at Boeing, there were these the release of these, all these internal emails during the litigation. And, you see these engineers at Boeing saying, These planes are designed by monkeys and I still need forgiveness for all the covering up I've done.
And it's clear they feel really disturbed and conflicted about this and think no one is going to listen. And then you'll see leadership that is top down and complacent. And it's kind of like, don't bring me problems, bring me solutions and, just get it done. And, and that kind of thing. And so you see these traits repeatedly appearing culturally in organizations. And very often those organizations get into a lot of trouble.
So, it's also, this is also, I think, an interesting example of how maybe it's, it's not what you need is a lot of rules and a lot of disclosures and a lot of don't do this, don't do that. It's looking at what kind of behavior the organization values and rewards and whether employees feel comfortable to raise concerns.
And that's the point we'll talk about next, because you say that one significance of office social ties stands out in data showing that whistleblowing increased significantly during the pandemic surge in 2020, as Bloomberg noted, people felt emboldened to speak out when managers and coworkers aren't peering over their shoulders.
A corollary of all this is that retaliation against employees who report wrongdoing has also increased according to a survey by the ethics and compliance institute those weak social ties don't just make it easier to report wrongdoing, make it easier to punish those who try to speak up the relationship between remote work and unethical behavior appears to be anything predictable, what a what a conundrum i thought that was so interesting and i love you to share this.
There's all this mixed evidence about whether remote work works or doesn't work makes us more or less ethical. And, and, and the reality is we don't know. We're in uncharted territory. We, we, we ran our businesses in a certain way until 2019 and now everything's up for grabs. And something I, I often think about is, is if you're under about 26 or 27 today, You don't remember that office culture before the pandemic.
So there's some really profound sense, I think, in which corporate culture is getting reshaped in real time. So remote work is a good example. It's not the only example of how something that used to be non negotiable is now totally negotiable. And, it means we're not coming to the same. Building every day, which has a lot of implications for how you run and manage and make decisions and set job descriptions and all sorts of things. And none of those assumptions again are reliable anymore.
So, so many implications here, but it really reinforces my point. I think that leadership these days is a case of building coalitions and influencing networks who may be very remote. It's not about come and sit in my office and I'm going to tell you what to do.
aidan_1_04-19-2024_140716: So important and there's a whole chapter on leadership the leadership of today as well for for those people interested as well but you emphasize the imperative instilling an ethical culture and how this means A conscious focus on fairness. Awareness, efficacy, empathy, and decision making. And this covers everything from psychological safety to diversity, to neurodiversity, et cetera.
But one of the things you point out is that although it might alleviate criticism, adding a few diverse candidates won't bring meaningful change in itself, and we see a lot of this.
There's a lot of diversity washing, or I don't know what the term is for it, but you say that no single social identity characteristic can explain a person's worldview or experience there certainly a relationship between demographic and cognitive diversity, but is neither straightforward nor predictable another one that's a difficult one to call There's a big backlash against ESG and diversity initiatives underway in the U. S.
And part of what is going on, I think, is that companies again for very, very good and understandable reasons have treated this as a legalistic process or treated it as a question of how many women do you have in the C suite? And, how many of this type of people do you have in this sort of division? And that's very understandable. I think what we need to do on this topic is to remember why we care about diversity in the first place. And that is one, because it is fairer.
We need our senior leadership and our companies in general to look like society looks. That is what I hear from my students all the time. I if I'm thinking about going and working somewhere and I go and look at the board and it's a bunch of old white guys, I don't want to work there anymore. So people just want. Leadership teams and companies that look like them and their friends. And I think that's very, very understandable. The other thing is, you don't know everything.
You need different perspectives. You need different backgrounds and opinions and professional experience in the room to make the best possible decisions. So if you only have a certain sort of person with a certain sort of worldview, you might make decisions more efficiently or more quickly. They won't necessarily be better decisions. So I think we've.
lost sight of the real benefits of diversity and therefore how to drive more diverse organizations and defaulted to something which is much easier, which is have you got a certain number of women in the, not easy to change, but easy to measure at least and easy to talk about, or a certain number of people of color. But this isn't Noah's Ark. And then you get into these really weird situations about, well, if we've got this many, does that mean we're diverse?
Does that mean we've solved the problem? So it's not enough to put bums on seats. If you have one or two women in the boardroom, That might tick a few boxes. If those women don't feel able to share their opinions because they're talked over and no one listens to them or they're the head of HR and they're perceived as not being powerful then that's not going to do very much.
So we need to get to the root problem we're trying to solve and think about how to actually solve it and how to have better cultures where more people feel able to speak up and share their views. And we have better ideas and we make better decisions, which is not the same as Same thing as the sort of tick box way that this topic's been treated.
beautiful beautiful. Alison, I a closing quote that i love from the book and. Before i give that i give you a time maybe to think about your final call to action for people listen to the show i'm before i even do both of those things where is the best place for people to reach out to find you for keynotes for Consulting it's after where is the best place to find you
Thank you. That's a great question. I have a website, AlisonTaylor. co. There is one L in the Alison, A L I S O N. I'm also all over LinkedIn. I'm so easy to find on LinkedIn. Put in Alison Taylor, NYU, you will find me very, very easily. And I post almost every
and i will link to your website and to the article that you mentioned earlier on and i'll link to that cfo article that you mentioned as well i'd love to find that and share that with our audience as well, my final quote is as follows and as i'm doing that please have a think yourself for your final call to action for audience i loved what you wrote here it's right at the end of the book you wrote, "today, being a good business doesn't call for exaggeration spin or overreach it's not
about setting rules pitching an appealing story or listing your achievements the time honored approaches have lost potency. They're losing their grip you'll need to imagine and then establish firm foundations in order to aim high to reach the higher ground. Absolutely love that Alison over to you to close today show what's your call to action. Oh, thank you so much. So, I guess I will close by saying this is simpler than you have been told. Please do not drown in the jargon.
Focus on treating People with dignity and respect, focus on your core business. Don't exaggerate. Don't over promise, do right by people. You will find that this is much less complicated than you have been told. And you will also bring people along with you much, much better. This is achievable. You can reach higher ground.
Do what your parents told you to do that's how i perceive it anyway and it's been an absolute pleasure having you on the show just a reminder for audience i have a copy of this brilliant book up for grabs higher ground, how business can do the right thing in a turbulent world we've been joined today by Alison taylor thank you for joining us
Thank you so much. It was such a wonderful conversation.