Disruption, reputation and the purpose-led agenda in 2020

17 November 2020 by Barney Wyld
blog author

Acre recently caught up with Barney Wyld, Group Corporate Affairs Director of National Grid, to get his perspective on trust, reputation and the purpose-led agenda, as we move towards the end of what has become one of the most disruptive years in recent memory.

Barney’s experience includes leadership roles at Unilever, Network Rail and Rolls-Royce and has become one of the UK’s experts in helping companies define their purpose and mission in a way that resonates strongly with customers, employees and wider communities.

In July 1945 Britain went to the polls. It was only two months after the end of WW2, with the wartime hero Winston Churchill basking in the respect of a grateful nation.

He lost the election heavily.

Churchill’s Conservatives didn’t realise that the war had changed people. Society had moved on, and it was time for a new normal. In the following five years the UK saw the creation of the National Health Service, the welfare state, and the nationalization of railways, steel, energy and other sectors.

It is of course far too early to know what the long-term impacts of the COVID-19 crisis will be on people as employees, consumers and citizens. But it is clear that all economies are entering significant recessions, and also that the crisis is accelerating several trends that were already apparent. Business leaders will find themselves navigating a set of ‘new normals’ across societal attitudes that few are prepared for.

Before the crisis, CEOs were starting to engage deeply in corporate purpose, multi-stakeholder capitalism, and sustainability in response to global warming and other collective concerns. This agenda will certainly become more urgent and specific as a result of COVID-19.

As citizens and small businesses endure increasing hardship while governments support major enterprises with unprecedented rescue packages, we should expect intense scrutiny of the social relevance and contributions of corporations. How individual companies act and communicate in this extraordinary period will define them during the crisis, and probably for years after.

A new social settlement?

Those who championed globalization once promised a world of winners, one in which free trade would lift all the world's boats, and extremes of left and right would give way to universally embraced liberal values. But as the likes of Paul Collier, David Goodhart and Ian Bremmer have described in their different ways, deep rifts are tearing apart the fabric of our societies.

These rifts are not between left and right. Rather they are between the highly educated cosmopolitan metropolitan types for whom global capitalism has worked well; and those often less educated, more provincial, often with more traditional values, for whom it too often represents a threat. These two groups are roughly equal in size – the UK is, after all, predominately a nation of small towns with a London ‘city state’. They are described by Goodhart as the ‘Anywheres’ vs ‘Somewheres’.

It is not difficult to track the Brexit vote and the rise of populist and nationalist politicians across Western democracies back to this clash of identities, with the reassertion of national identity, patriotism as well as local communities. The Conservative party tapped into this brilliantly in their 2019 General Election win, converting the so called ‘red wall’ across the north west and north east to a ‘blue wall’. The recent row over the BBC’s refusal to play the words to ‘Rule Britannia’ is but the latest example of this identity clash: there will be plenty more.

The blame and fury aimed at political, media, and corporate elites for people’s perceived – and often real – losses is intensifying. This matters as much for business leaders as it does for politicians, particularly for those for whom it is important to build relationships with consumers or citizens outside of the biggest urban conurbations, or those for whom popular sentiment matters (either directly, or as represented through regulators and politicians).

It will also be important for companies to understand the evolving new limits to liberal globalisation and the ramifications of the likely reinvigoration of the nation state. The protectionism touted by the Trump administration is likely to find its echoes elsewhere – including almost certainly in the UK. Increased intervention is likely to affect not only capital markets, limiting foreign investment and takeovers, but also attitudes to e.g. employment and supply chains.

One point of tension in this will be where companies prioritise their inclusion and diversity efforts – and how they choose to talk about it. The Black Lives Matter movement has led to an unprecedented, and welcome, focus on employers’ efforts and record in achieving diversity. Many people will be looking to see how companies aim to reflect the broader socio-economic and geographic diversity of their communities, and how this is reflected not only in the skin colour, but also the accents and back stories of both their leadership and their intake.

Business and climate change

There is a clear recognition by both pragmatic business leaders and politicians that society faces an existential climate threat. This is increasingly echoed by consumers, investors and employees. Yet despite the rhetoric, there remains a gulf between declarations of global responsibility and the inability to organise national action.

This is partly because the traditional climate change agenda has come from the liberal left – the most recent example being left-wing Democrats’ ‘Green New Deal’. But too often this has been couched in ‘global interest’ terms that alienate ‘Somewhere’ citizens for whom national and community identity is far more important than metropolitan executives and advisors would understand, or like. Furthermore, these positions have too often been presented as part of a wider liberal agenda involving language and policies that turn off (small ‘c’) conservative consumers.

One opportunity in the mid- and post-Covid world will be for companies (and politicians) to stop playing to the existential threat of our way of life represented by climate change, and instead to generate hope and support around the opportunity to ‘build back better’ through national green recoveries.

Resetting trust

In summary, it is becoming clear that as we clear the COVID fog, businesses everywhere will increasingly have to acknowledge they serve society, not the other way around. Societal expectations will have changed – perhaps irrevocably, and this will also be reflected in changing attitudes and roles of governments and regulators. We seem to have seen the high tide mark of ‘liberal globalisation’, and companies will need to negotiate a new ‘social contract’ with their customers and communities. The debate around ESG and purpose-led business has become mainstream. The ‘S’ in ESG has taken centre stage, and is likely to remain there for a while, with your own employees often the most critical observers.

Even before the COVID crisis there was a widening gap in trust levels of businesses, governments and other institutions between ‘informed publics’ and the mass population (gap increase from 9% to 16% between 2012 and 2019). People have been more willing than ever to call out the ‘say / do gap’ between companies’ rhetoric and the reality both of their climate change commitments, and on inclusion and diversity. In 2020, ‘virtue signalling’ became the corporate allegation to avoid.

We need a new way of framing these challenges (and a new lexicon that goes beyond ‘ESG’ or ‘purpose’). Businesses need expert help to identify the underlying (often irrational) ideas and themes that will help us bridge the trust gap and build a positive and purposeful reputation with key stakeholders. This includes delving into people’s notions of identity, their core values, their hopes, aspirations and fears for them and their families.

The prize for getting this right goes beyond mere mitigation of reputational risk, but the opportunity for deep competitive advantage in a new socio-political world. Business need increasingly to set the terms of the debate, and all the data shows they are increasingly being expected to provide the answers too.