HBR On Leadership: Episode Summary Episode: Should Your Business Take a Stand on Societal Issues?
Release Date: October 30, 2024

Introduction

In this compelling episode of HBR On Leadership, hosted by Harvard Business Review, senior lecturer Hubert Joly delves into the critical question facing modern businesses: Should your company take a stand on societal issues? Drawing from his experiences as the former CEO of Best Buy and insights from various case studies, Joly explores the complexities leaders face when navigating humanitarian crises, geopolitical conflicts, racial justice, climate change, and more.

The Evolving Role of CEOs in Societal Issues

The conversation begins with Brian Kenny highlighting the expanded responsibilities of today's CEOs. Beyond traditional roles—such as overseeing finances and ensuring compliance—modern leaders are increasingly expected to address complex social issues. Hubert Joly emphasizes that "doing nothing, ignoring these issues can be very dangerous and engaging can also be risky" (03:41).

Joly argues that the purpose of a firm has shifted from solely maximizing shareholder value, as advocated by Milton Friedman in 1970, to encompassing a broader responsibility towards society. He states, "the purpose of the firm is to do something good in the world, and you can do well by doing good" (06:13).

Criteria for Corporate Engagement in Social Matters

A significant portion of the discussion revolves around establishing a framework for when and how businesses should engage with societal issues. Joly suggests that CEOs should develop a set of criteria considering the company's purpose, values, and stakeholder impact. He outlines essential questions such as:

• How does the issue align with our company's purpose and values?
• What is the potential impact on our stakeholders?
• Do we have the legitimacy and competence to address this issue?

He illustrates this with the example of Microsoft focusing on immigration due to its direct impact on their workforce, while Walmart might engage in gun control debates due to the nature of their products and associated risks (11:42).

Case Studies and Examples

Best Buy and Social Engagement

Drawing from his tenure at Best Buy, Joly recounts how the company responded to George Floyd's murder in Minneapolis in 2020. The incident, occurring near Best Buy's headquarters, forced the organization to navigate community unrest and internal protests. Joly underscores the necessity for CEOs to "develop a framework for deciding when and how to engage at the highest level" (12:35).

Starbucks Diversity Initiatives and Challenges

Kenny references Starbucks' attempt to promote diversity by encouraging employees to write sentiments on cups. While well-intentioned, a subsequent incident involving racial prejudice led to significant backlash and necessitated company-wide retraining. Joly uses this to highlight the importance of ensuring that any public stance is supported internally and that employees understand and align with the company's actions (14:00).

Nike and Colin Kaepernick

Joly discusses Nike's support for Colin Kaepernick, which, while enhancing the brand's image among certain consumers, exposed internal disparities in diversity and inclusion. This example emphasizes the delicate balance between external activism and internal company culture (15:03).

General Mills and Merck Responses to Social Issues

Citing Jeff Hareding of General Mills and Ken Frazier of Merck, Joly illustrates how leaders can effectively engage on societal matters by consulting diverse employee groups and aligning actions with core company values. Frazier's decisive stand against the Charlottesville incident, supported by his board, exemplifies proactive and authentic leadership (16:18).

Authenticity and Purpose in Corporate Stances

Authenticity emerges as a cornerstone for effective corporate engagement. Joly stresses that a company's actions must stem from genuine values and a clear sense of purpose. He notes, "if you're centered around that, and of course, if the strategy and performance is derived from that... it's going to be authentic" (20:25). By maintaining an authentic stance, companies like Best Buy and Ralph Lauren ensure their initiatives are both meaningful and aligned with their long-term goals.

Communication and Internal Processes

Effective communication is paramount when taking a stand on societal issues. Joly advocates for:

• Proactive Planning: Identifying potential issues in advance to avoid being reactive.
• Internal Dialogue: Engaging with diverse employee groups, including previously marginalized voices like conservatives, to foster inclusive discussions.
• Transparent Communication: Clearly articulating the reasons behind the company's stance to both internal and external stakeholders.

He highlights the importance of listening, stating, "the first priority should be doing something inside so that you take care of those in your care before you teach lessons" (15:06).

Navigating Backlash and Public Perception

Addressing the potential for backlash, Joly advises companies to remain steadfast and authentic. He recounts how Bob Chapek's decision to avoid taking a stance on certain issues led to internal dissent and public pressure, demonstrating the risks of inaction. Conversely, he cites Jamie Dimon's leadership at JP Morgan, where taking a stand against racism enhanced the company's reputation without significant negative repercussions due to the company's established credibility (18:04).

Advice for Aspiring CEOs

In concluding the discussion, Joly offers invaluable advice to aspiring CEOs contemplating the challenging landscape of modern leadership:

• Embrace Purpose: If your aim is to make a meaningful difference, be prepared for a demanding yet rewarding journey.
• Prioritize Self-Care: Maintain your well-being to effectively lead and support others.
• Commit to Authentic Leadership: Align actions with personal and corporate values to navigate complex societal issues successfully.

He encourages future leaders to view their roles as opportunities to address pressing global challenges, emphasizing that "companies now have the opportunity and the duty to make a big difference in the world" (24:01).

Conclusion

Hubert Joly's insightful discussion on HBR On Leadership underscores the imperative for modern businesses to actively engage with societal issues. By establishing clear criteria, maintaining authenticity, and fostering inclusive communication, CEOs can navigate the intricate landscape of social responsibility. This episode serves as a crucial guide for leaders aiming to balance profitability with meaningful societal impact, ultimately reinforcing the evolving essence of leadership in today's interconnected world.

Notable Quotes

• "Doing nothing, ignoring these issues can be very dangerous and engaging can also be risky." — Hubert Joly 03:41
• "The purpose of the firm is to do something good in the world, and you can do well by doing good." — Hubert Joly 06:13
• "The first priority should be doing something inside so that you take care of those in your care before you teach lessons." — Hubert Joly 15:06
• "Companies now have the opportunity and the duty to make a big difference in the world." — Hubert Joly 24:01

Timestamps

• 03:41 – Central issue of when and how to engage in societal matters.
• 06:13 – Evolution of the firm's purpose from shareholder value to societal good.
• 11:42 – Criteria for corporate engagement based on relevance and authenticity.
• 14:00 – Starbucks' diversity initiatives and related challenges.
• 15:03 – Nike's stance on Colin Kaepernick and internal diversity issues.
• 16:18 – Effective responses to social issues by General Mills and Merck.
• 18:04 – Navigating backlash and the importance of authenticity.
• 20:25 – Aligning corporate actions with authentic values.
• 24:01 – Advice for aspiring CEOs on leadership and societal impact.

This summary encapsulates the comprehensive discussion between Brian Kenny and Hubert Joly, offering valuable insights for current and future leaders on the intricate balance between business objectives and societal responsibilities.