By Gideon Malherbe, Founder, Virtual Consulting
It seems most people agree with the observation that CV-19 accelerated many of the business and social trends that were already on a slow burner before the pandemic. The acceleration of corporate digital transformation being quite notable. Similarly, we saw substantial demonstrations against basic human rights abuses as well as individuals and institutions becoming more deterministic about environmental custodianship.
In stock market analysis, Robinhood Snacks draws a similar picture that it calls the “DPF Effect” – “Demand Pulled Forward” – to describe events that should happen now but actually happened in 2020. This “Covid-19 pull-forward” is expected to affect many aspects of the coronaconomy.
For business, this means that ESG (Environmental, Social & Governance) factors now take center stage in strategy making. No longer is it sufficient to zone in on shareholder value creation and use that as a justifiable defense against broader responsibilities. From a convenient history where governments were held responsible for social and environmental integrity, business is now squarely accountable.
Experienced executives may feel a sense of indignance – justifying historical behaviors by their historical contexts. Perhaps this sense of indignance may be correlated with the same emotion and feelings of rejection that so many royal families felt a mere 100 years ago when citizens claimed the right to participate in deciding the affairs of their lives.
I am increasingly convinced that our post-CV-19 world will continue with high demand for corporate accountability in the social justice and environmental spaces. I am also convinced that the political (UN/World Bank/NGOs) and capitalist (pension funds, private equity funds, hedge funds and banks) will abandon their ever-increasing bias towards responsible policy development and preferential funding thereof. If anyone doubts this, please look at the rise and fall of Peabody Energy in the United States. Or, look at the recently increasing pressure on the Exxon Board to turn over a new leaf.
To fully wrap the Board and Senior Executives’ arms around this jump-change to accelerated social and environmental accountabilities, a solid Scenario Planning exercise is recommended.
There is an increasing and noticeable separation of the leaders and laggards unfolding. The difference between a forward leaning and a stubborn zealot will be manifest in the strategic players’ ability to be well-prepared to capitalize on the price shifts and structural changes within extractive sectors. Whereas the laggards will consistently be caught by surprise pricing moves. We will also see the leaders comfortably deploying renewable energy-producing capabilities at their own operations and thus develop the competency to manage this new integrated asset base. The laggards will end up paying the penalty for not having developed the renewable energy engineering and (digital) management capabilities – an expensive penalty indeed. We will also see the leaders introduce and lead industry sectors in the technical and social aspects of a circular economy – managing the retention of commodity value throughout the life cycle within a near zero emissions environment, exponential innovation in this field being the enabler.
The leadership challenge of the future does not lie within the ambit of a traditional corporate leadership remit. The compelling goal is to plan and execute the company’s position as an accepted and trusted partner in a near-boundaryless ecosystem of ever-increasing stakeholders. You may even call it a further deepening of democracy. This links up well with the financial industry’s similar earth-shattering changes.
To help leadership teams with the understanding and design, we take them on a Scenario Planning journey. It’s a journey that looks at the profound shifts and logically and coherently grafts them into possible alternative futures. Perhaps linking blockchain platforms to community commitments. Perhaps redefining the social contract with environmental groups. Or, perhaps simply breaking out of the CV-19 funk and getting back to determining how the corporation should and can put its positive footprint on our new post-pandemic, awakened society.
For nearly 30 years, we at Virtual Consulting have been helping companies develop their scenarios and strategies. During CV-19, we supported clients in developing their pandemic response. Now, we’re helping clients reimagine their corporate strategies. Our Scenario Planning involves not only a wide range of views on how the future may play out, but careful consideration of the socio-political, environmental, technological, and people forces that will aggregate into greater change and greater opportunities for all participants.