Finding Purpose and Profit in a Recession
The Granger Network CEO
There’s a saying that “it’s easy to be a genius in a bull market.”
Well, the relentless images of plummeting stock tickers and deserted retail locations have made it painfully clear we are in bull market territory no more. Recession is in full force. Given the recent rallying calls at the World Economic Forum and elsewhere for a more conscious, thoughtful, stakeholder-oriented capitalism, it’s time to broaden that saying: “It’s easy to be a stakeholder capitalist in a bull market.”
But what happens when that market turns? What happens when it tanks? Will all of our idealism make it through to the other side?
Just a few months ago, CEOs and titans of industry made headlines with their renewed commitment to “stakeholder capitalism.” As a business community, they preached, we must broaden our focus to encompass the concerns of all stakeholders. Shareholders, yes, but also: employees, customers, vendors, the local community, the environment, and so on.
On so many levels, stakeholder capitalism makes good business sense. It’s more sustainable. A lot of research now suggests that it’s more profitable. And it also makes society and the planet a better place to live, an inspiring manifestation of the aphorism, “a rising tide lifts all boats.”
But if we’re not careful, all of that momentum towards a more conscious form of capitalism could soon evaporate. When times are tough — and every indication is that they are about to get even tougher, as the full effects of this pandemic on our economy will materialize — there will be an impulse to pull up the proverbial drawbridge. To hunker down. To defend. To protect profits at all cost, and to defer purpose for a brighter day.
I experienced this in my own business just the other week:
My firm was scheduled to host a large workshop for a client this month. When the workshop was cancelled in March due to COVID-19, I contacted the venue straight away to let them know. I was informed — quite matter-of-factly — that the full $25,000 stipulated in our contract would be due in any case. Tough luck.
At first I was surprised. Then I was upset. And then I got into defensive posture. I felt that natural impulse I just referred to activate within me: to protect myself, my colleagues, my client, my interests. My profits.
But when I actually called the General Manager on the phone, something happened. Those feelings? They subsided. I listened to a real, live, human voice — and the concern I heard on the other end of the line cut through the sound and fury in my head. This was a person, after all. He wasn’t “out to get me.” He was just scared and uncertain, just like I was.
I listened to him describe his predicament. His overhead for the month was $1.4 million — with the coronavirus cancellations piling up, he was only on pace to bring in $400,000 by month’s end. A tough spot, to say the least. I could imagine the pressure he felt. I could feel it.
I was also able to share my own circumstance as a small business owner and the impact these sunk costs would have on me and my team. As I did so, I heard his tone change in real time.
At the end of the call, two important things happened.
First, we resolved the situation at hand by reaching a compromise. I agreed to pay a small portion of the fee as a non-refundable deposit. He would allow us to reschedule the event for the fall and apply a credit towards that event. We were both able to walk away feeling as though our financial interests were acknowledged and addressed.
But something else happened, something arguably more important: instead of remaining adversaries, we became partners. By broadening our focus beyond our own bottom lines, we were able to hold what was fundamentally important to the other, demonstrate care for one another, and co-create a future, together. A future that wouldn’t have happened if we had gone at it as opponents.
We both had to make concessions. As business owners, there will be plenty of choppy waters to navigate, even if we engage all stakeholders as partners. But by turning the zero-sum game into a partnership, we stand a better chance of navigating those waters effectively.
Creating solutions with all stakeholder cares in mind is how we will weather this financial crisis, and the one that inevitably arises after this one is long forgotten. Now is not the time to let go of stakeholder capitalism. Now is not the time to return to a myopic focus on profits to the exclusion of all else. Now is the time to reach out to stakeholders, whether they be our colleagues, employees, customers, vendors, shareholders, competitors, or whomever. To work with each other to navigate all fundamental cares and concerns at play. To take care of each other. To co-create futures together.
The great test for stakeholder capitalists is upon us. Will we rise to the occasion?