During our four days at the World Economic Forum’s annual meeting in Davos, we were struck by the mindset of the private sector. In conversation after conversation, those in the private sector held two very strong beliefs: First, a recognition that the public sector has diminished to such a point that government institutions are unable or unwilling to tackle many of the challenges facing society today.
Second, the unwavering faith that the private sector has in itself to fill that void. The innovative spirit, the ability to collaborate across borders and cultures and—perhaps most important—the trillions of dollars in capital able to be deployed around the world all reside within the private sector.
While government remains relevant in helping to scale the work of the private sector, it no longer has the influence necessary to drive the significant improvements we must make to our society if we are to solve challenges like poverty, access to clean water and gender quality.
We do, however, offer a point of caution to those in the private sector. As anyone who has ever been to Davos can attest, it is an echo chamber of the highest order. There is a striking similarity to the mindset, life experience and outlook of most everyone at Davos. People are drawn to Davos for the same reason—a steadfast belief that the free market economic system created after World War II is the single most effective force to make the world a better place.
Moreover, a corporate executive expressing a desire to do something of consequence for society at a forum in Davos does not guarantee it will be met with enthusiasm elsewhere in the world.
What Does the Public Think?
Once you get beyond the Alpine confines of Davos, the public has a much more mixed view of the role of the private sector. For example, both qualitative and quantitative research conducted throughout 2017 by Handshake showed that most Americans—across all socioeconomic levels—view the private sector from a position of skepticism. As one focus group participant said, “Any time there’s a company or corporation involved in something, the assumption is going to be it’s benefiting the company in some type of way. I’m not saying it’s wrong, but that’s just the pure assumption.”
The recently released Edelman Trust Barometer indicated that such distrust is not limited to the U.S. In fact, there is a wide variation around the world in the level of trust the public gives to the private sector. For example, companies headquartered in Switzerland and Canada are viewed with a much higher degree of trust than those in counties such as Mexico, China and India.
The Importance of Influence
If the private sector is to lead the global effort to address the major challenges facing our society, it must use its influence more effectively, and in a manner that builds a genuine connection with the public.
At Handshake, we believe influence has three, equally important, components in which businesses must invest their time, money and reputation if they are to be in a position to create a lasting benefit in the world and gain a meaningful level of trust in doing so
- Human Capital – the value created by attracting productive employees and investing in their health, happiness and ability;
- Social Capital – the degree and effectiveness to which the organization engages with society, both horizontally with its peers in the private sector and with public institutions and vertically with the general public and stakeholders; and
- Business Capital – the value created by the organization selling its products and services plus its financial assets and investor confidence that it enjoys.
All three components must work in concert, which requires executives to take a holistic approach to their strategy and operations. This means executives must look beyond the traditional audiences of shareholders and see how their influence has an impact (both positive and negative)on society as a whole.
If a company is able to deploy its influence in a smart and strategic manner, it will get the credit it deserves.
For example, Handshake found that an overwhelming 85 percent of respondents in the U.S. believe it is a “good thing” for a corporation to maximize its influence to solve a problem that both benefits society as a whole and is aligned with business interests, with nearly 33 percent of respondents who believe it is “definitely a good thing.” Conversely, absent a social component, only 38 percent of respondents think it is a “good thing” when a corporation uses its influence generally.
The Way Forward
This is not to say the public is opposed to the private sector taking on a larger role in society.
The trick is to take the passion to solve big problems that is so evident in Davos and translate it into a purpose-driven strategy, executed day after day, and to do so in a manner that aligns with the business, the interests of the people that run the business and the needs of society.
As one focus group participant said to Handshake about the appropriate role of an executive in leading a company’s efforts to improve the quality of life in communities:
I want them to show up. Be intentional. Make yourself accessible. Go there. Talk. Get involved with the culture. See the environment. Talk to people and find out what they need…. I think if they get involved with the actual people, get on the ground, talk to them, talk to the people who are part of this organization, and then you begin to show a genuine effort and commitment. I think that, in and of itself, speaks volumes as opposed to, “We’re going to just throw you some money.”
So, yes, Davos is a wonderful time for people to connect with their friends, colleagues and partners. The conversations are stimulating, empowering and meaningful. But, if the private sector is to gain the level of influence needed to play a consequential role in solving challenges facing society, it has to engage the public in the communities where they live and in accordance with their culture. Furthermore, it must do so with an equal level of enthusiasm and commitment it brings to Davos—and sustain that over time.