There was a time when a CEO’s primary worries were about missing earnings targets or having a new product fail. Not so in today’s supercharged political environment. Polarization can spread quickly and drag business into the culture wars.
The best way to manage those risks is to build resilience into a company’s operating model and to make sure that actions are aligned with the business’s purpose and values, says Karthik Ramanna, Professor of Business and Public Policy at the University of Oxford.
Ramanna, author of the book “The Age of Outrage: How to Lead in a Polarized World,” spoke recently with Oliver Wyman Forum Partner Rupal Kantaria.
Is managing outrage different when you’re not in a benign economic environment and you've got pressure on your bottom line, and from a variety of stakeholders?
There were crises to deal with in the ‘90s but that wasn’t managing outrage. That was crisis management, where you bring in a PR team, you do some firefighting, and then you're back to smooth sailing.
But now the whole environment is a storm, right? You can't take a firefighting approach to it because you very quickly exhaust yourself. And when are you going to think about fire prevention, let alone growth? You have to build resilience into your business model and think deliberately about power and how you get things done.
Even in the early aughts, there was a general sense of optimism that free markets are going to deliver prosperity for the whole world. The problem we have today is that we've got this system of free-market democracy, and a lot of people don't think that it is fit for purpose.
How does an organization build a strong culture of agility and flexibility to manage outrage and adapt to change?
It's important to recognize that there are two cycles of transformation needed to get this done. One involves continuous innovation within the context of a broad structure, well defined. And then there's systemic innovation that involves changing the very structure.
There’s this great line from “Through the Looking Glass” where the Red Queen says to Alice, “Here, you see, it takes all the running you can do to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”
That's a really important point about how business works. You have to continuously innovate within the system just to stay where you are. But if you want to get somewhere, you need to run twice as fast. That's the systemic innovation bit. Now you can't always be doing systemic innovation because you never have the ability to bed in and consolidate the gains.
We've seen that outrage has become weaponized. How should companies think about the risk of sticking with their values on things like diversity and gender targets in the face of weaponization?
There are two broad points to recognize here. One, that having diverse voices represented in cognitive decision-making makes that decision stronger. Your rational analysis is a product of your lived experiences, and if everybody has the same lived experience then you're analyzing from a very narrow set of lenses. Bringing a broader set of lenses to a problem allows you to see more of the problem and be better at designing a solution.
The second is to recognize that there is a broad social justice motivation for diversity for its own sake, which is sort of what drove the whole woke thing, but it is not necessarily aligned with the purpose of business. This isn't to say business shouldn't lean into that, but it has to recognize that there might be costs associated with it.
That nuance is often lost in the political conversation on diversity, even within businesses. We seem to be coming round to the sense that maybe we're losing the part of diversity that adds value because we're overcorrecting. You don't want to throw the baby out with the bathwater in either direction.
Some say the British tend to be very influenced by the United States in business and culture. Do you see differences in how outrage is manifesting in the US and the United Kingdom?
The chasm between the US and continental Europe is probably wider than that between the US and the UK. One of the things about the UK is a greater degree of nuance associated with the public political discourse on issues, perhaps because it's a multi-party democracy, whereas in the US bipartisan political structure issues get reduced into sort of a single dimension.
Otherwise, they're quite similar culturally in that they have a strong common law tradition, and that influences the way business functions. The instincts tend to be more bottom up rather than top down. There tends to be a greater degree of tolerance in society to allow solutions to emerge endogenously or through innovation rather than to expect some expert group to sit together and say, OK, here's how we solve that.
You point out how social media channels people into bubbles of like-mindedness. Should companies embrace social media in responding to outrage, or should they look for other ways of getting their messages out?
The opportunity to raise the salience and awareness of your brand through social media is too good for most consumer-facing companies to forego. But there are ways to do this thoughtfully. Where possible, you shouldn't see yourself as a political citizen, let alone one that has a strong sense of identity on divisive issues.
One smart way of doing this is to work with brand ambassadors. You don’t say they are representing your values. They are simply using your product for the utility it provides them, not because of some ideological alignment. If, say, you make clothing, you can sort of make sure that clothing just plays a functional purpose for those individuals across a wide range of political identities. But if a company is in the entertainment business — it’s producing movies or theatrical shows — then you have to be more careful how you choose your brand ambassadors because your very product is culture.