In the 2018 Technology Vision, we discuss how companies are becoming embedded deeply into society, and the new responsibilities business leaders are faced with as a result. But why do businesses care to take on this new responsibility? After all, businesses were once content to keep customers at an arm’s length, letting governments and purchasing power dictate their responsibilities to society at large.
The first answer is that these responsibilities are driven directly by the new relationships companies are trying to build with people. Here’s a glimpse into my day: My alarm goes off and as I rub the sleep from my eyes I murmur “Alexa, let’s get the day started.” Immediately, Alexa—Amazon’s voice powered-AI assistant—instructs the lights to turn on in my room as it simultaneously informs me of the day’s weather, what traffic on my commute is like, and reads off the major news headlines for the day. And bear in mind, Amazon is not doing any of this alone: The news headlines I receive are curated by Reuters; my lights are powered by Phillips; and the weather forecasts are from AccuWeather. So, before I’ve even gotten out of bed, four companies have already delivered significant value to me—an unprecedented level of access to the consumer.
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“Business as usual” won’t cut it anymore. #TechVision2018
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Innovative services that allow companies to become deeply intertwined with customers’ lives are becoming some of the most impactful—and profitable—opportunities for businesses to capture. But earning that access means businesses face new expectations around trust and their commitments to society. It behooves business leaders to rise to, and even exceed, that challenge. Take Twitter: The company captured our mindshare by revolutionizing the way we communicate, not just with one another—but by breaking the “ivory tower” and giving us direct access to musicians, writers, politicians, or any other public figure on the platform. In 2017, though, people realized the adverse impact this relationship can have. The company came under scrutiny for the surge of bots on its platform that, in turn, ended up influencing political discourse in the United States.
With the future of the platform at stake, Twitter changed its policy. Rather than staying largely removed from the content on the platform, it began to aggressively shut down the bot networks. The company’s stock surged, staying strong even through the brief market decline the U.S experienced in early 2018. Part of this was on the merits of better-than-expected earnings, but an important takeaway is that investors continued to stay positive despite the negative impact that shutting the bots down had on Monthly Active Users (MAUs). Traditionally, MAUs are one of the most influential metrics for evaluating social media companies, and slowed growth often spells doom to share prices. But the company attributed the MAU attrition to the removal of bots, building trust in the strength and long-term prospects of the platform. The lesson here should not be understated. Twitter faced a risky decision where meeting society’s expectations meant subverting investors’ usual expectations. Twitter picked society, and the market rewarded them – and now, they are doubling down on their bot-dismantling efforts.
It may seem like only technology companies, or consumer-focused companies, are confronted with these renewed expectations and responsibilities. But soon every company will need to address societal-level challenges, whether that comes from the ethical use of AI, redesigning the workforce and retraining workers, or ensuring the integrity of data in decision making. And when leaders are faced with these questions, just like with Twitter, the old metrics of success won’t adequately evaluate long term solutions. In other words, “business as usual” won’t cut it anymore.
This new reality was starkly illustrated in a letter sent from Larry Fink, CEO of investment firm BlackRock, to other CEOs this past January. In the letter, Mr. Fink declared to his peers in no uncertain terms that “the public expectations of your company have never been greater” and described BlackRock’s plans to hold CEOs accountable for their companies’ impact on society. Managing $1.7 trillion in active funds, the firm is backing up its words with a level of investment that has the power to move markets.
A key signal to companies is that Mr. Fink does not just see this as being good for society’s sake alone, but an obligation to his investors. Once again, in his words: “Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the license to operate from key stakeholders. It will succumb to short-term pressures to distribute earnings, and, in the process, sacrifice investments in employee development, innovation, and capital expenditures that are necessary for long-term growth.”
BlackRock’s plans to hold other companies accountable is a microcosm of a larger trend. Over the last decade, companies have become accustomed to technology disrupting their products and services, and have worked hard to get ahead of the curve. Now technology is disrupting their relationships—with customers, other businesses, even governments—and business leaders are being held accountable by society at large. Ultimately, how leaders respond to these new challenges will dictate their success for years to come.
To read more about the technology trends impacting businesses, check out the 2018 Technology Vision.