Alison Taylor - Higher Ground - The Innovation Show

Episode Transcript
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Aidan McCullen (00:00):
Today's guest offers guidance on how to figure out the

(00:03):
right thing to do for our companies.
She invites us to go back to the firstprinciples about our companies and
about the social license to operatethat society's grant to corporations.
Her answer is both simple and inspiring.
Make your core product well, Cleanup your messes do no harm and treat

(00:25):
human beings with dignity and respect.
Her book offers an indispensableguide to help companies navigate the
new era of ethical challenges andrisks in a volatile global landscape.
It is a pleasure to welcome nyustern ethics professor and author
of this brilliant book, "higherground: how business, can do the

(00:49):
right thing in a turbulent world"Alison taylor welcome to the show.

Alison Taylor (00:55):
Thank you so much for having me.
It is a pleasure to be here.

Thank you so much Alison is up at six am particularly
to the show she's over in vancouver atthe moment so i'm very very grateful
for you taking that effort as well toget up early, hopefully i'll get back
to bed so i won't keep you too long

Ah, no worries.
It's really, really nice to talk to you.

so let's jump into part one of the book which is a turbulent world
a transparent world, and here you giveus an overview of how we got to where we
are today i thought that would be a goodway to get everybody on the same page.

Yeah.
So, I argue in the book and in theopening of the book that it's never
been so difficult to run a business.
And there are lots of ways we might.
be able to think about that.
A very obvious way to think about that isthat we used to have this idea that came
from Milton Friedman that the all youreally needed to do to have an ethical
business was focused on shareholdervalue and you don't break the law.

(01:52):
So we treated legal compliance essentiallyas a proxy for business ethics, and that
worked quite well for quite a while.
But now we've seen as you I'm sure we'llknow the rise of this rhetoric about it's
often called stakeholder capitalism, andthis really started to emerge in 2018
2019, and it will be one thing, right?

(02:14):
If we'd move from this era of shareholdervalue to stakeholder capitalism, but
what I would I would say is it's morelike everything everywhere all at once.
The short term shareholder pressuresare still just as intense as ever.
And now we've got all these new pressures.
So the question about how we got here.
I think there are three reasons.
And I argue in Chapter one.

(02:34):
There are three reasons.
The first is the increase oftransparency in the rise of social media.
That's pretty obvious, right?
It used to be that the corporationcould, to a great extent, control
the narrative, use its PR teams,puts messaging out by the media.
Now there's a much more fraughtinteractive relationship.
I'm sure if you're, Trying to figure outwhere to go on holiday or what to buy.

(02:58):
You're more likely to look atother customer reviews than
take the company's word for it.
So obvious, but really profound.
I think that the less discussedelement of transparency is this rise of
employee voice and strategic leaking.
So very often you get this situationwhere the company's trying to say one
thing from senior leadership about allthe wonderful things they're doing.

(03:20):
And then employees are undercuttingthat narrative by saying,
they don't really mean it.
Here's what it's really like to work here.
There've been videos, for example,recently of employees filming themselves
being laid off and putting it on TikTok.
The second thing is a little bit morecomplicated, or the second trend is
a little bit more complicated, butbasically, I argue that political

(03:40):
dysfunction and the fact that we nolonger trust governments and trust
politicians to get anything done, andthat's really true in almost every
country in the world, has meant we'veturned to business to solve problems
we used to treat as policy problems.
And that's very interesting and arguablyironic because it Certainly in the U.
S.

(04:01):
Business has contributed to thissituation by trying to undermine
regulation and also have very,very low tax and things like that.
And then the third trend, which Ithink is also obvious and perhaps
some of the people listening havehave Children or relatives of
this age is that young people.
And so the undergrads I teachin particular Think very, very

(04:21):
differently about these topics.
So there's a really big value shifts,I think, going on across generations.
And that means that corporationsneed to respond to this new set of
voices, but all of this adds up to avery fraught cocktail of pressures.

I want to tell our audience, if you're a board member.
So for example, Alison, I'm on aboard and I'm on the risk committee.
And now there's a lot of talk aboutESG like there is in most companies.
And this book is invaluable.
It was so, so useful for me toread the book at the moment.
And I have a copy of higher ground up forgrabs for the innovation show audience.

(04:56):
If you're a member of our sub stack.
You're immediately in the hat and peoplewho are paid subscribers you have twice
the chance to win that book but i have apowerful quote Alison i'd love to share
and i'd love you to riff on this one andthis is just a sample of the writing in
the book you say today's corporationsare bigger and more powerful than ever.

(05:18):
Yet, they remain so vulnerable thatcolossal time honored brands can vanish
in a blink even corporate value hasbecome less material it once rested in
physical assets such as plants, machinery,buildings and cash but by twenty twenty
the economist was reporting that.
Sixty one percent of the market valueof s and p five hundred companies sits

(05:42):
in intangibles such as research anddevelopment, customers linked by network
effects brands and data the link betweenthe ceo authorizing investment and getting
results is unpredictable and opaque.
i thought that was.
Very important quote.
And you go on then to say, "thisin turn has put a soaring premium

(06:04):
on trust and relationships insidecompanies and between companies and
their stakeholders that reliance onhuman capital and brand reputation and
the prospect that technological changemight upend it all renders some of our
mightiest business empires intangible.
I thought that quote sums up somuch of what you mentioned there

(06:26):
about how difficult it is to be aleader in an organization today,
but also how difficult it is to bean organization in the world today.

Yeah, that is really arguably the central quote
in the book because they shiftfrom tangible to intangible value.
I think it's all sorts of implications.
Arguably, this is what has driventhe rise of ESG very directly
because we no longer can rely ontraditional financial accounting and
disclosures to measure value becausethere are all these other factors.

(06:57):
So I think investors arefinding this less predictable.
The other thing about this is thatif value is more intangible and
perception based, the way I thinkabout this is, the boundaries
around organizations have dissolved.
It was always a fantasy reallythat to argue that a business
is cut off from society.

(07:18):
If racism is a problem in society, racism,Inside corporations, but I think they used
to be more reliable ways to control themessage and to control your narrative.
Even we can think about things likeconfidentiality agreements for sexual
harassment and discrimination andnow, not becoming viable in the US.

(07:38):
So just a lot more is on public display.
It's much harder to keep secrets.
It's much harder to control bylegal documentation, what people
are seeing and hearing about you.
And so it's like we can gaze intowhat's going on in corporations and
read about them, maybe not reliably,but certainly more powerfully than

(07:59):
we've ever been able to before.
And that has all sorts of implications,I think, for how we run companies.
And all, even means that the kindof traditional functions we have in
companies are more I don't know thatthey're less effective, but most of
the problems companies face cut acrossfunctions and cut across issues.
So they might be sustainability problemsand HR problems, or they might be,

(08:24):
Compliance problems and then also problemsabout political spending, or they might
be risk problems and and ethics problems.
So it's you.
It's also very hard to delegateproblems to one particular person,
and certainly very hard to hopethat the head of corporate comms
or PR is going to take care of it.

I thought that was a key moment and i'm gonna jump around a bit
and i just finished it just before we cameon air which is perfect timing because
it's all fresh in my mind but one of thethings you do talk about is that you can't
have siloed functions and giving somebodythe title of you're in charge of ESG for
example is impossible unless they're apolymath and they have deep understanding

(09:04):
of supply chain resilience, understandinghow to source the supply chain etc etc and
it's that de-Siloing that's so importantand by the way all of this mirrors what
we see in innovation all the time Alison.

This is a real barrier to innovation, right?
Interestingly, I just read a reallyinteresting article about how CFOs
often shut down innovative opportunitiesand they don't mean to, but it's the
kind of, it's the way the function'sstructured and they need to see proof.
They need to see proof of returnsand the business case and all this
stuff that doesn't really existwhen you're innovating because

(09:40):
you're trying to do something new.
It's really, really interesting article,but I read it and I was like, That's
exactly what happens in sustainabilityand responsible business as well.
Like, a lot of the people I work within that area will go and say, let's
use renewable energy or something.
And the CFO is like, well, I don't know.
And, and, and so there is a lot ofkind of stifling impact effect, I

(10:03):
think, on on innovation opportunities.
And we can think about sustainabilityand responsible business as a kind
of innovation, if it's done well.
And I think we need to be pretty clearthat in a big corporation, it can be
very challenging to get that stuff done.

Your book was inspire me the way i write my weekly articles is
i'll mix together different insights fromdifferent people and constant inflow of
information from different books and oneof the things that i started writing
about because of yours was this idea that.
Blaming one person so you talk aboutthis idea of the bad apple getting rid of

(10:38):
the bad apple but i often think the samehappens to poor souls who are in charge
of ESG or innovation for members of ourshow many of them are these people who
have often been ousted by organizationsor else gas lit out of the organization
making them feel like they fail.
Because putting all the onus on themto drive the change is not fair.

(11:01):
It's systemic inside the organization.
Maybe we'll mention that as well.

I think that's a huge issue.
And then there's this issue of kind ofif a new problem comes up or there's
some, development in society, peopleare like, Oh, well, we need a chief.
something officer, so we need a new chiefAI officer or we needed a chief happiness
officer, a chief medical officer.
This certainly happenedwith, diversity and inclusion.
So, this becomes a huge problem in theU S which is where I'm based in 2020.

(11:28):
And then everyone's like, wow, we'll hirea chief diversity officer and give them a
bit of money and have the report into HR.
And then 18 months later, it'slike, oh, you didn't see that.
Solve racism.
We're going to fire you.
So, that I think as well as a sortof sign of how corporations tend to
knee-jerk respond when some problem comesup that doesn't neatly fit anywhere.

(11:49):
And it is usually not effective becausemost of these problems are very cross
cutting as we've been talking about.

I wanted to go back to how we got here and
explain to our audience why.
Controlling the narrative is no longerenough because you can't, and you write
in the book, "in 2009, only 1 billion ofthe world's people had internet access.
This is incredible.
When you think about this,you understand how there's the

(12:15):
democratization of information.
11 years later, almost four timesas many were using social media.
So 4 billion and adoption hascontinued to surge in the global south.
This revolution has transformedevery aspect of our lives,
including how we do business.
If you manage a business, one ofthe most profound consequences of

(12:37):
mass internet access is that you canno longer control your narrative.
You mentioned, for example, Wikileakswas this moment of change and how
organizations, and I'll throw a few.
Alison has so much research and casestudies in the book here companies
like starbucks companies like coca colacompanies like brew dog who are often

(12:59):
celebrated as these great companies tryto control the narrative and realized
the exact effect of the internet.

, Alison Taylor (13:07):
the example I use in class, which people always
remember is the doctor being draggedoff the United Airlines flight.
We all watch that and we're like,Oh, I don't know that I'm going
to be flying United anytime soon.
And I think it would have been verydifferent if you'd just been reading
a news article after the fact andyou'd be like, Oh, that sounds bad.
But I think watching ithappen, you're like, I want

(13:28):
to get on one of those planes.
And I think that that is, is somethingthat's happening all the time.
Right?
So now anyone with a smartphone cancapture these real time evidence of what's
going on and put it on the internet.
And that has a very visceral powerthat reading about something after the
fact just doesn't have the same effect.

You mentioned then trying to control the narrative externally
for example, but then trying to controlthe narrative internally is very very
difficult because there's a growingswell of what you call bottom up activity

Yes.
In fact, I had speakers in my classthis week who have a whole organization.
They were undergrads at McGill in Canada,and they have a whole organization helping
young people organize, figure out where towork, figure out how to push for change.
There's an organization out of SanFrancisco called Climate Voice, which
gets tech employees to get to work.

(14:22):
Get together and push companyleaders to make various policy moves.
And I think yeah, something I hear inthe classroom as well is I could manage
my own carbon footprint and what I buyand that kind of thing that would have
a little tiny effect, or I could go andwork for a corporation and push them to do
something on the issues that I care about,and that will have much bigger effect.

(14:44):
So I think that's morethan understandable.
I actually spent quite a lot of timetrying to help him help my students
think about how to do this carefully.
But let's be clear.
This is in some cases presentsa set of really unrealistic
and unmanageable pressures.
And I think if you handle this badly,you very often end up in a kind of

(15:06):
internal turf wars over resources.
What the corporation should andshouldn't say on what's going on in
Israel and Palestine, for example.
And that's quite obviouslya no win situation.

i will come back to that because you talk later on
the book about issues like DEI.
You also talk about psychologicalsafety speaking truth to power all
these critically important elements in aresponsible business but in chapter two
you go on to critically examine commoncliches myths and misunderstandings
about responsible business andwhy they confuse and paralyze us.

(15:40):
I thought we'd share alittle bit about this.
So if you're a leader or you're workingin this realm inside of business, what
are the booby traps that we can avoid?

So chapter two is about this series of, I wasn't sure what
to call them when I was writing it.
Myths, cliches, tropes,conventional wisdom.
So there's this set ofthings we like to say.
So, an example would be, we'll justbalance the interests of our stakeholders.
Like that's easy or yeah, the weshould have zero tolerance for,

(16:11):
for doing the wrong thing, likeit's easy to implement that.
So there's various things peoplelike to say that have come,
become conventional wisdom.
And my argument in the book is thatthose ideas, while they worked perfectly
well for a long time, don't workanymore because of all the changes
we've been talking about so far.
So it's like, the book'scalled higher ground.

(16:32):
It's like, you're trying to hike upa mountain, but you've got rusty worn
out tools that don't work anymore.
You have a good grip.
And so we need to rethink a lotof things is, is my argument.
And then I think partly the way thatwe've always done things and thought
about this in responsible businessis fast becoming part of the problem.

aidan_1_04-19-2024_140716 (16:52):
One of those things is, and I've noticed
this myself from my own work, when Iwork with organizations and there's
somebody who works in say supply chainor they're working on sustainability,
they'll often say we are doing ourbest, say for example, to retailers,
but the retailer is neither.

(17:12):
Rewarding us nor penalizing the othersthat aren't complying or aren't making
the huge efforts and financial sacrificeswe're making to your point about CFOs.

This is so interesting to me because one of the ideas
we put out there a lot, right?
Is that if you do sustainable things,if you are a sustainable company, like
Unilever would be a very good example,then everyone will give you a pass
and you'll have a better reputation.
You'll have this sociallicense to operate.
You'll have everyone will think you'regreat and then you'll make more money.

(17:46):
Yeah.
I wish this were true,but unfortunately isn't.
There's quite a lot of evidence thatactivists, for example, NGOs, they don't
target necessarily the worst performers.
They'll target the most prominentin a company in an industry or maybe
even the leader in an industry,because what they're trying to do
is get the whole sector to move.

(18:07):
So if you for example, can get Starbucksto move on unions, which they have just
done, then a lot of other restaurants.
Brands, a lot of othercompanies like Starbucks will be
pressured to do the same thing.
So that's fine.
That's a perfectly good theory of change.
But what it does mean is that wecan't rely on who's getting negative

(18:27):
press or positive press to knowwho's doing a good or bad job.
And very often where the scrutinyhits is is, is even a sign a company
might be doing a better job thanother companies on this issue.
So I'll give you an example becausethat's a very wonky point, but
what you will see out there, right.
It's a lot of reporting and a lot ofpressure on corporate proprietors.

(18:50):
So fast fashion has become a real issue.
There was a lot of reporting a fewyears ago about the cocoa supply
chain and deforestation and childlabor in West Africa, for example.
That's super interesting to mebecause as a sustainability former
professional, when I'm working withcompanies on supply chain issues, it's
food and apparel companies that aredoing a better job than anyone else.

(19:14):
So very often where the scrutiny hits,that's because the company has bigger
risks in that area, not necessarilybecause it's doing a worse job.

One of the guests we had on the show, we had a three part series
with Yossi Sheffy on supply chains.
And he mentioned something that isintertwined in your book in some
way, which is that oftentimes aswell to the point about putting all
the responsibility on one person.
In charge of ESG you say it's verydifficult to have a ESG expert because

(19:46):
of the need know so much including,where their suppliers are getting their
supplies how they're treating theirworkers and sometimes you don't even know

Well, exactly.
And then, so there's, there's areally, part of the consequence, I
think, of this rise of intangiblevalue is that now we have the idea.
And it's becoming legally regulatedin the EU that you're responsible
not just for your own company,but for your entire value chain.
You've got to take responsibility forhuman rights violations and carbon

(20:17):
emissions and all sorts of things.
Going on in your value chain.
So this idea of yourresponsibility and the limits
of that have massively expanded.
And let's be clear.
Yeah, that's really, really,really difficult to do.
Well, the second thing that you're talkingabout that I think is equally important
is where sustainability sits and whatwe're saying it is because sustainability

(20:40):
challenges are a real mix of challenges.
They're very often innovationand opportunity challenges.
There are also risk management challenges.
There are also impact challenges.
What is the impact of your business thatthe externalities on the wider world,
and what are you going to do about that?
And that, branding challenges andtheir challenges with your employees

(21:02):
because of their externalities.
expectations.
So we don't know where to put thisthing in the company very often, where
it should sit, who it should report to.
And that's because we're trying to embedthese ideas throughout the business.
And again, that's easier said than done.

Beyond embedding throughout the organization, outside
as well because you describe howto build stakeholder trust you want
stakeholders involved as well because.
No one person or no one unit orno one business can listen to
the entire world all at once.
And you say here, listening tostakeholders is a process that invites
companies to learn, address theirinternal blind spots and , build resilient

(21:41):
reciprocal networks to tackle challengesfor which good solutions don't yet exist.

The question of stakeholder engagement and stakeholder
trust is very, very interesting.
It's another thingthat's come up recently.
You hear companies talking abouttheir stakeholders all the time.
It's almost become a newsort of form of jargon.
But very often what we call stakeholderengagement is really just PR.
It's really just messaging.
It's really just, how did you feelabout this service or, or, or whatever.

(22:10):
We can think a very good example wouldbe an employee engagement survey.
And I've worked at companies andI've filled these out how I feel
about the benefits and how I feelabout my boss and this and that.
And one, I'm not totally surethey're anonymous, so I don't feel
completely comfortable fillingthem out in the first place.
I'm not convinced the company'slistening and really has any

(22:32):
intention of changing anything.
And if someone asks your opinion andthey've got no intention of doing anything
differently, or all they're going todo is spin some kind of message back
to you, you're more annoyed than ifthey didn't ask you in the first place.
And I think a lot of what we're callingstakeholder engagement is really
just that sort of PR it's messaging.
It's trying to manage our perceptions.

(22:54):
But if we actually focused on stakeholdertrust and our network of relationships
and influence, in the supply chainwith our employees, with our customers,
seriously, that would mean somethingvery, very different than messaging.
And it would mean we consultour stakeholders to understand
emerging challenges.

(23:14):
There are lots of examplesabout this actually during
the beginning of the pandemic.
So.
So Levi's, had this, had this challengeat the beginning of the pandemic
that its suppliers would go out ofbusiness unless it did something.
So it provided financial support.
So they would stay in businessand they'd have these trusting
relationships afterwards.
I also really like there's an example inthe book of Clorox the bleach company,

(23:38):
and we can all remember you couldn't getbleach and couldn't get toilet paper.
And Clorox has this problem becauseit's got really a lot of strategic
retail relationships and Target andCVS and all those companies need the
bleach on the shelves for the customers.
Clorox knows the higher priority right atthat moment is to, is to supply hospitals.

(23:58):
So they were able to go and talk to theirretailers and negotiate and navigate
this in a really transparent way.
And that's the kind and manage thesetrade offs and talk to everybody.
That's a very different thing thana kind of nice message and a nice
glossy sustainability report with ahappy, smiling children and look at
all the wonderful things we're doing.

(24:19):
So it's a different thing to have adeep thoughtful conversation where
you actually care what the stakeholderthinks, then sending out some survey
and then trying to adjust your messagingto make the stakeholder feel better.
Those two require a differentmindset in approaching them.
And , I argue out there in general that alot of what we are calling sustainability

(24:40):
is just PR and messaging, and that weneed to do a much better job given the
scale of the, the problems we're facing.

And for our audience, you're a CEO of an organization.
You listen to this, you're going on now.
And I got so much more thingson my list than ever before.
It's true.
It's difficult.
It's so difficult to be a CEO, but inthe book as well, Alison gives you a
way to identify your priority issues.
We won't have time to cover it indepth, but how does somebody even start

(25:09):
because you help people to do this,

Yeah, there's a general problem, right?
That there are more and more andmore environmental and social issues.
The rise of this discourse aboutstakeholder capitalism and how companies
need to listen to all their stakeholdersand balance their interests has led
to more and more and more demands.
And it's led to this phase more recentlyof corporate speaking up, right?

(25:31):
So in the last decade or so, we'veseen a lot of corporations taking
stands on things like climatechange and racism and immigration
and gun control, even in the US.
So, there's, we've got, I think,into this situation though, where
it feels like I think corporateleaders feel like everyone's yelling
at you and you've got to figureout when are you going to listen?
When are you going to take a position?

(25:53):
When are you going totreat this as a priority?
And when are you going to say,I've got to run a business.
I can't pay attention to these 50things that various various people
in my wider network care about.
So, I think this is allpart of the problem.
I think it has drawn companies for.
very understandable reasons intoover promising into ticking the

(26:16):
box on 40 things at the expenseof saying, we're a yogurt company.
We're going to focus on theagricultural food system.
So so that would be a verygood example of, focusing on
something that's really relevant.
But a lot of companies these days,I think, feel forced or pushed or
pressured to say and do somethingabout an ever expanding list of stuff.

(26:40):
And it's not sustainable.
And it is not actually a goodidea, either strategically for the
business or for the wider world.
And so I make a very strong argument thatthe leaders need to focus on one to three
problems that they can actually solve.
They might need to report on more things.
They might need to Be aligned withpeer companies on more things.

(27:01):
But if we're talking aboutstrategic focus, I think the
fewer issues, the better,

I'm so difficult even for executives in an organization to speak
up to the board and say that we haveit's the equivalent to change fatigue
we can only do so much at certain times.
The cfo i can only fund so many thingsat one time and one of the mistakes
i made working in industry as achangemaker head of innovation was

(27:27):
not asking for more resources cuz youalways have this kind of dilemma that
if i ask you to feels like i'm failing
. and one of the things i thought it was really important that you talked
about and this is more to do withwrongdoing with inside an organization
like volkswagen and diesel gate forexample, is that these engineers were
made feel that the organization wasstruggling and this made them make

(27:49):
decisions that weren't the best decisionsfor the world rather than, they were
the best decisions for the bottom line

One of the consequences of this need to have a laundry list
of here are the 20 or 30 thingswe're working on is you'll get these
very Diluted incremental efforts,probably none of which will work.
Whereas it would be much better tohave a big bet on, on a few things
and actually have the resources andthe planning to make that happen.

(28:17):
That would also of course, make it mucheasier to embed, making those things a
true priority in the rest of the business.
Cause if you have too manythings that everyone's going to
be like, Oh, that's exhausting.
We'll just leave it to thesustainability team to write the
report and disclose the stuff.
And we'll hope everyone leaves.
And that's how you get these kind ofvery unconvincing documents about look

(28:38):
at all the wonderful things we're doing.

i'm one of the problems even for as a board member
myself is reading those documents.
Everybody has to upskill it's nota case of just leaving it to that
department is like well i need to knowthis that's why i felt so serendipitous
that i read your book at the momentis that it helped me upskill hugely
and i really leaned into reading it.

(29:01):
Because there was so much i wasunaware of and you can't be because
there's so many things you needto be be aware of in this world.
Moving on to one of those otherthings that you cover in the book is.
Things like corruption and founda incredible yesterday i was at
the barber you might you might havenoticed for those people watching the

(29:23):
show i was at the barber yesterday.
And he mentioned to me that he had setup, I'm not going to name the country,
but he had worked in a different countrywith his girlfriend for six months.
And they worked at a barberthere and the barber was run by a
foreign national in that country.
And every day the police would comeand harass the owner about his papers.

(29:50):
Is he tax compliant, et cetera,et cetera, until he learned about
I'm doing air quotes for peoplewho are just listening to us.
The way things are done around here sonot only did he then have to give these
police man and their family free haircutsbut a little brown envelope when they
left the left the barbers as well.

(30:12):
To many people that will seemincredible but corruption is rife.
And you talk about this in thebook, you dedicate a huge amount
of the book to this as well.
So you cover every aspectof getting to higher ground

I think the corruption story is so interesting partly
because it's such a good newsstory for corporate regulation.
Like if you work in human rightsor climate change, your whole thing
is they got to regulate disclosure.
Things have got to happen.
I'm really pleased to see these laws.
And so what I tend to say to thosepeople is careful what you wish for,

(30:49):
because I felt the same way when, whenanti corruption laws really started
to ramp up in the early two thousands.
And now any public company has totake this super seriously and we'll
have a big kind of compliance program.
But as you just said, with your storyfrom the barber, there's quite a lot of
evidence Corruption is still alive andwell, maybe just taking different forms.

(31:12):
So I think the corruption conversationis partly about a conversation about
how far we're expecting businessesand big businesses in particular to
go to solve these wider problems.
that sit in society.
It's also a parable reallyabout the promise and limits of
regulation to really change society.

(31:33):
So arguably, and many peoplewould argue with me about this,
there's this real consensus.
Everyone knows they've gotto sign these documents.
Everyone knows they've gotto sign these contracts.
We've got enormous compliance departments.
We all know what it takes to runa good anti corruption program.
But we still got a lot of corruption.
So, so how, how usefulhas this really been?

(31:54):
We, what we regulate really inthis world is bribery, which is
just one element of corruption.
And then there's a lot of other otherthings that many many of us consider
corrupt that are perfectly legal.
So tax avoidance certainly in theus lobbying and campaign finance
is a really, really big deal.
And that those practices areillegal in some countries.

(32:16):
So, the influence of business on politicsand vice versa, which is really what,
what the story of corruption is in thiscontext is a super fascinating one.
So that's why I spent some time on it.

It's a nice segway for this next section because you
tell us that kato palazzo, a professorof business ethics at the university
of lots on has pondered corporateimpact and responsibility for
decades during the nineties prominentcompany started to be attacked for
not taking care of their workers.
And the workers in their supply chains.
Or for causing deforestation.

(32:50):
In both cases the proximate causewas efforts by multinational
companies to evade local regulations.
By moving into countries withgovernments unable or unwilling
to enforce the rule of law.
Early corporate responsibility efforts,pressed corporations to voluntarily
fill these gaps in governments.
I thought that was really importantpoint to just even explain how

(33:13):
that in itself is so immoral.

It's also the story of really the rise of this whole
topic, or at least in its most moderniteration, right, was, is to a great
extent, the story of globalization.
So I don't know how many of yourlisteners are deep in the kind of
ESG or responsible business world.
But maybe some of them will have heard ofthis guy, Tarek Fancy, who quit BlackRock

(33:37):
in a big, sort of storm and it's nowout there saying ESG will never work.
And what we need is regulation.
And I always find that really funnybecause the original kind of problem
is companies globalizing and going toplaces where the rule of law and, fiscal
capacity and things like that are lower.
to avoid regulation.

(33:59):
And so, it's it's a long time ago, butthere was a lot of pressure on Nike
and Gap, for example, in the ninetiesabout running sweatshops in Asia.
And a lot of pressure then,and all of that led to what
became sustainability and ESG.
So I just find it funny that now thereare a bunch of people popping up in the
2020s being like, wow, we need to go backto regulation and not understanding that

(34:22):
the original problem was about companies.
Going abroad to avoid regulation.
And, and, and those things are notthose and so, you can sit there and
say, well, Bangladesh needs to regulategarment workers better, but maybe
Bangladesh doesn't have the capacity.
And so then the question is, well,what should Nike be doing about

Next up is a primer on business and human rights.
And you start this section by saying whilefar from straightforward and frequently
controversial, the best guidance to helpcompanies understand and manage their
impacts on the world was created way back.
Well, not that far back in 2011 andcomes from the burgeoning field of

(35:00):
business and human rights, becausethis is a relatively new terrain, many
corporate efforts are embryonic, buthuman rights frameworks offer significant
advantages over or compliance.
And you mentioned here Paloma Muñoz Quick,an associate director of human rights
and business for social responsibility.

(35:22):
A sustainable business network andconsultancy and she mentioned that
ESG is still considered a niceto have a human rights is not and
therefore offers an opportunity.

ESG says we prioritize environmental and social issues on the
basis they will drive higher returns.
Human rights says we've gotobligations to human beings.
Human beings have rights andwe need to think about how
we impact those human beings.
And the big argument in my book is thatwe should base our ethical obligations.

(35:56):
I'm not saying our entire businessmodel, but our ethical commitments
should be grounded on the impact thatwe're actually having on human beings.
One of the really interesting thingsabout publishing this book has been
this, the reaction to this chapter,because I think if you are not
deep in the world of responsiblebusiness, this strikes you as obvious.

(36:17):
Why would you not treat humanbeings with dignity and respect?
Why aren't all companies doing this?
it seems obvious.
I've even had someone come up to meand say, I can't believe you took
seven chapters to make this argument.
But if you are deep in responsiblebusiness, this seems it seems as
if I'm suggesting something very,very radical, whereas, in fact,
I think it is very, very simple.

(36:39):
I'm not saying it's easy, but to me, thisoffers a firm ground and a firm place to
rest at least your ethical commitments.
Not least because what human rightsframeworks have going for them, and
this picks up on the conversation wewere just having, is they're clear
about here are the limits and remitof your responsibility versus the

(36:59):
government versus civil society.

aidan_1_04-19-2024_140716 (37:01):
Okay.
we have covered only some of thechallenges with all of this and the
challenge is great and the challenge isthe same as other realms, like people
who work in innovation, we struggle withthe same things and so therefore if the
tools work to build better culturesthat are more ethical and effective.
They're the same tools to build moreeffective innovation so this next part is

(37:26):
brilliant and Alison i'll throw it over toyou to share just some of the tools that
you mentioned for example you zoom into.
Leadership compliance.
Speaking up and organizational purpose.
Will touch them and then i might , pickup a few threads of some great quotes
that you mentioned across this part.

Yeah.
So, let's start off by saying cultureis a strategic advantage in a way.
It's always been, butnever maybe to this degree.
And that is partly because weall see now what is going on
inside corporations all the time.
So there's all these sort of leaks.
You can read all these longreports about, this or that.
Town Hall meeting at Facebook or thisand that employee rebellion or this and

(38:09):
that, a group of people writing thisopen letter or protesting something.
Google's just fired a bunch ofpeople for protesting that it's it's
working with Israel, for example.
So all of this is on fulldisplay as never before.
And that means we need to take culturemuch, much, much more seriously.
And it also means we've got to shift,I think, a whole notion of leadership.

(38:33):
Barking orders from the topis one way to think about it.
But the traditional notion of leadershipwhen I was young is, you set strategy,
you set direction, you design incentives,you you set out your vision and then
you sit back and the money rolls in.
And I don't, Come across thatidea of leadership as being
valid in the classroom anymore.
Young people want mentors.
They want inspiration.

(38:54):
They want to be persuaded.
They want to be brought along, and so the,the maybe most useful way we can think
about this is that Being a leader hasmuch has changed from setting direction
to driving influence, and we can even seethis in CEO job descriptions, which have
really evolved from technical skills.

(39:15):
We need you to have been a CFO beforethis to, Can you influence networks?
Do you understand sustainability?
Do you understand topics like diversity?
Can you build coalitions?
Can you work with people that havegot different values from you?
And I, you mentioned your boardwork a little bit earlier.
One of the ways we might thinkabout these topics in general.

(39:37):
Is that you should continue tohave your core expertise, but
topics like sustainability anddiversity ought to be minors.
Maybe to your major,you need some facility.
You need some confidence innavigating these topics because
young people and stakeholders ingeneral care about themselves.
It doesn't mean you need to go andbe an ESG expert, but you need the

(39:58):
confidence to prioritize, you need tounderstand what's going on, and you
need to be have a good game on thepriorities that you're going to set.

. Aidan McCullen (40:06):
I loved what you said here about a company's culture.
You said if your company is headinginto an ethics scandal, this will
frequently show up in the cultureof that organizations long, long
before the problems ever discovered.
The issue isn't so much thatconcerns aren't visible, but
it's that , no one's looking.

(40:27):
I love how you wrote that, but oneof the things I wanted to share
was the findings from a study youconducted in twenty fifteen with twenty
three experts and they all agreed
that unethical cultures have severalthings in common i love you to share
just some of them just so if anybody'sout there and they can spot them they

(40:47):
can start worrying about these things.

So this was a an early piece of research I did.
There's actually, I wrote an articlein Harvard Business Review at some
years old, though, now, calledFive signs your organization might
be heading for an ethics scandal.
And the question I sought to answer,which sort of sounds obvious is,
yeah, if a company is heading into anethics scandal, if there's a problem
with ethical issues in the company,can you see it in the culture?

(41:14):
Are there like proxy indicators and so on?
signs that something is going wrong.
And I found that there were allthese experts agreed that there were.
So, one of them is growth at all costs.
We were talking about VW earlierand the engineers feeling under this
pressure and what VW had done wassay, we are going to be number one.

(41:34):
In in, in, in our sector in America.
And so there was this push, you'vegot to grow, grow, grow, grow, grow.
And so the incentives and thepressure really, really built up.
And that's, I think partly howthese engineers ended up cheating
on these admission tests.
Yeah.
Siemens.
There was a big bribery scandalat Siemens in the early 2000s.
And if you read interviews with theexecutives who were paying all these

(41:56):
bribes, or at least signing them off,they will say, we thought we had to do it.
Or we'd ruin the company.
And so there's very often this sense ofkind of existential competitive threat.
We've got no choice.
We've just got to do it.
And that's a sign that you areheading into an ethics crisis.
So it's obviously thedesign of incentives.
I actually wrote an article in2020 when the last CEO of Boeing

(42:19):
was appointed and I said, Oh,look, he's got a 7 million bonus.
If he can get the 737 plane back tothe skies as quickly as possible.
Sorry for where we are.
Could not have been more predictable.
You'll also tend to see a lot ofkind of in jokes and euphemisms.
No one ever says I'm payinga bribe very directly.
It's always like I'm doing a favor fora friend, or there'll be like often

(42:42):
these kind of metaphors of war andsport and people telling these jokes.
Again, at Boeing, there were thesethe release of these, all these
internal emails during the litigation.
And, you see these engineers at Boeingsaying, These planes are designed by
monkeys and I still need forgivenessfor all the covering up I've done.
And it's clear they feel reallydisturbed and conflicted about this

(43:03):
and think no one is going to listen.
And then you'll see leadershipthat is top down and complacent.
And it's kind of like, don'tbring me problems, bring me
solutions and, just get it done.
And, and that kind of thing.
And so you see these traits repeatedlyappearing culturally in organizations.
And very often those organizationsget into a lot of trouble.

(43:24):
So, it's also, this is also, I think,an interesting example of how maybe
it's, it's not what you need is a lotof rules and a lot of disclosures and
a lot of don't do this, don't do that.
It's looking at what kind ofbehavior the organization values
and rewards and whether employeesfeel comfortable to raise concerns.

And that's the point we'll talk about next, because you say
that one significance of office socialties stands out in data showing that
whistleblowing increased significantlyduring the pandemic surge in 2020, as
Bloomberg noted, people felt emboldenedto speak out when managers and coworkers
aren't peering over their shoulders.

(44:03):
A corollary of all this is thatretaliation against employees who report
wrongdoing has also increased accordingto a survey by the ethics and compliance
institute those weak social ties don'tjust make it easier to report wrongdoing,
make it easier to punish those who tryto speak up the relationship between
remote work and unethical behaviorappears to be anything predictable, what

(44:27):
a what a conundrum i thought that was sointeresting and i love you to share this.

There's all this mixed evidence about whether
remote work works or doesn't workmakes us more or less ethical.
And, and, and thereality is we don't know.
We're in uncharted territory.
We, we, we ran our businessesin a certain way until 2019 and
now everything's up for grabs.
And something I, I often think aboutis, is if you're under about 26 or

(44:55):
27 today, You don't remember thatoffice culture before the pandemic.
So there's some really profound sense,I think, in which corporate culture
is getting reshaped in real time.
So remote work is a good example.
It's not the only example of howsomething that used to be non
negotiable is now totally negotiable.
And, it means we'renot coming to the same.

(45:17):
Building every day, which has a lotof implications for how you run and
manage and make decisions and set jobdescriptions and all sorts of things.
And none of those assumptionsagain are reliable anymore.
So, so many implications here,but it really reinforces my point.
I think that leadership thesedays is a case of building
coalitions and influencingnetworks who may be very remote.

(45:39):
It's not about come and sit in my officeand I'm going to tell you what to do.

aidan_1_04-19-2024_140716 (45:43):
So important and there's a whole chapter on leadership
the leadership of today as well forfor those people interested as well
but you emphasize the imperativeinstilling an ethical culture and how
this means A conscious focus on fairness.
Awareness, efficacy,empathy, and decision making.
And this covers everything frompsychological safety to diversity,

(46:05):
to neurodiversity, et cetera.
But one of the things you point outis that although it might alleviate
criticism, adding a few diversecandidates won't bring meaningful change
in itself, and we see a lot of this.
There's a lot of diversitywashing, or I don't know what the
term is for it, but you say that
no single social identity characteristiccan explain a person's worldview

(46:27):
or experience there certainly arelationship between demographic and
cognitive diversity, but is neitherstraightforward nor predictable another
one that's a difficult one to call

There's a big backlash against ESG and diversity
initiatives underway in the U.
S.
And part of what is going on, I think,is that companies again for very, very
good and understandable reasons havetreated this as a legalistic process
or treated it as a question of howmany women do you have in the C suite?
And, how many of this type of peopledo you have in this sort of division?

(47:02):
And that's very understandable.
I think what we need to do on thistopic is to remember why we care
about diversity in the first place.
And that is one, because it is fairer.
We need our senior leadershipand our companies in general
to look like society looks.
That is what I hear frommy students all the time.

(47:23):
I if I'm thinking about going and workingsomewhere and I go and look at the board
and it's a bunch of old white guys,I don't want to work there anymore.
So people just want.
Leadership teams and companies thatlook like them and their friends.
And I think that's very,very understandable.
The other thing is, youdon't know everything.
You need different perspectives.
You need different backgroundsand opinions and professional

(47:46):
experience in the room to makethe best possible decisions.
So if you only have a certain sortof person with a certain sort of
worldview, you might make decisionsmore efficiently or more quickly.
They won't necessarilybe better decisions.
So I think we've.
lost sight of the real benefits ofdiversity and therefore how to drive more
diverse organizations and defaulted tosomething which is much easier, which is

(48:11):
have you got a certain number of womenin the, not easy to change, but easy to
measure at least and easy to talk about,or a certain number of people of color.
But this isn't Noah's Ark.
And then you get into these really weirdsituations about, well, if we've got
this many, does that mean we're diverse?
Does that mean we've solved the problem?

(48:32):
So it's not enough to put bums on seats.
If you have one or two women in theboardroom, That might tick a few boxes.
If those women don't feel able toshare their opinions because they're
talked over and no one listens to themor they're the head of HR and they're
perceived as not being powerful thenthat's not going to do very much.
So we need to get to the root problemwe're trying to solve and think about

(48:53):
how to actually solve it and how to havebetter cultures where more people feel
able to speak up and share their views.
And we have better ideas and we makebetter decisions, which is not the same
as Same thing as the sort of tick boxway that this topic's been treated.

beautiful beautiful.
Alison, I a closing quotethat i love from the book and.
Before i give that i give you a time maybeto think about your final call to action
for people listen to the show i'm beforei even do both of those things where is
the best place for people to reach out tofind you for keynotes for Consulting it's

(49:28):
after where is the best place to find you

Thank you.
That's a great question.
I have a website, AlisonTaylor.
co.
There is one L in the Alison, A L I S O N.
I'm also all over LinkedIn.
I'm so easy to find on LinkedIn.
Put in Alison Taylor, NYU, youwill find me very, very easily.
And I post almost every

and i will link to your website and to the article that
you mentioned earlier on and i'll linkto that cfo article that you mentioned
as well i'd love to find that andshare that with our audience as well,
my final quote is as follows and as i'mdoing that please have a think yourself
for your final call to action for audiencei loved what you wrote here it's right
at the end of the book you wrote, "today,

(50:08):
being a good business doesn't call forexaggeration spin or overreach it's not
about setting rules pitching an appealingstory or listing your achievements the
time honored approaches have lost potency.
They're losing their grip you'llneed to imagine and then establish
firm foundations in order to aimhigh to reach the higher ground.

(50:33):
Absolutely love that Alisonover to you to close today show
what's your call to action.
Oh, thank you so much.
So, I guess I will close by saying thisis simpler than you have been told.
Please do not drown in the jargon.
Focus on treating People with dignityand respect, focus on your core business.

(50:58):
Don't exaggerate.
Don't over promise, do right by people.
You will find that this is much lesscomplicated than you have been told.
And you will also bring peoplealong with you much, much better.
This is achievable.
You can reach higher ground.
Do what your parents told you to dothat's how i perceive it anyway and

(51:21):
it's been an absolute pleasure havingyou on the show just a reminder for
audience i have a copy of this brilliantbook up for grabs higher ground, how
business can do the right thing in aturbulent world we've been joined today
by Alison taylor thank you for joining us

Thank you so much.
It was such a wonderful conversation.

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Alison Taylor - Higher Ground

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