CEOs have to turn away from short-term thinking and narrow concern for shareholders and instead take bold steps to improve workers’ conditions, promote diversity and take a wider stakeholder perspective.
That was the consensus among business, labour and academic leaders in a session on the last day of the World Economic Forum Annual Meeting 2016 that focused on the challenges posed by the Fourth Industrial Revolution, the wave of rapid advances across technologies that are changing all aspects of life and work.
“The central question is whether technology can be harnessed for systems change,” says the meeting’s co-chair Sharan Burrow, general secretary of the International Trade Union Confederation (ITUC) in Brussels. “Can we get to a zero-carbon, zero-poverty world?”
Not with current business models and approaches to public and private governance, Burrow reckons. “We have a huge divide and our governments are struggling. The orthodoxy that demand will come back if we graft on technology, I just don’t believe it,” she says.
Technology is not shared on an equitable basis, she points out, and in today’s world, “greed is outstripping opportunity”.
The problem is a lack of leaders willing to recognize the challenges and make the necessary changes, Marc Benioff, chairman and CEO of Salesforce, argued. “We are in a leadership crisis. We are seeing technological shifts and changes on a scale we have never seen on this planet. These require severe and extreme leadership. Countries that are having a problem are those with the weakest leadership. There is a leadership void in this world.”
Surveys confirm that people lack trust in their leaders, says Maurice Lévy, chairman and CEO of the Publicis Groupe in France. The business sector should not be held back if government is unwilling to take the necessary steps to push through the right policies, regulations and reforms, he stresses.
“As CEOs, we have a lot of responsibility. We cannot sit and wait for the decisions by politicians. We have to insist that they make the right decisions. Otherwise, we will have more situations like Greece. We will see all this transformation but without the right effect on workers and society.”
It would be a mistake to blame technology for such problems as the rise of inequality or unemployment, says Erik Brynjolfsson, director of the Initiative on the Digital Economy at the Massachusetts Institute of Technology (MIT) Sloan School of Management. “The biggest misconception is the idea that technology will come for our jobs. The bigger opportunity is to use technology to enhance performance and augment human activity.”
He explains: “Technology can be used to destroy and create jobs. There is no economic law that everyone is going to benefit equally. You have to put the policies in place.”
Major changes from mindsets to management principles have to happen, the panellists agree.
“Education has to be fundamentally reinvented” so that young people are given the critical 21st-century skills to cope with the rapidly changing world, Brynjolfsson says.
Benioff comments: “Everyone has to work together in a new way. Leadership can’t be defined anymore by who the head of the country is. We have to have multistakeholder dialogues.” CEOs, he adds, have to wake up to the need not just to focus on creating value for shareholders, but also to consider the interests of the broader community of stakeholders.
Also important is the use of data to understand issues accurately and fully and help find valid and sustainable solutions. But this will require collaboration and settlement of issues regarding the ownership and use of information.
Company chiefs have to discard short-term thinking, Lévy says. A CEO can impose gender parity immediately if he really wants to do so and take a long-term view, unfettered by immediate concerns about profits and the stock price.
Governments too have to be far-sighted, Benioff says. “Every country needs a minister of the future – someone who can look at what is to come and what we are going to do.”