A New North Thanks to COVID-19

Photo by Jordan Madrid on Unsplash

A little over a year ago, scientists released an emergency update to the World Magnetic Model. You probably missed it like I did. But, the earth’s magnetic north pole had shifted so far so quickly, that we had to adjust our GPS so that, you know, planes and ships would arrive at their destination. Magnetic north is where a compass needle points.  It is how we decide what direction to head so that we get to where we want to go.

Now, a year later, we are in a very similar position. Some invisible force has come in and changed all of our business and societal navigation equipment. We might know where we want to go, but all of sudden, we aren’t sure how to get there. Most of our tools, maps and plans suddenly look out of date.

The business of social impact and purpose has seen a definite evolution over the past five years as rising generations of employees and consumers demand more while early adopters in impact investing are showing that you can get more from purpose-driven companies. In fact, CECP recently reported that 76% of companies changed their corporate purpose statement in the last five years.  

But what happens to all of that after the tectonic spasm the world is currently in subsides?  Here are a few thoughts:

Geography Matters
Mike Roman, the new CEO at 3M, and his team might have an interesting strategic review after this all settles down. Dale Buss has an interesting piece outlining some potential new definitions of purpose for 3M and many others large organizations who have been all in on the global supply chain. That global supply chain is having its issues as it relates to masks, ventilators and other types of medical equipment needed by every country at the same time. One wonders whether geography will start to make a comeback. Are you able to be purposeful across the world if you aren’t ready to support your local markets when they need you? There were a lot of tech companies over the past 10 years in Silicon Valley who considered themselves doing the most good for the world while the local communities around them fell apart. How will local reality collide with global narratives and ambitions? 

ESG Is ‘Soft’ No More
I am old enough to remember when the impact investing was a radical idea.  In the beginning, all the quant-jocks said it was largely ‘soft bullshit’ (their words) but some held their nose and put a pittance in those funds. In the past 5 years, impact investing has gained strength even while defending itself against the same narrative.  However, when the tide goes out as it has done in the past 6 weeks, this ‘soft bullshit’ has transformed into a safe harbor. As the New York Times put it, “funds focused on buying stocks that score well on environmental, social and governance-related metrics proved a safer harbor for investors during the coronavirus-fueled market rout last month, Morningstar data shows.” This will likely mean that the ESG metrics are going to have to get better and be less anecdotal — especially the ‘Social’ metrics (more on that in a later article).

Employee Culture
People are pretty adaptable.  While many people have lost their jobs, many more have repositioned themselves.  There is a lot of chatter about the notion of 30-40% of a company’s workforce working from home at least part of the time going forward. What does this do to company culture? Creating a connected and aligned workforce is no easy feat, but purpose has proven itself as good adhesive for a productive workforce. Pulling our teams together will be key to a growing remote infrastructure.

The changes we see in corporate purpose will be evolutions more than revolutions, but its value and prominence will grow once we all start getting regular haircuts again.