Leadership
Understand the Systemic Nature of the Challenge — and the Role of Your Business in the System

The following is an excerpt from The Activist Leader: New Mindset for Doing Business by Jon Miller and Lucy Parker (HarperCollins, 2023). Reprinted courtesy of Harper Collins Inc.

Business is an inextricable part of today’s major global systems: Food or health, energy or transport — it’s hard to imagine these systems without companies of all shapes and sizes playing an intrinsic role. And when it comes to playing a positive role in society, this is the front edge of delivering social value: being part of the drive for systemwide change.

Of course, the priority for any company is to improve its business performance: to do what it does ever better — whether that’s in financial metrics, operational KPIs or brand preference — and every part of the operation is already busy delivering on that. So, why would you choose to step beyond the business to look at systems transformation? There are two compelling reasons.

The first reason is straightforward: This has become a natural extension of achieving your own operational goals relating to social performance. Most companies now have targets, for example, on sustainable wood supplies, water efficiency or driving forced labour out of the supply chain. It is hard — impossible, even — to make progress on these targets unless you engage beyond the business. No one company can solve these goals in isolation: Making operational changes in your business often requires a corresponding adaptation in the system.

The second reason is about impact on the issue itself. Even though progress towards the sustainability of the business is important — and hard to deliver — hitting your own targets on these challenges, improving your own performance, is unlikely to fix the issue in the world. No one business, even the biggest, can make a material difference on its own.

For people running a business, we’ve found, looking at it this way can be something of a shock. To keep pushing their businesses to perform, they are heads down, eyes locked on the track in front of them. And realising the need — and scope — they have to act across the system suddenly brings a new dimension to their leadership. They start to consider the potential they have to shift the ecosystem, establish new norms, generate new solutions. Sensing that opportunity for the first time opens up their horizon.

In this context, shifting the system doesn’t mean the economic system, at large — which is important to note, because the very idea of engaging to change the system sometimes elicits an initial response that the business cannot hope to change how the capital markets operate. It means working across the ecosystem of organisations that enables your business to operate successfully, in order to tackle a complex issue of shared concern. The most immediate connection with the ecosystem is through the value chain — and this is where companies first started on this journey.

Help drive system innovation

Achieving meaningful systemwide change will inevitably step you beyond the immediate relationships in your value chain and out into the broader ecosystem around that issue. It’s about collaborating on shared challenges, making links, filling gaps and seeking dependencies to unlock progress on some of the thorniest challenges.

Shifting the system doesn’t mean the economic system, at large — which is important to note because the very idea of engaging to change the system sometimes elicits an initial response that the business cannot hope to change how the capital markets operate. It means working across the ecosystem of organisations that enables your business to operate successfully, in order to tackle a big complex issue of shared concern. The most immediate connection with the ecosystem is through the value chain — and this is where companies first started on this journey. The following three examples show what a radical shift in perspective this entails.

Nike: Taking responsibility for the system

Nike’s engagement with societal issues stretches back to the sweatshop scandal of the 1990s. Their rapid growth had been driven by a vigorous, global outsourcing strategy to access cheaper labour; and they became the poster child of globalization. Nike’s founder and then CEO Phil Knight had a famous nostra culpa moment at the National Press Club in Washington DC in 1998, when he declared: “The Nike product has become synonymous with slave labour, forced overtime and arbitrary abuse.” Nike then established its Corporate Responsibility department and produced the first-ever Corporate Responsibility Report — and at that time, for them, the word “responsibility” carried a new vibrancy and sense of commitment. They were paving the way for what has become a different model of the social contract between companies and the ecosystem that surrounds them. And today, Nike is among the world’s leading activists in the corporate arena.

Walmart: Mobilizing the supply chain on climate action

Walmart, the second-largest retailer on the planet with a market cap of $400 billion, has established a track record in this arena over the past 15 years: Insisting on supplier certification for more sustainable fishing practices, driving plastic waste out of the system and backing female entrepreneurship are all issues on which they are delivering measurable impact at scale. As the urgency of global environmental crises becomes more evident, Walmart has become more assertive. With Project Gigaton, announced in 2017, their stated goal is to avoid one gigaton — 1 billion metric tons — of greenhouse gas emissions from the global value chain by 2030; and they are working through their supplier network to make that happen.

Brambles: Collaborating with customers to drive out waste

Operating out of Australia, Brambles began in the nineteenth century with a horse and cart and has grown to become the backbone of global supply chains. This gives them a unique vantage point from which to look across the world’s logistics system. By asking their customers about their most pressing supply chain issues, the company identified three ‘breakthrough challenges’: eliminate waste, eradicate empty transport miles, and stamp out inefficiency. They decided to make their customers their partners in finding practical solutions to those challenges, setting up a series of ‘working collaborations’ right across the logistics ecosystem — backed by the company’s data analytics and expertise. While Brambles can’t boast the scale or purchasing power of the consumer-facing giants like Walmart, they’ve identified where they fit in the system and what’s distinctive about the impact they can have.

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It’s hard to exaggerate what a radical shift in business thinking this is: not only tackling the issue through the core of the business, but also aiming to be part of system transformation — because achieving the company’s own ambitions and targets requires it, and because making an impact on the issue itself demands it. This is a defining aspect of social leadership for these times: showing up with a commitment to drive change systemwide, beyond the performance of your own business. Leaders with an activist mindset are looking for new ways of working with and through others to mobilise change.