This Boston Consulting Group podcast series looks around the corner of today’s big business and social issues. The goal—the so what—is to make sense of today and prepare busy leaders and executives for the day after tomorrow.
Award-winning British journalist Georgie Frost interviews the leading thinkers and doers at BCG on the trends, developments, and ideas that will shape and disrupt the future. Topics range from global warming, COVID-19, business resilience, and social inequity to the influence of digital technology on everything. This is not your typical business strategy podcast.
Companies will never achieve net zero unless they can measure their emissions, and few of them do it successfully. Only about one in ten companies accurately tracks its emissions. Artificial intelligence is starting to help fill in the data gaps. Charlotte Degot, BCG partner, and founder of CO2 AI by BCG, an an AI-based solution for emissions measurement and reduction, explains how better data about emissions accelerates action. She is joined by Dexter Galvin, global director of corporations and supply chains for CDP, a global nonprofit organization that runs the world’s environmental disclosure system for companies, cities, states, and regions.
GEORGIE FROST: Imagine trying to stick to a shopping budget, but none of the goods in the supermarket have a price tag. or losing weight, but there's no information about portion size or nutrition on the food that you buy. How can you reduce what you can't measure? This has been the problem with reducing greenhouse gas emissions. They continue to climb and we haven't been able to accurately measure the climate impact of our actions. So does AI have the answer? I'm Georgie Frost. This is The So What From BCG.
DEXTER GALVIN: Over the next eight years we need to see climate solutions becoming "the thing." And if we don't see that transition then we're going to lose this battle. It's those technology companies, those winners in technology that are going to help us get where we need to go.
GEORGIE: I'm joined today by Dexter Galvin, global director of corporations at CDP, an international nonprofit organization that helps companies, cities, and regions disclose and manage their environmental impact. Joining Dexter is Charlotte Degot, global leader of CO2 AI Solution by BCG.
DEXTER: At CDP, we've been gathering data from companies for the past two decades, and we now have over 14,000 large corporations disclosing data to us every year. That's obviously a very significant challenge. It's a very significant technical challenge, in particular. And one of the things that brought us to BCG is that they have very strong capabilities in this space and a really powerful solution in CO2 AI. We've actually developed a new platform together called the Product Ecosystem platform which helps companies measure the life cycle impact of their carbon emissions across their product portfolio.
GEORGIE: Charlotte, Dexter has outlined there the problem with emissions being so difficult to measure but why are they so difficult to measure accurately? How far off do you think that some companies actually really are?
So the data challenge to be able to collect all the data about all the activities that the company can perform to be able to access accurately a carbon footprint, is a massive challenge especially for large corporations and the corporations that have a big scope.
So emissions coming from their supply chain. Last year we did a survey with more than 1,000 corporations across the globe asking them their own assessment about the level of margin of error of their carbon footprint. And what they said themselves is that on average they think they have 30 to 40% margin of error on their measurement. So anything we can do to better measure more accurately, more granularly, is of course, more than welcome.
GEORGIE: Thirty to 40%, Dexter. And this is what companies are actually telling you. I imagine in some instances it's a lot higher than that. So is everything we've been reading so far has just been a load of rubbish?
DEXTER: Well, obviously I find that statistic a little bit depressing as the organization that's been gathering this data for 20 years. I think it is a reflective of reality though. I think there is a serious challenge of data accuracy. What we've seen at CDP is the evolution of reporting capabilities over time. So when companies start on this journey they understand how to manage their electricity bills. And then they start to understand how to turn that into carbon emissions data. And then they start to look at their own operations more broadly. And that takes a while, actually.
Some of the larger corporations that have been disclosing to us for a long time, they have emissions verification in place. So there'll be a lot of credibility in the data that they're reporting. But a lot of the companies, particularly in the supply chain that are just starting out on this journey, have really a long way to go to gather more accurate data. And that's the great thing about the sort of technical solutions that are coming into this space right now. Organizations like BCG have said, "OK, look, there's a problem here. Organizations are really struggling to gather this information. How are we going to help them?" Technology can really play a massive part of that puzzle and help to solve that problem.
GEORGIE: I want to get more into the technological solutions but you touch there on the supply chain. I mean, it's hard enough as a company to measure your own greenhouse gas emissions but then to factor in a supply chain. I mean, it must be nigh impossible.
DEXTER: Well, yeah, we often talk about this in terms of an iceberg. Imagine an iceberg, right? As an organization, you're accounting for your direct emissions. These are called Scope 1 and 2. They're quite geeky terms, but basically your direct and indirect emissions. And that's really only the tip of the iceberg.
GEORGIE: Charlotte, how were companies measuring it before? How involved was tech in those measurements?
CHARLOTTE: Very limited, close to zero until very recently. And that's part of the issue because as we were saying, it's a massive bucket especially the supply chain emissions. It's super complex to get access to the data. So it's a data issue. But if you don't have tools you end up in exile and you end up doing super big averages that gives you a first figure, which is good, right? It's a first step. And as Dexter was saying, it's a journey. So no shame in starting with something averaged. But it's important to get to a more accurate figure because otherwise there is no way you can really identify the right actions to put in place. And there is no way you will be able to measure the results of the actions you put in place.
GEORGIE: You touched there about the need to have accuracy to put the right measures in place, but surely ballpark figures would be good enough, would they not? I mean, who else benefits from accurate measuring? I'm asking you this, for you, just to explain to me for all the stakeholders involved, why accurate measuring is so vital?
DEXTER: At CDP, we represent over 590 institutional signatory investors. Some of the world's largest investors with $110 trillion of assets under management. So more than half of the world's invested capital is interested in this data.
CHARLOTTE: If I can add something about, it's not accuracy for accuracy, it's really accuracy or so to be able to drive action. And when you get into the details and you take precise examples of what can change, the accuracy value can be massive. If you take a wine and spirits company. Usually a big bucket of emission is coming from the glass they buy for the bottles.
If they just take an average number for the emissions of all the glass they buy, independent of the color of the glass, the country of origin, the supplier, the type of production they have for the glass, the recycling content in the glass itself, et cetera. They are going to end up with a super average number. If they go into the details the difference can be factor two or even more sometimes depending on those parameters. So it's really about identifying what are the drivers behind the carbon emissions to be able to identify where to act. And then of course, when you have done the action, being able to measure the progress.
GEORGIE: OK, Charlotte, this is where AI comes riding to the rescue, is it?
The second thing is once you've collected all this data and you can do a much better job in terms of accuracy of the calculation of emissions from the activity you have covered. The ultimate step is all the decision making support that artificial intelligence can enable. For example, enabling simulations of decisions about multiple scenarios and helping corporations make the right decisions for their trajectory in terms of net-zero roadmap. Doing some forecast of what is going to happen in the future, depending on what decisions they are making for their business and what abatement levers and actions they are implementing to reduce their carbon footprint.
And how does the full picture come together? And is it positive or negative? There is also the field of optimization, just directly using algorithms to recommend to users, employees, the best decisions to make. For example, in factories, just putting process parameters under control and helping reduce carbon emissions by making better decisions in day to day.
GEORGIE: Dexter, with your two decades of experience with this, how exciting is this a prospect? What's your assessment?
DEXTER: Yeah, I think this really improves the way companies are going to gather this information. We've always been of the belief at CDP that we need the companies to build the capabilities internally and start to understand how to gather this information and really understand where the impacts are across their organizations. So that that then drives emissions reductions. That's the reason we ask for these sort of disclosures every year. It's less about giving them fish and more about teaching them how to fish. But these tools are the fishing rod. It's really helpful and it helps speeding up the whole process for the company to really accurately identify where the emissions are in their organization.
GEORGIE: Charlotte, you did say there were big gaps in the data. How can AI fill those gaps? I mean, surely it's working on inaccurate numbers anyway. There's always going to be a margin of error until we can get much more accurate figures from source.
CHARLOTTE: Instead of keeping a gap because you don't have the data, it's better to identify first the wrong information because that also happens a lot today in systems and data-sharing, that they are wrong data that are shared. And artificial intelligence can spot and help improve the quality of the data that is shared or fill in the gaps, by doing some extrapolations, et cetera, et cetera. And because we are on a journey of identifying hot spots and improving the accuracy along the way, this is super important to avoid to leave just some gaps because we don't have data.
DEXTER: Yeah, I think filling in the gaps is pretty important because that then helps you understand the relative impact of different activities. So that's really important. I'm very cautious about us relying on emissions factors.
And as we start to gather more granular product level data around the world, that's when we can start really using AI to its full effect to say, "Actually, we thought a glass bottle was 20 grams of CO2. But actually, with all of this primary data that we've been able to put into the system over the years, we've actually identified that it's 22 and a half grams of CO2." And in fact, that might drive somebody else's decision to go, "I'm not going to use a glass bottle in this case I might use a carton." And so it can really, really drive meaningful emissions reductions activities on a product level, which can be super powerful.
GEORGIE: Dexter, getting the data is one thing but how we choose to act on that data is another in terms of the more holistic global target of reducing greenhouse gas emissions. Where do regulators and governments come in?
DEXTER: Regulation is absolutely critical. I'm a big supporter of the market taking action on this topic, of course. And it's one of the key MO's of CDP.
What companies are crying out for is clarity around the regulation that's coming in on this topic. When we were coming into the Paris negotiations, back in 2015, we set up our science-based targets initiative where companies are saying, "Yeah, we're willing to make this really ambitious science-based target that's going to reduce emissions in line with the needs of science." And then we were able to take that to the governments and go, "Listen, governments, all these big corporations are making commitments to reduce their emissions. Now you guys need to set really ambitious targets at Paris."
And so there's this virtuous loop, this feedback cycle which is really important. So yes, the corporate world and the financial markets can make significant advances, but they can only do so with regulatory certainty. Because without regulatory certainty, you can't make long-term investment decisions.
So we were looking at some of the emissions reductions activity disclosed by companies in China recently. Sixty percent of them had payback periods of less than a year. So you've got those quick wins early on, but then you have to start making significant capital investment. And that is a challenge without regulatory certainty. Without knowing that in a couple of years the carbon price is going to be this, or there's going to be taxation on this, or there's going to be a mandatory reporting requirement on this. So the two, the market mechanism and the regulatory environment are absolutely critical.
GEORGIE: Charlotte, before we end, let's go back to the technology and look to the future of AI. What does it look like in this space? When I talk to you in five, ten years time is this going to be absolutely 100% perfectly accurate? AI has saved the day.
And then if I look forward more to the next ten years et cetera, we could speak about, I think, for 30 minutes about potential ideas of what we can do. I mean, it's a data issue. It's a massive issue. Artificial intelligence has a lot of techniques that can help. For me, the angle is really driving action and acceleration of the action. And there are tons of things that can be done. Again from measuring better but also helping on the decision making. Doing some better recommendation on action, optimization on the ground of tons of things that can be better managed, leveraging a algorithm. Just a side note. That does not mean that we should not measure and track the emissions related to artificial intelligence itself.
DEXTER: I think this is critical.
We need to see that same transition in the climate space over the next eight years. So in a shorter amount of time we need to see climate solutions becoming "the thing." And if we don't see that transition then we're going to lose this battle. But I think it's there. And the great thing is it's those technology companies, those winners in technology that are going to help us get where we need to go. So we have to lean in on every possible solution in the market. And AI is one of the really key tools that we can lean on to help us in this transition to a better world.
GEORGIE: Dexter, Charlotte, thank you so much for talking to me and to you for listening. We'd love to know your thoughts. To get in contact, leave us a message at email@example.com. And if you liked this podcast why not hit subscribe and leave a rating wherever you found us, it helps other people find us too.
Nan DasGupta played soccer in her youth and worked as an engineer at GE early in her career, so she has firsthand experience in pushing into male-dominated fields. DasGupta, a BCG people and organization expert and Women@BCG leader, talks about the difficulties in breaking down bias at work, how bias prevents men from assuming more caregiving responsibilities, the importance of role models, and why nobody wants to talk about menopause.
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Pay, promotion, and benefits have been the traditional carrots for hiring, exciting, and retaining employees. But feeling safe, challenged, and valued at work can be even more important than a paycheck, says Gabi Novacek, a BCG Henderson Institute fellow researching diversity, equity, and inclusion.
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In the face of lagging and highly volatile demand, how can airlines, hotel chains, and cruise lines prepare for the future? Jason Guggenheim, BCG’s global leader of travel and tourism, talks analytics, adjacent business opportunities, and sustainability challenges.
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Neveen Awad is the leader of BCG’s Detroit office and an expert in gender diversity in technology. She talks about her own tech journey, the insights women can bring to tech, how paternity leave can be for a boon for women in leadership—and more.
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GEORGIE FROST: Technological progress and automation is infiltrating and altering every facet of our lives and the lives of our children, and soon their children, and their children's children. But in many ways, education in the current system of learning hasn't moved on very far from Edwardian times. Is it time for new progressive era of education? But what would that look like? And where do values sit in this digital world? I'm Georgie Frost, and this is The So What From BCG.
LEILA HOTEIT: If we get this right, education would become the great equalizer, and it would lift up the whole of society.
GEORGIE: Today I'm talking to Dr. Leila Hoteit, a specialist in human capital topics and global lead of Boston Consulting Group's education, employment, and welfare sector.
LEILA: If you look at a drawing of education classrooms at universities centuries ago, and you look at universities or classrooms today, they look very similar. It's very much teacher-centric, people sitting in rows, and looking at the teacher, and listening to the teacher, so very much true. Now we see so much change happening very fast, led by technology, by other trends, and education has to innovate, has to catch up, and I think it is going to start to happen at a very fast pace.
GEORGIE: What will that look like? You said it needs to innovate, it needs to change, and it is strange that it's one of those areas in which it really hasn't, and yet it is so fundamentally important to communities, to society, to the world.
The second one is befriending technology. So technology is not the enemy. How do we befriend technology so that we can use it as a tool for equity and progress and we mitigate the risks that come with technology? And the third one is lifting each other up and working towards better social equity through education and learning.
GEORGIE: To achieve those three points then, the right skills, befriending technology, lifting each other up as you say, what levers do you think we need to activate?
LEILA: So if we think about the first point around making sure we armor ourselves with the right skills, when I think about education, it's key to prepare people to unlock their new potential. And when we talk about education or certainly when I talk about education, I'm not thinking classroom and campuses. I'm thinking very broadly about education and learning inside and outside the walls of education institutions and across all age groups, children, but also adults. It's all about life-long learning today.
GEORGIE: How do those two things marry up? When you talk about the way you think about education inside classrooms and campuses and outside, do you see there's a time when there is no space for classroom, it's all going to be done remotely outside?
GEORGIE: So you've spoken about where learning happens, but what about the type of learning? So much focus now is there on coding and technical skills. But what about the so-called softer skills, the values, those sorts of things that we tend not to emphasize so much with education and yet, I mean, maybe I'm wrong here, but seem to be more important in society than ever?
LEILA: Absolutely. So when we talk about the future of work and the future skills that you will need to be able to work in the future, you're hearing a lot about STEM skills, you hear a lot about the importance of teaching coding and things of the sort. And while it is important to teach technical skills, for our kids to have technical skills, with technological advancement, what we're witnessing is, by the time our kids graduate, the skills that they've learned are already obsolete.
On top of that, what you see is that most fields of work are becoming increasingly intersectional. So there's no domain of knowledge that is standalone today.
And if I take just a single example, the Stanford marshmallow experiment. So in this study, a child is given a choice between either one small but immediate marshmallow that he or she can have now immediately, or two marshmallow rewards if they wait for a certain period. So this is all about a skill called delayed gratification. Are you able to wait to get more? And what was found is that though the children who are able to wait for a longer period tended to have much better life outcome. So whether on educational attainment, but even in other life measures.
So how do you make sure that you teach at a very early stage in life such skills such as delayed gratification?
Another example when we talk about social-emotional skills, if you look at existing jobs today, like the job of being a doctor. Today, the physician is supposed to be the single source of truth on everything to do with your body, with your health, and that's what makes a good doctor mostly. It's about how good he or she is in terms of really understanding human biology and all things to do with health care. But tomorrow, Gates was talking just the other day, that you'll have an electronic tattoo on you that will be capturing all of your health care data 24/7, and you'll have the machines telling you all the diagnostics.
So as a patient, you'll be extremely well-informed. And the doctor then, the good doctor, will become the one who has the emotional intelligence to be your thought partner, your emotional partner, and make decisions with you about your health.
What we see is that these skills are becoming incredibly important to be successful in life and to contribute to society. We look at employers, and they're looking for workers who have very strong skills such as resilience and professionalism, and they often report shortage of such skills more than they do on technical skills. On the other hand, when you see employees are also looking for more empathetic and more collaborative employers, and now you see a whole great resignations phenomenon because of that exactly.
GEORGIE: I want to go back to the marshmallow experiment because I'm not sure how much it was taken into consideration the background of those children, the environment they grew up in, the support of their parents, their education level before they did the experiment. But do you think that the current framework for our education system support skills that perhaps aren't technical but no less important in our future?
LEILA: This is a very good question, Georgie, and it's about the nature versus nurture debate. When I was younger I used to think about school choices for my kids, and I used to think I really want a school that's very strong in mathematics, very strong in science, and in languages, and everything, all these core subjects and literacy where they have to be very academically rigorous. And now I really think very differently about the choice of school and what's important in terms of the skills that the education institution has to incorporate.
Do I think in general we do enough even from the youngest age in terms of parenting techniques? But then in education institutions, kindergarten, and schools, do we do enough? No, but certainly good schools are evolving to really incorporate these skills and in their curricula.
GEORGIE: Where then do values and principles sit when we're progressing so much, when automation is inevitably going to come into education? You're going to have what you were talking about earlier, perhaps not that classroom structure in which these values and principles can develop. So how do these sit do you think in the future of education?
LEILA: I think they need to be incorporated across the curriculum. So I'll give you a simple example. If it's a language class to very young kids and we're reading to them and discussing with them "Little Red Riding Hood," a simple story like "Little Red Riding Hood." But this time, instead of just telling the story and it's black and white, and there's a good person and a bad person in the story, the teacher would try to show it or to discuss from the perspective of the wolf and try to ask the students why the wolf might have acted the way that he has.
Maybe he was hungry. And that if he was hungry, what would you do instead? What should the little girl do instead? maybe she should just get him some food and he would have reacted differently. It might sound like a very funny example, but this teaches kids critical thinking. It teaches them empathy. It teaches them also how to control emotions to think of better solutions, and we can see in the world today how important these skills are for a better world.
GEORGIE: How would you measure that? Is it important to measure it?
LEILA: So measurement is extremely important. And I remember in a class, in an MBA class, one of the first things we were taught, was you get what you measure. So if you really want to get an outcome in education or you get an outcome at work, you have to be able to measure it. So being able to measure these skills also gives a signal that these skills are important. And you look at all the organizations that do standardized tests, international standardized tests, like PISA. They are trying more and more to measure skills like collaboration, so collaborative problem solving, creative thinking, etc.
GEORGIE: Where did you go to school? I'm talking secondary and primary school.
LEILA: I grew up in Lebanon, during the war, and then I left Lebanon at 18.
GEORGIE: Very different to me. I was born and raised in Norway before moving to school in the UK. I ask you this because in conversations around values and principles, inevitably, the future of education will turn to a universal framework for education. Is it possible to even have it? Is it possible to have it when we have such differing values and principles?
LEILA: There's a lot of organizations that have tried, have put a lot of effort into trying to develop a single universal framework for skills.
GEORGIE: What would be the benefit of that though? What is the benefit of having a universal framework? Before we even look into whether it's possible, why would it be a good idea?
LEILA: The benefit of having a universal framework, when you think about the global citizens, when you think also about machines and the need to provide the machines with our set of values, so that they can make the decisions that we want them to make as humans, we need to all agree on what are the right values.
So these are just at a very quick, very high level of important benefits of having a single universal framework for skills. And so organizations like the World Economic Forum, like OECD have tried to do that and to standardize. And to some extent, you can try to converge and agree on some specific set of skills. But there are some where you would start to disagree at the cultural level on very basic things where you'll be quite surprised.
I'll take one example. If you ask me about one of the key skills that I would like my children to have, that would be, and that most people would like their children to have, that will be curiosity. So you can explore, and investigate, and learn. And then when you look at certain cultures, like Japan, for example, they ascribe less value than we would to unstructured curiosity, and thy would put much more respect and much more learning from the experience of the elderly. So it's very difficult to get to a single universal framework of skills and of values because there are a lot of cultural differences.
GEORGIE: I'm actually listening to both of those points. Both have great merit, respecting your elders and being curious. It would be a shame to try, and then do we have to prune some things out to have a universal system that actually...? Could we work in another way, a hybrid system that we can still have some kind of universality, but we're still keeping those amazing qualities that each culture and society brings?
LEILA: We should definitely try to work to converge, and respect, and celebrate the differences and incorporate that into what makes a global citizen. At the end of the day, a global citizen is one that also is very in tune with cultural differences and very tolerant of cultural differences. Where we need some form of decisions, if you will, are when you come to, for example, the need to control technology as I was saying.
So I'll give you a simple example. When you think of the example of the trolley problem, which I'm sure a lot of us are familiar with. But instead of trolley, you think about the driverless car. And a simple example, if you think this car can either hit a child or an elderly, what would you choose if you could code the car? The Japanese people might decide that the elderly can then teach and share their experience with many more, every old person with a hundred children. Whereas in other cultures you might think, he or she has his whole life ahead of him. So in this situation, we would need to try to come up and converge to a set of values because we need to control technology before technology controls us.
GEORGIE: You said at the start, befriend technology for progress and mitigating its risks. Tell me more about that.
LEILA: Let me start with the befriending part that you mentioned. Technology has and continues to solve many societal problems. It's a key enabler, if you want, to deliver innovative education. So one example we're seeing is more of the use of artificial intelligence to deliver personalized learning, learning that is customized to the need of every single student. And today we are even talking about hyper personalization in education where you're really personalizing to every single aspect of a child.
GEORGIE: How does that work? What would that look like? Children are developing and changing all the time. It's the beautiful nature of childhood. You'd have AI that can adapt with that child?
LEILA: Yes, children change, but technology is also very adaptive. So whether it's AI, and also you see genetics, brain science, technology more generally, all of these fields are intersecting and will be adding a lot of value to education. So a simple example, there's a lot of research and scientific experiments to support autistic children in learning better by measuring their attention through various devices that they place to measure how the eyes are focusing or not.
This same technology can be used with a larger population to see whether the individual is attentive, whether they require additional support to grasp a concept, to measure the cognitive load and see how much that child can understand at this point in time, and what factors are affecting his or her absorption of learning. So the number of hours of sleep, etc. And you can imagine optimizing all of that and mapping content that he or she is learning to cognitive development levels.
Genetic testing can also be used to see, to understand to explore the student genetics and understand how best they learn. So you can imagine how science can go extremely far to create this super child, super human. Now how much of that do we want is also a good question. Does this become the equivalent of the performance enhancing drugs in sports? Where do we draw the line? Those are all ethical questions that need to be posed and agreed on universally by everyone so that education moves in the right direction.
GEORGIE: Glad you mentioned that because I was going to talk about, as a parent yourself, just looking at the risks at the moment, that being online and being in a digital world for children, pose--online bullying, and we can go very dark and very deep-- troubling for a parent? How can you mitigate the risks? It's one of the eternal questions, isn't it? How can we get the most out of technology and the advancements? Because they've transformed our lives in many wonderful ways, but there's always hanging, as I said, those dark, deep risks.
LEILA: There are indeed these dark, deep risks, and we need to change our education systems in a way that teaches kids how to navigate technology, how to protect them from online bullying, from inappropriate content, from digital addiction. There's all these digital competencies that our schools are starting to teach the kids. They tell them how to behave online, what to share, what not to share online, etc. The solution cannot be simply on the children obviously. Parents have to play a role but also other actors. There's currently a generational digital divide where parents don't know how to educate their kids on safe practices regarding the use of technology because they grew up in a very different world. And beyond parents, there's a whole ecosystem that needs to be activated to protect children online, including the tech companies, law enforcement, child support services, the schools obviously, and international agencies. So this is a very urgent and critical issue that needs to be addressed head on.
GEORGIE: I know that people get kind of nervous when we talk about business involvement in schools and education, but do you see a positive role?
LEILA: I think the role of businesses is critical in making sure that education evolves in the right direction. Innovative for sure, but also preserving the right values. So whether it is to make sure that children online are kept safe, the role of business is extremely important there, whether it is to make sure that we don't stretch too far when we think about augmented intelligence, etc., that we are still keeping our humanity and are doing the right things, whether we are developing education in the metaverse, and we need to make sure that the developers there and the businesses there are working closely with educators to ensure that the education that's going to happen in the metaverse is the right one. These are just three examples of where we need to make sure businesses play the right role to ensure education evolves in the right direction.
GEORGIE: Before we end the podcast, I want to go back to the start if that's all right, when you spoke about what we can do to thrive, and your third point, and I like this because I think it's a quite nice, hopefully uplifting, end to the podcast when we've spoken about perhaps some of the troubles that lay ahead, but you said it could lift each other up working towards a better social equity. Talk to me about that.
LEILA: So this is where education can be a great equalizer if you may, and technology is a great enabler to this. When we think about access to internet or access to data, it's now viewed as a basic human right. So when we look at refugees, for example, and we think about access to water, access to food, making sure that they are safe, now we also say access to data and access to internet is a basic human right. Because with access to data, you have access to education, to knowledge, but also data to jobs, to health care, to social services. And we recently worked on a paper on bridging the digital divide in the US. Basically, what the conclusion is, with full digital connectivity and permanently closing the digital divide, this is critical not only to achieve educational equity, but also to accomplishing all sorts of endeavors to promote equitable, economic, and social opportunities.
GEORGIE: What a lovely point to end on. Leila, thank you so much. And to you for listening. We'd love to know your thoughts. To get in contact, leave us a message at firstname.lastname@example.org. If you like this podcast, why not hit subscribe and leave a rating wherever you found us? It helps other people find us too.
GEORGIE FROST: Not too long ago, supply chains were relatively straightforward, but the world's changed. So how do you lead your company to success in the face of rising inflation, global shortages, and conflict in Europe? By putting suppliers at the core of your business and by making procurement a leadership imperative. I'm Georgie Frost, and this is "The So What from BCG."
DANIEL WEISE: It's probably what every CEO dreams of. You will actually increase your sales and profitability, and you will actually have cost savings available to refuel your innovation pipelines once again and invest the money.
GEORGIE FROST: Today I'm talking to Daniel Weise, global leader of Boston Consulting Group's procurement business line and author of "Profit from the Source: Transforming Your Business by Putting Suppliers at the Core."
DANIEL WEISE: For the last 50 years, the Iron Curtain fell down. We had WTO supporting us with free trade. We can go to China. We have a billion of people helping us to produce stuff. All of this was available. There was no scarcity in supply, and it was always getting cheaper as well. It was paradise.
Now, the world has changed. We have a pandemic. We have a war in Europe. The US-China trade conflict, and many other things. And I think the new Iron Curtains we are seeing, they will not actually go away again. They will last. I don't think there's a way back to source in Russia quite soon. We will see how the US and China will go on.
The chip supply, for example, is also scarce, amplified by the Ukrainian situation. Last year, 10 million cars did not get produced. This year, we thought it was five, but it's going to amplify because there's neon gas shortage out of Ukraine. So potentially, another 10 million cars don't get produced.
That's a complete paradigm shift.
GEORGIE FROST: So basically for the past decades, companies have been resting on their laurels, and they find themselves very quickly, perhaps over the past two or three years even, with a situation that is incredibly difficult. What do you do as a company when faced with such a level of uncertainty? And bear in mind, this has not been your priority largely in the past.
DANIEL WEISE: I think, and that is what we see. You have to dramatically rethink. You also cannot afford to make it hypothetically or theoretically. There's no benefit in chasing black swans. We don't know what will happen, but there are those gray rhinos.
We know from the Spanish Flu that the pandemic is not happening for the first time. We cannot prepare for everything, but we need to have a fact base ready that if something happens, you know what to be doing and potentially can even take action before.
And we see some companies doing this better than others. There are companies who are still producing. There are companies who can deliver goods in time. And then, of course, there are others where they are actually losing market share because they have not invested in preparing their supply chains. And we see this a lot.
GEORGIE FROST: We'll get more into the role of the CEO shortly, but I just want to know, and you were right. I was a bit unfair by implying that every company have been resting on their laurels for decades. I don't think that's the case. In fact, it's definitely not the case. What are the benefits of the companies that have prioritized procurement?
DANIEL WEISE: There's, for example, a simple study with it. We took a look at the S&P 500 in the US, and out of the top 150 companies, one-third has actually a chief procurement officer on their board and/or part of the leadership team. That one-third actually outperformed the S&P 500 in the last 20 years by 134%. So that's some evidence.
When you take a look at certain industries, for example, in the tech space, where procurement is actually owning the innovation process, where a CPO becomes a CEO, take a look at Tim Cook following after Steven Jobs. Those are examples where you can see really benefits when people who are savvy about procurement and supply chain take actually an office and can lead a company to success.
GEORGIE FROST: And you know what I'm going to say. Correlation does not imply causation. So while that looks very good, what other evidence is there that actually by putting procurement first, as it were, that you will get the benefits, you'll reap the benefits?
DANIEL WEISE: There's another thing.
And I think in those times we live in, when, yes, there is inflation, you potentially can do still cost savings. This is not good enough anymore. We talk about multi-currency procurement, where we want to come to a place where we reduce CO2. And this only works when you work with your supply chain. We want to de-risk supply chains so we want to have the goods available you can produce. We want to have good quality and speed.
Think about a vaccine in Europe. If you have smart people thinking something through, you need still a home where you can manufacture that vaccine. That is what happened with BioNTech and Pfizer. That's procurement. And that is what we're arguing, that those times are over when you have a simple focus on getting something in for cheaper.
GEORGIE FROST: Is that where it's been just on cost-cutting?
DANIEL WEISE: I think cost-cutting is not anymore the paradigm of procurement. It is still important because we still need to finance innovation. Everyone will take a cost-cutting, good, accepted, but it's not good enough. We have to be completely different in thinking through, for example, where we want to make trade-offs.
GEORGIE FROST: I'm wondering about those companies that have prioritized procurements. Is it a certain type of companies that have, tech companies, perhaps where it matters more?
DANIEL WEISE: I think you're very right. Tech companies, probably, that cluster of, at least in our of thinking, companies which are more most advanced in procurement. I mean, it's not only rare that the CPO becomes CEO. That's the Apple example, but take a look at Dell and Apple and also Tesla. It is the supply chain and the procurement guys who own to a large extent the innovation engineering cycle. It is them who have a say in where to produce, what to do, and how to actually make those supply chains resilient.
And that's a difference to many other clusters. Take a look at automotive, for example. In automotive, engineers tell the procurement team what to do. Procurement team is tasked to get it in for a good price. But at the end of the day, that is not working out anymore because we don't have the full supply ready.
You're operating in scarcity. You're operating in inflation. And you have to actually achieve the sustainability targets, assuming you want to be leading in the sustainability piece. If you only have a cost focus like in some of those industries, this will not fly. And I think there's a lot to learn from actually the tech cluster.
GEORGIE FROST: You make a lot of claims in the book about how your company, if you do make this a priority, you lead the way, competitive, innovative. If it was so beneficial, why have companies not prioritized it? Why are CEOs only spending 1% of their time thinking about it? And if it is so vitally important and the benefits are what you say they are, or have they just been caught with their pants down, basically, over the last couple of years?
DANIEL WEISE: I think there are two reasons. One is, for 50 years everything was available, and it was not a need to focus on procurement. You just found the stuff, and you bought it. But now with the shortages there, the pandemic being there, with so much uncertainty, this is not good enough.
Those are the negative events, but there are also positive events which are changing the world like the push for sustainability. And that is then something where we need to rethink, I think, supply chains and where companies potentially too late understood on how very much they can benefit from supply chains.
If you take, for example, the CO2 footprint of a car, 60 to 65% of the emissions come from the supply base. So if you want to come to CO2-friendly cars, you have to work with your supplier. You have to put new teams behind. You have to put new teams behind with a different skill set. And that is what we are completely missing at the moment.
GEORGIE FROST: You mentioned that it starts, I guess, with CEOs. CEOs have a fundamental role to play. Why do you put so much emphasis there at the top?
Why? Because you need to be talking to your important suppliers, and offer something. And offer something means co-investment. It means certainty in demand. It means so many things, but those things, nothing a procurement professional can offer. That's a board decision. That is true partnership for the important suppliers.
So we think that only a CEO and the board can make that happen because if you leave it to the people stuck in corporate Siberia, they don't even have the mandate to take those decisions.
GEORGIE FROST: Okay, where do you start then? Where do you start to build this emphasis on procurement into your company? Obviously, it starts with the CEO getting on board with the idea. Then what?
DANIEL WEISE: The next thing for us is to actually change the company in itself.
One push is invest in digitization, make the company as much as possible bionic. Why? Because we want to get all the effort out of the transaction operational stuff, free up the people's time to become creative to work on the strategies.
Second, have human folks own the lifecycle of the problem, at least co-own it, and make sure that whatever we learn from supply chain gets embedded in the way we source the product.
In our thinking, yes, of course, costs savings also in an inflationary time still matter. However, we need to have a focus on CO2, human rights, on the sustainability agenda. We need to think about speed, getting goods early enough to market to be able to sell it. We need to think about quality. We need to go out thinking about risk. In times when supply chains are unstable, in times when we have shortages, we need to have an emphasis on resilient supply chains and availability of products. So that is, I think, what needs to change, A, within the company, and, B, also what we ask from our suppliers.
GEORGIE FROST: Transform the company sounds quite a large undertaking. That's what it takes?
DANIEL WEISE: We think so. At the moment, many companies tick internally, and you can do so many cost-cutting efforts and so many pushes in R&D. But if you understand, if you typically take your 20 or 30 biggest suppliers, they typically entertain R&D teams 20-, 30-, and 40,000 people available. They could be working for you if you partner with them rightfully and do something together with them in a meaningful way.
And that is where we think it is a transformation because we need to become a lot more focused on the supplier and allowing partnerships to happen. And I think that's a dramatic shift from the way we operate today within the boundaries of your company, so to say, but really extending that, leveraging your global supply chain.
GEORGIE FROST: Can you do that without breaking the bank?
DANIEL WEISE: We think so, yes, because by all honesty, that sustainability and all the other dimensions are important, cost will always matter in a supplier relationship. And we have seen those investments in suppliers truly paying off because if you give them stability and security, if you invest in longstanding partnerships, you will get also cost benefits.
But we don't think that is reducing profitability. It's actually the opposite.
GEORGIE FROST: Is the ultimate to get to a stage where almost you factor procurement into the design of products, if that's your business, obviously?
DANIEL WEISE: I would clearly say yes. Take a look again at Apple. Procurement is in the design process, early on involved. It's their job to get innovation insourced from the supply base. It is their job to actually have global capacity available, then to produce those products integrating those innovations. And that is different to many other industries where procurement only comes involved very close before the start of production.
GEORGIE FROST: Should every company have a lead in procurement then?
DANIEL WEISE: I'm not sure if everyone needs one. There potentially are industries where procurement is not that competitive or is not creating competitive advantage, I don't know, for some more service-oriented companies who basically only buy real estate or an office or IT infrastructure. But for all those companies where there is a physical product out, I would clearly say yes.
GEORGIE FROST: Mm. It is great having, if that's what your company will need, a lead in procurement to have your, as I said, the CEO on board, and start to build this emphasis on procurement. But then how do you take it to the next level to maximize it, to get the best partnerships that you spoke about with suppliers?
DANIEL WEISE: By doing it differently. I don't think it's enough to say, hi, here's my new email. We are going to change the world we have been living in for the last 50 years.
No, you need to reach out.
If you really want to make breaking decisions, both CEOs, the client and the supplier CEO, need to be involved. And then of course, they can delegate it back at one point of time to the teams, but it's a true change. It is not coming from procurement. It is, or it has to come, from the CEO in changing the way you have interacted before.
GEORGIE FROST: What can suppliers do to help companies to position themselves into greater advantage?
DANIEL WEISE: I think one of the most important things suppliers can do is understand your client's strategy. Reach out and offer on how you can help. reach out to those people who make decisions in the company. Get heard. Be very clear on what you can offer to those companies and be selective. I don't think, and that's not what we are saying, you can be friends with everyone.
You cannot partner with everyone, but pick those, that number which is relevant and feasible for you where you can partner and then reach out and do it. But I think that is what many times the relationships become very, very transactional. That is, I think, what is missing most.
Why don't you reach out if you have something in your innovation pipeline which is great and do a cool innovation partnership? Why don't you secure early on selling on that stuff? Why don't you even pitch it? And I think that is a change we are now seeing in certain industries, but it's truly not the case everywhere.
GEORGIE FROST: So if you were to give companies then a blueprint to leave us with as to how you would do this best, what are the key takeaways?
DANIEL WEISE: I think I don't know any company who does it perfect, not even the tech cluster. Potentially they need to improve a lot more on sustainability and putting their supply base into action also on this topic.
And lastly, escape the mono-dimensionality of procurement. It is not only about cost savings anymore, but equally important is sustainability, is the resilient supply chain, is quality, is speed, and is innovation. And if you put currency behind that, incentivize the procurement team to not only deliver on the cost basis, but also on a CO2 basis, on the innovation basis, that is, I think, the best advice we can give because if you put emphasis on it, people typically start to act.
GEORGIE FROST: And if you do that, spell out the benefits for me.
DANIEL WEISE: I think it's probably what every CEO dreams of because you will actually increase your sales and profitability because you have those products, A, available in those times and, B, hopefully a lot more innovative than those originating from their competition.
And lastly, you will actually have cost savings available to refuel your innovation pipelines once again and invest the money. So the benefits are quite numerous, and it's not only cost line which we can drive out of procurement. It's truly the top line.
GEORGIE FROST: Daniel, if you and I are to meet up in five years' time and do this podcast again, let's hope we do, what sort of things do you think you'll be telling me? What will have changed?
DANIEL WEISE: I hope that we will move to a lot better world. Potentially, we have advanced on the sustainability topic, and it becomes again a priority. Potentially, we have left some shortages behind, but for sure, we will have not left some geopolitical conflicts behind.
So I think ultimately what has changed, I would predict a lot more focus on risk management, a lot more emphasis on sustainability. And I would hope some companies have actually put suppliers at the core and are really benefiting from still working supply chains.
GEORGIE FROST: Thank you so much, and thank you for listening. We'd love to know your thoughts. To get in contact, leave us a message at email@example.com. And if you like this podcast, why not hit subscribe and leave a rating wherever you found us? It helps other people find us, too.
GEORGIE FROST: If you've ever hidden anything significant about your personal life at work, then you know how exhausting it can be to lie. We aren't performing at our best. Perhaps you're going through a divorce, received a cancer diagnosis, started IVF, or you haven't come out to your colleagues yet. But creating a culture of openness and acceptance is not only beneficial for the welfare of your staff, certainly, but also for your bottom line, and for designing policy suited to attracting and retaining the best talent. I'm Georgie Frost. This is "The So What" from BCG.
DAKOTA SANTANA-GRACE: It's because it's the extra mental labor to navigate that identity that it's important that people feel comfortable. Now, they don't need to share anything about their lives, but they shouldn't spend time thinking about what they're not sharing as they talk about it.
GEORGIE: Today, I'm talking to Dakota Santana-Grace, BCG principal and expert in e-commerce package delivery and leader in BCG’s Pride team.
DAKOTA: Every year my Instagram fills up with people talking about how stressed or agitated they are by all the companies with their rainbow flags and their policies that don't actually support queer people or their funding of lobbyists or politicians that are actively homophobic.
I wouldn't tell anyone not to do it, but they should be asking themselves, is it matching what they're actually doing for their employees and what they're actually doing when they are influencing their external world? Are they also supporting those employees from a broader social context?
GEORGIE: What they're doing for their employees, you talked about policies. Just explain what some of those might be.
DAKOTA: Yeah, so I'll break it up, right? You've got your culture policies, which is how you bring queer people together, build allyship, make people feel included. I think back to my first time hosting a large Pride festival in our Boston office, and I brought a drag queen to the office.
Everyone was completely startled at the thought of a drag queen walking into a consultant office. I was not the first to do it. New York had done it the year prior. And it still sits with people. It sits with people who were allies, how exciting it was. It sits with people who were members of the Pride or LGBTQ community, how cool it was that the office wanted to experience part of their culture that's a little bit more niche.
But the only reason that that was worth anything is because there were policies to back it up.
And you know, very personally for me, do you cover Truvada, which is an incredibly lifesaving medication that actually prevents the transmission of HIV AIDS. So it actually essentially creates high level of resistance for people who want to take it proactively to avoid getting HIV AIDS.
GEORGIE: I don't know if you have the stats to hand, but do you have any idea of what percentage of companies in North America, where you cover, have policies like that in place?
DAKOTA: I don't, but I'm comfortable with saying too few.
GEORGIE: Right, that's fair enough. That's fair enough. What would it take to get those policies in place? How do you build them? Where do you start?
DAKOTA: Listen, I think it always starts with listening to the employees and what they actually need and what they're looking for. In most companies, assuming there's not a breakage in values where they actually don't want to support their LGBTQ employees, at which point I can't help them, but for those that do want to and I hope that's a majority, it comes down to actually listening to what the employees are looking for.
I still remember when we were advocating inside of BCG for shifts in our paternity and maternity benefits and shifts in our adoption benefits and surrogacy benefits. And those have evolved over the past two to three years. And they've meant a lot to our employees. And that's how it came forward, though. It was actually just listening to people and where they are and what they're prioritizing.
GEORGIE: Obviously, it's wonderful to have those sorts of policies in place for your workers to make people feel included, but there is also a great business case for this as well.
DAKOTA: Yeah, I think if we decide that we want to have the strongest employee base and you decide that you want the most diverse and capable employee population that you can build, and there's tons of research around the value of diversity in the workplace that we don't need to get into. Almost every executive will have read it. How does this translate then to the importance of retention and attraction of LGBTQ talent, I think is the real question. And the reality is that queer people are 13 times more likely to quit a job if the culture isn't right.
GEORGIE: Culture isn't right. Explain to me, what do you mean when you say the culture isn't right, for example?
DAKOTA: Yeah. Not just policies that are right. Places where there's open discrimination.
DAKOTA: Places where there's not consequences for implicit discrimination, and places where they don't feel comfortable being out is one of the core drivers. And that's also a core driver in how we attract talent. The reality is we're seven times more likely to not go somewhere because of a culture, a perception of the culture.
Now for me, I've been very lucky, right? I sit back and I think, well, these questions are so obvious. I feel very supported. I walk around in four-inch red stilettos on a Friday occasionally, and no one bats an eye, which I find actually offensive at this point. I'd like someone to bat at least half an eye.
And I have mentorship across the country and world of queer leaders that I really respect. So for me, it's always been there. But when I think about the conversations I have with dozens and dozens of queer recruits every single year, this comes up, and it's a reason that they don't look at other places. And it's a reason that they're prioritizing coming to us. And it's something that I'm really proud of, but it's something that I would encourage any company to be stepping up to focus on, because it's the only way you're going to pull in as diverse of an employee workforce as possible.
GEORGIE: Dakota, we live in the real world, you and I, most of the time. I am offended by the four-inch heels purely because my back could never handle four-inch heels and I'm jealous. [laughing] But no, we live in the real world and we live in a world where people are quite easily offended by certain things. And there will be people who don't appreciate seeing you going around the office, I don't know if you go around the office in four-inch heels, but if you do...or a drag queen.
DAKOTA: I do.
GEORGIE: Well, there you go; take care. Or a drag queen in the office, that might offend people as well. So are we swinging too far in one direction to appease one section of society or one section of the workforce while risking offending the others? Or do you say, well, boo-hoo to you?
DAKOTA: Well, I would love to talk to the person who is emotionally wounded by my heels, and we can have a conversation for how it harmed their self-perception and identity. But on the front of the drag queen being in the office, it's well announced; it's optional attendance. You don't need to go. I think the reality is unlike 40 years ago when it was a boys' club in a cigar room where I would not be invited, we did invite everyone. And you can opt in or opt out of that journey of your own volition.
GEORGIE: I have spoken about this on BCG podcasts past, that bleeding of private and work life. And I think the last couple of years where everyone's been on Zoom and you can see in the background pictures of my family, it's become much, much more intertwined. Too much so? There might be some people that argue, why do you need to say what you do in your private life in your workplace? Just get on with the job.
DAKOTA: It's a fair question. And I think the question comes from a place of I always say that a lot of our questions on these topics come from blind spots, not necessarily from malice, same with where companies have policy gaps, right? I think it's a blind spot, not an intentional choice.
But the reason that it matters is because there's so many times that the person who asks me that question about why does it matter that I can talk about my personal life also mentioned their opposite gender partner, talked about their kids, their family commitments, all describing their weekend within the past few days.
And the minute you have to start filtering, we call it covering, covering pieces of yourself as you're working through it, describing your weekend, say, it's the week after Pride, do you mention that you went to the Pride festival? If you're covering, no. Now you have to come up with your Saturday story. But then you just bumped into your straight colleague who didn't know you were out while you were on the street because they went to witness the coolness of Pride, and now half of the people in the office have heard about how they saw you on the street and now you're covering again. And so it's because it's the extra mental labor to navigate that identity that it's important that people feel comfortable. Now, they don't need to share anything about their lives, but they shouldn't spend time thinking about what they're not sharing as they talk about it.
GEORGIE: Well, for different reasons, I'm sure that many people will know what it feels like to hide things at work and that weight of having a secret, whether that's you're going through a divorce or IVF or cancer treatment, as I said, not the same thing, but you can understand that trying to hide what's going on. And it impacts obviously on you mentally and possibly physically, but also the quality of your work. To put it bluntly, you're not going to be performing at your best when you have things on your mind that you can't get out.
DAKOTA: Yeah, I mean, from a pure corporate value perspective, right, it is materially worse if you have some of your queer employees spending the day worrying about what they say about their weekends. I mean, we all understand basic professional norms. I'm not saying that you need to hear every detail of every single Saturday evening I've had. I'd prefer that you didn't.
But I am saying that I shouldn't have to think about whether or not I give the top-line narrative that I went out to a restaurant and then swung by the Pride festival, or that I swung by a gay bar for two seconds, or if I happen to name the bar that I went to and it is gay, that I'm not somehow jarring the world by saying that, and that I didn't have to spend time making up a restaurant name.
Because it's actually a very natural question when someone says, "Oh, where'd you go out this weekend?" You might actually answer that question. Now I'm in DC, so the answer's probably Number Nine, but that's a gay bar. Now if I'm trying to cover, now I have to spend 20 seconds quickly choking on my words as I figure out where I went out.
That is exhausting to do, and I've done it, right? I went to a client, and I've always been out with my clients, and for whatever reason, this client I felt was conservative. And I work largely in industrial goods and package delivery. I work with a fairly conservative base of clients as it is, and I've always been out, but for whatever reason, and I've never had an issue and I've been very lucky there. But for whatever reason, in this instance, I felt the need to hide it. And I was stressed. I was more stressed than I had ever been with a client. I was stressed in meetings. I was stressed coming in on Mondays. I wasn't having a good time, and that was rare.
I actually like my job. I was just sitting there wondering three weeks in. And I was lucky one of my best friends was on the team. And she looks at me and was like, "Well, it's because you're not out right now." And it was dumb stuff.
And I'm coming from a fairly privileged position here. Right? I am a largely white-passing Latino gay man, which means that I get many of the benefits. I don't pass as straight, to be very clear, but I get many of the benefits accrued to men in society. And I'm neither trans nor a woman, right? I am on, of the spectrum of discrimination that I face day to day, I probably face some of the lesser within our queer community. And my trade-offs are different when I do that math. But for me, I really was materially more stressed, more tired because constantly in conversation, I was adjusting the words coming out of my mouth and I did not enjoy doing it; it's tiring.
GEORGIE: And how was it received by the client?
DAKOTA: There was a soft smile on this man's face as if he was happy that I had finally come out. And again, like I again have sort of the joy and curse that I mean, I really don't pass, right? People have screamed explicit phrases at me on the street just walking home from friends' weddings. And I live largely in the New England area. So this is not the most homophobic part of the States. And I still get heckled and cat-called and insulted on the street regularly, over the past two, three years, probably five, six times. And I got chased by a man maybe four weeks ago, screaming "You're giving us all HIV AIDS." So discrimination is real and it happens. But for me in my corporate setting, I don't live it and I don't pass as straight. So I have given up ever trying to hide my identity.
There's one other story if you'll let me tell it that I think will be helpful. I was in a client meeting, and I always say this is one of the best moments of allyship. Allyship is about meeting people where they are, and that's all it is at its very simplest.
And when I left the client meeting, I was probably in my second year at the firm, and one of my closest mentors now, we were sitting at an airport. Our flights had been delayed and he says, "Hey, like we haven't done feedback in a while. Can we quickly chat?" So we're chatting and he said, "Hey, I just want to mention, like you deepen your voice in meetings. Why do you do that?" And I said, "Oh, well, I'm trying to hide my gay voice."
And in this moment he had choices. He could have said, "You don't need to do that." I would've been really annoyed because he doesn't know what it's like to try hiding your queerness. Instead he said the most honest thing he could have. "It's not working and you're less effective."
GEORGIE: How did you respond?
DAKOTA: I was so happy. He took a risk in that moment to say those words. And he took a risk that he knew that I would perceive them honestly. And it was super important because I never again spent time trying to sound super straight because it just wasn't worth my time, and it was making me worse at leading my meetings. But it's simple things like that where I have tons of energy that was getting totally bogged down by trying to deepen my voice because I thought that's how I needed to sound when presenting.
GEORGIE: I'm glad you mentioned that story because I do think it's really relevant. Because earlier you were talking about blind spots, unintentional discriminations, and I think it's twofold. It's one, the blind spots obviously that we can't see, we don't know are there. We can't do policies for people that we can't understand what they're going through, etc. But also it's the, am I allowed to say this to him? Will he think I'm being discriminatory if I say this?
DAKOTA: It's so, I don't even want to write it off as easy, right? It's so hard.
And that is why mentorship, openness, and the reality is, I also personally was sending out signals that gave openness to do that. And he read those signals accordingly and it was helpful. It's a hard line. It requires judgment. It requires, I always joke the best allyship is very close to an HR violation because you're talking about really personal topics about someone's identity and helping them navigate it in a professional setting. And that's hard. And that's why leaning on allyship is just as important as leaning on fellow queer mentors who implicitly have a bit more license to go there with you.
The problem is just by statistics and the realities of our corporate world, a majority of senior people are not queer, by a huge margin. And so we do need to figure out how we navigate that gray zone. And it starts with intent and it starts with an understanding.
And you don't have to go right straight to "You still have gay voice, right?" You can go softer into it like saying you shouldn’t deepen your voice, and he didn't need to say it's not working. He could have said, "Well, let's talk about how you could be more comfortable because you're more effective when you're emoting as your full self." He had other ways to go.
The reality is we had a relationship where he felt super comfortable shooting the straight shot on that. There are circular ways to arrive at that same outcome, just would've required a ten-minute conversation instead of a three-minute conversation and a chuckle.
GEORGIE: How do you know though if you're getting it right or wrong as a business leader, with all the things you've spoken about: policy, language, culture?
DAKOTA: Well, I always say in any of these topics, anything that has to do with diversity, the first assumption I always have is we're probably not doing it right. In some place, somewhere, somehow, we're probably not doing it right.
But the way that you know that you're doing the right thing, I guess I would say, is one, is this on your agenda? Is this something that you are thinking about from a leadership C-level and minus-one-level perspective? Because that matters. If those people are thinking about it, that cascades. Are you present as a leader with the communities?
I actually find it...I'm planning a Pride conference right now. It'll be our first one back in person, and leaders are scrambling to be invited to this conference. And I have to now navigate that, which puts me in a fun position, but it is because our leadership understands the importance of their visibility. And that's the second thing.
So that's what I would say. Is it on your agenda and is your agenda visible? Because if those two things are happening, everything can flow from there and there will be animated, excited people to help work with you.
GEORGIE: Does language matter? Does it matter if you say homosexual, gay, queer, LGBTQIA+?
DAKOTA: Oh Lord, it's a fun one. This is going to have a variable answer.
GEORGIE: I had to ask, I'm sorry.
DAKOTA: You have to ask. No, you have to ask; it's right. Because I mean, I can jokingly say like I mean, we'll debate if we cut this, I mean, I can jokingly say like, I can barely track the letters if we went the whole way out.
And we would debate what Q stands for. If you set members of our LGBTQ community together in a room, we would still be debating what the Q stands for. Questioning or queer, who knows? I think it's queer. And what's the plus? And so listen, that is such a real question, and it's important.
The first thing I would say is each region of the world's going to have its own journey here. So I think it's important to figure out what is right for your local community and for your employees.
For me, personally as a queer person, I find queer makes my life a heck of a lot easier because it is super inclusive of gender identities, of people's different sexualities. It's a very inclusive term. That said, it makes people who are not queer cringe to say it because it has been historically a derogatory term.
So I've generally driven people towards LGBTQ+, LGBT+, something that just signals the inclusion. If you can get comfortable with queer in a lot of spaces, particularly in the United States, that can work well. But it's going to vary, so I'd say listen to people, but that language does matter.
Most people actually don't want to hear homosexual. It's fairly clinical and reductive. I rarely see it actually existing in an actual term, how we all refer to ourselves. And it matters because words have historically shaped this community. Queer was reclaimed, and those words shape how people identify themselves, how they relate to others and how they want to see themselves within the world. So figuring out how to be as inclusive as possible is really important. I think that words matter.
GEORGIE: The words matter, but listen, and respond to what people are telling you, how they identify.
GEORGIE: Dakota, thank you so much. And thank you for listening. We'd love to know your thoughts. To get in contact, leave us a message at firstname.lastname@example.org. And if you like this podcast, why not hit subscribe and leave a rating wherever you found us. It helps other people find us too.
GEORGIE FROST: When you're buying something, what stops you from making the ethical choice? Is it time, price, cynicism, or is it transparency--you simply don't know enough about the product? Despite grand pronouncements and targets by governments and businesses, progress in encouraging consumers to buy sustainable and ethical products is slow. Could a big part of the problem be that too often people are left out of the equation? I'm Georgie Frost, and this is "The So What from BCG."
SHALINI UNNIKRISHNAN: This is a test of leadership for many of the companies, of their boards, of their CEOs, of their C-suite, and of their shareholders to make these moves.
GEORGIE: Today, I'm talking to Shalini Unnikrishnan, global lead for societal impact in the Consumer and Social Impact practices at BCG.
SHALINI: If you think about people-centered design, what you want is to really dig into what are the motivations, what do people really care about when they're using that product. What makes them happy? What is giving them satisfaction from that product? Then thinking about, well, how do I create that experience sustainably? And putting that at the center of the innovation process, of the marketing process, of the pricing process, of every part of how I'm taking that product to market.
Here you can take the example of Tesla, for instance. Before them, there were plenty of car companies that came and said, well, I tried electric vehicles. Nobody really wants them. They've failed. People don't want to pay the premium, etc. And fast-forward, we've seen what design that people really want, features that people really want that happens to be green and electric, can do, and it can fundamentally disrupt an entire industry.
GEORGIE: Isn't it at a price point that people want as well, particularly with Tesla?
SHALINI: It is at a price point that people want. We are seeing, though, that if you look at the data, let's say in North America,
GEORGIE: A bin bag is slightly different than an electric car, though. I think a lot of people might be a able to stomach the 15p or 15 cents or whatever it is, extra, but when you're talking about things that are worth a little bit more, but there are also, there are other elements to, for example, an electric car, charging points, availability, those sort of things I imagine you also need to factor in when you're designing this people-centered approach.
SHALINI: Absolutely. Absolutely. I think one of the key things is no product has to address every part of the market, right? So that's an age-old consumer segmentation theory. In the same way, the innovator, the Tesla, doesn't have to appeal to every single consumer in the market, but what they are doing is proving a business model. What they are doing is proving demand. And now we have the Chevy Volt that goes with the Tesla as well, right?
And so over time, that creates the ability to have a wider range of products in the market. So we don't have to constrain ourselves just because it hasn't solved all the problem yet. And then we get to, of course, none of this can work by purely innovating cool products. It has to happen in the right ecosystem.
No one company is going to be able to solve this. No one government is going to be able to solve this challenge. And finding new friends, finding new people that you're going to collaborate with is going to be a really important part of this journey.
So you can take the problem of plastic waste. You'll have the consumer company put up their hands and say, well, I've made it recyclable. What else can I do? You'll have the downstream players talk about their challenges. You'll have upstream players talk about their challenges.
I was recently working with a very large consumer company, and they'd spent a year looking at what it would take to meet their sustainability goals. And they have bold sustainability goals, not just around being net zero, but around nature and being nature-positive, around equity and inclusion. They went through the process of identifying lots and lots of things they could be doing. It was an entire company process to identify all the little initiatives they could be doing, tweaking their own product, the packaging, the production, the energy mix, etc., etc.
And at the end of the day, they were 25% of the way through the journey, and that's it. That's all they could find within their business and even within the core suppliers that they have. The remaining 75% of the answer needed to be fundamental changes to their business, to who they're partnering with, how they're sourcing their entire procurement structure, suppliers, all of that. So we have set out on a very big journey here. I think at some point we have to realize that it's not going to come with little tweaks and changes. It's going to be big things that need to be changed.
GEORGIE: I always have to caveat this, but I do think this all sounds absolutely in the direction that we should be going. Who doesn't want us to be more sustainable, more ethical, more green? However, as a business and in a capitalist system that works on quarter-to-quarter growth, you would be looking at those sorts of stats and thinking 75% of my entire business model needs to change. And we're in a situation we mentioned earlier about consumers. Do consumers really want it? Do consumers really want to buy green and ethical? When companies are shown very clearly by the media, very publicly to be doing the wrong thing, people are still buying it. And what I think of immediately is things like fast fashion. How then as a company, as a leader of a company with shareholders, do you then get everyone around a table and say 75% of our business model needs to completely change? They're not doing it over there. That company there aren't doing it. I'm not entirely sure our consumers are really behind this either, but I think we should do it for the right reason.
SHALINI: It's not easy. Let's start off there, right? If there were easy answers, we would've done this by now and moved on. It will require some companies to step ahead of others. There is now mounting evidence five years ago, 10 years ago, some of these even longer, some of the leading companies already stepped out. Patagonia already stepped out, Unilever already stepped out, even before some of this evidence was mounting. They've had great value created from this.
As I mentioned before, sustainable products are small, but they're the biggest part of the growth. I'm doing this to capture the new pockets of growth. I'm doing this because there is a sustainability scarcity that will emerge for many of the commodities that I am going to need as climate change begins to have more and more effect on agricultural outputs and other outputs. Some of these commodities are going to start fluctuating. There's much more risk in the system, and this is about creating resilience. This is about creating access to scarce commodities, making sure my business is strong for the future. So it's preparing for growth, ready to capture growth, and it's preparing for resilience and for the risks that are coming.
And by the way, in that process of getting growth and getting resilience, capital markets are shifting, and there's a large amount of capital that is looking for sustainability targets. And I can take advantage of being a first-mover and capturing that. It's more efficient. It can save me money. So, more and more and more arguments building up for businesses that want to tell that story. It's not without risks. It is not without getting uncomfortable. You've had a certain business model that's worked for a really long time, and this is a disruption. But we've seen over and over again that any time there are big disruptions, whether that's a digital disruption or all the way back to industrial revolution, the companies that get going and that start and that ride that wave are going to come out more successful and more resilient in the long run. So this is a test of leadership for many of the companies, of their boards, of their CEOs, of their C-suite, and of their shareholders to make these moves.
GEORGIE: Where do you start?
SHALINI: I start always with the purpose of the company. What are you trying to accomplish for whom? Who are your stakeholders? And for each of those stakeholders, what's the value that you're creating? Climate action, sustainability action, equity, diversity, any of these agendas are anchored in purpose, and they are core to the company rather than something that is being done to the side of the business. That is much more likely to succeed. And to me, that is the simplest but most important starting point for a business.
GEORGIE: But what if your company's purpose is to find fossil fuels, to do massive shipments across oceans, to make petrol cars?
SHALINI: Yeah, this is a great conversation to have with that leadership. Is the purpose to find fossil fuels, or is the purpose to provide energy that powers mobility? Is the purpose to identify energy that powers the production of products that create value in our lives? And if that purpose is understood and described properly, these companies that are facing some of the biggest challenges will also be able to make their transition to a resilient and profitable future.
GEORGIE: All of this seems to start, go forward, and end with people, people-centered designs, people in leaderships who are willing to take risks. What happens to companies that don't put people at the center?
SHALINI: Yeah, I think what you end up with in that situation is potentially great technical answers that really struggle getting adopted, with having the energy and the momentum of the organization to make it successful.
So we have seen many examples of products, solutions, services, business transitions, etc., where companies have had great ideas and great products, but they never take off. And there's lots of reasons for them, but I strongly believe one of those is not really thinking through the people aspect internally, or your consumers and your customers, etc. And by the way, this is not just about the person in the grocery store picking up products, right? That's not the only people part of it. It's the other end of the spectrum. If you are a company, I don't know, making bags of chips, the people to think about are also the farmers that are involved in producing that crop who are about to go through probably the greatest transition since the green revolution if they do change to regenerative practices and so on. So it is a people transition up and down that value chain throughout.
GEORGIE: And yet we live in a digital era where tech is being advanced, automation, algorithms. How does that marry up?
SHALINI: Could we do this all in the metaverse, right? Well, digital, I think, is the most powerful enabler on this journey. It's going to be very exciting to see that intersection of digital and sustainability and how that's going to create the solutions that we need for tomorrow.
I'm personally very excited in BCG for the team that has been working on leveraging artificial intelligence to help companies dynamically understand their very complex carbon footprint and be able to run scenarios and simulate their business decisions and democratize sustainability throughout the organization because digital is creating different interfaces to that very complex data to different parts of the organization and helping them understand and grasp and make decisions with sustainability data in the same way that you would with financial data.
To me, that's one of the most powerful tools we are going to have as we move forward, is where can digital create a dialogue at the intersections? Because the value is not in silos anymore. The value's going to migrate to the intersections. How does digital help us talk across these boundaries that we've created of: you work in this sector, and I work in that sector, and you are my competitor, and X and Y? Digital is going to be powerful at helping conversations and partnerships and collaborations to happen at intersections and boundaries.
GEORGIE: How do you see this in the future? In this ideal—silo-less, everyone connected—how would it look?
SHALINI: I think you would still have, absolutely have competition and the innovation that competition spurs and the advancements that competition spurs. None of this is meant to be anti-competitive. It's not meant to be some fuzzy, theoretical approach. It's meant to have us rethink some of the boundaries and find new sources of advantage.
At the core of this, sustainability is a source of advantage. This is not about a "kumbaya," let's all the good to each other and be happy solution.
It's going to come from new collaborations. You see pharmaceutical companies, airline companies, across the board you're seeing companies come together pre-competitively and co-investing in solutions, where actually instead of every one of them designing sustainable aviation fuel, they are co-investing to create that technology that they can all benefit from. They will still compete to get you and I on the cheapest and best way to our wonderful island vacation in the summer, but that doesn't mean that they can't generate advantage from pulling in their resources pre-competitively.
GEORGIE: You mentioned there about engaging with your consumers. How can companies best do that?
SHALINI: I think the first step is to listen. A while ago, we did this piece of work where we were trying to understand why there were so many financial services products aimed at the small-business holder. So think of the corner shop in Indonesia or in Nigeria or the small shop in that's in rural Tennessee, a lot of financial solutions aimed at helping them digitize, helping them save, so on and so forth. The adoption is very low. Sometimes they try it out. The stickiness to those solutions was very low. So we went out and did this anthropological kind of survey. It wasn't about asking them about financial services.
We actually asked the shop owners, men and women in Indonesia, in India, in Nigeria, in Mexico, etc., what's money for? What's happiness to them? What's a good day? What's a bad day? What do they do with the extra money? What does happiness mean, so on and so forth. From that, we uncovered an incredible set of rich insights.
We talked about who do they trust, why do they trust who they trust. So what you could discover for product design for this company from those insights was actually what really mattered to people, what kind of incentives would motivate them, who the message or the marketing message should come from because those would be the more trustworthy individuals, etc.
It starts from listening and really understanding what lies underneath people's motivations and why people act the way they do. And then I think the other side of it is it comes from narrative and storytelling and recognizing that just creating the solution doesn't mean that people can get it. We're surrounded by a cloud of information right now.
GEORGIE: It's one thing to listen, but I imagine a lot of what people say is very different. So you're listening to lots of different messages. And I haven't read your research on this, but I imagine from Indonesia, India, Nigeria, rural Tennessee, I think that the responses and cultures will be very different and will reflect different responses in people's answers. So if you are a company that has to factor that in, that is something that will be quite difficult to measure or not?
SHALINI: It is. The simple answer is you have to customize. We customize products all the time. Why not customize technical solutions? Why take a solution that's worked and been designed in a city in the US and try to make it work in a developing country? We have to customize, and it's not always going to be a transfer like it was in the past of a solution created in the West and then taken to developing countries. We're going to need innovation and solution design happening everywhere. We are going to need collaboration to happen and solutions to be traded across.
So the simple answer is yes, and that's OK. Let's actually work with those cultural needs, etc., and design something different. But maybe there is also a point to be made, as we looked across these countries, there's plenty that's similar as well. At the end of the day, there are a lot of values, and there are a lot of things that are quite common across people no matter where we are. We all have aspirations that are common. There is value around family. There's value around safety. There's value around well-being and health and wellness of my child, etc. There's just so many values that are common that I don't think that it's as complicated as we may think it is.
GEORGIE: I was listening to another podcast that was talking about barriers. Now, there was a bed company. and a lot of people, a lot of customers, kept going onto this site, designing their own bed. And when it came to the purchasing, they stopped, and the company couldn't work out why until they did a bit of research. And they found out that the biggest problem was people didn't know what to do with their existing bed. So, as part of the process, they said, "We'll remove your bed for free." And as a result, you can imagine, sales went up. By that, I mean, do companies focus a little bit too much on trying to push products without thinking about what is holding people back? And this feeds back into that argument about sustainability. If we want consumers to be more sustainable, are we focusing enough on the reasons why we're not, what is holding us back?
SHALINI: Yeah, I think it's a great point. We see it over and over again, that if we can get rid of simple barriers that we all are actually quite willing to change our behaviors.
There's a toilet paper company. It's actually quite successful. They're called Who Gives A Crap. They don't do plastic packaging. The loo rolls are wrapped in paper, and they're made from sustainable materials and so on and so forth. All that's great, but the simple thing that they do is they deliver loo rolls to your door on a subscription service that works for you.
And over and over again that we see, you take Patagonia, for example, yes, they've got sustainability deeply embedded in what they're selling and the products they create. But they have tied that very closely to a central thesis of their marketing positioning, etc., which is quality. They say fast fashion or clothes that are disposed of are part of the problem. We want things to last. That's better for the environment. We design for things to last.
I don't know if anyone has done the disaggregation of how many people are buying Patagonia for just the fact that they're green or just the fact that they're higher quality or the intersection of both, but those two are actually very closely linked. And it is a sustainability argument to have a higher-quality product as well as it's a value argument. If I'm paying this higher money or this larger sum of money, it should be a higher-quality product that lasts me longer. So, it's a great point. There are important ways in which we need to understand the barriers for people to buying products and what appeals to people and not make it just about, I've created a better widget, and, therefore, people will just buy it.
GEORGIE: Thank you very much to Shalini and to you for listening. We'd love to know your thoughts. To get in contact, leave us a message at email@example.com. And if you like this podcast, why not hit subscribe and leave a rating wherever you found us? It helps other people find us, too.
GEORGIE FROST: Every company wants to unlock more value and growth, but how much bias is being allowed to creep in? Biases across your business, but especially from leadership in the recruiting process, can seriously stunt those aims. Acknowledge and compensate for them, boost your business, or ignore them and risk letting competitors steal a march on you. I'm Georgie Frost, and this is "The So What from BCG."
NAN DASGUPTA: Bias is everywhere, and it's everything that might seem small. And then it's big bias. It's unconscious bias, and then it's pervasive systemic bias that's been built into what we do.
GEORGIE: Today, I'm joined by Nan DasGupta, a lead in BCG's People & Organization practice, and an expert in people and organizational strategy.
NAN: Oftentimes, you have a direction in mind. You want to achieve certain outcomes. But the real question is how do we get there? Gender equity and inclusivity is one of those big areas where, actually, we know we need to do better, but we simply don't know how. It seems a little bit too big of a problem. So companies are looking for, we are all looking for, ways to move the needle and actually make progress on that really good ambition.
GEORGIE: Don't worry, Nan, we're going to solve this in the next 20 minutes, aren't we?
GEORGIE: Let's start with unconscious bias. How big an issue is it in the workplace and how do you understand it?
NAN: Well, I think bias is a big term, and it's pervasive. I mean, it's certainly in the business context, in the corporate environment that we work in, bias is everywhere. And it's everything that might seem small, and then it's big bias. It's unconscious bias, and then it's actually fairly pervasive, systemic bias that's been built into what we do. And if I were to describe, Georgie, how I think about it, I mean, fundamentally, this may be a provocative way to say it, but our business world, our context, was made by men for men, and it works for men.
GEORGIE: How? I like provocative, and that's OK, but it's a sentiment that we hear quite a lot, and I think it needs some qualification. What is the evidence of that and how is it manifesting itself?
NAN: Well, I think the evidence in that is how we make decisions in the context of recruiting people into our talent pools.
GEORGIE: While we will have unconscious bias of some sort, to varying degrees, that individual bias can filter through a company, from a leadership level, to become that systemic bias that you spoke about.
NAN: I agree. I agree. And I'll give you a couple of examples where I see this at play.
GEORGIE: Are we not in danger here of putting women in a box? Should the emphasis be less on encouraging companies to perhaps accommodate these more, quote-unquote, "traditionally female" ways of working? And more on the men themselves, getting men to want to, to take up some of those caregiving roles?
NAN: For sure. I think that's why it's important that we focus on the act and the work of caregiving and not just the act of making the workplace equitable for women. Honestly, that is a bias that impacts men in a very dramatic way as well. I think, I believe, I know, there are many men in this day and age that actually get tremendous purpose, reward, satisfaction, joy out of caregiving. And yet biases prevent them from really dedicating themselves more fully to that role in their family, whatever their family might look like. So yes, we have to break that stereotype that caregiver equals women. It does so happen, though, that in today's day and age, in most societies, women are carrying the massive load of caregiving, if you will, more so than men. So that is the way it is today. And that's why that bias against caregiving, the fact that we don't recognize caregiving as valuable, we often don't pay for it, or we underpay for it. All of those biases are impacting women in a very, very dramatic way today.
GEORGIE: Actually, this can be a lot smaller, a lot more pervasive in the way that people think about the way that women react to certain things. There's a famous chef here in Britain who has made a comment about why he prefers to work with men, because they deal with pressure better, because women are too emotional. A famous scientist once said, "One of the problems with women in the lab is you fall in love with them, they fall in love with you, or they cry." Right, those are two examples of very stereotypical ideas of women being emotional. My first question would be, what is the damage of that? And two, what's wrong with emotions?
NAN: I think that's the right question, right? So of course we have so many stereotypes, and those examples are excellent ones. I'm not saying that there are no differences between men and women or between people in general. We have so many differences between us. The problem is how we've been ingrained and trained and systemically biased ourselves to thinking emotion is bad, right?
GEORGIE: I'm curious, you and I both come from backgrounds in industries that are heavily male dominated. Me, before finance, which is heavily male dominated, I was in sport, and you in engineering. How did we manage? Was there something that we can do better or differently, or did the rules not apply to us? Or did they, we just didn't realize? Saying that, I've got lots of examples of sexism that I could talk to you about, but this is only a 20-minute podcast.
NAN: We'll do that another time, Georgie. You know what, Georgie, I don't know about you, but for me, as I grew up loving science, loving sports, participating in sports, it actually never occurred to me this was unusual or I shouldn't. It just didn't occur to me. And I credit my parents. Absolutely I credit my parents. At no point in time did they ever reflect to me that, "Hey, wait a minute. That's a weird path. Don't do that." They weren't thrilled that I was playing soccer, because I was injured a lot, but it wasn't because I was a girl. I think somehow the truer you are to yourself and have the confidence, that self-expression is valued, the more you're able to sort of filter out some of how others are perceiving you in that field. But I'm not trying to diminish the impact of being the lonely only or always the minority. You do feel it. It does take lot of resilience and resolve just to say, "You know what? That doesn't really matter. I know what I bring to this party."
GEORGIE: That's made me think of two things. One, do you think that we, to a degree, internalize that? Some of the comments that are made: "you're emotional," "perhaps women shouldn't be in sport." It's already within us. We've just for some reason chosen to ignore it. But also the importance of role models, because my parents played a very important role in me deciding that I could go into sport or I could do anything I want to. Because, well, my mom was always the main breadwinner. She was always the one out at work. And so that's the role model I had growing up. How important are role models in business?
NAN: Incredibly important, in my opinion, I mean we hear all the time, and I certainly felt this way, moving up through the ranks in my corporate career that it's very helpful to look ahead and say, "You know what? I can see myself being that person. I can see myself following that success pattern." And it's troubling when you look ahead, and there's no one that you can relate to. You just feel like you have to forge a path. You have to blaze a trail. You have to prove to everyone that you can do it. So role models are very important, and we're stuck in a numbers game right now where we don't have enough role models. So there's an additional ask and tax and burden on those that we have to really make sure that they are able to have the impact on all those following them.
GEORGIE: How do you solve that problem in a business context?
NAN: Well, ultimately,
GEORGIE: Now how much can and, indeed, should we force change? Because on many levels, women are smashing it. I mean, girls in the UK are doing better in school than the boys. In the US, women reportedly make up almost 60% of all college students. I only need to look at my own old profession, sports journalism, and see how far that's come. Shouldn't we just wait? I think there's an argument that says, "Look, it's going to happen anyway, and actually we should pat ourselves on the back for the speed of that change and where we are now."
NAN: Heck no, as my daughter would say. Heck no, no. I mean, look, I don't feel like we're smashing it. Look at the representation alone of women, the CEO ranks, and the board tables, the important decision-making tables in politics. We are dramatically underrepresented. And that doesn't make sense. That's not right. I mean, with all due respect, as a society, as a human race, I don't think we're crushing it. I don't think we're crushing it. We have a lot of things that we can do better on. And I have to believe that giving other voices a greater chance to weigh in on how we do things, on how we lead, on how we drive society is going to make us better as a race, as a human kind, as a planet. We have to keep reminding ourselves that, you know what? We don't have equality in the workforce, certainly, in society as well, in many societies. And yes, we do have to push that conversation.
GEORGIE: To go back to the unconscious bias conversation we were having before. There's obviously unconscious bias with leaders and how that filters down into a company. Of course it does. But what about, I speak as women here, our own unconscious biases, perhaps toward ourselves, our own ambitions. Is there something that we could do as women to put ourselves in better positions that we could feel more comfortable in the workplace?
NAN: Yeah, I think first of all, unconscious bias is in everyone.
GEORGIE: I want to ask you, because actually it's something I've been focusing on a lot at work, about menopause. Seems a strange start to a conversation, but I think it shouldn't be. I think it should be a conversation that we all have. There's some research in the UK from our trade unions saying that one in four women have considered leaving their job due to symptoms of menopause. And yet only 19% of businesses say they have any policy toward menopause in place. This is something that is affecting 13 million women in the UK. And it is something that doesn't seem to be considered by businesses. Why is that?
NAN: Because nobody wants to talk about menopause, Georgie, let's face it. I think it's a great question, right? And it is such an interesting point that menopause occurs in a woman's stage of life where they're probably at that very senior stage of their career where they might be in consideration for something bigger, where they are asking themselves, "Do I really want something bigger? Because right now I'm not feeling it." It happens at a very, very particular point in a typical career life stage. And nobody wants to have that conversation, right? Nobody really wants to talk about it.
GEORGIE: But why is that? I mean, technically, menopause is just one day, but perimenopause can last over a decade. It can affect women in their late 30s, 40s, 50s. These are key periods for women building a career and trying to reach the top. And I'm wondering if the reason that it's not talked about or considered in company policies goes back to that idea that you were talking about right at the start of the podcast of the business environment being created by men for men. Can, should, businesses do better here?
NAN: Absolutely. Absolutely. But to be honest, because there are so few women in those positions that might be asking the questions that you're asking, Georgie, it doesn't get brought up, right? It does not get brought up. But it should be, it should be. And honestly,
GEORGIE: Exactly right. I mentioned menopause much as we mentioned caregiving, having children, taking career breaks, all things that that affect women, largely. If you were to talk to, as you do, you go into businesses regularly to discuss these sorts of things, where do you start as a business leader?
NAN: Well, to me, the starting point is always when you look at representation, when you look at just the raw numbers: Is that right? Or is that wrong? And you have to fundamentally believe that we have to change it, right? We actually aspire to more balance and complete balance, complete equality, if you will. Every part of the organization. That has to be the aspiration. I think as long as you think that, "OK, well, this industry is always going to be skewed this way, or it's always going to be challenging for a woman to devote herself to her career the way men do." As long as you keep those beliefs at the back of your mind, I think we're stalled. We're stalled. So I think that's the start. So the belief and just the general acceptance that there's got to be a different normal is the starting place. Then I think it's systematically looking at all of the processes that we have in place, all the practices that we have in place to grow our talent and our organizations. Everything from who are we recruiting? Where are we recruiting them from? What is our message to them? What are our belief systems about? What "fit" means? What experience you need to have. Being willing to challenge that with the overarching North Star in mind that, you know what? It ought to be equitable in the end because that's actually what normal should be.
GEORGIE: Do you believe in targets?
NAN: I believe in ambitions and goals. I think quotas and targets are dangerous if applied in too crude a fashion, right? I think what's important is setting an ambition that is a good ambition, a bold ambition, and then really keeping yourselves accountable to making progress and doing the right things to drive that progress.
GEORGIE: What if it's a choice? What if women want to get to an age and have children and leave the workplace and not have those sort of high-pressure jobs? And what if that's what, not all, of course not all, but what can you do then as a company, if you're trying to not necessarily fill targets but certainly have a wider diversity of thought?
NAN: I think these are all individual characteristics, choices, preferences, priorities, and values. So absolutely there will be women, and I would argue there will be men, who would actually prefer to devote their lives to their children, for example, who would like to step out of work at an earlier age. Absolutely. I think at the moment, the forces out there are making those predominantly choices that women feel they have to make because they don't really see a good path outside of that choice spectrum.
GEORGIE: Is there an argument though that, yes, to a degree, you could say that the way that industries and work are structured in businesses is not conducive perhaps to women wanting to push themselves to leadership roles, but could that also just be society? Aren't businesses just playing a role, which is very difficult to change when society has those norms and expectations?
NAN: Well, I think, obviously, there's a big societal question here, and societally, we need to change and make progress. But I disagree with business's role is small. Actually I think business's role is huge. And if not business, then who? If businesses aren't actually declaring that, "Look, we actually aspire to something better. We know we will be a better company. We'll be more innovative, we'll drive better results. We'll be a better home for the best talents if we are more inclusive. We know this and therefore we will work on that and we will do better. And we will actually move the needle." If companies don't do that, oh my gosh, this is going to be so slow, right? Society moves slow. I mean, absolutely parents play a role, institutions play a role, governments play a role. Absolutely. And a lot of the pressures and the stereotypes and the biases are really driven by societal factors. But every company can control their culture.
GEORGIE: Nan, thank you so much for joining me. An absolute pleasure. And thank you for listening. We'd love to know your thoughts. To get in contact, leave us a message at firstname.lastname@example.org, and if you like this podcast, why not hit subscribe and leave a rating wherever you found us. It helps other people find us too.
GEORGIE FROST: Right now when it comes to climate, business leaders are watching each other carefully. There have been big promises and big commitments, but the world is a volatile place. If you're a CEO, you're focusing on threats to global trade, the Great Resignation, and your customers' tightening belts. So is it better to let your competitors move first on climate policy and learn from their mistakes, or be out in front investing early? Or is treating climate like an oncoming storm for your business exactly where we're going wrong? I'm Georgie Frost, and this is "The So What from BCG."
GEORGIE: Today, I'm talking to Rich Lesser, former CEO and now global chair of Boston Consulting Group who led BCG's presence at COP26.
RICH: While this COP overdelivered against the political backdrop and incoming expectations, it still underdelivered against the science. We need to be on a pathway ideally to 1.5 degrees, if not that, as close as we can get. And while this was the targets that were put forward were meaningful improvements, we're not yet on the pathway that we need to be on.
GEORGIE: The desire from businesses and business leaders is clearly there, but if the systems and structures aren't in place yet with which to meet that demand, how can we hope to achieve what we've already committed to, let alone even more?
RICH: First, getting to the commitments that have already been made will not be easy, and frankly, in the very short term, what we're seeing with the war that's going on, the implications for energy security that many parts of the world are feeling, let alone even worse challenges like food security, but even on the energy side, we face near-term challenges and we face, you know, broader medium-term challenges to realize it.
And some of it is working with governments to put good policies in place, policies that encourage decarbonization, ideally, including a price on carbon, policies that encourage investment in new technology, because while we can make enormous progress with the technology that exists today, we will never get to the net-zero goal unless we bring down the cost of advanced technologies that'll be critical to go after--the harder to abate parts of our global economy. So we do need action from government. But it is also true business can do a lot even with the mechanisms already in place. And what we see in working with clients across many, many sectors is that you can actually take out more carbon than you realize, not just in your own operation, but with your business partners, more than you realize with the technologies that currently exist. It does require a change of mindset, it does require reprioritization, it requires some investment. It's not easy, but it is doable.
GEORGIE: Rich, how did you as CEO of BCG reach your own climate commitment?
RICH: I was fortunate. When you're at BCG, you have very smart, passionate people around you. It's just part of being here. It's one of the privileges of being here actually, and I was fortunate to have a number of colleagues, who felt like the world was not acting fast enough post the Paris Accord, so this is in the 2017-18 period. We weren't seeing the actions that we had thought might come out of the Paris Accord.
That was true across the full economy, and frankly, around the world, and that BCG was in a unique position to have impact in accelerating progress, because we have this privilege of working with businesses and governments around the world. We know how to make really hard change happen; we know how to solve hard problems, and while we were working in this space, we weren't working at the level we needed to, and if we were going to be credible to work with others and advise others, we had to walk the walk ourselves and our own commitments, while we had green initiatives in place in different offices, but we were not doing what we needed to do to show our own commitment to being net zero, let alone then have the credibility to walk into somebody else's office and say we can help them. When you first hear tough messages, I think we all have a tendency to maybe put up antibodies at the beginning to, to resist a bit, but--
GEORGIE: Did you?
RICH: [laughs] Yeah, for a bit, you know, I'll send a video to the entire partnership of how we are not doing enough, whatever. You know at first you say, wow, you know, really? But then you say, you watch the video and you say, OK. And I was just entering my final term as CEO, you also start to think about your legacy. And I feel like this is like a really important thing, and if I don't do this, I'm not meeting the responsibilities to our partnership, to the world, to what BCG lives, tries to live in our own purpose statement. But I think at some point I said, I really just thought they were right and I was wrong to have...not ignored it, but not taken it at the level of seriousness that it deserved to be treated.
And so I told the partners that. I said, we are going to change the way we act, but we're also going to realize that our biggest impact-- that we do have to get better ourselves-- is to help our clients, because we work with clients across so many sectors of the economy, get tons of emissions across our whole client base, and how do we help them improve? And for some it'll take longer, some will go further, some will go less far, but we should be a force for good and a force to help drive positive change and do what BCG does best, which is help our clients understand how they make changes they need to make and do it in a way that leads to sustainable and lasting advantage for them, and that we are uniquely positioned to bring those kinds of insights and then to also contribute to the world through our Social Impact practice. So then you get to work.
GEORGIE: With so much volatility in the world, are we in danger of taking a step back perhaps from the commitments made in Glasgow? I say this because I was at a financial services event last night actually, and there were a people there who were saying to me, do you think consumers really care about green anymore with the cost of living crisis, inflation so high, a war going on in Europe? I mean, it's also been argued the Ukraine war spells the end of globalization, yet this is surely a global problem and a global solution is required. Do you sense that some of that momentum from COP26 is being lost and actually, given the current situation, could seriously be dented, or are you more hopeful than the people last night?
RICH: Both. War--when it leads to energy issues that are going to raise energy prices, and food security issues that are going to raise food prices, and people worrying in a way they haven't about security and all of those pressures--how can that not take up a high share of mind? So in that sense, I think those concerns in the very near term are justified. We're all hoping we'll get beyond this before too long. And I won't try to project how that's going to evolve, but we just have to remember we're in a 30-year battle here.
To your point about consumers, I think it's a fair observation, not in every sector and not every consumer, but many consumers in many sectors are currently unwilling to shift behavior, or pay premiums for more green products, at least not high shares of them. A few, a small percentage will, but not enough. But frankly we're making it so hard for consumers right now. There's no consistent labeling. The messages of what it means to be green aren't clear because the measurements aren't fully transparent. At one level, it's easy to say consumers don't care. It's another to say it's our job, as business leaders and government leaders, to create an environment where consumers who are committed will make smarter choices on this just as they hope we will in other aspects of their lives and where we invest to educate consumers on what it means to make smart choices.
And very little of that has happened. And so to write off the consumer over a ten-year horizon I think is both wrong and dangerous for a business who thinks that way because they could really miss the boat. As we've seen on what's happened on electrified cars and how fast that market has taken off versus what people were projecting five or ten years ago, that will happen in other categories. But it's also underestimating the consumer. Yeah, if I make it really hard for people, of course they won't do it to the extent we want. We need to make it easy for people to make those choices.
GEORGIE: I said at the start, a business leader balancing their responsibility to their company with that of the planet, but do you think there is that sort of split, that you can only do good for your company or for the planet, or actually we're at such a stage now that if you don't consider the planet in your business planning, you're not considering your business?
RICH: believe it's that logic, of it's one or the other, breaks down for two reasons. One, just in general, companies that live purpose, companies that come at things with a multi-stakeholder mindset, yes, of course they have to deliver value to their shareholders and their owners, but they also deliver you to employees and society and customers and doing the latter is essential to being able to create long-term value for the investors. We've seen that over and over. And what, in BCG parlance, it means the total societal impact and total shareholder returns are synergistic rather than in conflict with each other, if done well, if done with strategy and thoughtfulness and good execution. It doesn't mean one automatically is synergistic with the other, but it means it's very possible to make that.
The second thing specific to climate and sustainability:
To not think that it's in your business's interest to figure out how to align with that tailwind rather than to argue for the status quo and to face that as a headwind, as a business leader, (I heard Indra Nooyi, the former CEO of PepsiCo, talk so passionately about, the first starting point for good strategy is look to align with tailwinds rather than try to run your business against headwinds) if investing in climate and sustainability, when the world is going to spend trillions and trillions to do this, and governments and customers are going to change their behavior, sometimes faster, sometimes slower, if that isn't the kind of tailwind you want to align with, I don't know what is.
Now, does that mean it's easy, does that mean it happens in every business at the same time? Of course not, and it doesn't mean you can do everything that the world might want you to do all at once. It does mean, considering this is a core part of how you develop strategy and then not just how you could develop the strategy, but then how you actually act on it, how you engage with society more broadly to be an enabler for good rather than a resistor. I mean, I think all of those things take on great importance.
GEORGIE: There is also tailwind and headwinds within moving forward in this space and trying to reach net zero. Do you want to be a company that just goes with the easy approach and tinkers around the edges, does the minimum of what you need to do to get to where you want to go, or do you want to be a business that stands out in front, that perhaps makes bolder moves, bigger investments, or is there a first-player disadvantage here?
RICH: It's going to be some of...and part of the job of leadership is to figure out how to do that which is right in the right way so that you can also be successful as a business, so that you can thrive, so you have reinvestment capacity, so that you can take market share and then double down with winning strategies that are aligned with our planet and climate and sustainability, and other priorities. I would argue diversity and equity and inclusion would be another one of those. It's not the only one. It's just the one that touches all of us globally in such a huge way. I think that's the responsibility.
But if you know that the right change is a really hard change, government policy that forces everyone to be transparent, that allows it to be easier to show that you're differentiated if you're outperforming, because others can't obfuscate it so easily, that force everyone to incur some level of transition cost to a lower carbon economy, so if you're the one making the investment, it doesn't seem like your costs are going up and no one else is, everyone else has a cost advantage, I mean, those things are in your interest.
And I use the business to government example, but I could say that for companies in the same sector. Imagine being a supplier to four different companies downstream of you and each one of them sets different standards of how they want to measure, of what data you need to submit, of all those things. Imagine how complex you made it for a supplier, which might just be a mid-sized company, to try to live up to its customers' expectations. So when sectors align and say, we're not going to align on our plans, we each make our own plans, but we are going to align on the kind of data we want from our suppliers, the formats we want it in. Sectors aligning on things like that help everyone.
So while I do think individual actions of companies need to be bold, they also need to be thoughtful about how we move together in ways that make it easier and less risky for all of us to move and don't have the ones that go a little faster feeling like they're really taking risks in terms of their near-term performance in ways that will scare off their investors or put more pressure on them to not take those kinds of actions.
GEORGIE: You spoke a lot about engagement, so engaging across industries, engaging with sector leaders. It seems that messaging, communication, engagement, collaboration are absolutely fundamental.
RICH: I completely agree. I would argue that engagement strategy will be different for different companies and different sectors, but is critical everywhere. I think almost every leading company needs to engage across its supply chain, should be engaging with others in its sector to align on standards, to talk about initiatives that they can move together on that will make it both less risky and more impactful than each company trying to do it alone, to engage across industries on things like breakthrough energy catalysts, where companies from across sectors try to fund new technology or do other things to ensure progress, and of course, of course, with the public sector, to try to get smart government policy that can allow us all to go further, faster, and to still have a very productive and growing economy in the process.
That engagement strategy is absolutely essential, and every CEO needs to think carefully--three things: Commit, act, engage. Commit, you do as an organization, or as a leader and as an organization. Act, you have to mobilize your team and figure out how to make it real.
GEORGIE: Rich, you finished your final term as CEO of BCG very recently, but are you still personally as committed as ever to the climate cause?
RICH: Yeah, so I stepped out of the CEO role at the end of September. It was a big change. I'd been doing that role for a long time, and honestly, I didn't know what I would do next. Even a year ago, I wasn't sure what, where my time would go. But as it turns out, it's probably about 60% to 70% of my time now is working on climate- and sustainability-related topics, partly helping BCG, because we've started this new practice under my successor who formalized it as a practice, and I'm so excited about that. So I try to contribute to that team in any way I can.
Some of it's talking to CEOs and other business leaders. Some of it's helping a few clients specifically because I have to stay on top of what it takes to do this; and the real problem...it's easy to talk theoretical, it's hard to be on the ground, actually making it happen. And then of course, to contribute to society, meeting our COP delegation as senior advisor, to the WEF CEO Climate Leader Alliance, you know, and in other societal ways where I can contribute and make a difference.
I feel like I have this privileged position where, having been a CEO who had to step up to these challenges myself, and as I said, wasn't the first person to realize that, you know, I had to come along on my own journey to get to talk to leaders across so many businesses and across society, and to have the time now to really engage, whether it's in the science of new technologies or the operational challenges of changing supply chains, or CO2 AI and how you put a whole new measurement and AI infrastructure in to make this better. I've got this privilege of time and now it's my job to use that privilege in the most productive way I possibly can.
GEORGIE: Do you think this situation makes the job of a CEO much harder, or is it just another challenge to be faced, and actually there's a real opportunity? As you said, I mean, just one aspect, to leave a legacy, to leave a very positive lasting legacy on a company and on the world.
Yes, it is a harder job. It is also a more privileged job because I think a decade ago when you stepped into the CEO role in most companies, BCG was a bit different because we're a private partnership, but I'd say for most companies, the focus really centered around the shareholders and investor returns, and that was the one yardstick. I think what we've seen over this last decade, where purpose has come much more to the fore. There's so much more emphasis on how do you articulate purpose? How do you live it, how do you tie it to your history? How do you use it as an engagement tool within your company and in the world? It's a privilege for a CEO to have the license to do that versus just thinking about like what they're going to deliver over the next year or two in terms of performance.
And then the other thing, I'd say, the tools that are at our disposal to make a difference. I mean, what's going on in technology, and not just the technologies we've already put in place, the ones that are coming, offer enormous opportunities to build a deeper relationship with customers, to have better data to make smart decisions, to have new tools to create better offerings for customers. I mean, it's an extremely exciting time, but you know, with excitement comes stress, and there is a lot of stress too.
GEORGIE: Rich, thank you so much. I really appreciate your time.
RICH: It's really been a pleasure, Georgie.
GEORGIE: And thank you too for listening. We'd love to know your thoughts. To get in contact, leave us a message at email@example.com. And if you like this podcast, why not hit Subscribe and leave a rating wherever you found us. It helps other people find us too.
GEORGIE FROST: How do you feel when you wake up on a Monday morning? Invigorated at the start of a brand new working week or full of dread? Here we go again. When it comes to employees, most leaders focus on their thoughts and behaviors. But when it comes to creating the right culture, feelings and emotions are just as important. As our work and home lives become ever more entwined, and more of us reassess our work life balance, is all this about to change? I'm Georgie Frost, and this is The So What from BCG.
GABI NOVACEK: We don't quit jobs always because somebody's going to pay us better or there's a better benefits package. Absolutely, that does shape decisions, but a lot of the times we quit a job because of how it made us feel.
GEORGIE FROST: Today I'm talking to Gabi Novacek, a core member of Boston Consulting Group's, Consumer and People & Organization practices, and a fellow at the BCG Henderson Institute working to advance diversity, equity, and inclusion in the workplace.
GABI NOVACEK: I personally have been on a little bit of a roller coaster and it actually started before the pandemic began. If I rewind to March of 2019, my wife was diagnosed with stage four colorectal cancer. And I mean, it's a traumatizing piece news to receive. And at the time when I had to figure out like, how was I going to balance dealing with this incredible kind of crisis together with a job that I love and I am passionate about, but it is incredibly all-absorbing of your time and energy? I had to really rethink how I was going to make it all work.
And I started to reconfigure my work life and I started to drop leadership positions and step away from things, but it was really the pandemic then that was the next big inflection point for me. And it was all of a sudden finding myself- I was at home and I was on Zoom or I was at my computer and I was doing work, but there was so much going on behind the door in that personal life, and
And I found myself a really reprioritizing where I spent my time at work on the things that challenged me, that delivered impact, that that allowed me to continue to learn, to influence others. And if it didn't do that, I dropped it away. And now, we're 18, 20 months into the pandemic. I'm continuing to work part-time, which I never thought I would have done, but I it's really become kind of my new normal as I look to balance things in very different ways.
GEORGIE FROST: Your role in the work you do with diversity, equity, and inclusion in the workplace to me feels very much driven by feelings of emotion. Had you ever looked at it in the same way that you do now? Having that experience, has it impacted on how you look at your role and how you approach trying to find solutions?
GABI NOVACEK: I can't even begin to describe how much it has. I mean, I think there's one- there's an inner level of that, which is, I'm not a mom. You know, I had never taken maternity leave. I had never had to figure out how to balance work and kids. And I think there was one slice of this which was just taking on the role of caretaker, completely reshaped my understanding of what it is that folks are wrestling with every day.
But I think at a more profound level, it really prompted me to step back and say, we spend so much of our energy on DEI work, doing- it's profoundly critical, the efforts to say, how do we address issues of pay equity? How do we address issues of equity and promotions and hiring and the like?
And as we think about a way to drive that next big step change of diversity, equity, inclusion, there's a big missing link, which is every one of us is going to make a choice. We're going to make a choice to get up, to feel happy, to feel motivated, to want to stay in the job. Like how do we actually tap into that? You know, and as somebody who's gone through crisis and has had to make that choice, what is it about the job that says, "I still want to keep doing this. I still want to get up, I still want to engage. I still want to put my energy against this." It's such an important part of the equation.
GEORGIE FROST: I want to talk about the way that that we think about work. And I'm wondering if we've got it all wrong in a way. You only have to look at children to see that the best way that they learn and develop is through stories, through narratives, through play, and we still love play. And you just have to look at some of the astonishing figures coming out of how many hours we played Fortnite, not me included, during the pandemic, many, many hours. And yet of us get this sense of enjoyment, this sense of achievement through playing something like Tetris. You can tell how old I am. Satisfying though nonetheless pointless, than we do from our work. Can businesses, can leaders incorporate that mentality, that play more into our work so that we can get more of a sense of purpose, more of a sense of motivation on Monday morning?
GABI NOVACEK: I think we can, and I think it can happen in two ways. So one is when we research the underlying drivers of what really motivates people in the workplace every day, I think we often confuse this idea of advancement with achievement. And there is this real sense among a very large proportion of the workforce that I come to my workplace every day and I am motivated, I am happy, my brain lights up because there's something that I'm doing that is challenging. And I'm interacting with others in order to do things that solve a problem or get to something different, or allow us to tackle something that's complicated. And it doesn't matter what job role you're in.
And I think it feeds into that idea of play a little bit, you know, which is this notion that we're not always motivated by the next big job title or the award.
And I think the second piece that we've really seen throughout the pandemic is as we have been pulled apart from one another physically, it's been so fascinating to me, as we think about coming back from the pandemic and what is the time that we spend together? What is it best used for? It is when we need to connect, to affiliate, to play, to find joy, to creatively solve problems together. That's actually when we are best when we work together.
GEORGIE FROST: So how then do businesses respond to that change?
GABI NOVACEK: So I think we, just at a fundamental level, we need to get away from talking about emotions as something shameful. You know, like I can think about times when I have broken into tears in the workplace and sitting in my office and trying not to be seen through the glass wall that everybody can see. You know, we've all had those experiences. And I think we've all been trained and coached to feel like that is something shameful and that's something to hide. That's not really what I'm talking about when I talk about emotions.
When I talk about emotions, what I mean is that we are all prompted to make decisions every day based upon a set of things that are going on inside our brain that transcend the functional. So my mom wouldn't let me eat sugared breakfast cereal as a kid, and now when I'm walking the aisles of the supermarket, I pick the one that has the most colors and the most sugar imaginable, not because it makes any kind of rational nutritional or economic sense to pick that box, but because it triggers that emotion that 40 years later is saying, "You know what? I'm going to stick it to mom and get that cereal, right?"
I mean, this is everything from frontline retail to the executive suite. It's like a collective post-traumatic growth experience that we're all going through at the same time and actually really evaluating the calculus by which we make these decisions, and some of those factors are starting to play a much bigger role than they ever had in the past. And so businesses are not recognizing that the people who I depend upon to be successful, I mean, we're at the point where restaurants are not opening because there's nobody to serve the table. I can't possibly have a successful business if I'm not thinking about my talent in a way that includes a conversation about what is it that they're looking for when they come here beyond just the paycheck?
GEORGIE FROST: Is it as simple as saying this great resignation is due to the fact that we've all had a pandemic, we've all sat down, we've all been at home and all realized that actually there's more important things in life than earning money and working, or is it something else at play?
GABI NOVACEK: Think it's multifaceted. I mean, I think there is a very fundamental set of issues that are going on in that we have had massive segments of our labor force who have not had wages that have kept pace with economic growth and inflation, who have not had security when they come to work.
When we talk to certain segments of the workforce that are more hourly in nature, or perhaps were more in the frontline roles during the pandemic they talk a lot about this idea of security and that of course gets manifested in things like I have an employer that doesn't respect my health, welfare, and safety when I come to work. I have an employer that doesn't provide me with health security in the US market where we're dependent upon that from our employer. And so there's some very fundamental issues that are going on, which are just about equity in the workplace.
But there are now also these broader questions as individuals have retreated into these workspaces in our homes and said, "What is important to me?" You know, I think the simple fact that I'm an executive in a fairly intense job, and I haven't worn business casual from the waist down in 18 months, right?
GEORGIE FROST: When I'm having a bad day or something is on my mind personally, I love going to work. I love the fact that I don't have to think about what's going on in my life. I don't want the two bleeding across. What would you say to people, businesses, who say this has all gone too far, this wellbeing, this diversity and inclusion, all of them are wonderful things to have, but have we not just gone a bit too far? Is it not just go to work and do your job?
GABI NOVACEK: Yeah, it's funny. I don't know if you ever watched "Mad Men," but there was this great scene where Don Draper is mad at Peggy, and but I he's like, "I pay you, I pay you the money." You know, like that's it, like you have the job and I pay you the money. That's what I owe you, you know?
GEORGIE FROST: I sure there's a lot of bosses that think that, right?
GABI NOVACEK: Yes. There's something to be said for that, and I think at the end of the day, we are businesses and we are in business for a purpose and we need to fulfill that mandate. That is what we are here for. I think the challenge that gets presented by that though,
And you depend upon that human capital to generate the things that drive the business. And when you struggle to hire your fair share of talented people in the market, when you struggle to keep them employed and staying with you, when they come to work distracted and unmotivated and unhappy, they don't generate the types of work and thinking that you would hope. And there's a very, very real impact on the ROI that you get from those human beings. And the world is becoming more complicated and it's becoming more diverse, and it's simply a cost of doing business is to be able to actually see a diverse group of human beings be successful inside of your environment if you actually want to be a successful business.
GEORGIE FROST: Agreed. And we're talking about sort of inside your environment, the things you control. I was reading about a company that asked their employees at the end of the working day in the lobby to press a button, smiley face if they're feeling happy, frowny face if they feel sad. I don't know about you, it sort of reminds me of service station toilets and how clean they are, but anyway, somewhat crude and maybe a little gimmicky. Of course, it depends what you do with that information. But there's certain things that businesses can control. You know, the quality of your work. Is there some bullying going on, those sorts of things? But they can't control what happens outside. So where do we draw the line? How, as a business, are you trying to measure, trying to promote satisfaction at work with the things that you can't actually control?
GABI NOVACEK: So we have focused on the things that we can control, but we haven't been broad enough in what we understand that to include. Like I talk a lot about we focused upon what happens to people when they come to work. Am I experiencing kind of unconscious bias from my manager, or did I get left out of a promotion opportunity because there was something that was perceived about me, did somebody use language that was offensive?
Like, there's a lot of things that happen to us that are squarely in the realm of businesses to say I need to create an environment that's free of discrimination and bias and the like. But I think there's a broader aperture to that.
Or do I actually need to say, I actually want to motivate them to be innovative, I want to tap into their desire to be successful, I want to find a way to give them the mentorship that they seek, because for them it's really important to feel like they have role models? Like I'm actually creating a broader environment that breeds success in the workplace environment. I'm not going to solve everything.
You know, I think there's been a lot of very well intended work on topics like racial equity and the like that have been trying to bring a lot of discourse into the workplace, and it's really interesting and it's really important, but at some point you start to say, "Okay, is that book club, is that going to be the thing that actually changes the outcome for somebody at work?" Like, yes, it might make them feel better, because somebody's listening, but is it really going to change what they experience day to day when they work in a team?
Is it really going to change whether or not they get that opportunity? Does this tap into their motivation to do work that has impact? Maybe, maybe not. And I think that's where we start to run into trouble is we don't always compute what the intended outcome is of where we're focusing.
GEORGIE FROST: Some of the argument that's been thrown up about diversity, inclusion, wellbeing, been viewed as actually causing divisions between people, the mothers that are allowed to work flexible hours and then other people saying, "Well, that's not fair." Could some of these things create divisions? How do you make sure that that is not the case?
GABI NOVACEK: Oh, absolutely, absolutely. And I think we're seeing it in the data as people talk about in our survey and research work, their perceptions of the value of DEI programs and whether they benefit from them or are harmed by them, etc.
GEORGIE FROST: Do they explain why?
GABI NOVACEK: So we follow up survey data with focus groups and interviews to try to understand and what it boils down to is this sense that, and I'll make it sound academic, but it's a little bit of there is a fixed quantity of power, resource, and opportunity available, and when you disproportionately allocate some of that to people who have been identified as marginalized, I lose out.
The reality is those disadvantaged groups have missed out. You know, we actually are righting what have been intensely discriminatory and unequal processes that have manifested through time, and we are trying to reshape behaviors and outcomes such that they reflect what should be sort of everybody getting their fair share at the end of the day, and that is very painful.
But I think the there's another piece of it, which is you can focus on how do I better allocate a total quantity of things or you can say how do I actually make that quantity of things bigger and more substantive and more kind of inclusive of everybody? And so one of those things might be to say,
At the end of the day, we have to actually deliver on our jobs. We have to do what the work output is that's demanded of our role, but I can actually step back and say, "I can re-craft the rhythms, the rituals, the routines of the day in terms of how we work together to get that done so that more people can be successful in delivering that."
And what you're doing is you're taking the conversation away from: a target has been set and I'm not part of that target and I'm going to lose out, and instead, what we're saying is no, we're going to reshape how we think about kind of the nervous system of the way we work every day, and we're going to rebuild it in such a way that we're actually expanding the breadth of who can be successful in that context, in that environment and who can tap into the things that matter most to them. It's a win-win when that happens.
GEORGIE FROST: You spoke about humanity. I'm wondering if you have optimism that what's happening at the moment, whatever you want to call the great resignation or the pandemic or whatever, is actually making a seismic shift in the way that we view work, all of us?
GABI NOVACEK: I really hope so. Before I was a consultant, I was a PhD in the social sciences and so much of the work that I did was studying through these great inflection points in human development. And I would love to think that this is one of them.
But now I look and I say, "My God, like we've got this generation who is growing up in the middle of this and saying the constraints that defined how we work are gone, that defined where we need to live are gone. I can reshape how I make decisions in ways that look really different. What I value can now look really different. The pressures I can put on kind of my workplace and how I want that connection and relationship to look can be different."
GEORGIE FROST: Gabi, thank you so much. And thank you for listening. We'd love to know your thoughts. To get in contact, leave us a message at firstname.lastname@example.org and if you like this podcast, why not hit Subscribe and leave a rating wherever you found us? It helps other people find us too.
GEORGIE FROST: There aren't many businesses or industries that have gone through the pandemic unscathed or unchanged, but there is one that's been continually buffeted by COVID and whose future looks more uncertain than most. What will the lasting impact be on the travel industry, and what do leaders need to do in the face of such volatility to ensure their businesses not only survive, but thrive? I'm Georgie Frost, and this is The So What from BCG.
JASON GUGGENHEIM: Consumer behavior is one that I think will shift and has shifted. And then I think a use and a willingness to use technology to disrupt their own models and processes to get better, quicker, more reactive.
GEORGIE: Today, I'm talking to Jason Guggenheim, global leader of travel and tourism at BCG.
JASON: Historically, many companies, including travel companies have used history as a guide to the future. So what did the previous three years look like, the previous five years? And within reason, you could leverage that as a means to plan, what do the coming year or two or three probably look like. And I think what COVID has done is created a world in which you can't rely. History is no longer necessarily a lens to the future.
GEORGIE: Which of course leads me on to the question, Jason, of how do you as a business leader predict the future with such volatility and just explain to me the importance of doing so, the short,- the medium-, and the long -term.
JASON: Yeah. Many travel players, not all but many are still quite fixed capacity, very asset-intensive businesses, whether it's land and buildings, in the case of hotels and resorts, airplanes, cruise ships, etc.
I think in terms of the need to do that more long term, so if you move beyond medium term and say where do I think we'll be in three years or five years, I mean, those are obviously really hard questions given just the volatility in the short term. And sometimes we are seeing that short-term volatility actually in some ways being quite crippling of executives' willingness to look three or five years out because it is so uncertain today and tomorrow. But again, I think executives have a duty and onus to drive value. And so I think thinking through business models that will be more resilient to this type of volatility, the next, who knows what that will be, pandemic, etc. There's just an onus to think both in the short term to survive, but also in the long term to ensure that their business models are resilient enough to thrive in whatever gets thrown at them.
GEORGIE: I'm wondering whether many of the patterns of change to the industry that we're seeing now were already put in motion, already set and likely to continue after this disruption. That's in no way seeking to minimize the impact of coronavirus. I'm just curious about how fundamental some of the changes have actually been as a result of coronavirus.
JASON: I think some of the patterns were set. And look, I think some will probably continue. And one of the things also, it was interesting when you started to see the results of COVID show up in travel, you saw very different outcomes starting to emerge across the world. For example, you saw Europe was much slower to come back and has been slower, where domestic US certainly on the leisure side is pretty much back to where it in 2019. Some of those patterns will come back. Some models that relied on types of travel that have been more affected, more threatened, more reliant on cross border, etc., I think maybe slower or may come back in a different form. People will choose alternative behaviors, right? Whether it's video, whether it's hybrid, whether it's train, etc. And so I do think there are some adjustments into how businesses will be run.
GEORGIE: Coronavirus is of course incredibly impactful. We've seen the impact of it already. It won't be the only factor and hasn't actually been over the last couple of years the only factor in influencing this industry. It's important not, I guess, to be blindsided by it and forget everything else. Climate change of course is the one thing that I'm thinking about here and one of the biggest ways, of course, that we can reduce our carbon footprint is to stop flying.
GEORGIE: You spoke about predicting the future, but before I get you to tell me ways in which you can do that using data and technology and building resilience, I want you to tell me what you think, crystal ball gaze now, what you think the future of this industry will look like. Let's say I'm the CEO of a travel firm. I come to you. I want to know what I should be doing, what will my consumers want in the future.
JASON: Yeah. Let me maybe take that from two different angles. So one is the consumer, as you mentioned. Then I think the other pillar around which I would build a prediction of the future would be technology. And so let me take consumer first. I think there is going to be a huge onus on travel companies to truly understand behavior going forward. We're all working differently; hybrid models, flex models, people in offices certain days of the week, at home other days of the week. It's going to fundamentally disrupt our travel patterns. It also has and will I think fundamentally disrupt the way we take vacation. More shorter trips, more trips that are combined work and leisure, more trips where I may be socializing with my coworkers as opposed to actually only meeting with my coworkers at meetings and events, etc.
GEORGIE: Do you really think that's the case now that we're in the Zoom era? Why do we need to make those business trips anymore?
JASON: Yeah. So when we do research and talk to executives, but also talk to leaders of companies, travel managers and companies, we see a few things. One, culture, human connection amongst employees is still a critical part of collaboration. People want to know who they're working with. And yes, you can get to know somebody, so to speak, over technology platforms, but really you don't create the sort of bond and trust in many cases that you do when you're at an event team building, training, etc., where you're live in a room and you're having the proverbial water cooler conversations about what you did that weekend. A lot of that disappears on Zoom, right?
Zoom is incredibly efficient, but it's not very effective at building bonds and relationships amongst people. I think we also see when you talk to leaders that their belief is, and I think you're even starting to see this now in travel behavior, you will not replace the connection between, let's say somebody selling something and somebody buying something, those client relationships in whatever form they take, right?
So I think that's part of the onus on travel companies is to try and understand how that affects their product, the way they market, the way they price, the way loyalty programs recognize those who used to travel maybe 50 weeks a year and no longer will, but that doesn't mean they're no longer the most loyal. And so how do you adjust a lot of the things that you have within your business? There had been a lot of talk and there has been a lot of talk about data, big data, AI and the use of it.
I think in travel, one of the things that I've seen both amongst my clients, but more broadly amongst the companies we spend time with is an acceleration of how companies are using and looking to leverage advanced analytics and data to in some ways predict or sense the future, whether that's looking for signals from consumers that help them better predict who's going to show up on a website to book or taking what used to be robust processes, so to speak, like the long tent poles in the business model, it may take me three months or six months to sort of, in an airlines example, build a network, schedule, assign the fleet, get the crew assigned. But in a world of volatility, I may need to learn how do I do that now instead of in 180 days in 15 days. And so you're seeing technology combined with humans really try and dramatically reduce the time taken for what were historically in some cases, very long, very manual, very linear processes in big complex operations.
And so I think if I had to sort of think about the future, consumer behavior is one that I think will shift and has shifted. And then I think a use and
GEORGIE: Human brute force?
JASON: So if a change happens, historically it took a lot of just human hands to push that change through the business, right? Whether that meant repositioning aircraft, repositioning ships, etc. I think now with the use of technology become less reliant on a lot of people making things happen and some combination of technology and people to make it happen more quickly. And in many cases more accurately, right? Faster and more accurately.
GEORGIE: On that theme, the companies that seem to have been the most successful during the pandemic are those that have been able to pivot their business models, be flexible, adaptable, move quickly, find opportunity perhaps where they hadn't looked in the past. A really simple example perhaps would be, I don't know, a beer company that makes hand sanitizer. For many in the travel industry, and I'm thinking big airlines, for example, where do you see their space for that sort of adaption? They seem so linear and not just linear, they work within an ecosystem that is large and seemingly so immovable. How do you square that circle?
JASON: Yeah. That's the billion- or trillion-dollar question that many of them are asking. I think some of it will start as we were talking, with innovating and being willing to sort of really change some historic ways of working and processes and challenge the way things are done in order to get faster and more agile, that both allows them to take costs out, maybe make costs more variable than it had historically been, which allows them then to react to changes that happen just with more agility, right? Less fixed cost and more agile. I think some of it is also going to require executive teams to think differently about value and where does value come from? Obviously, in many of these businesses, there are still going to fly people or sail people around put people into beds, but
And so I think you'll see some creativity around business models that could emerge maybe initially as adjacencies to the core travel business. A great example of this is Qantas down in Australia, not driven by COVID, but driven by other sort of threats to their existence from other competitive entrants, etc., went down a path of creating a data business, a loyalty business that really had a robust currency. They pivoted that into a health care insurance business based on the data and customer set. And so they thought differently. They thought about assets beyond just a steel tube and a network. And so I think hopefully those that are innovative will look to do more things like that to find pools of value that historically hadn't been tapped within the business.
GEORGIE: Where do you think collaboration will fit in in the future? With that, I mean, companies that work within the same space, perhaps two airlines, as well as those companies that work within complementary areas such as hotels, airlines, insurance firms.
JASON: Yeah. I think that's a great question. I mean, over history, you've seen collaboration often become the key to solving some really big industry challenges. So over the arc of my career, if you go back, one of the early things I worked on was Orbitz, right? A collaboration between the major airlines in the US back over 20 years ago in creating an online web-based distribution challenger to the others, Expedia and at the time Travelocity. And so I think collaboration can certainly play a role when any individual player, whether it's airline or other on their own was unlikely to solve or really make a dent in that problem. I think more recently you've seen ACT come into being with two plus global airlines or aviation climate task force where we as BCG were sort of instrumental in coalescing airlines to collaborate on sustainability, alternative fuels. Our view is no individual airline will solve this on their own. There's very little, if any, competitive advantage for one airline solving it and not the other. It's a global problem, it's a problem of humanity, and so why not collaborate? Ten or 15 or 20 or 25 airlines working together to fund technology and innovation, alternative fuels regulation, is far more powerful than all of them trying to do it individually, sometimes pushing in the same direction, but sometimes pushing in 20 different directions.
So I do think there is a role for collaboration in solving some of the structural and other problems that exist in the industry. Another example is four or five years ago, we had a thesis that there was a better ability for data to flow across people's travel journey. And so today your airline data doesn't talk to your hotel booking, doesn't talk to your car rental booking. And so we helped with some partners sort of create a business by the name of Journera that really looked to create a safe, well-governed data platform that travel players—hotel, air, and others—could plug into in order to better serve their customers by knowing more of out their travel journey to knowing that I was going to get on a plane, but then I had a hotel on the other side. And so should I get disrupted, why not let the hotel know that I'm actually not going to arrive when I was meant to arrive? And so I do think there is a role for collaboration, for sure.
GEORGIE: Is the future bright for the travel industry?
JASON: Yeah. I think there's opportunity. I think the opportunity is finding those green shoots, those places where the consumer is going to be optimistic. I think leaning into leisure, finding opportunities for how the new business model, like how new businesses will meet and gather. I think it's probably too early to say it's bright. I think there's opportunity. I think there is still more strain to come, right? As the latest variant showed us and the numbers very quickly dwindled, those flowing through airports. But yeah, I think, look,
GEORGIE: Jason, thank you so much, and you for listening. We'd love to know your thoughts. To get in contact, leave us a message at email@example.com. And if you like this podcast, why not hit subscribe and leave a rating wherever you found us. It helps other people find us too.
GEORGIE FROST: Businesses and organizations have been working toward greater gender diversity for decades. Some are moving faster than others. Women account for just 16% of senior-level tech jobs and 10% of executive positions. So why is an industry that looks so far ahead falling so far behind? Has anything been learned from the way we've been working during the pandemic that could change all that? I'm Georgie Frost, and this is The So What from BCG.
NEVEEN AWAD: What happens is oftentimes women get dissuaded and frustrated by having to convince, challenge, and repeat the concept of where they see the future going multiple times before it's taken seriously.
GEORGIE: Today, I'm talking to Neveen Awad, a core member of the Technology Advantage practice and leadership team at BCG. Neveen also leads the Women in Technology Initiative in North America.
NEVEEN: When I graduated with a degree in computer science, I was the only woman in my graduating class. I originally got involved because I grew up in a house where my dad was an engineer, and he always had these early computers, and I thought they were so cool. He was always in front of them. So I wanted to understand these devices that he was really obsessed with.
Then when I got to college, I mean, I think it was a mix of I didn't really like memorizing and so I thought I wanted be a doctor, but I didn't like biology. Then I started understanding how fun it was to make a machine do something. Put together a bunch of code that really made no sense to lots of people, but that actually structurally broke down a problem into a way that you could sort things, you could figure out patterns.
Honestly, to this day,
Or you'd walk in and people would be talking about things that you were just totally uninterested in. I always kind of felt like, "OK, well, it's OK. I'm different, but that's fine because I like what I'm doing, and I have the people that are like me outside of this role." But it did, I will say, when I first graduated college, I didn't want to just become a programmer.
And a lot of the males who graduated with me just wanted to go work for Microsoft and develop Microsoft Word or...well, there was no Google at the time, but I'm sure they would've loved to go to Google. But that wasn't what I wanted to do. I wanted to be at the interface of the technology and communication because I felt like I was uniquely positioned at that place. And maybe I was, or maybe there was a part of me that was like, "I don't know. Do I want to be sitting in rooms with a bunch of males just grinding away at computers for the rest of my life?" Maybe not.
GEORGIE: I'm curious, Neveen, how that feeling has continued as your career has gone on and what you've seen from the experiences of other women as well. Because we do from the outside, speaking for myself here, no offense intended of course, we have this view of those who work in tech as a lot of guys in dark rooms playing with computers. It's interesting you say that as someone from the inside. Do women have a different role then? Are we advertising those roles enough? Are we employing our own bias here by even suggesting that?
NEVEEN: Yeah. Now, some of the most innovative people in the field are women and you see what they do and you see that there's so much more to it than the technology.
What's very critical for any organization that wants a diverse leadership board is to see that there are different ways of getting from point A to point B, and for enabling those different ways to occur. So that once you get to leadership, which is point B, there's people that got there from lots of different trajectories and then therefore see different paths forward for the organization.
The companies that have the most diverse leadership do that the best, and then therefore they're more economically resilient. They see better profits. There's been research that their margins are higher.
GEORGIE: I'd suggest it's more than a shame. [LAUGHTER] When you think about the industry that you work in, perhaps like no other, is shaping our future in our society. We hear a lot about inbuilt biases in creating technology such as AI. Is that a legitimate concern?
NEVEEN: I think if you look at the places where people have been really successful on changing society, like how we search, how we take car rides, how we buy things, it's been a lot of men that have charted those.
There's a lot of flip side to technology in terms of, yeah, there's wonderfulness of connectedness, etc., and progression, but if we were seeing all this stuff about the Facebook whistleblower and everything else where if things are handled incorrectly, there's a real downside to humanity. That's where the checks and balances, the different thoughts, the different ways of like what this could mean is very important if we're actually going to further our society right.
GEORGIE: And not to the exclusion of a big sway to society.
GEORGIE: It brings to mind a book called Invisible Women that looks at the gender data gap. This world literally built by men for men. How the absence of sex disaggregated data in things like medical research, in transport, indeed in the size of our mobile phones is having a real-world impact on women, sometimes tragically so. Are we in danger of repeating this with AI, with machine learning, the metaverse even, that inbuilt bias? Or will it be so good, the technology, that it will learn not to be biased?
NEVEEN: Well, you hope it will learn not to be biased for sure.
So both last year and this year, we've done research with women leaders in tech. So over 1,000 minority and nonminority, senior, mid-level manager, women in tech, and there were just so many fascinating things that came about. A really clear difference of perspective for the senior women and how much agency they felt in terms of whether it meant rebalancing what was important to them in a job they took, whether it meant switching jobs because they just didn't want to be in a big organization and they knew they could get something at a small organization, and whether it meant just taking some time off for a period of time.
Middle-manager women felt much less agency in that. However, they felt much more value came to them from being in an environment where everyone was remote and so it was all balanced. So now you come back to the question you had asked me about the impact of making sure that men, women, everyone have similar impact in terms of how technology is used for the future, how it's used for society.
One of the things that's so important for organizations to figure out is how to create environments where there really is equal agency and equal voice. What that comes down to honestly, one, is making it very clear that differences are celebrated, not squashed [LAUGHS], which sounds so basic. But if you actually look at how every type of large-scale organization is run, it's often the case that there are few very key paths to success.
How do we create more paths to success that are just as quick but allow different levels of engagement? That's kind of one. By doing that now,
The last thing I would say is that the other thing that's super important is how do you get access early? Not everyone wants to be in STEM or it's we're not getting the diversity. We're definitely not getting diversity in tech that's racial, and we're getting more gender diversity, but there's an opportunity for more. So why is that when you look across our early systems, everything from like the Lego programming to building the robot. And you analyze the bulk of the people on those different teams, they do skew to non-minority boys. And so how do we encourage everyone?
GEORGIE: I'm interested to go a bit more into this research that you did, but because you did it in the two years that we've been obviously having the pandemic and the impact that that's had. You talked about things like paths to leadership. What will those paths to leadership look like when we don't even know what the world of work is going to look like? It feels like someone's ripped up the rule books, thrown it in the air and waiting for the pieces to land. They may all land together as they were, maybe go back to normal and everyone back in the office, etc. But I sense that's not going to be the case. So how do we navigate this "new normal" to the benefit of women?
NEVEEN: The first way we navigate it is to acknowledge that we don't have the playbook of what it looks like in the future and to try and just say, oh, in April, we're going to go back to what we looked like in January of 2019 is clearly not optimal for anyone. We also, the second way we navigate it is to say what the future of work looks like for Georgie may be different than the future of work for Neveen may be different than the future of work for Jack, etc. And as organizations, we have to figure out kind of what our parameters are of what we think needs to be, you know: these are how we want the team to work together, but then we don't necessarily dictate what that means for each individual person. So that may mean for some people being completely back all the time. That may be for some people hybrid and that might not actually affect productivity by any stretch and that now the teams have learned really how to work across these different environments.
The third way that we go back is we acknowledge that there's a couple of things that are very clear in terms of trajectory of diverse leadership. One is
GEORGIE: Do you mean bringing in that promotion quite soon? Is that what you're suggesting or is there something else to it? You have a big promotion, have more responsibility?
NEVEEN: Exactly. OK. You've done this job for a year, even if it's not officially, like you went from level seven to level six, like is it that you take on something, you take on managing a part of the team where you hadn't been before?
GEORGIE: Don't leave someone languishing.
GEORGIE: So if you are a business leader listening to this podcast, because you don't have to be in tech, this is across the board in terms of diversity, but what can you learn from this?
NEVEEN: Yeah. I mean, it's a great question. One thing that we didn't talk about and I know everyone knows, but just the research really shows is that women have borne greater number of hours of the ecosystem of the household than men. And actually for minority women, for non-Caucasian women, what that has looked like has been different. It's been kids and family versus just kids, for example. So that creates different types of pulls. So why do I say that?
As an organization, as an employer, understanding that and understanding that that's part of the reason you have to create different work models, different paths to success, different journeys through the organization is because actually those people can bring in a very valuable perspective that may be different than someone else's perspective and therefore will make you a more effective organization is really critical.
So with that as context, key lessons for organizations moving forward. So one is in the vein of the ecosystem. People like men, women, everyone, are looking for work life balance. And what that balance means is very different for everybody. That's why creating different ways for people to take step-backs in careers and making it more normalized.
Second thing is that there's been a lot of learnings around the value when you're in the middle of your career of feeling equal voice and equal space. So how do you structure interactions, meetings, your operating model, etc., so that you make sure that you're giving equal voice, equal space, same manager attention, same manager and coaching and guidance across your entire set of mid-level and junior people, because that's actually really important in their career trajectory. The third thing, just kind of thinking again on like the value that the manager plays.
The fourth thing would be, as you look at your work models, as you look at like what it means to come in and then advance, look at how much you enable people to chart their own course, how much that's encouraged, how much there are examples that you can show. So those would be the ones I would say are kind of very critical. All that comes together to basically create an environment that feels inclusive and supportive and enabling to everyone.
GEORGIE: One of my big fears, Neveen, is this move to working from home that we've seen through the pandemic will potentially set women back. What seems liberating and make no bones about it, for many people, this is liberating. I work from home and I'm enjoying the benefits that that brings.
But I also have a fear of not going into studio, not going into the office, not speaking to people, not being present and in people's faces. For all sorts of things, for creativity, but then also the material impact of that. Will I get promotions? Will I get pay rises? Those sorts of things. And also this idea of reinforcing old gender stereotypes, because all of the research shows so far that women are still doing much of the housework and caregiving, regardless of whether both partners are still at home. I just worry.
So that's one thing. This other thing I would say that has come out of interviews and research very clearly is take on things that are different, take on things that are challenging, stretch into places that are uncomfortable in a positive way, because that's expected in a career of everyone. And then communicate when you've done that successfully and you've had wins because everyone communicates their wins and there's nothing wrong with it if you communicate in a way that's like productive to the organization and the team. So I do think just as organizations have responsibilities, we have responsibilities too.
GEORGIE: Amazing, Neveen. Thank you so much. And to you for listening. We'd love to know your thoughts. To get in contact, leave us a message at firstname.lastname@example.org. And if you like this podcast, why not hit subscribe and leave a rating wherever you found us. It helps other people find us too.
Episode 10: Imagine If Companies Were Better at Imagination
Creativity is too important to be left in the sandbox. It belongs in the boardroom. Martin Reeves, chairman of the BCG Henderson Institute, explains how to bring it there.
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Episode 9: Are You Bridging or Broadening the Racial Wealth Gap?
To create inclusive workforces and inclusive products, companies must treat inclusion as a business innovation, explains Kedra Newsom Reeves, colead of BCG’s North America Center for Inclusion and Equity. Bridging the racial wealth gap requires committed resources and responsibilities.
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Episode 5: Why the Way We Work is Broken
How can organizations recalibrate their outdated approach to leadership, work, culture, and purpose? Deborah Lovich, who leads BCG’s people strategy topic, and Brian Elliott, executive leader and senior vice president of Future Forum, explore.
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GEORGIE FROST: "Imagination is more important than knowledge," so stated Einstein. "For knowledge is limited, whereas imagination embraces the entire world, stimulating progress, giving birth to evolution." But how can we understand and shape the murky mental territory that leads to good ideas; that realm of imagination? I'm Georgie Frost, and this is The So What from BCG.
MARTIN REEVES: Companies don't shy away from trying to harness other complex aspects of human affairs, like consumer psychology, or team motivation, or team composition. So, it's really rather strange that we shy away from having a handbook of collective imagination.
GEORGIE: Today I'm talking to Martin Reeves, chairman of the BCG Henderson Institute, BCG's think tank dedicated to exploring and developing new insights by embracing the technology of ideas. Martin is also the author of a new book about imagination in business called The Imagination Machine.
MARTIN: Imagination is something every five-year-old can do, but CEOs complain it's very hard for their companies to do. And every company is founded on an active imagination, but we don't have a handbook for it. And then if you're successful at imagination, you're likely to get complacent, so that could be the beginning of your demise. So we thought the world needed a handbook of the imagination, and to play that up a bit the fact that you can actually bias the odds in favor of imagination, we called it The Imagination Machine. Because in the long sweep of history, we really do believe that companies have changed the world as much as any poet or visionary. They're in the business of taking ideas and turning them into new realities.
GEORGIE: You said that any child can be imaginative. Is that why, perhaps, we don't take it that seriously in business, or is it taken that seriously? Maybe I've got that wrong.
MARTIN: Well, I've been working in strategy for longer than I care to admit, and not much has changed on some dimensions. But there's been one absolutely huge change, which is what's called the competitive fade rate—that's the time period over which you can enjoy leadership—has gone from about ten years to about one year. What that means is, it was perfectly reasonable in the past to coast on your previously successful business model, because it would probably last at least ten years. Now it won't, on average, across all public companies. Therefore it's reasonable, I think, to say that companies are in the business of constantly reimagining themselves. You could say that imagination is the new execution. If you don't constantly reimagine yourself, your advantage will decay very quickly.
GEORGIE: Is there an argument that you can imagine too much, too often? Is there any argument to, I don't know if it's resting on your laurels, but sticking true to what your principle was? Is there a danger that we are all trying to be too innovative?
MARTIN: Theoretically, yes. I mean, you could imagine being so hyperactive that you have lots of ideas and you execute on none of them. I think that's sometimes visible in startups. I remember looking at an oncology startup that was spending a lot of cash to develop a new cancer drug, and they found one. But they were so interested in the science, that instead of commercializing that one, they went on to run out of cash by developing many more ideas. So it's possible, but in large companies, it's almost exactly the opposite is a much more common scenario. Which is, you don't have enough ideas or a big enough portfolio of future possibilities so that you renew yourself. The proof of that is we can measure something called vitality, which is the future growth potential of a company. And it declines on average by three percentage points for every doubling of the size of the company, or every doubling of the age of a company. If you call that the gravity of size and age, essentially you could describe the competitive struggling business as defying the gravity of size.
GEORGIE: Why is that? What stops large companies from being imaginative as they grow?
MARTIN: Well, there are a number of things that stop them on average, but fortunately there are many exceptions. I mean, one of them is just the sheer physics of size. If you increase the size of a sphere, then the surface area to the volume decreases. More and more of the mass is internal, and the same thing's true of a company. Companies become more and more introverted. And the one thing we know about the neuroscience of imagination is it's based on surprise. If you're not seeing the surprise in the world, which is the trigger and the inspiration for imagination, then you're not going to imagine anything new. So, that's one reason.
I think a second reason is what some people call the success trap. Which is if things are going pretty well because you successfully came up with an innovative business model in the past, then you don't feel that hunger, that sense of danger that an entrepreneur feels every day, and you relax. Now, the problem is that the financial indicators may all be in the green, but that's because they're lagging. You need to constantly reinvent yourselves.
And then the other one is, the procedures of yesterday's business model often restrict thinking about tomorrow's.
GEORGIE: Tell me more about surprises that spark imagination.
MARTIN: Well, one of the unique things about humans is that we have mental models in our heads of reality, and we change those mental models. We reimagine reality in response to a surprise if something doesn't fit the pattern. That surprise can come in different forms. It can be an anomaly, which is: Most of the points look like this, but then this customer is doing something different. Or it can look like an accident: I was trying to do this, and then this other thing happened. Or it can be an analogy, which is: That's a bit like this. What if it were more like that? These are the ways of encountering surprise and triggering imagination.
GEORGIE: It brings to mind when I was at university a very long time ago, Martin, and I took part in a psychology experiment of a housemate. I asked them about my response to it. It was all about whether a certain chap was a good or a bad person. Lots of different things about this guy that I had to read examples, but his behavior was so erratic. One day he was good. One day he was bad. I said, "You can't decide." So I just put a big line through the middle and just said, "Well, that's it. I can't decide either way." And I said, "What happened to that?" And he said, "Well, it was anomalous, so we threw it out." Do you think that happens too often in companies? Could I have been actually telling them something else there?
MARTIN: Well, one of the greatest simple-but-powerful mathematical inventions is the average. Companies have to measure and manage vast amounts of information, and so they use averages and aggregates. That is very efficient, but it suppresses the visibility of the points that don't fit. But sometimes those points that don't fit are actually the beginning of a new trend or the seed of a new idea. So it's very important to think like a novelist, and not an accountant, for the purposes of imagination, and to look at the particular.
GEORGIE: For example? Any companies?
MARTIN: Well, there's a great example of a company called Brooks Automation. It was a leader in semiconductor manufacturing equipment, and it was maturing, so it actually deliberately set out to be surprised. So it created a map of all of the people that were using its patents, and all of the people that were referring to those patents, and essentially asked the question, "What's surprising in this picture?" They found that amongst the more predictable electronic companies that were quoting their patents, there was a group of bioscience companies that were using their patents, and they didn't really understand why. They went out into the field, and they investigated, and they saw that biological tissue handling was extremely primitive relative to the sterile, precision, computer-controlled way in which semiconductor wafers are handled. They imagined that, "Well, this could be a new industry. The biobanking industry. The biological materials manipulation industry." So in fact, they created that industry. Became a pioneer in it. And then just a couple of weeks ago, in fact, they sold the previous core business. And now their core business, the new core business, is actually this business that was imagined, triggered by a surprise that they deliberately went out to seek. So, it can happen very practically in very down-to-earth companies.
[Note: In late 2021, Brooks Automation changed its name to Azenta Life Sciences after divesting its semiconductor business division to focus exclusively on the life science business]
GEORGIE: So how do you spot those surprises, those anomalies, those changes? Because, of course, by the time you can see them, it's almost like it's become a trend and it's not going to spark certain imagination and drive in certain directions to give you a competitive advantage.
MARTIN: Well, if you're talking about a trend, by the time something is an established trend, indeed, it's probably too late. It may have been arbitraged away by competitors. It's no use at this point in the evolution of COVID in business to say, "You know what? I've got this great idea. There's a trend towards home-working using video conferences." Well, everybody knows that. That's too late. But incipient trends, nascent trends, anomalies that could become a trend, are quite important. Now, the difference between an anomaly and a trend is manifold, actually. One of them is, it's much earlier. Another one is, it's not a slam-dunk. It's before something becomes an established trend.
Also, it's not an inevitability. It requires shaping and nurturing by the company, and the data may alert you to the possibility, but the possibility has to be imagined. When the company I gave an example of, Brooks Automation, was looking for surprises, the data didn't say, "You must create them via banking industry. There's an opportunity here." It simply said, "This is the way that people handle samples, and it doesn't appear very good relative to the semiconductor industry. Let's think about that." "Well, I have an idea. Let's create a new industry."
GEORGIE: Do we have a case where an anomaly is just an anomaly?
MARTIN: Yes, absolutely.
GEORGIE: Like my psychology experiment that should just be chucked out.
MARTIN: Well, an anomaly, we often throw away the anomalies in a chart, don't we? We say, "That's an outlier." Sometimes that's right. It was an experimental error. It was a freak, one-in-a-million event that won't be repeated. But when you see an interesting anomaly, you can do a couple of things. You can say, "Well, let me look at that from a couple of angles. Is that robust? Do I see it again?" You can look for momentum. Is that anomaly that you're seeing, growing? You can imagine how you might shape it so that you can actually create your own fate. You can say, "Let us do an experiment to see whether in fact there is an opportunity here."
Another example is a company called Turo, which is a company that rents out private cars. It creates a contract between the private car owner, often a luxury car, and the person who wants to rent it for a couple of hours. So they thought they saw an opportunity, and they tested it by handing out postcards saying, "Would you like to hire this Porsche or this Bentley for a few hours at this price?" They handed out a couple of hundred postcards, and the response told them that there was a shapeable opportunity there. They could have got the opposite result. They got a very positive result.
GEORGIE: Well, that's an important one, because imagination is just a step. It's what you do with that.
MARTIN: Right. So we outline six steps, and I just described them briefly. So the first one is, we call it the seduction. It's when the anomaly seduces you to look more closely and to imagine the trigger. The inspiration, if you like. That's all about looking out of the window. Seeing and caring, basically. Caring about what you see. The second stage, we actually call it the idea, which is the art of working an idea. So, it goes from being a one-liner to a fleshed-out model that you can test.
There is a well-described skill of counterfactual thinking, imaginative thinking. But most of us haven't been taught it since kindergarten, so there's some skills that one needs to build there. And then the third step is what we call the collision, which is when you collide the idea with the reality, maybe in an experiment or by handing out postcards on the corner. Of course, one thing that's going on is, you're validating the surprise, the idea. But another thing that's going on, because most new ideas fail, is that you're actually triggering new surprises. The fourth stage is what we call the epidemic, which is the spread of the idea. Ideas tend not to spread in large corporations, and if they don't spread, then they remain private fantasies. The fifth is the codification of the idea so that the success can be replicated, which is much harder than it sounds. And then the last stage is called the encore, which is not falling into the success trap, and having successfully imagined a new business model, doing so again and again. Not being caught in the trap of the assumptions underpinning your own success. So, it is an entire process.
GEORGIE: When you talk about imagination in terms of business models, and what you were describing earlier about how companies do need to change and to innovate regularly, more regularly than they used to. They can't sit on their laurels. Do we have to reimagine the entire business model, or can imagination just come in little, little steps?
MARTIN: Yes. Well, it comes in little steps and big steps. And the longer you postpone it, the bigger and riskier the steps that you have to take.
GEORGIE: Forgive me. If imagination is just thinking, and we do it all the time anyway ... hopefully that's what we do when we're at work. We think of ideas and ways of doing things, and hopefully ways of doing things better. Why are we measuring it? How can you measure it? Isn't it just obvious?
MARTIN: Well, it's obvious to a five-year-old, but that fade rate that I talked about implies that it's not obvious to large groups of people that are trying to renew their advantage. Which is why we think we need a handbook for collective imagination and for the harnessing of collective imagination.
Now, that may sound unreasonable, because this is a conjunction of the word machine and imagination. Some people say, "Well, we don't need to have a guidebook, and we can't have a guidebook for something so mystical."
GEORGIE: And then apart from reading the handbook, obviously, what do you do as an organization? Do you fill your company with polymaths? Is the traditional division of labor idea dissolving, and if so, is that welcome?
MARTIN: Well, there's a number of things to do. I think the first one is to make sure you have a balanced portfolio. So you have some new possibilities in the portfolio, as well as some things that are delivering cash. That sounds obvious, but if you're using current financial metrics, metrics of current financial performance, you may miss that because they don't measure future option value very well. I think the types of people in the companies is very important. I mean, I think in recent years we've seen the rise of the specialist, and I think there's a role here for imaginative types, for generalists.
GEORGIE: Such as what? How would you find those people? Where would you look? What sort of people?
MARTIN: I think you can measure people in terms of their response to novelty. So Alibaba, for example, the Chinese internet company, has been rather successful--measures not only tolerance of change, they actually measure liking of change. They measure energization by change and new possibility in their recruiting, and they try to fill the company with those people, because those are the sort of people that the company needs right now.
Another interesting thing that you can do is, because often...we all have the capacity for imagination, the other side of this, are we utilizing that in the workplace? Another idea in the book is actually harnessing play, because play is a very serious business. Biologically, play is de-risked, accelerated, spontaneous learning. We play when we're small because it's a lot safer and a lot faster than waiting until opportunities for mortal combat. And we don't find that large corporations are very playful. So there are 16 executive games in the book, which are designed to have people loosen their assumptions.
GEORGIE: For example? Give me a couple. What games can we play?
MARTIN: Let me give you two. So a good icebreaker game is what I call the anti-company game, where you list on one side of a piece of paper all of the core assumptions, all of the sacred assumptions of the business model. And on the other side of the piece of paper, you list all of the things that you would never do, you would never contemplate doing. You reverse of columns, and you create the best business case for the anti-company. Now, it's often humorous. It breaks taboos, but out of this humor emerges some ideas and a flexibility to go on and play a more detailed game.
So a more detailed game, for example, is, we have a game called the pre-mortem game. Where essentially you assume that you're in a press conference in five years' time apologizing for the failure of your company, and you're describing exactly how it happened, and thinking through exactly how you might go off the rails is a very good way of underlining the case for imagination.
GEORGIE: Where does imagination fit it in an ever-increasingly digital world?
MARTIN: Ah, well, that's a great question. So probably over the next decade, we're going to see the substitution of many human managerial activities for machine learning. Many routine cognitive activities will be taken over by machine learning, and the experts are largely aligned that the response to that should be for the humans to focus on more uniquely human capabilities. The three obvious ones are anything to do with empathy—dealing with other human beings—anything to do with creativity, or anything to do with ethics, that machine learning can't do. But it raises the question "Well, is that safe too?"
Well, eventually we have artificial general imagination, and we believe, based on our research, that that is very far off indeed. So, no we won't. But technology, traditional technology, doesn't oppose the activities of imagination. There's a synergy between the two. In fact, we've already discussed one example today, Georgie. The example of Brooks Automation, where they used network mapping software in order to analyze their second-order patent map in order to see the surprises, which triggered the thoughts about creating a new industry. So the new analytical tools can help us to imagine, and throughout the entire process, the six-stage process we talked about, there are tools to that we can use that can power that process.
GEORGIE: Is there an argument then that actually an increasingly digital world will bring out more of the human in us? We get more imaginative?
MARTIN: I think so. Some people lament the demise of routine work because of employment insecurity, and so on, and there's a certain aspect of that. Will we be able to employ the same number of people in companies in the future, or will it require some sort of universal basic income? I see it as a sort of liberation from drudgery, actually. The imperative to emphasize these more uniquely human aspects of ethics and imagination and empathy, I think should lead to a re-humanization and a revitalization of the workplace, which personally I'm very excited about.
GEORGIE: So then where can leaders start?
MARTIN: So, I think they can start by accepting the need for imagination.
We have an example of a wonderful company in Japan called Recruit, which actually has an entire personnel system that's based around the celebration of entrepreneurial activity. They have these hero entrepreneurs that they say are the most important people in the company, and they have a festival where they celebrate new businesses, and anyone can start a new business. Providing one other person wants to join their team, they get first-round funding automatically. And they don't separate the ideas from the initiators of the ideas. They keep them together, because they're interested in creating heroic journeys and a lot of excitement around entrepreneurship. And they have been, in fact, a very successful serial business model innovator.
GEORGIE: Well, thank you very much, Martin, and thank you for listening. We'd love to know your thoughts, to get in contact, do leave us a message at email@example.com. And if you like this podcast, why not hit subscribe and leave a rating wherever you found us? It helps other people find us too.
GEORGIE FROST: In 2020, the Black Lives Matter movement sent shock waves across the world. In response, grand pledges were made by governments and businesses to move much faster towards a more inclusive society and economy. Yet the financial wealth gap when it comes to race, gender, and disability is still huge. So how can we make sure that these promises translate to action and progress?
GEORGIE: I'm Georgie Frost, and this is the So What From BCG.
KEDRA NEWSOM REEVES: Being inclusive is an active commitment. It requires action because it is not our norm.
GEORGIE: Today I am talking to Kedra Newsom Reeves, a partner at BCG who focuses on financial services and social impact. She leads the Center for Inclusion and Equity and guides governments and businesses on how they can address inequality.
KEDRA: I think when we look at COVID, whether we're talking about the US or North America or globally, if you look at any ethnic minority, globally, COVID certainly had a greater impact in terms of infection rates and in terms of deaths for ethnic minorities. We think about that in terms of loss of livelihood, for those that were ill and may have long COVID. We think of that as loss of treasured family members and the emotional impact of that on people and in the families.
And then certainly as we look at, outside of those that were affected by the illness directly, those that were affected by the shutdown of industries, as we tried to stop the spread. Which, I think was necessary in terms of stopping the spread of COVID, but certainly had economic and financial impact for individuals in terms of the service industry shutting down. If we look at—whether it be food service or home health care aids, etc.—many of those industries have a much higher percentage of minorities in the US certainly, of women certainly. And so when we think about those spaces sitting down in the unemployment, that it caused, that certainly was another factor that again decreases the income and the ability to grow wealth for families. And so certainly COVID has exacerbated the gap if you will. That that gap was already incredibly large and quite challenging to begin with.
GEORGIE: How big is this task and closing the wealth gap, because as you said, it's been something that's been around for a very long time, and it crosses so many different demographics. How do we go about closing it and just explain to me what exactly do you mean by the wealth gap?
KEDRA: Certainly. So, I mean, I think firstly, we measure it simply by assets minus liabilities: your assets, your home, your cash, your retirement accounts, minus whatever debt you might have. When we look at that for Black Americans versus white Americans, it's a 10X gap. For Latinos versus White Americans, it's I think at 8X gap now, and it probably has been exacerbated. We don't know the results of COVID on the wealth gap today. I think that is yet to be seen.
GEORGIE: Why so large? Why so large in those groups?
KEDRA: I think consider what wealth is and how you attain it over time. Just think about your own personal journey. And I think we have to start with the fact that intergenerational wealth plays a huge part in the wealth gap. Did your family have wealth to pass down to you? And that's everything from a trust fund or a massive business or tons of equity in a public company or private company, global company. And that certainly is a big part of the total wealth gap. So that affects a small percentage of people. But in fact, in even larger percentage of the smaller things. Could your parents make the down payment on a home? Could they give you a home? Could they pay for your college? Do you have to take debt out for that?
And you think about wealth accumulation, growing assets versus wealth extraction or decumulation. Debt creates extraction and decumulation, so if you don't have intergenerational wealth, you are heavily reliant on debt to grow your potential in our economy, and to grow your wealth over time. And so I think that's one big factor, is that intergenerational wealth is our starting point.
Where do you start at day zero of your life or year 20, of your life, as you become an adult? And then everything after that. It is what's your education level? Did you graduate from high school? And did you graduate from college? What are therefore the employment opportunities that are available to you? What are the income bands that are therefore available to you? What are the benefits packages in terms of health care, health care savings plans, which allow you to, do some of that tax-free? All of these seemingly small things have a huge impact on our ability to grow wealth.
And as we get older and have more steady jobs and have benefits and have retirement accounts and invest in other businesses and perhaps start businesses, all of those things contribute, as well as home values. So we like to think of it as a loop.
If you think about it that way, you're going up this ladder, if you will, and then looping back as you get the intergenerational wealth.
GEORGIE: Which is a big task. I mean, there's nothing we can do about intergenerational wealth. That's kind of done. So we're starting at a different point. Therefore what point are we starting at? What needs to be done? What needs to be changed? Where do you look across all areas of the economy? You said that things like education, that's just one part.
KEDRA: Right, that's a very small part. And I'll just say, an intergenerational wealth point, I think, yes, we are starting at different places. I do think you're seeing things that are really interesting where wealth is being given back to families. So you take, there's land in California that was taken by the city and now has been given back to that family. And the city is now paying for that land from that family. So that wealth that family had, a hundred years ago, has now been given back to the family that it belonged to. And now their wealth position is totally different, if you think of it that way.
I don't want to totally put that aside. I think at scale and mass, that will not be the solution for everyone, but there are opportunities for that to happen. There's some work going on in Evanston close to where I live here in Chicago, around reparations. And so there are some efforts to address intergenerational wealth gaps where feasible. Direct money, direct dollars.
GEORGIE: So direct money—direct dollars, direct money or dollars—could be one solution?
KEDRA: Could be part of the solution yes, yes. And I think that's a governmental solution. I think we are seeing pilots and experiments in that space and in various places.
GEORGIE: How else would you like to see that played out? I mean, could you have sort of parachute payments for certain groups?
KEDRA: I mean, there are really interesting ideas like baby bonds. How do we ensure that every child starts off with some level of wealth? I will say this, I think my only challenge, I would say when I talk to my clients in the public and private sector, is that it can't just be a government solution.
There are things that we can do in the private sector that are really, really critical. And I think education is certainly one of those. So we actually look at, for Black families, education is not a true wealth driver. Education is not a panacea. It doesn't solve all issues. I think the thing that we see employers doing, if we just talk about income for a minute, that I think is a big driver of equity is thinking about skills-based assessments of potential employees.
So rather than saying, “You have to have this college degree from this set of ten schools that we always recruit from,” employers can say, “We're looking for something very different. We're looking at an assessment of what makes someone successful in this organization.”
If you think about sales, think about the things that are important in a sales job. It is about being personable, being able to connect with people. There are a lot of different profiles of people that can do that role really well. So how do we find those individuals and ensure that they're getting equal opportunity to those types of roles that someone else might? And then you think about the benefits that come with that, the retirement account, etc., that I think is certainly a level that's really interesting.
GEORGIE: How do you find those people as a business? Because part of it is knowing where to look. And I guess the other part is giving young people or anyone the confidence to believe that they can go for those jobs.
KEDRA: Most, certainly all about exposure. I mean, how did I become a consultant? And how did you sit in the role that you're playing today as a journalist? You were exposed to something at some point in your life that said, "Huh, that looks like an interesting job. That looks like something that I could do."
I do a lot of community work and go into schools. And it's interesting to talk about consulting. To help students understand that everything you see and do and touch is someone's business. Anything that seems interesting to you, there's a role for you to get there. I think the question is what's the path.
GEORGIE: And the role that businesses can play in that?
KEDRA: I mean, I think that a lot of that is about connecting back to your community. What is the community service that you do?
When we talk about diversity, equity, and inclusion at BCG, we really talk about it in three ways. It's what are you doing in your community? Which I think businesses often really do think about. I don't know that they really think about how that is a channel and a pipeline to talent for their organization and for the economy more broadly, they think of it as perhaps more of a charitable donation, a charitable activity. But really investment in our communities is critical to how our nation will thrive over the long-term. And so I hope people start to think of it that way, but certainly one is that philanthropic piece.
I think the second way to think about is team and culture. And I think what we're talking about right now is the connection of that community work to that team and culture and the path into those roles over time.
And then the third piece that we think about is, from a business perspective, what are the products and services that you're putting out there? Are you being equitable in that piece? And certainly in financial services that plays a huge part in the wealth gap and the opportunity for families to accumulate wealth over time.
GEORGIE: What should leaders be doing? How do you get investors and consumers on board with this? Why does this matter so much from a business perspective?
KEDRA: I think from a business perspective, from a sustainability perspective as a business, and we often talk about sustainability as it comes to climate, but we also have to talk about it when it comes to people and communities.
When we are excluding large portions of our society, we are not setting ourselves up for success, quite frankly. One of the things we're really trying to do at the Center is to really think about how do you deliver services equitably, and what does that mean for people?
So take health care as an example, if we have truly equitable health care in the US, we don't have a public system in the same way that we see in other parts of the world. If we're not taking care of our people, we see outcomes like COVID, right?
And that comes back to wealth. Health is wealth. If you aren't healthy, you can't work. If a family member passes away, that is a livelihood that has gone, that has disappeared. And if that person passes away at an early age, think of the kids that no longer have those parents that can provide for them. And so health certainly is a contributor to this.
And we think about the health care organizations that are out there, that are shooting to do some of this work that is incredibly important to the wealth gap. I think on the financial services side, we talk a lot about how do you deliver services equitably?
How do you ensure that people are not experiencing wealth extraction by using really unfair, high-interest predatory lending products just to get by on a week-to-week basis? It's really difficult to be at a low-income status. It's hard, it's hard to make a budget meet. It's actually not hard at all to be wealthy. [LAUGHS] There are many things that you can do with that wealth, and you can make it quite difficult for yourself depending on your goals, but it's actually not that difficult. What's really difficult is living on a very tight income. And when our products and services don't meet the needs of those families and those individuals, there is no choice but to use products that are really quite predatory. And I think we talk a lot about wealth accumulation but we don't talk a lot about wealth extraction, and high-interest products are doing just that, they're extracting wealth every day, every week, from families that don't really have wealth to really grow at this point.
And so I think what we talk a lot about in our practice in financial services is what can banks do? What would equitable products looks like? What would equitable reach look like? And in all ways, from very traditional banking services, just like your checking and savings accounts to your mortgage accounts, to investments. How do we make that access more equitable for people? And how will that have an impact on those higher parts of the wealth loop, if you will, than the intergenerational wealth piece that we started with?
I think, the question is, are we reaching the folks that need the product and are we building the trust in the community that that relationship can be held? And how do we look at that product suite, on the investments we make there versus everything else we're trying to do as an organization? That's where the real challenge comes in. Are we making the investment necessary to make those products successful, to have the reach that's necessary to reach the communities that need them the most?
GEORGIE: How do you make the investment? How much is the right investment? Where does it come from? How do you direct it? What resources you need to achieve this?
KEDRA: First, let me just start with people.
I think the thing that's going to change that, I think one is, being a CEO-level priority and seeing that investment can be made—that it's not fundamentally dilutive to your margin. I think that's part of it. Do you have the leadership commitment?
I think the other question is what will investors do? And this gets back to the thing that you asked earlier: what about investors and consumers? A majority of the assets in the world are controlled by a relatively small number of pensions, sovereign wealth funds, etc., foundations, endowments. And I think when we start to see investors taking a different tack, demanding to be part of the goal set for companies, that's when you'll see change, really I think more fundamentally. And I think we're starting to see it. I think we see most of the major banks in the US have made those big pledges. I think all of them are working to deploy them. I think they're running into the investment challenges that we talked about. How do you prioritize this versus other things? But I think we are seeing a lot of those pledges come forth.
GEORGIE: Is there only so much the organizations can do? And by that, I mean, do you think the system, the economic system, governmental system, is rigged against Black Americans, Hispanic Americans, maybe to a large degree women too?
KEDRA: I don't think our economic system was set up to be inclusive of women, minorities, LGBTQ, to some extent, people with disabilities, it's just as simply the case that our economy was not set up to be inclusive.
GEORGIE: What was it set up for? How was it set up?
KEDRA: I think historically it's been set up for white men. You think about our government leaders. You think about our business leaders over time, and you think about the laws that are in place in terms of employment of women and minorities over time. These were not things that happened by happenstance. There's some work we recently released around climate that just says, you know, systems are not organic things. There are people, individuals making decisions.
And I think for hundreds of years, we were not making decisions to be inclusive. That's just not how our economy— and the global economy—not even just the US, but our global economy, was really set up. And so being inclusive is an active commitment. It requires action because it is not our norm. And I think you see that certainly for ethnic and racial minorities. And you also see that for women.
You know, I do a lot of work in wealth management. We did a study a couple of years ago, just looking at women in wealth management, looking at women that are actually high-net-worth, ultra-high-net-worth—very desirable to serve for banks and really being completely underserved.
And still a lot of conversations that you would have expected to be happening in the 1960s and 1970s of a woman sitting at the table with her husband: the woman is the CEO, the husband's a stay-at-home dad, and the husband is the one who's getting spoken to. And the husband's the one that's getting the advice and getting the packet that comes after the meeting. And so there's a lot of work to do. It requires focused and intentional activity because it has not been our historical norm. You could have a perfect credit score outside the traditional lending system and still be turned down for credit in the traditional lending system.
And so these are the types of really ingrained, I think, business practices that we have to attack and really look at very closely if we're going to build a more inclusive economy. And I think that intentionality around that focus of time and investment and study is the thing where you need those business leaders who are truly committed and are going to say, "You know, [inclusion] is an important innovation for us. Similar to how digital has been an important innovation for us, similar to how data's been an important innovation, inclusion is an important innovation for us.
We recognize that it is something new that we have to do differently, and we're going to put dollars against it, and we want to see progress and we're going to set goals." That's what we have to see from business leaders, if we're going to see real impact and real change.
GEORGIE: What did the Black Lives Matter movement last year—well not just last year because it's continuing—but what did that moment mean to you in your life, in your work? Are you optimistic that this could be a real point for change, permanent lasting change? We've had so many false storms along the way. Could this be the final one or is it just the way that progress happens?
KEDRA: It's a great question. I think, I think for me personally, one, the Black Lives Matter movement has been around for a long time, there's a great quote. I'll just speak very personally for a moment. There's a great quote by an activist. Actually I think on the West Coast in a press conference, and she said something like we've tried every way of protesting, we've rioted, but we've also made music and drawn pictures and made movies and tried to excel professionally to be in places of power as a way of, our presence being a protest, if you will.
And so I think the racial reckoning, which I wouldn't say is just Black Lives Matter, I think I would say the racial reckoning that occurred last year, Black Lives Matter has been, as a movement, has been happening for a very long time under that kind of name, if you will. But I think the reckoning of last year, which drew in people outside the Black community. I think that was an important moment. To me the impact of that moment, launching people outside the Black community on their own personal journeys of realization and reckoning, and then asking themselves the question: what should I do at this moment?
Unfortunately, in a way it took all of that to get to where we are today. And had we not seen so many protests by people in the streets, had we not all been confined to our homes and really unable to look at anything else, I don't know that we would be where we are now. And so I think for me, what's been really meaningful about, the last year is this: I've been in financial services for a couple of decades at this point. I've been at BCG for 13 years and been doing equity work outside my job for years. And in some ways doing it inside BCG for a number of years as well. But as we said earlier, systems are not organic, systems are driven by actors that are in places of power—and having actors that are in places of power care about these topics is what is making the difference.
And I think how we all choose to remain committed to this work and make it a core part of our businesses and our organizations is again what will determine whether or not this movement will be, you know, "Three years in the late, you know, early 2020s, something happened, and no change was...no progress was made." That could be the line in the history books. I think there are a lot of people who don't want that to be the line. I'm certainly one of those people.
And for me, it's a very personal journey. I want my kids to have a very different experience over the long term. I've been incredibly privileged, but I can look to my left and look to my right and my family and see a very different outcome. It's really heartening. I think it's really exciting to see where we are now versus where we were even 18 months ago. And it is heartbreaking, I think, that it took a global pandemic and a televised murder of a man for that to happen. But I think, I think that is what it took. And so now what do we do with all of that is the question.
GEORGIE: What do we do with all of that?
KEDRA: I think we stay committed, we stay committed to doing the work.
GEORGIE: Thank you very much Kedra. And to you for listening, we'd love to know your thoughts to get in contact, leave us a message at, firstname.lastname@example.org and if you liked this podcast, why not hit subscribe and leave a rating wherever you found us? It helps other people find us too.
Georgie Frost is an award-winning freelance finance broadcaster and journalist. She began her career as a sports journalist at the Guardian Media Group before hosting sports shows on BBC Radio. In 2014, she created a daily finance-based talk radio show on Share Radio, winning honors as the financial broadcaster of the year and as one of the top five best new presenters in the UK at the APA Awards. She has written for the Financial Times, the Sunday Times, and the Daily Mail and appeared as a sports and financial commentator in national newspapers as well as on ITV, Sky Sports Mix, and BBC One. She has written and hosted the Daily Mail’s “This is Money” podcast for the past five years.
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