Radical business: how to transform your business in the age of global crisis podcast
Humanity is facing major global challenges – from climate change, social injustice, economic inequality, and not to mention the global pandemic.
But businesses are in a position to help and start to repair the world. This is by no means an easy thing to do but there are approaches businesses can take to improve their chances of creating positive and meaningful impact and transforming their business.
In this podcast, John Davis discusses why now is the time for businesses and their leaders everywhere to step up and become a force for social and economic good, and how to take inspiration from those businesses that are already doing just this.
John Davis is Professor of Practice at the University of Oregon’s Lundquist College of Business and Chair of BrandNewView, a leadership firm that helps organisations become a force for social and economic good.
A best-selling author, his 11 books have been translated into multiple languages. His latest, Radical Business, is based on his work with leaders in over 40 countries and is rated a top 10 must-have book by CEO Today and Amazon's top 100 Sustainable Business books.
John has run businesses from start-up to $1 billion, leading teams from 5 to 1,000. He moved into academia, became a business school dean and professor in Singapore, and has taught top leaders in executive education programmes worldwide, including with Duke CE, London Business School, Wharton, Chicago Booth, and University of Washington. He has also published articles: Harvard Business Review, Dialogue Review, Forbes, CEO Today, The European, Indian Management Journal, plus regular keynotes, including: TEDx, Global Soft Power Summit, Global Knowledge Forum, EO, YPOs.
In this episode:
- How will taking a societal value approach versus a profit motive approach be more of a desirable indicator of success?
- What three themes should businesses consider if they are to start to radically transform their business?
- Why is defining your company’s aspiration critical to taking the first step to transformation?
- Why sustainability shouldn’t be ignored if we are to try and change the world for the better.
Radical business: how to transform your business in the age of global crisis
Daniel Ridge (DR): It often seems that the world we live in is in constant crisis, whether because of the economy, the environment, or global politics. While businesses are often implicated in these problems, they can also be a force for good. Today, I'm joined by author John Davis, who argues that the changes needed are surprisingly simple. John is chair of ‘BrandNewView’ a global leadership development and organisation transformation firm. He works directly with CEOs and leaders from around the world. He has started two companies and led global operations for Fortune 1000 companies. He's also an award-winning business school professor and the author of numerous books on branding, marketing, sports and strategy. In his book ‘Radical Business, How to Transform your Organization in the Age of Global Crisis’, he offers examples of companies that are already taking action to make a better world and presents a framework to help leaders learn to put societal value at the heart of their business.
DR: So you know, there's a note at the beginning of your book that I think a lot of readers overlook, but I think it's fairly significant. At the beginning of your career, you were offered two jobs, but you chose to take the lower paid position. And I'm wondering, what did that job teach you that the higher paying job couldn't? And what does that say about building a career in business?
John Davis (JD): Well, it's interesting, because at the time, I remember feeling that tension that any new graduate feels, which is how do I get out in the marketplace, and so much of the advice I was getting was go for the highest possible money you could and I had this wonderful opportunity with this investment bank, but it just didn't feel quite right. So, I sought some advice from people just to get a sense of what they would recommend. And they did a good job, even in those days. I recall this vividly of asking questions about my interests, what I wanted to do, and to a person, they just said, look, it sounds like what you'd be better at and be interested in learning more from would be something that's more operationally centered, you're going to get more out of it, you're going to learn how to deal with a P&L, build people skills, how to develop a team, basically running a business. And you know, if you were to go into the investment banking world that has its own interest areas, but you're going to become pretty good at things like managing spreadsheets, and that's great. And of course, sleeping with a phone on your pillow, or the proverbial equivalent of that in those days, or 100 hour weeks, and no social life and you know, basically dead by the time you're 30! But I'd have a higher salary, or I'd have a really fun eight years of high salary. And then that's it. So, it didn't make sense. So that's why I chose the lower paid, but interesting, operationally driven restaurant business. And there were huge lessons that came out of that for me. I mean, thinking back, probably the biggest lesson and, and it may sound self-evident, but was that being human and relating to people requires far greater depth and dexterity than a daily inventory tracking or weekly number reports or monthly planning. Those are incredibly important technical skills. But it was the very human issues, such as employees that are ill, customers that have unique and sometimes perplexing requests, our suppliers that deliver late or the wrong supplies. And those are very real business-like issues that you have to contend with that require in the moment kind of decision making. So that was probably the first big lesson. The second big lesson I think, and there's a few in here, but one of them was just learning to pace myself. So, I sort of jokingly mentioned that one of the reasons I didn't want to pursue the investment banking job was because of what I was told of the 100 hours plus weeks. But in that first year, in the restaurant business, I worked 80-to-90-hour weeks, it was still pretty intense, and ended up taking, as I recall, two days off that year, literally because the business is always going. And at the time I remember thinking I was sort of Ironman and I had this incredible superhuman stamina, but it really took a toll as well. I'd always been physically really active, I was a track and field competitor. And you know, I ran a half mile - I competed for years. But in that first year, I actually ended up gaining 30 pounds, which I've never done in my life. And I've never felt physically worse. And so I learned that one of the big lessons was learning to pace myself and fit in those things that are really important to a more well-rounded life. And another lesson as it kind of relates to the to the first lesson on being human, and that is being relatable. I actually wrote a short piece recently Daniel in Forbes on relatability which was actually kind of vital not fakery, but instead of listening to people and being tuned into them being if you will present in the moment, and that particular behavior has come back over the years, time and time again, because I've built these relationships with people inside and outside the company in those early days, who then became situational mentors for me later on in my career, and even providing new opportunities as well, you know, so I think those were some of the key lessons that kind of came out of that and while I can't go back in time and try to compare without against having gone into investment banking, it certainly was a worthwhile experience for me to do that. And once I kind of got calibrated on my personal life balance and getting back into shape, I was able to kind of navigate my career direction from there.
DR: It sounds like these are really human skills that you're focusing on, the interactions with people, developing relationships, developing your own, knowing where you're going with your career, and how you can help other people along the way.
JD: When I went back to grad school and earned my MBA, and then went back out of the work world, the first company I joined after that was Nike. And I went into that with a mindset of I've got these, you know, great technical skills, I went to a really top business school, I know how to crunch numbers, like nobody's business, I know how to do multidimensional scaling, and conjoint analysis and all these other technical tools. And I was just filled with this idea that that was going to reap dividends. And one of the first things that my mentors and bosses at Nike said is what you just came out of in grad school is nice, but it has absolutely no meaning to us, if you can’t actually get things done. Yeah, and part of getting things done is being able to work with the teammates, work with people in other divisions, because of the company's global presence, getting familiar with the issues of different cultures and those kind of human issues and the technical skills I gained in business school, are certainly important, and not to deride it, because I've been a dean and a professor of business schools, you know, obviously in the last few decades, but that human side of it, to your point, is really critical. I think that's the number one attribute or in any kind of business setting, that's required for somebody to have a chance to be successful.
DR: So getting into your book, you write at the outset of your book, “My premise is simple, business leaders today have a wide open door to change their companies for the better by making a deliberate shift away from the profit motive, and toward the societal value motive, where businesses are a force for good that contributes positively to society, not just makers of goods, strengthening the circular economy.” So, there's a lot there. But I'm hoping you can unpack this for us a little bit and begin a conversation.
JD: Sure. So, the point is that the profit motive has been a great source of strength, and also a great source of perversion over the last 100 years. So let me describe a little bit about both of those on the strength side, you know, we know that profitable growth helps build enterprise confidence, it helps reward customer loyalty in many ways. It can help create or develop industry respect. If you're a publicly traded company, you gain shareholder support if you're doing well. But the perverted side of it, if you will, is that growth sometimes comes at all costs mentality, meaning doing whatever it takes to achieve aggressive targets. And this is partly because of the idea that growth is the only way to measure success or the primary way. And it's not, it's a bit delusional to think that economies and businesses can all grow forever, let alone at double digit paces. So, the societal value motive says the profit is still important. But it's what we do with those profits in service to society, and not just in service to enriching shareholders. That's the important issue at stake, it’s basically stakeholder capitalism. You know, as I think about this, too, we're no longer obviously, in the 20th century, we're in the third decade of the 21st century. But we're still in many ways worldwide, businesses are clinging to a business model that worked in the 20th century, yet we didn't adjust as new information came through as to how we can operate more effectively and better in this new century. But we're a bit smarter now. We now know what things do work, we can start to redeploy our good fortune to strengthen, if you will, our social contract. But now, what's funny about this whole approach to societal value approach versus the profit motive is that it kind of makes a skin crawl of those who are very economically conservative, and I understand that, but they also live in the same planet we all live on. They all suffer the same environmental, social and economic pains, or at least they will eventually, if not right away. So we might as well make the effort to build new approaches, new business models that can help us do great things and also help society. You know, what's interesting about this is growth effectively occurs because we all buy more things, people buy things, companies certainly encourage this type of disposable behavior because we can always replace what we have or update it, but it feeds this consumption cycle. The more stuff we buy, the more it activates an entire value chain of supporting activities, you know, from extraction, to sourcing, to refining, to manufacturing, to packaging, to shipping, to distributing, and so forth, and then ultimately going into our landfills and then the cycle starts over with discarded purchases just piling up. But as our careers progress and we earn more income, we tend to buy more things and more expensive things because we can. And the point is kind of the comeback to say, look, this growth idea, consumption is not inherently bad, and that people shouldn't acquire, it's just that instead, we never look at moving away from mass market consumption as a desirable indicator of success for our companies, and replace it with a more deliberate effort to calibrate and define, if you will, wellbeing and prosperity as the more interesting outcomes, and therefore encourage more support for what we do in society. And that's where companies can play a bigger role, and that's part of that societal value motive.
Look, this one eliminate growth or mass consumption, it's an intentional effort to encourage new way of looking at what creates a satisfying life. And I think that's entirely possible, I'm seeing evidence of it. And as you've seen, in the book, I described some of that in there. We just haven't spent as much time on that, as I think we should over the past century, because we have different business models and a different understanding of what was going on in the world. Now, there's an interesting kind of dynamic in this too, this, what I just described, is really applicable to a lot of the Western economies. But we've got, you know, a good chunk of the world 10 to 12% of the world's population, well over 750 million people, that are in a survival or starvation mode. And so that's not a trivial thing, either. And they're on the cusp of disaster, and they, you know, they're facing some real issues there. So for them, this notion of mass consumption versus societal value, the public doesn't even enter their horizon. But for the rest of us, we can help with that. So the simple questions is, what are we doing right by all of these people, if we massively consume and hoard while they struggled to find ways to feed their family, and hopefully have just a little bit of money left over for a place to live and social interaction?
DR: No, exactly, I get it. So, you know, from your research and your work in over 40 countries, what you did was you distilled the principles top performing companies demonstrate to create enduring value. And you put this into three main themes and 12 underlying focus areas. So the three themes are value meaning, value measure and value mobilisation. So, you use these themes to organise your research throughout your book. So, could you begin by telling us about these themes and why you chose them?
JD: The themes were based on the typical sequence that I saw most of the firms studied, bear in mind, not all of them did this. But the most interesting and reputational, the strong ones, did this, and that's what made it captivating to me. Some businesses run surprisingly, had a very thin rationale for their existence, and then consequently struggled compared to better prepared and more thoughtful peer competitors. But the consistently strong ones began with a search for meaning asking why they're here. And it sounds philosophical, sounds almost like a fluffy concept, but it's not. If you focus on making money, then you can do it doing almost anything. But in their case, the firm's that focus on that idea of defining meaning, making money becomes a byproduct of doing other things well first. And it begins with defining aspiration. And that informs several other internal approaches to build out the business. So having aspiration under this idea of making meaning is critical. And it's important to know I intend then to measure success. And that's the value measurement part of it. And there are four subcomponents to measuring success, which we can talk about a bit later. But it's critical to say, if our aspiration is to achieve this, if our way of making meaning is to do this, then we need to understand how we're going to know that we are achieving it. That's the measurement piece. And then the final theme, is value mobilisation, as you mentioned, and that is essentially how do we catalyse the resources to go to market, from stakeholders, to engagement to environment, and even then to solutions in order to realise that the meaning we have defined, the ways we think we can achieve success through the measures we also define, can be activated through the mobilisation efforts we undertake. The sequence itself is an absolute, except to say that it is exceedingly hard to determine success in themes two and three, the measurement and mobilisation themes if you have no conception of what gives your business meaning, and what you aspire to do. Otherwise, you can go sell pencils on the street to make money, or you can sell apples the following day. And you get the idea. You can do a whole range of different things, but there's no focus without that aspiration as sort of the lighthouse, providing a beacon of directional light.
DR: That's kind of why I began our conversation by asking about your own career and where you're heading because it seems that you from the beginning had certain aspirations of your own development that you wanted to head toward. So, it seems that you know, we've been talking about personal relationships and how businesses actually work. And it seems that these aspirations, they need to be baked into the cake if you're going to be successful.
JD: That's correct. That's what I have seen time and again, and it was gratifying to see that the most encouraging well, many things were encouraging about the work I've been fortunate enough to do. But for you, whether you're in the UAE or Japan or Thailand, or you're in Europe, or here in North America, what was interesting about it is that the companies that hold on to that sense of why they're here and really use it as that guiding star ended up being able to weather some really tough times. Because they can always go back to that, that central point of focus that says, look, we may not be making money the same way we used to because of the challenges in the economy. But if we stay true to our overall vision for where we want to go, we know we can eventually kind of align ourselves back towards a place where we feel comfortable again, in our in our financial health grows. But if you were obviously to do the opposite of that, then you know you'll be floundering about and not effectively sort of utilising the resources you've invested in the talent you've invested in and so on. So really helps to have that aspirational focus.
DR: Well, I'd really love to hear some specific examples. You give a lot of examples throughout your book, which adds a lot of color to it, you give cautionary tales, like Volkswagens greenwashing scandal, but then you give more positive inspirational examples like Ravi Kumar, the president of Infosys, can you tell us you know about some of these stories that inspired you that we can learn from?
JD: Sure. And Robbie is a great example within the book. And he's actually in the first chapter and the work that he helps lead worldwide for emphasis on upskilling populations is really powerful and important with other examples as well. So, there's a there's a company out of Denmark called ORSTD, O, R, S, T D, and they are an energy company and back in 2008/ 2009, 85% of their business was in fossil fuels. And they wanted to shift towards renewable energy. They wanted to basically flip the company upside down and pursue a renewable future, because they obviously saw the writing on the wall and the decline of the fossil fuel extraction, partly because of declining resources, but also the harm and damage it was creating. They didn't have a lot of supporters at that point, you know, it's understandable, you have investors who have invested in the way you do business, they want to see returns on those investments, you have employees that are hired to achieve certain kinds of capabilities, because their technical backgrounds working based on the original fossil fuels model, you have customers and so on. And then there's a whole value chain of implications and stakeholder results when you start to make a shift like this, but they invested in it. And over the course of the next decade, basically through 2019 2020 ORSTD, did flip its business, it's now 85% renewables, their market capitalisation, which means you know, the value of the company in any given day, you know, multiply the share price, and the number of shares has doubled. And they have been ranked the most sustainable energy company in the world for the last four, maybe even five years. And the reason why I liked that, as an example, sort of an inspirational company example, is because we often perceive transformation of that kind as challenging, and it's not easy - it took them a decade. But it also was for absolutely the right aspirational reasons. And it helped drive the business towards better performance, which is the piece that often gets missed is people, cynics will say, gosh, if we do this, we're not going to make as much money. And the evidence is contrary to that in this case, which is great.
Another example that I featured in the book, Divergent 3D, which is a company actually based out of Los Angeles, founded by an entrepreneur by the name of Kevin Zinger. And he wanted to find a way to change how the automobile industry manufactures vehicles. Obviously, back in the early 1900s, as the assembly line mentality took hold and affected a lot of the industrial practices for manufacturing for all kinds of sectors and industries worldwide. And they became the de facto model for how major manufacturing was conducted. And Kevin looked at it and said, look, he'd spent a lot of time in the industry anyway, he spent a lot of time in China, he'd had a joint venture, working on new battery technologies and EVs in the early days. But he looked at the entire industry and said, there is a broken model here and it's one of the most broken industrial sectors in the world. And that is, we have this bias that to build automobiles, we need to have a multi acre facility with huge amounts of machinery that take hundreds of 1000s of square feet, all kinds of suppliers coming in at various levels of capability and environmental consciousness and the enormous amount of waste that comes out of that every stage of that process, plus, it's even with a robot is still very labor intensive. But what Kevin did is he said look, I can clean sheet this, we need to try and see how if we could absolutely reinvent the entire manufacturing automobile industry process? What would that look like? And he took a blank piece of paper and imagined from raw materials all the way through to final production of a new vehicle, what could he change every step of the way. And that meant completely getting rid of the mental model and the actual business model that says you have to build these horribly expensive, terribly wasteful, multi-acre facilities. And he ended up developing a process that's called DAPS - it's the Divergent Adaptive Production System. It's a patented system, I think it has close to 500 patents on it now. And he can build hybrid automobiles in that system of significantly reduced price, and it's a closed loop. So, the materials that go into the manufacturing of their cars can be re atomised, if a part breaks down, they take that part, put it back into their system, which is basically a very sophisticated 3d printing process, re atomises materials and put them right back into the car. So it is literally closed loop. And he's tested it now with the first hybrid hyper car called the 21. C. And it's really exciting. You can look it up on YouTube. And there's tons of press about this. But the car broke the Laguna Seca track record last August I believe, it goes zero to I think 60 in two seconds. Again, it's a hybrid car, top speed 253 miles an hour. It’s amazingly cool. It's a great looking car, but it's less about the car, to me anyway, and more about what he just diligently doggedly pursued with an amazing team of engineers and colleagues to build this new approach to auto manufacturing. And by the way, it can apply to any kind of manufacturing. And the final point I'll mention on this is he envisions the DAPS system, that divergent adaptive production system has been a series of integrated notes. So, you know, a country or a company, anywhere in the world can invest in this system, put it there, it's much smaller, right? It doesn't take up multi acres, it just takes up a small site. And those different systems can all talk to each other through AI. And so as you learn about different needs in different markets, the system learns about that, communicates that, and feeds it into the rest of the system, making smarter and even more effective and efficient.
DR: You talk a lot about sort of sustainability and looking at the environment and things like that. But you know, I talk to quite a few authors and researchers who work on corporate social responsibility and there's some that feel that sustainability and circular economy are just you know, another trendy topic that companies might use to greenwash their business. So I'm wondering what you say to your more cynical colleagues?
JD: Well, they are right to be cynical, but wrong to then ignore and walk away. So, the cynicism is kind of a result of the businesses that have abused the concept of sustainability because they put a temporarily positive spin on an otherwise poor set of business practices. And they're the ones that are giving it a bad name. The sustainability challenge is real, we all see it worldwide. And circular economies are conceptually ones in which economy basically kind of like what I describe at Divergent 3D, it reduces the demand on raw materials inputs, kind of reimagines, and redesigns, less resource intensive methods, and that recaptures waste for brand new uses. That's a very important ambition. Even if cynics derived it. Nothing great gets done without ambition and aspiration to try to achieve something that can better things for all of us. And that's where you see some of the great breakthroughs over the past millennium, let alone the last 100 years in business. So even if the current execution is less than perfect, we know that it has the proper rails on which to guide the future where we go. Every new model, if you will, every new business model needs to be vetted just because it's new, and proposes a different and I think better way for us all to behave does not mean we should avoid it. It is hard, and it's also critical. Furthermore, those who kind of greenwash I think are contributing to the cynicism and skepticism. As I mentioned before, the concept of ESG has become weaponised as a political tool. We've certainly seen that here in the United States, but it's not we're not alone in that it is actually a set of performance boundaries. And they're not perfectly well defined. They continue to evolve, but they're important starting points.
DR: Can you explain ESG a little bit?
JD: Yeah, I'm sorry. ESG is Environment, Social and Governance. And there are three broad based parameters that help guide the sustainability practices and inform others about the sustainability practices of a company. And in fact, you know, the SEC, which is the Securities and Exchange Commission in the United States is currently proposing new disclosure rules for companies reporting, their environmental impact, if you will. The sustainability disclosures they're much more rigorous in reporting and they're around this idea of each of those areas of ESG, Environment, Social and Governance, the environment ones tend to be the more metric driven because we can, we can sort of forecast carbon outputs and, and whatnot. Social has a lot of different factors attached to it, it can be things like D, E & I, Diversity, Equity, and Inclusion, but also gets into the social impact we're having, which becomes a bit more diffuse to precisely measure. But it's still important to weigh as we think about the impact our companies have. Governance gets into both the internal governance structure that allows organisations to prosper more effectively and efficiently, but also governance across societal actors, not just businesses, but governments, NGOs, civic groups, and whatnot in a way that helps align their various interests toward accomplishing the sustainability objectives.
DR: Something that I want to ask you about actually is if you want to get us away from the profit motive and toward the societal value motive, how do companies measure that? And how do you incentivise them?
JD: One of the biggest and most enjoyable revelations, and I really do think it was a revelation, occurred, this is almost a decade ago, and it's been echoed time and time again. And this was through some conversations, and then an executive education teaching I was doing that led to research with a bunch of companies about how they're measuring the value they create. And so to your question, there are actually four different ways that this is measured, how are they measuring value. And, and it was interesting, because there's a sort of a misguided notion about how that's done, which I'll get to at the end. The four areas that they focus on our first one is reputational value, which in effect is are we trusted, right? Do we have a reputation for being a trustworthy business, and there are annual brand surveys and league tables that measure companies in this capacity for trust. Do the public, whether it's consumers or stakeholders more broadly, look at the organisation and say, yeah, I would do business with them, I have done with business with them, they honor their commitments, and so on. So reputational value is really important. The second value is organisation of value, and that's internal to the company. And that is, do people inside feel like their work matters, that is in service to a larger cause, and that their own contribution is having a demonstrable impact in pursuit of that cause. And that's really important, because you need to know that obviously, people inside feel like what they're doing is something more than just being slot fillers, otherwise, you'll lose them, they'll move on to someplace more interesting. The third value is societal value. And this is the external lens and organisational value is internal societal value is external. And this is, is the company or is the organisation engaged with the communities it serves in those communities are its stakeholders, and also where it's located. And by being engaged, it is more than just having a presence in a market or geography, where they employ people that is important, that doesn't necessarily earn you the love and the trust of the people in that market. It may save some economic concerns they have, but you have to be a good corporate citizen. And that's, that goes above and beyond just putting a business in place, an office in place, a factory in place, whatever it might be, and employing people, it gets to can those people or are those people doing things for the good of the local community, whether it's through educational outreach, or you name it, those three things, the reputational value, the organisation value and societal value, when they're done, then lead to the final value. And that's financial value. And that is the result of doing those other three things well, and that's the health of the business. At the beginning of this, I mentioned that this is what turns it on its head, we are taught and I've done this before, too, is you know, as a professor in business schools that you know, the return on investment to financial outcomes, those are sort of the driver of results. The actual rationale is not true. It turns out that's a byproduct of doing other things. Well, we've been sort of teaching it backwards. And I think it's time to be honest about the fact that really to achieve measurable financial success, you need to do these other things really, really well. And that's a hard thing for companies to do. But the good ones do it phenomenally well. And that's why they excel compared to competitors.
DR: You're very enthusiastic about what you're working on. I think that's really contagious. And you know, your book provides a lot of inspiration for today's leaders. And I'm wondering what surprised you and what got you excited as you were doing your research?
JD: Well, I went into this project with kind of a combination of trepidation and enthusiasm. The genesis of radical business really began a couple of decades ago when I was starting to look at what creates value in businesses and how do businesses create value for society? And I used to look at it through the lens of what was my domain expertise, which was marketing, and as marketing I mean, that's kind of how I started my career and spend that I should say a good chunk of my career. But that notion of value creation quickly goes from, are we generating profitable returns on products towards a larger sense of what's the organisation's role in the things that I mentioned before and contributing to society? And, and that's when I began to realise that really, companies have a significantly Influential Potential footprint globally to enact major change. That was sort of both trepidatious and a source of inspiration and enthusiasm for me. The trepidatious part of it is that's a big ocean to boil. But the enthusiastic part of it is, but it can be done right. So the trepidation is the cynical forces you mentioned earlier, for example, there are lots of folks, greenwashing and mis-positioning intentionally poisoning the well of public trust. But the enthusiasm is because many of the leaders and companies that I profile and radical business are doing groundbreaking work, like the folks I've mentioned earlier, we just need more of it. And so radical business is a call to action. It's a blueprint to help businesses that are on the fence, or skeptical or even just unsure of what steps to take. To me it is encouraging to see that many of the CEOs and businesses worldwide that I had the chance to study and work with are really working to tackle this. Are they perfect? No. But are they making progress? Yeah! Often in the face of shareholders who simply want unlimited, profitable growth. But again, we need far more of those folks. Secondly, the global consumer has tremendous power and influence today, much more than they've ever had before. And they want companies to change for the better. This is a developed world perspective back to what I mentioned earlier, but it's still important. The developing world wants not to be wondering whether or not it will survive to the end of the day. And the developed world plays a role in helping with that. Couple other points in this; capital markets are continuing to grow and emphasise the importance of sustainability and ESG, environment, social and governance type investments. And we're seeing it through BlackRock, we're seeing it through TPG. We're seeing it with a number of other capital groups out of Europe. And we just need the capital markets that continue to do this to be supportive, because if businesses everywhere see this, they're going to have much greater confidence and comfort, knowing they can make the change themselves. And then finally, to my earlier comment about regulatory environments in the SEC, the changing nature, those environments, again, whether it's the SEC, or the European Union, stringent sustainability measures, the world is moving towards sustainability. And not everyone likes this as it disrupts their current business model. But consumers, back to my earlier point in this section, have a disproportionately loud voice to wield in persuading companies to change. So, CEOs and consumers and governments and capital markets, all moving in the direction of sustainability, actually feel really optimistic, it doesn't mean it will happen overnight. Or that we should wait for a few brilliant people in some garage somewhere to invent a solution, because that's not going to happen, or at least it's really unlikely. Instead, this is about a collective alignment among societal actors that aren't usually synchronised and bringing them together to make it happen.
DR: Well, I think what's really great about your book is that it strikes a good balance between inspirational examples, and then also practical advice through these examples. So, I'm wondering if you could tell us what are the key strategies that companies can adopt to help them achieve their goals related to the ESG that we've been talking about?
JD: This is going to sound almost simplistic, but a couple things I think companies need to do well is think big, and start small. And that sounds so obvious and incredibly important. So, think big is about defining that aspiration that we talked about earlier. Don't get caught up in the incremental day to day How do I beat my costs from yesterday or improve my market share from last week, sort of important but kind of trivial, and overall, distracting. Think Big about what that aspiration is an aim toward that and keep marching toward it, you will not get there in a straight line, it'll be a bit like a pinball machine, you'll bounce all over the place. But starting small is the encouragement to get things going. Don't invest in boiling the ocean, thinking big sometimes puts companies in that unusual position saying we need to have a massive project that is going to if it goes well rock the world and make people notice us but that's also where a lot of projects fail. So, thinking biggest setting that direction, and then starting small, through test and learn exploration experiments, a lot of the design thinking stuff we've heard about gathering facts and data and iterating new ideas, all those things are really helpful. They tend to be really low cost, and they have high potential returns. So, I think that approach thinking big and starting small is the clearest opening to making a transformation.
DR: Thank you for listening to today's episode. You can learn more about John Davis's book radical business on our website and also find a transcript of today's show. I'd like to thank Penny Trees for her help with today's episode and Alex Jungius, from This is Distorted.
We aim to champion researchers, practitioners, policymakers and organisations who share our goals of contributing to a more ethical, responsible and sustainable way of working.