Can you imagine a bigger business challenge than the pandemic? Well, the CEO of Delta Air Lines has just explained what might be next.
It’s a great example of something I’m exploring in my e-book. Flying Business Class: 12 rules for executives of US airlineswhich you can download for free here.
In short, no matter what business you are in, airlines are well worth following. Your industry is like an uninterrupted parade of detailed case studies that can help you make better decisions.
Today’s lesson comes from an interview Delta CEO Ed Bastian did with David Faber on CNBC this month.
You talked about the pandemic, of course. As I have already written here, Bastian’s optimistic outlook has stood out among his industry colleagues.
In a half-hour discussion, Bastian went even further and talked about other great challenges and beyond how the work of a CEO of a large company has changed radically in recent years.
Let’s rewind quickly. There’s a not-for-profit organization of large company CEOs called the Business Roundtable that Delta is a part of – but also Apple, Amazon, most of the other big airlines, and many others.
In 2019 they came together and redefined “the purpose of a company” and the changes they made were profound.
- This is what they said in 1997: “[T]The main task of the management and the board of directors lies with the shareholders of the company. The interests of other stakeholders are relevant as a derivation of the duty to the shareholders. “
- Here’s the newer version: “While each of our individual companies has its own corporate purpose, we share a fundamental commitment to all of our stakeholders.”
Emphasis added: “all of our stakeholders. “You get the difference. In the 1990s” shareholders “were important, in the 21st century it was” stakeholders “.
And while the definition of the Business Roundtable is only a non-binding consensus and was not mentioned by name in the interview, Bastian and Faber talked about it for exactly half an hour. Just look at some of the topics covered:
- The pandemic (of course)
- Diversity and inclusion,
- Environmental, social and governance issues (ESG),
- Threats to democracy and
- Employment and Unemployment in Atlanta.
“I’m just thinking about this conversation,” Faber said at one point, “if I were to turn the clock back five years, I couldn’t even imagine having a conversation with a CEO who deals with the things we have. Can you? “”
“I agree with you, David,” said Bastian, and added: “The pace of change is faster. And we as a company, as a model, have to be more dynamic and recognize that we have stakeholders who go beyond our limits.” Bottom line. “
Bastian seems to have accepted this change for a while now. During the interview, he cited an example: When he decided after filming Parkland in 2018, List a discount Delta offered to the NRA.
Delta is headquartered in Georgia, and the state has taken away a $ 40 million tax break following this move. This of course meant that Bastian was immediately faced with the explicit question of whether Delta should serve the shareholders or a larger group of stakeholders.
It also showed how difficult it is to assign positive or negative monetary value to social or political attitudes.
“We say here at Delta: If you take good care of our people, your people will look after your customers well. [and] Then reward your shareholders with their business, “said Bastian, adding:” Since we took the position on the Parkland shoot, our brand preference has never been higher. Our earnings have never been so high in our history. And the company’s net promoter score [and] Customer satisfaction has never been so high. “
Of course, the questions arise: correlation? Root cause? Who can say that And frankly, that’s the point.
When the Business Roundtable brought out its new definition for public companies, I tried to make an analogy for private companies. I found eight stakeholders:
- Founder and owner,
- Customers,
- Employees,
- Investors,
- Creditor,
- Familys,
- Competitors and
- the community in general.
I doubt it’s an exhaustive list. Some readers had a different attitude.
Regardless of that, you work here as a company manager. Because even if you hesitate to accept this broader definition, it is likely that some of your stakeholders (and possibly your competitors) are already expecting it.
With apologies to Canadian band Rush: “If you choose not to choose, you still have made a choice.”
Bastian seems to agree. “I think it’s the new normal,” he said. “I’m not looking back.”
If he’s right when you’re done navigating the pandemic, this could be your next big challenge.
(Don’t forget the free eBook, Flying Business Class: 12 rules for executives of US airlines.)
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.
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