Lessons from a Covid-19 year: wise leadership, of countries and companies, is about trust

The success of New Zealand and Vietnam in containing the coronavirus pandemic shows that the richest countries aren’t necessarily the best at managing a crisis
Amid the political turmoil and shortcomings of global governments, the private sector has, in many areas, risen to the occasion

Richard Chandler

Published: 9:15am, 22 Jan 2021

Why you can trust SCMP

Over the past year, the world has endured what appears to be a perfect storm. Events have included a global pandemic, racial intolerance, state-sponsored cyberterrorism, a stock market collapse (and recovery), and the ongoing battle with climate change.

With vaccines against Covid-19 being rolled out, the year began with hope. However, turmoil returned with protesters storming the US Capitol building – the seat of American democracy. It was a calamitous end to Donald Trump’s presidency.

In the back of everyone’s mind is the concern about the polarised state of American leadership. Never before have the “left” and “right” been so far apart – and so unwilling to compromise for the common good.

The noble ideals, so passionately held, eloquently articulated and wisely stewarded by George Washington, John Adams, Alexander Hamilton, Thomas Jefferson and Benjamin Franklin, have been compromised by a new political class of self-interested and intransigent ideologues. The principle that a house divided against itself cannot stand is one that brought America through its civil war in the 1860s.

Hence, the world is looking at America, home to the United Nations, the World Bank, the International Monetary Fund and countless other regional and international organisations, with great concern.

The pandemic has also laid bare the capabilities of governments around the world to manage a crisis. The initial response of the international and domestic agencies was underwhelming at best, and simply wrong at worst.

Firstly, the World Health Organization was slow off the mark. Then the US Centres for Disease Control (CDC) advised that the wearing of masks was unnecessary. Next, we witnessed a shortage of ventilators and personal protective equipment. In some countries, health care systems were quickly overwhelmed.

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Other countries capitulated early, deciding that they lacked the resources to effectively control the virus. In doing so, they protected livelihoods, sometimes at the cost of lives. They were confronted with what is known as Hobson’s choice – as all choices led to bad outcomes, which was the least bad?

The Covid-19 pandemic has revealed both the level of skill in national governance as well as the level of wisdom exhibited by country leaders.

Bloomberg’s Covid Resilience Ranking provides a scorecard for government performance during the pandemic. A comparison of the results is illuminating. The best performing countries were neither the largest nor the wealthiest. New Zealand comes out on top, followed by a mix of Asian and Scandinavian countries.

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Lying just outside the top 10 – and in my view, deserving a much higher ranking – is Vietnam, showing that developing countries can often manage a crisis better than wealthier ones. Indeed, it could be said that they are better equipped politically and culturally to achieve more, with less.

The lesson? Resilience isn’t measured by financial resources. Notably absent from the top of the list are the United States and western European countries.

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Amid the political turmoil and exposed shortcomings of global governments, the private sector has been presented with an opportunity to rise to the occasion, and indications are that in many areas it has.

On August 19, 2019, Jamie Dimon, chairman of the US Business Roundtable (and chairman and CEO of JP Morgan), stood up and declared a new social contract between business and society. The Business Roundtable released a new “Statement on the Purpose of a Corporation”, effectively replacing shareholder capitalism with “stakeholder capitalism”.

The statement was signed by the CEOs of 181 companies who committed to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders. The pandemic has put this to the test.

A bright story has been the quick response of pharmaceutical companies. Moving quickly to address the global health emergency, Pfizer, Moderna, AstraZeneca and others have delivered vaccines in record time. An industry often vilified for exorbitant drug prices has stood up and applied its innovation resources for the common good.

Another industry also acquitted itself well. Banks, castigated for their role in the global financial crisis in 2008, have worked with borrowers to provide support and forbearance.

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If the pandemic created an opportunity for the business community to showcase how innovation, enlightened self-interest and compassion, together, can create value for society, it also accelerated other trends, creating winners and losers who were reshaping the marketplace.

The stay-at-home economy accelerated the shift from the physical to the digital marketplace, sending a long list of retail companies bankrupt while catapulting new companies such as video communications company Zoom to prominence.

It also further entrenched established technology and social media companies in our social fabric. Is this concentration of marketplace power good for society? One wonders if, in the new winner-take-all world of Amazon, Apple, Google, Facebook and others, dark knights are emerging.

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Beyond the pandemic, the theme of the coming decade is likely to be how the world addresses another existential threat – climate change.

In 2020, the clarion call to address climate change grew markedly louder. Nothing represents the leadership opportunities for business better than the vertiginous rise in Tesla’s stock price – up sevenfold in the past 12 months.

Tesla now has a market valuation of US$780 billion – greater than the nine largest automobile makers combined. The stock prices of battery and hydrogen companies have also soared. The mercurial Elon Musk, Tesla’s founder and CEO, just became the world’s wealthiest person.

It is reassuring that, after several decades where society’s view of business was coloured by executive greed and management failure, business is redeeming itself, demonstrating its ability to create solutions to the great challenges of our times.

What we have clearly seen in 2020 is that the businesses that survive and thrive in the years to come will be not just those which can make a superior product or service, but those that also earn the trust of their stakeholders. The wise companies will be those that spend as much time managing trust capital as they do shareholder capital.

Richard Chandler is the founder and chairman of the Clermont Group and Chandler Foundation, as well as the founder of the Chandler Institute of Governance