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Summary: Radical Business: How to Transform Your Organization in the Age of Global Crisis by John Davis

Stakeholders increasingly demand that businesses make meaningful contributions to the improvement of the world. As consultant and professor John A. Davis explains, managing for meaning is harder than managing for spreadsheets. In Radical Business, He provides an encouraging analysis of today’s radically new business leadership requirements. Drawing on research and his experience as a business leader and scholar, Davis presents his case in plain, persuasive language. He offers examples from various industries and cultures to illustrate his advice for managing your organization’s quest for change and meaning.

Take-Aways

  • Business as usual cannot solve today’s problems.
  • Your organization can’t fake distinction.
  • Don’t wait for a crisis to instigate change.
  • Authentic transformation should permeate your institution.
  • Shaping your company into a force for social good depends on the culture you nurture.
  • Customers will pay one-sixth more if they enjoy a great experience.
  • Practice transparency.
  • Treat your employees as important stakeholders.
  • Fostering “societal value” is worthy work and sound business.
  • Stakeholder Involvement Steps touch on the societal, fiscal and political aspects of your organization.
  • Yours is not the only organization seeking transformative change.

Book Summary: Radical Business - How to Transform Your Organization in the Age of Global Crisis

Business as usual cannot solve today’s problems.

Making money brings corporate success, but earning profits alone is no longer sufficient in today’s changing, more responsible marketplace. Bravely facing change and incorporating meaning into your corporate processes can keep your company competitive against ever-increasing responsive, adaptive competitors.

“Developing your aspiration drives meaning for your business, casting a halo over your societal contribution activities.”

Technology company Infosys, for example, is building an educational infrastructure to make training available to people who lack access to higher education, but need new skills to address the problems confronting society. Infosys President Ravi Kumar emphasizes corporate social responsibility (CSR).

Your organization can’t fake distinction.

If you try to frame your business as socially responsible without taking real actions which back that story, you will fail. For example, a fashion company wanted to apply for a “Most Promising Brand” award. It engaged a consultant, not to help it meet the award’s requirements, but to favorably spin its current practices. The consultant declined that engagement. Similarly, Volkswagen created its own fiasco when it attempted a “greenwashing campaign”: trying to present its diesel cars as environmentally friendly, when, in fact, this was not the case.

“When your company genuinely pursues bettering society, you will have a distinctive advantage over competitors stranded by a fixed mind-set on an ever-shrinking island of obsolete business practices.”

Companies that know and expand on their particular strengths are three times as likely to outstrip their competitors. Patagonia, an exemplar of positive Environment, Social and Governance (ESG) efforts, offered its research to its competitors and even told customers to limit their buying to help avoid waste.

Don’t wait for a crisis to instigate change.

Your firm’s response to a crisis can offer a productive context for communicating why things must change. During hard times, such as the pandemic, business leaders must address new ways of working, managing supply chains and staying on top of changing markets.

Communicate simply and clearly, so your stakeholders understand what change will mean for them. Staff members who might not normally engage with customers should do so. This makes customers recognize that you hold them in high esteem and helps the company understand current consumer trends. When Nike followed this path, it developed a program to recycle shoes, grinding them into materials to make ground coverings for athletic use. The company has not completely eliminated waste, but has significantly reduced its environmental impact.

Authentic transformation should permeate your institution.

To bring about a business transformation, first define the chief strategic challenges you face in the near future. Delineate the results you want and work backward to recognize what you need to do to reach them. Consider whether you have the capacity and skills you need. If not, work to obtain them. Concentrate on each step in turn. How the company did things in the past or outdated best practices should never constrain you.

“A business’s impact should be felt the same by people inside and outside your company.”

Transform your market image through a communication program carried out in month-long sprints – a structure that abets fast action. Consider how you make decisions and what the market finds special about your company. Inform your staff and the public that your business is distinctive in meeting its responsibilities. Consider how your plan will change your operations and how to work effectively with any new partners. Communicate to stay on message.

Shaping your company into a force for social good depends on the culture you nurture.

Hotel entrepreneur Chip Conley speaks of “karmic capitalism”: the idea that businesses prosper when they help improve society. His company, Joie de Vivre Hotels, has more than 50 unique properties. Conley also founded the Modern Elder Academy, a school where people undergoing midlife transitions can reinvigorate their knowledge through workshops, classes and personal guidance.

“Several CEOs said that while financial performances have improved, internal engagement scores (a measure of employee satisfaction) were declining at an accelerating pace.”

Conley emphasizes treating his hotel employees well, because when they in turn treat hotel guests well, the guests spread positivity into the greater community. Seminal business author Peter Drucker also stressed that corporate culture is more important than strategy. Nurture your employees’ humanity and help them to become comfortable with the possibility of making mistakes. Doing so cultivates trust.

Customers will pay one-sixth more if they enjoy a great experience.

Research by PricewaterhouseCoopers found that customers are willing to pay one-sixth more if they enjoy “a great experience.” Half of Latin American customers will react to a “bad experience” by ditching the company that provided it. Worldwide, a single bad experience will motivate about a third of consumers to do the same. Employee experience is similarly powerful. More than nine out of ten Gen Z employees believe their employers should be involved in social issues. For many Gen Z job-seekers, this factor trumps salary.

“You must show that you understand generational and diversity differences. Consider technology savviness for example.”

Globally, more than half of customers are loyal to brands with which they feel a personal connection. Seek feedback from your stakeholders as to what might constitute a “Wow! experience.” They’re probably looking for more than favorable prices. Maybe you have expertise that can add value to your products. Tell stakeholders about your ESG efforts and demonstrate their positive effects. Exercise your curiosity and stimulate theirs. Direct experience and communication with stakeholders is more effective than surveys when it comes to gaining insights into how to create the right experiences for consumers.

Practice transparency.

The level of trust a company enjoys depends on its transparency. The Economist found that business scandals cost affected companies nearly one-third of their market value. When consumers trust a brand, they recommend it and defend it against critics. Influencers often wield more force than advertising. Red Hat CEO Jim Whitehurst acquired a company with some non-open source code. Red Hat was an open source business, but Whitehurst decided to take the proprietary code to market anyway. In the face of negative responses, he admitted his error and ordered a rewrite, even though doing so put the product release a year behind schedule. Whitehurt’s public dedication to transparency protected consumer trust and Red Hat’s reputation.

“Building trust with consumers and other key stakeholders helps convert them into advocates.”

The Edelman Trust Barometer shows that most people don’t trust business leaders to tell them truth. Even if a company has a sound reputation, the taint of being in the wrong business sector may affect it. A study of the food marketplace, for example, showed that customers will pay a premium for transparency. Many would change brands in favor of a more transparent company, and four out of five would consider a company’s entire range of products if they trusted its transparency.

Treat your employees as important stakeholders.

More than 80% of employees want their employers to keep them informed about the firm’s financial performance, but only two-thirds of public companies, and only a little more than half of private firms, do so. Employees also want information about pay scales, though sharing pay information can be a delicate subject. Critics of pay transparency maintain that employees may not understand why each person draws his or her salary. Discuss how you can facilitate more openness and what problems transparency could cause.

“Kick start the weaving of your organizational fabric by no longer referring to employees as human capital.”

To build your corporate values, ask if your employees feel their work contributes to society, and if investors see your leaders as trustworthy. Do they believe your leaders steer your firm according to what is best for the public good? Do your value chain partners see your company as an honest partner, rather than a demanding enforcer? Employees who feel that they belong within their organizations produce much higher job performance metrics than those who don’t feel that way. Sadly, more than half of employees feel disrespected at work. Respect elicits better performance and correlates with health, safety, trust and retention.

Fostering “societal value” is worthy work and good business.

As the Black Lives Matter movement gained momentum, people demanded their companies make visible commitments to social justice, including in hiring and management. Almost three-quarters of investors say that social responsibility adds to return on investment. Prioritize the “S” in ESG.

BlackRock, for example, puts ESG in the foreground when making investment decisions. It has announced a 2050 goal of owning a portfolio of companies with net zero carbon emissions. The transition to ESG values isn’t risk-free, though some of its risks relate to laws and guidelines, which may change. Technology and market requirements are also changing. Solid ESG efforts can safeguard your reputation within your local and your “brand communities.”

“Societal value is realized when your company is more than just an employer selling products and services; it must be considered an invaluable contributor to the lifeblood of that community…”

Use an established framework to assess your financial exposure to climate change. In 2021, many countries agreed to establish a 15% minimum corporate tax “to stop the use of tax havens.” But your company needn’t wait for government action. You can act now to redress the balance toward fairness and deliver more to your stakeholders. That means getting to know your stakeholders, including their customers and suppliers.

Stakeholder Involvement Steps touch on the societal, fiscal and political aspects of your organization.

Learn what your stakeholders want or need. Your reputation can affect theirs, so seek stakeholders who prioritize doing right and who can bring you the attention of valuable influencers. Express why all your stakeholders matter to your transformation, understand their interests and figure out what will move them to champion your company. If your transformation requires a new business model, work with stakeholders to figure out how to make it happen. When Puma, the athletic gear maker, realized that most of its negative environmental impact came from its suppliers, it crafted a program to help targeted suppliers finance innovations to make their goods more sustainable.

“Transformation is not just about how to make money but how to create positive societal value.”

If your business ecosystem needs more attention, plug its holes and bring participants together for the greater good. If this has political implications, be sure you understand the potential impact on stakeholder and public relationships. Use your data, share it with your stakeholders, and project your near and long term ESG performance, as you would project financial results. You might have value chain relationships you maintain only due to price advantages. If they don’t advance your new goals, get out of them as gracefully as possible.

You are not the only organization seeking transformative change.

Many firms worldwide now actively embrace positive change. Roongrote Rangsiyopash, CEO of the publicly traded, diversified manufacturer Siam Cement Group (SCG), halted production during the COVID-19 pandemic to manufacture masks for Thai children. SCG’s commitment to the public good won widespread admiration.

“Today’s crises are evident and innovative solutions are not.”

Research from New York University demonstrates that more than half of the growth in consumer packaged goods from 2015 to 2019 was in sustainability; sustainability marketing commands a “40% price premium.”

The Swedish transportation authority Skånetrafiken has adopted many forward-thinking, detailed policies to fulfill its goal of achieving complete climate neutrality. This public transportation system prompts people to drive less and get more exercise by walking to its stations, thus magnifying its social benefits.

As your company considers what it can do, don’t rush to address any problems. Take time to dig deep and to plan.

About the author

Business school professor John A. Davis chairs Brand New View, a global consultancy. He is a frequent keynote speaker and the author of numerous books on branding, marketing, sports and strategy, including Sports Marketing: Creating Long Term Value and Measuring Marketing: 100 Key Metrics Every Marketer Needs.

John Davis is Chair of Brand New View, a global leadership development and organization transformation firm. He works directly with CEOs and leaders around the world. He has started two companies, led global operations for Fortune 1000 companies (an award-winning executive in both his start-up and Fortune 1000 roles); he is also an award-winning business school professor; and author of numerous books on branding, marketing, sports, and strategy.

John has written articles for Harvard Business Review, Dialogue Review and International Advertising Journal. He has keynoted at dozens of global conferences, including TEDx and Global Brand Forum. He is also regularly interviewed by media, including New York Times, BBC, CNA, Los Angeles Times, Knowledge@Wharton, and more.

Genres

Business, Money, Economics, Sustainable Business Development, Environmental Economics, Business Processes and Infrastructure, HR and organizational behaviour, Organizational structure/dynamics,

Table of Contents

Section 1. Value Meaning
Chapter 1. Reimagining Aspiration
Chapter 2. Pursuing Distinction
Chapter 3. Reinvigorating Culture
Chapter 4. Creating Experiences
Section 2. Value Measure
Chapter 5. Strengthening Reputational Value
Chapter 6. Inspiring Organizational Value
Chapter 7. Generating Societal Value
Chapter 8. Delivering Financial Value
Section 3. Value Mobilization
Chapter 9. Cultivating Stakeholders
Chapter 10. Stimulating Engagement
Chapter 11. Enriching Environments
Chapter 12. Developing Solutions

Review

Stay tuned for book review…

Nina Norman is a certified book reviewer and editor with over 10 years of experience in the publishing industry. She has reviewed hundreds of books for reputable magazines and websites, such as The New York Times, The Guardian, and Goodreads. Nina has a master’s degree in comparative literature from Harvard University and a PhD in literary criticism from Oxford University. She is also the author of several acclaimed books on literary theory and analysis, such as The Art of Reading and How to Write a Book Review. Nina lives in London, England with her husband and two children. You can contact her at [email protected] or follow her on Website | Twitter | Facebook

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