By understanding the bottom-line benefits of authenticity, transparency, candor and empathy…CEOs can…help their company excel in this new environment of increased scrutiny and skepticism among stakeholders.—William G Margaritis, SVP Global Communications, FedEx
The true measure of a leader is how they handle a crisis when the world is looking, which in today’s connected culture, it always is. The top three CEOs in the world, according to my informal analysis are: Howard Schultz, CEO Starbucks, Mark Parker, CEO Nike and Fred Smith, CEO FedEx. When you look at some well-publicized crises all three have seen their organizations through, you see a common theme in their leadership—transparency. Transparency is the single most important attribute that a company and its culture must embrace to survive in what Margaritis called a “new environment of increased scrutiny and skepticism.”
Starbucks and the Recession of 2008
You have to be honest and authentic and not hide. I think the leader today has to demonstrate both transparency and vulnerability, and with that comes truthfulness and humility and obviously the ability to instill confidence in people, and not through some top-down hierarchical approach. —Howard Schultz
Howard Schultz, in an interview with HBR, describes a turning point for Starbucks in 2008. At the height of the financial crisis, Starbucks’ stock was plummeting amidst bad press over expensive coffee and unsustainable practices. After closing over 600 locations, and taking a harder look at the overly diversified products, it was clear that something had to be done.
Schultz stepped back into the CEO role after having served as Chairman of the Board. His first act was the epitome of transparency. Schultz addressed the employees in a town hall format, allowing them to vent their frustrations directly to him. He also “[made] a confession” to the 180,000 employees and their families that “the leadership had failed [them].” He told them, “I should have known more. I am responsible.”
Had Schultz not issued such a disarming pubic apology, it is doubtless that Starbucks would have continued to lose the trust of the public until it went bankrupt. When the public is calling for a corporation to take responsibility, the best thing is to do so quickly and humbly. As quick as social media is to condemn, it is also quick to forgive.
Viral Video of FedEx Courier Dropping Package
Our quality-driven management says at its heart that you’ve got to use failures as an opportunity to improve…not to hide it, but to make sure everybody looked at it and learned from it. —Fred Smith, in reference to the viral video
FedEx, having been established in 1975 by Founder and CEO Fred Smith, is a corporation with some serious battle scars. The ups and downs are too many to enumerate here, but one calamity on social media perfectly illustrates the honesty and humility of an organization driven by what they call “reputational intelligence.”
A security camera at one FedEx customer’s home recorded a FedEx driver dropping a monitor box over the customer’s gate onto the ground, damaging the monitor. The angry customer posted the video online and within days it went viral, gaining over 5 million views.
What was notable was the alacrity at which FedEx responded. Immediately Matthew Thornton III, SVP for U.S. operations posted a response on social media, wherein he apologized profusely, said that FedEx went to the customer to personally make it right and that they are now using the video in their trainings to show employees what not to do. Again, this kind of self-effacing, immediate humble response is the kind of transparency and authenticity that the public values above all else.
Early on, we learned that rather than just managing our reputation by reacting to criticism about our supply chain, we could create real opportunities for change by creating an environment of industry collaboration, partnership and transparency.—Mark Parker
Nike’s history with sweat shops goes back way before Mark Parker’s tenure as CEO of Nike, starting in 2006. In the late 90s, Nike suffered bad press due to their overseas subcontractors’ shockingly substandard factory conditions. At first, they responded by claiming that it wasn’t their fault, as the factories were making other products besides Nike and how were they supposed to keep those subcontractors accountable when they were so far away? That tactic backfired, making things worse for Nike as consumers responded with outrage and worldwide boycotts.
In an effort to revamp its manufacturing processes, Nike was the first apparel manufacturer to publish a complete list of its suppliers, in 2005. Mark Parker picked up the torch as CEO in 2006, on the cusp of the metamorphosis of Nike corporate culture into a more transparent and authentic company.
It turns out he is an excellent champion of the kinder, gentler Nike. His aggressive approach to reducing Nike’s carbon footprint throughout every phase of manufacturing and distribution has yielded impressive results. As he reported in the 2012/2013 Responsibility Report, Nike has been successful in “reducing absolute greenhouse gas emissions by close to 3 percent while simultaneously increasing revenues by 26 percent over the time period covered by this report. This motivates us to push even harder for sustainable innovation across the business.”
In this era of “scrutiny and skepticism” perpetuated by social media, the public is able to respond en masse to things that it does and does not like about companies that provide their products or services. While transparency is on the one hand a function of social media being up in everyone’s business, it is interesting that the leaders who have responded by embracing and even championing transparency have been the most successful, gaining not only the consumer’s trust, but also that of their employees. It is no coincidence, then that the top CEOs in the world all have something to teach us about transparency.