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Leadership
What Determines the Success of a Leader?
True leaders are not afraid to pioneer change.
Posted March 3, 2020
Last week, Amazon chief Jeff Bezos announced a $10 billion investment in the new Bezos Earth Fund, which is aimed at combating the effects of climate change.
A number of Amazon workers, united under the name Employees for Climate Justice, reacted to the news by challenging Bezos to put his money where his mouth is: for example by replacing the diesel trucks that are currently delivering products with electric vehicles, by stopping donations to climate-change-denying companies, and by putting an end to the threat of dismissal for workers who are questioning Amazon's support for the oil and gas industries. It may not have been the reaction their boss had been hoping for.
Why are the Amazon workers so angry? Aren't they happy with the $10 billion for the climate? And what does this move tell us about Bezos's leadership?
For years, Bezos was considered a top dog among CEOs. In 2014, he came first in the top 100 of the annual Harvard Business Review, receiving particular praise for his long-term vision. He went on to figure prominently in each subsequent edition. Until now. Bezos is conspicuously absent from the latest edition of the review despite his company's comfortable financial position. Why did he fall off his pedestal?
It's his way of doing business, the Harvard Business Review said. His financial success simply cannot make up for it. Questions surrounding the company's working conditions, personnel policies, personal data privacy guarantees, and infringements of competition rules made Bezos tumble out of the top 100 CEOs.
It cannot have come as a surprise to him. From 2015, these criteria have been explicitly included when composing the list. Apart from the financial performance, the Harvard Business Review now judges a CEO on his environmental, social, and governance credentials. In the final edition, the so-called ESG parameters made up 30 percent of the total criteria, and that is likely to increase in the future.
This is not a crusade by the Harvard Business Review, its makers say, but simply the recognition of a social trend and a response to the demands of investors. Recent research has shown that investors, as well as employees and customers, are looking beyond the financial figures. They want to know what a company's social performance is like before deciding who to support.
Of course, Bezos knows this. His own workers have told him often enough. He even was one of the CEOs of U.S. multinationals (the Business Roundtable) who issued a statement on the subject some months ago. They declared that companies must not only aim at satisfying shareholders, but they have a duty to consider the interests of other stakeholders, such as employees, customers, suppliers, and communities affected by their activities.
Reputation Repair
Bezos's first problem is that he is bringing up the rear. His call last week to "everyone" to become involved in saving the planet came very late, and that makes it sound a bit hollow. The parties he is rallying (companies big and small, nation-states, worldwide organizations, private individuals) are already doing their bit. So much for his long-term vision.
A good leader does not look at what worked in the past but looks at what will prove successful in the future. So is Bezos, who ignored the wished of investors, workers, and customers for so long, fit to lead others?
Another problem for Bezos is that an Earth Fund can be seen as a quick and easy way for an extremely rich person like himself to buy off criticism. For the ordinary American, $10 billion is a lot of money. But for Jeff Bezos, who, even after his divorce, remains the richest man in the world with $120 billion to his name and counting, it is not that much. Bezos can afford to spend $10 billion on reputation repair. What else is he going to do with all that money?
A third problem—and one that his employees have been pointing out—is that Bezos's "solution" doesn't really address the challenges we are facing. To make money available for research and the development of new technology is a token of goodwill and might, in the longer term, contribute to limit the effects of climate change. But it doesn't achieve anything in the short term.
Making changes to how he runs his company seems costly but will enable Bezos to start contributing to resolving these problems on a daily basis. This is what he has been telling others to do, after all. Even though Bezos frequently promises to make changes in the way he runs his company, his employees are disappointed time and again, as they don't see this happening.
In sum, it is one thing to give the impression that you care for the planet, but another to follow through by actually making sacrifices to transform your way of doing business. A true leader is not afraid to pioneer change and shows others what needs to be done, even if it is inconvenient or costly.
