The Health Pulse

[MUSIC PLAYING] SAL GILL: Hello and welcome to a new episode of Electrifying AI. Our mission is to provide a venue for clean energy enthusiasts to gain up to date insights on the latest developments taking shape in the electricity sector. Along the way, we'll help demystify the connection between the greatest machine ever built, the electric grid, and the greatest enabler of our time, data analytics.

To help us do that we'll have a series of special guests this season who hold a variety of different roles throughout the electricity industry. However, for this episode, we have decided to change things a little. We're going to look at the role of leadership and change management in our rapidly transforming industry.

For today's episode, we're excited to welcome someone I came to know and admire during my time in business school. Dean Bill Boulding is an accomplished scholar with a passion for helping advance business as a force for good. Amongst his many other engagements, Bill also serves as a member of the World Economic Forum's Council on Values.

He's also the Dean of Duke University's Fuqua Business School, which is where I earned my MBA. An interesting fact is that Bill's star students and my fellow Fuqua alums include, Tim Cook, the current CEO of Apple, and Melinda Gates, from the Bill and Melinda Gates Foundation. Dean Boulding, it is an honor to welcome you to Electrifying AI.

BILL BOULDING: It's a privilege to join you. And it won't be long before they're going to be naming you in that category. So it's great to be here with you.

SAL GILL: Well thank you. Thank you for that. So Bill, before we talk about anything else. And since I have intense rivalry where I work, how is our basketball team doing, and more importantly, how is our wonderful Coach K doing?

BILL BOULDING: So it's been a really tough year. And the impact of COVID from the very beginning on the basketball season just made it a very challenging year. Of course, Coach K was up to that challenge but at the very end when he had the team playing great and ready to advance, then COVID raised its ugly head yet again. And so--

SAL GILL: Unfortunately.

BILL BOULDING: Not quite the ending we were looking for. Although I will point out this makes two years in a row where Duke has ended their season with a win.

SAL GILL: That's right.

BILL BOULDING: That's the first time since 1991 and 1992. So I'll take it.

SAL GILL: I'll take that too. And also that's a plus for us versus where I am right now. So we're talking about change and builders, there's a lot of change that's all around us these days. From the way our world has turned upside down during COVID-19, obviously we're talking about the basketball team just here, but in several other industries as well.

And also the ever increasing political divides across the world. And add to that the rapid rise of automation and just the generational shifts and work forces. So leaders today have so many variables they need to handle, how does one influence change on top of all this?

BILL BOULDING: So what you described is a very, very complicated, complex world that we now live in. And I do think that the job of a leader is much more difficult than it once was, where you could kind of roll out the ball to play a game with a single minded focus on maximizing shareholder value. That was the expectation.

But that expectation has changed profoundly where it's become clear that business has this transformational power and given that it has that power, there's responsibility that goes along with that where you have to manage the impact that business has on society. And with that opportunity to change things so significantly comes a responsibility to be very thoughtful about the scope of things that now fall within the domain that a leader needs to worry about.

SAL GILL: And Bill, what would be some of those domains that you would say are high on the pecking order just given the current environment for leaders?

BILL BOULDING: So there's a good news, bad news story here, which is that we've gone through one of the most challenging eras of my lifetime, if not the most challenging era as you look at the convergence of multiple crises that have hit. The biggest public health crisis of my lifetime and certainly over the last 100 years. You'd have to be pretty old, I think to see something worse. The worst economic crisis since the Great Depression, although the economic crisis is very idiosyncratic in many ways. Some people are doing fine, others are harmed greatly.

And on top of those two crises, what we've seen is the clear intensification of a crisis around racial equality and justice. Where this is a crisis that's been building for many, many, many years. But as with many things in the COVID world, has been intensified in this environment. And so what's interesting is that as you look at the convergence of these three crises simultaneously and you ask, how have we done, have we done a good job of managing those crises. And the answer is in a world that is so very, very polarized as a starting condition pre-COVID, in many ways that the COVID environment has intensified that polarization and made the challenge of leadership all the more complicated.

And I would argue that what we've seen in many instances is a fourth crisis, which is a crisis of leadership, where what's happened is people have played on differences, they've looked out for their team versus another team and really taken actions which could be viewed as selfish, ineffective, confusing. They have not done the things that are so badly needed during a crisis, which is to give people a sense of confidence that they're going to be OK, that they belong to something, that there's some common purpose that we're all working toward. A sense of we're going to tell the truth and be honest and realistic with one another. And that ultimately, even though these are difficult times, that we're going to be better, we'll be OK.

And so there's this enormous stress and anxiety. And it's worsened in many cases rather than improved. And so that's why I say we've seen this crisis of leadership and a loss of faith and trust in institutions we typically rely on to advance the common good.

And what I find so interesting in this environment is to look at well how is the business community viewed in the midst of these terrible crises. And here it's really a fascinating thing to see, that unlike the response that society had to the role of business in the Great Recession, the great financial crisis of '08, where business came out of that with two very big black eyes and an enormous loss of faith, trust, and confidence in the institution of business. Now it's very different where people are actually looking to the business community.

And so you ask the question if you're going to deal with a health crisis, which institution do you trust the most to tell you the truth about what's going on, to give you the best advice in terms of what you should do in responding to this health crisis, that institution is actually your employer. If you ask the question, who's going to be most helpful in terms of driving economic recovery, well, that's in our sweet spot, that's our day job that we're going to be worried about how we drive innovation and value creation and opportunity, dignity, and respect for people that is badly missing in many instances in the current environment.

And then if you look at the question of racial equity and justice, it turns out that here, 71% of the population says the institution they trust most to successfully deal with issues of racial equality and justice is my employer.

SAL GILL: Wow.

BILL BOULDING: So once again, as you look at these three core crises, business is now in an elevated position where there's an expectation that we're going to successfully tackle some of these issues that traditionally may have been left to other kinds of institutions, governmental institutions, non-governmental organizations and so on, but the belief is that it's going to be business.

And of course, as we kind of steer towards the core of the content of relevance to this podcast, there is an expectation that beyond those crises that are really immediately presented by COVID, that business is going to be the platform to deal with issues like climate change. And so we have this very interesting juncture where we're being given the trust, we're being given the faith to take positive steps. And so here's where I'm both excited and nervous, because the excitement is we can really unlock the potential of business as a force for good, that we can use business as a platform for positive change in society.

But at the same time, I'm nervous because what if business is given this opportunity to step up and they're not ready. They don't seize this moment, they don't take the steps where that expectation is clearly there. And if in this moment when people think that we can do things that will positively change the world, we fail to do so, then we're looking at very much a broken promise to society.

SAL GILL: Bill, very well summarized and very well said. I'd like to revisit the point that you made about racial equity. There's a lot of voices in our industry that are saying that there is no environmental justice without social justice and vice versa, there is no social justice without environment environmental justice. I was curious to get your take on that sentiment that's ongoing in many different parts of the world.

BILL BOULDING: I agree with that belief. I think that we're living in a world where there is so much interdependence. And to be able to in many ways we like to be able to partition problems and be able to tackle them in some modular fashion and knock them out one by one. But if anything has happened out of this pandemic, it has made so clear the amount of interdependence between a variety of different issues that all converge together.

Which is why I'll just repeat my comment from before, that the challenge of leadership in the world today is so much more difficult. As you're trying to pull together these different threads that will need to work together to pull together in the right direction, as opposed to having things that we deal with something over here, but then we fail to recognize it connects to something over here and therefore we don't do as good a job as we could.

And so you need leaders who have an incredibly broad, encompassing perspective on the challenges that we face in society today. And you need to do something which is recognize no one of us is smart enough to see everything in that picture. And so more than ever something that we believe in and that I think that we certainly put into your head during your time at Duke, is that a great team is going to be a great individual. And one of the reasons why you need great teams in the world today is the world is so complicated you need to draw so much expertise, you need to draw the different perspectives to see how things interrelate in ways that are just too much for a single person to be able to come up with the entire landscape.

SAL GILL: Absolutely. So Bill, just taking that thought and bringing it to some recent events in our space. How do you see leadership and corporate responsibility contribute to public trust and then why is that important for us in the electricity industry perhaps in the wake of damaging events such as the California wildfires or the big aftermath of the Texas ice storm, where pretty much most of Texas was left in the cold in an environment like 2021. So any thoughts on that?

BILL BOULDING: Yeah. So again, this connects to these expectations that are real in society that the business community is going to be looking out for a variety of stakeholders. And one of the critical stakeholders is if you have a footprint in a community, then you're going to be looking out for that community. And that you actually care about those people.

So this connects into a very fundamental concept that I think is important in leadership today, which is decency. And I've already alluded to one dimension of decency, which is the humility to understand that others know more than you. But another dimension of decency is that you care about other people, that you want to put them in a better situation, you want to improve their lives, you want to bring out their best. And when you can do that, then you create virtuous cycles as opposed to vicious cycles.

And unfortunately what we've seen is that due to a combination of natural events, and then man-made events in response to those, that people literally feel left out in the cold. Like who is looking out for me. And this is where I come back to during a crisis people want to know the truth, but they want to know that they belong to something that gives them some structure, some ability to cope with the very difficult situations they're in. A sense of that they belong to something that will make a difference for them and that they can get to the other side of this.

And so there's a really critical recognition of there's some things that we don't control that can lead to really miserable, miserable conditions. And it's not like any of us made the choice to have COVID, it's not like we chose to have wildfires, it's not like we chose these horrible weather conditions in Texas. But how we respond when something bad happens means a lot in terms of communicating our values in terms of what we stand for, what we care about, and how we want to use business and its role in society.

And so my belief is if you're going to be a business leader today, you just don't have a choice. You have to recognize that that business platform has to be used as a force for good. Whether it's dealing with these COVID issues or whether it's dealing with decarbonization, we have to think through how we take advantage of the power of business in order to improve lives around us.

SAL GILL: Absolutely. Absolutely. And Bill, continuing on that thought, from where you sit, you have a lot of insight into some of the next greatest things happening in the finance world and investments in general. So from where you see things, why can't business leaders ignore climate, carbon, and energy anymore, either be it from a corporate responsibility point of view or maybe even due to investments or bottom lines.

BILL BOULDING: Yes, so and really it's all of the above. Where for one thing you can't ignore the business risk people have perhaps ignored the science, but the business community if you're going to run your business effectively, you have to engage in risk management. And the reality is that the climate presents serious, serious risks and the climate threats may be global warming and so on and the climate change associated with that or it could be the path that gets us there and these more erratic weather events that are causing massive disruption. And so simple business logic of risk management means you cannot ignore these issues. But there's another dimension, which is if you're building a business and you're thinking about what you want to accomplish over the long run, then you actually have to think about, well, is there a long run.

And so I had an interesting conversation with the-- he just stepped down as the CEO of Mastercard, he's now the Executive Chairman. Why is Mastercard so engaged in climate change activity. And his answer was because we have to think about this long-run dimension in terms of what shape will society be in. And we want it to be in good shape because if it's not in good shape, then how can we hope to have a business that's in good shape. And so this is a very foresighted individual, very foresighted company in terms of thinking about we're building something for the very long haul. Now so just again, these are pure business reasons.

But then there's a third reality, which is, how are we going to solve this problem and how will we get things under control. And the recognition among the business community is if we're going to decarbonize, where is that going to come from. It's not magic, it's going to have to be from the source, which is the business activity that so many of us are engaging in to be thoughtful about how we'll decarbonize, how we'll incentivize new business, new innovation, that allows us new ways of doing things that help with the decarbonization, along with creating market based incentives for decarbonization. Which by the way, we've got a lot of work to do, because the amount of decarbonization that has to take place and the carbon markets maybe you could argue cover 1% of the task at hand.

And so we have to think about how we're going to bring the best minds in business and government together to think about this task of building markets that will create the right incentives, that will allow business to be sustainable to contribute to society, to drive the innovation that makes us all better off. But honestly, no business leader is in a position now where they can ignore it for a multitude now of reasons. And so this in my opinion, is very, very good news that we're seeing more and more people ask this question if not us, then who. And so it needs to be us, we can't just expect someone else is going to give the magic solution here in terms of protecting our present and our future.

SAL GILL: So Bill, what I'm hearing is that climate risk is not just an environmental thing anymore, it's also investment risk, is that right.

BILL BOULDING: That's correct. And at the same time there is investment opportunity. And so on this dimension of as we transition to decarbonizing and what are the replacement technologies there is so much activity as you alluded to, the financial sector where they're finding there is plenty of opportunity to create great financial returns in these investments, while at the same time making our planet safer, more resilient and more secure. And so we have an opportunity to make ourselves better while doing what's best. And for us I think that's the magic path is to be able to simultaneously do better while doing what's best for society and best for your company.

SAL GILL: Absolutely. Absolutely, and especially as the generational shift continues in workplaces throughout the world. People are really interested in having purpose and working for a greater good. So it's a win-win from multiple dimensions. Even from a talent pipeline.

BILL BOULDING: Well that's exactly right. So you just made another business argument for why we need to care about this. Which is at the end of the day, a company is no better than its talent. And the enduring source of competitive advantage is going to be how good are your people.

And so the world has changed in that people broadly speaking, want to take responsibility, not just for what's happening today, but what's going to happen for people in the future. What's going to happen to the people who will inherit planet Earth from us. And so a real desire to do something that's meaningful. And so if you want to be able to attract the best and the brightest, then this is yet another reason to say we care about our footprint and how it is that we're shaping the world that we live in.

SAL GILL: Absolutely. So what does Dean Boulding think executives and business leaders in the energy industry may need to focus on in 2021, and as the world continues to emerge from this pandemic?

BILL BOULDING: Yes, so first of all, we can't just snap our fingers and make a transition overnight to something that gives us clean energy, renewables and so on and so forth. And so one thing is to be really responsible about our carbon footprint as we make a technology shift in terms of new options. And so one interesting implication that may be sticky coming out of the pandemic is as we've all been stuck at home, so many businesses, the normal way of doing business is that you travel. And of course, that creates a fairly large carbon footprint if your company is sending people out around the world on a regular basis. And so will we use the technologies that we've become, I wouldn't say comfortable with, because people love these technologies, they miss people, they want to feel connected, but we--

SAL GILL: We've become our filters, especially the Zoom filters.

BILL BOULDING: But at least we've become accustomed to these technologies. And so a conversation with a really big company where I was talking to someone right before they were going into their annual meeting where normally they would bring people together from all around the world and they're doing it virtually. And this person was saying, you know, this meeting is so much better than what we were doing in person. And so will we see some stickiness in terms of any business being able to reduce its carbon footprint.

And so one thing I would say here is it's not just people in the energy business directly, if you're an electric utility or you're involved in big oil and gas, it doesn't just fall on their shoulders, they're operating off of the demand. And so there's derived demand for energy. And so we have to be thinking about, all of us collectively, about our energy future and what that can look like and can we make sure that we give people the opportunity for healthy lives as we move forward.

SAL GILL: For sure. This has been a terrific conversation, Bill. Thank you so much for your insights and your time. We hope we can have you back here again soon. So thank you. Thank you again, for joining us today.

Here's a reminder for our listeners that they can find you on Twitter @BillBoulding and they can learn more about the Fuqua School of Business at fuqua.duke.edu. Bonus points if you get to pronounce Fuqua right. And you can follow the Fuqua Business School @DukeFuqua as well.

OK, Bill, so here is one last curveball for you. We're building an Electrifying AI playlist on Spotify during season two and you get to pick a song. So what is it going to be and bonus points if it includes power or energy or electricity somehow.

BILL BOULDING: OK, so let me give you actually three different options.

SAL GILL: We'll take it.

BILL BOULDING: One is an album. So the album would be Electric Ladyland, Jimi Hendrix. The song would be The Electric Slide by the Hit Crew and the band would, of course, be the Electric Light Orchestra.

SAL GILL: Wow. Wow, that may have been our most creative and best list so far on Electrifying AI. So thank you for those suggestions. So listeners, what songs do you want us to include. Leave your music suggestions in the comments or tweet them to me @TheElectricSal. We might just include your pick on our playlist and send you some very cool Electrifying AI swag to say thank you. Well, folks, that is all for this episode and we'll see you again soon. Thank you so much for joining us again. Bye bye.

BILL BOULDING: Thank you.