Chapter 12: Leadership and Change

  • Carbon literacy (Carbon Literacy Project)
  • The four-day week
  • labour shortages
  • sport – making sport sustainable
  • Twitter and Elon Musk
  • Indicative solutions to questions concluding the chapter (Chapter 12)

Carbon literacy

Achieving change in organizations depends on a number of factor: culture (and the propensity for change), coercive, transactional or authentic leadership, or just urgency arising from declining performance, shocks (pandemics, for example) or innovation. Little changes, however, without an engaged and informed workforce. When it comes to climate change and cutting emissions, carbon literacy is essential. The text offers the example of cutting carbon emissions merely by switching off computers when not in use, and considers procurement challenges associated with replacement vis-a-vis retention (using machines to life expiry).

Managers may not wholly understand carbon literacy themselves. Hence, organizations such as The Carbon Literacy Project offer firms employee training programmes to embed responsible carbon use/decisions; to normalize them. Below is a vox pop of BBC North employees having undertaken the training.

Change – moving to the four-day week

The four-day week competes with universal basic income as one of the change challenges of the decade. The text makes reference to four-day week as a mechanism to relieve the pressure on resources and to displace some valuable economic activity into worthy causes. The four-day week is discussed in Chapter 14 in the context of scenarios for the future. But essentially it is a change management issue. Employees are not always convinced that 4 days rather than 5 is in their interests. We await the results of the significant trials that are taking place. The book makes reference to Unilever in New Zealand and microsoft in Japan (p254). The evidence so far shows the following benefits:

  • improved productivity
  • job satisfaction
  • establishment of micro-businesses (particularly amongst Gen Z)
  • upskilling
  • volunteering
  • wellbeing.

Since the text was written, a UK think-tank, Autonomy, and the 4-day week Campaign and researchers at Cambridge University, Boston College and Oxford University are running a major trail with 60 SMEs 3000 employees (starting in June 2022) involving . ITV has reported on this with a useful 8-minute video that can be used in class to present the case and test the ideas.

Dealing with a shortage of labour

Labour shortages are real and problematic for all kinds of firms. The so-called “great resignation” is a true phenomenon, at least in the USA, but the pandemic has focused employees minds on what is important and worth intensive working hours and career advancement. Men, in particular, have left the labour market (often retiring early or changing careers completely). Reduced immigration is also a factor, particularly in the UK after Brexit, for example. There are a number of approaches for firms. These include:

  • increasing wages (often well above the stipulated minimum wages in countries that have them)
  • creating full-time jobs from part-time jobs and zero-hour contracts
  • automation – particularly in labour-intensive jobs such as picking and packing. Higher labour costs make the investment more cost-effective
  • reducing services – for example, in hotels, room cleaning, restocking, etc., is reduced to, say, every three days rather than daily
  • reducing qualification requirements – in particular whether a 4-year degree is necessary
  • in-house training and apprenticeships
  • renewed focus on wellbeing

All of these are interesting and recognised across sectors. The Economist article that I have drawn on (How America’s talent wars are reshaping business, 5 February 2022) does not mention “purpose”. Firms that prioritise a progressive purpose beyond profit do recruit and retain better than those that do not. Managers, owners and shareholders, take note.

Sport and climate

Chapter 12 discusses the impact that climate change has on sport and the effect that sport has on climate change, especially with respect to major events such as the Olympics and the football world cup. The most recent Winter Olympics in Beijing relied totally on fake snow and whilst it was created using 100pc renewable energy, the water “footprint” as it were was huge. The impacts on biodiversity was also significant as the Olympic park was built on a forest (destroyed, of course, in the process).

Dr. Madeleine Orr is a sports ecologist at Loughborough University London, and the founder of The Sport Ecology Group. She is here interviewed by Jelena Sofronijevic on the Bunker podcast.

https://play.acast.com/s/the-bunker/f13354b6-947f-11ec-b563-0b87dec6db24

The series narrated by Jonathan Overend, Emergency on Planet Sport, can provide a more comprehensive commentary on sport and the environment with a detailed look at different sports and the impact of climate change on the health and wellbeing of athletes.

Twitter and Elon Musk – this is work-in-progress as of 12/11/22

Many students are fascinated by Elon Musk; often it is his wealth derived from the success of Tesla and Space X. The BBC recently aired a 3-part documentary, The Elon Musk Show, profiling Musk and his undoubted entrepreneurship: Zip2`, PayPal, Space X and Tesla. Indeed, it is Tesla that students often use as a case study in their coursework. The BBC documentary was made before Musk bought Twitter – an acquisition that conceivably challenges the sense of invincibility that Musk and his followers seem so convinced about.

The acquisition of Twitter links into many themes in the book. In addition to leadership and change (chapter 12), it speaks to innovation and entrepreneurship (chapter 9), growth and diversification (chapter 6), portfolio management (chapter 7) and structures (chapter 11).

The takeover story is difficult to fathom. It starts in January 2022 when he bought a 5 per cent stake in the company, rising to 9 per cent in April. He broke US securities laws by not disclosing and also reneged on a deal with the company that would give him a seat on the board in exchange for no more than 14.9 per cent stake in the company. He reneged by making a bid for the company valuing it at $43bn. His interest in the company centred around his own brand of “free speech”: he is a well-reported small-state libertarian (states make bad decisions and should be limited). Seemingly, two factors made him back out of the deal; first, his finance was raised on the back of his Tesla stake. When it became public knowledge, the value of Tesla shares were negatively affected (see below). Musk’s own stake fell by $30bn (not well received then). Second, on declaring that 5 per cent of Twitter activity is actually generated by bots (bad in their own sense, but also they are not susceptible to advertising and hence must be discounted), knocking 10 per cent off Twitter shares. Musk tried to back out of the deal but was challenged in the Chancery Court of Delaware and told he was legally-bound to complete the purchase. Which he duly did on 27 October 2022.

His first act as owner was to fire the senior management including Twitter’s CEO, Parag Agrawal. On Friday 4 November he fired half of the company’s employees – including whole teams engaged in human rights protections, accessibility and curation. Subsequently, it appears that the blue check mark will cost $8 per month and app’s algorithm will prioritise these tweets when we scroll. Indeed, unverified accounts will be low down in the hierarchy along with the bots. All of this is being done hastily ahead of the US Mid-term election on 8 November (see below for an update on this part of the story). This he revealed in an interview (extract) at the Ron Baron Conference Nov 2022.

The whole interview is here:

This is a very strange definition of free speech. The fear amongst users is that the platform becomes an unregulated space for hate. Whilst there are many places for hate speech to be aired (such as Parler and Truth Social), they are not well used by liberals. Liberals are the main focus of many hate contributors and Twitter is currently blocked to them (including Donald Trump who was eventually suspended after the January 6th attack on the Capitol in Washington).

But where does this fit with Musk as a business person, if anywhere? In the first instance, the Guardian published an article in April 2022 by Siva Vaidhyanathan, entitled: Elon Musk doesn’t understand free speech – or Twitter – at all. This article provides a good level of context regarding the man and the entity that is Twitter. The deal is highly leveraged and Musk has to achieve a rapid turnaround in the fortunes of the company against the background of declining advertising revenue (by his own admission) with advertisers such as General Motors, Pfizer and General Mills, amongst others halting – at least temporarily – their spend on the platform (see below for further developments on this in terms of Omnicrom’s clients).

Verification – not well thought through?

The award of a blue check for Twitter users was always something to be celebrated. To some extent it was earned, but more important, a blue check identified the user as real, authentic, influential, reliable and by definition, as people who added value to the platform and its users. Musk’s decision to allow users to buy a blue check was criticised early on, but the market for blue checks opened on 9 November 2022 with immediate consequences. A fake George W Bush account with a purchased blue check emerged and tweeted inflammatory words about Iraq. Another fake account from the former British Prime Minister, Tony Blair, agreed with those comments.

Even more problematic a fake account from US drug company Eli Lilly tweeted “We are excited to announce insulin is free now” (left). This forced Eli Lilly to respond, but not before the stock market responded. And not positively. Likewise with Lockheed Martin, the US defence contractor (right). $26 per share was wiped from its value in a single day – though the usual caution is needed here with regard to causality. A fake Chiquita account announced it had overthrown the Brazilian government. Nestle, Apple, Nintendo and SpaceX all succumbed to fakery.

Further implications relate to Omnicom’s recommendation that its clients should suspend Twitter ads – clients include Apple, Unilever, McDonald’s and Johnson and Johnson.

In strategy terms, Musk was seeking – rather hurriedly – to turn Twitter into a subscription service rather than funded by advertising – or at least shift the balance in favour of subscription. It is difficult to understand why Musk and his team did not consider the unintended consequences of this move, not least because they had been extensively discussed on Twitter itself! These three cases show that Twitter has become more than a social network – it is a place where real ideas, information and intelligence are shared amongst its users. The safeguards put in place by the previous management struggled to cope with these challenges and responsibilities, a slimmed down operation and a hasty change to the revenue model that undermined the credibility and reliability of the platform should have been anticipated. The paid-for blue checkmark was temporarily removed on 11 November 2022 and subject to some review.

There are other implications related to the slimming down of staff. Here is an example of a firm that uses Twitter for marketing allegedly being linked to a harmful website.

A second question is whether Musk paid too much for Twitter. At $44bn it was hardly a bargain. As the Economist reported on 19 May 2022 “The value of tech stocks has tumbled since the Twitter deal was announced on April 25th. Mr Musk agreed to pay $54.20 per share…This week Twitter’s shares have been trading as low as $37.”

The Economist reported also the implications for Musk’s other business interests. Tesla lost 29 per cent of its market value on the news of the Twitter deal. Tesla’s interests in China could also be harmed by its association with Twitter which is banned in the country.

Hardcore leadership

By w/c 14 November, Musk was demonstrating/imposing his leadership style. Having dismissed half of Twitter’s workforce the previous week, he initiated a so-called return to office mandate for workers that had through the pandemic and beyond got used to working from home for the part of each week. On 16 November, Musk wrote to employees with an ultimatum to work “long hours at high intensity” and being “extremely hardcore” or else leave with three months’ severance pay. The need for such an approach to work was to build the next iteration of Twitter (Twitter 2.0) – only achievable through “exceptional performance”.

This seems to have backfired with a good percentage accepting the severance terms rather than working long hours at high intensity. Where working long hours and at high intensity is a characteristic of Musk and the source of his reputation, not all employees share such a life philosophy. The severance pay option may have sweetened the pill somewhat. For talented and experienced digital workers – as many Twitter employees invariably are/were – other work options are a distinct possibility. And indeed, at a personal profit.

It was reported that Musk had spent some time on Thursday 17 November speaking to groups of employees on Signal and Slack to try to get some key employees to stay after they had chosen not to meet the terms of the ultimatum. On Friday 18 November, Musk temporarily closed all of the company’s offices and disabled access keys. It was not clear why (at the point of writing). Though he also relaxed the office mandate saying “would be allowed to work remotely if their managers asserted they were making “an excellent contribution”.”

None of this, arguably, was helped by Musk himself mocking both employees and users on Twitter itself (above left).

This article in the Verge has embedded resources: https://www.theverge.com/2022/11/17/23465274/hundreds-of-twitter-employees-resign-from-elon-musk-hardcore-deadline

On 19 November, Musk reinstated the Twitter account of Donald Trump that was suspended after the 6 January Capitol uprising. Musk had said that Trump’s account would only be reinstated after advice from a yet-to-be constituted “oversight board “content moderation council” had heard the case and there was a “clear process for doing so [hearing and reinstating]”. Instead, Musk used a poll on Twitter to solicit the opinions of his followers.

Having reinstated Trump, Musk then held a further poll asking his followers whether there should be an amnesty for suspended accounts. The result in favour of the amnesty (23 November 202, right) resulted in Musk declaring (24 November) that “The people have spoken. Amnesty begins next week. Vox Populi, Vox Dei.” It remains to be seen which accounts are reinstated and the impact those people will have on the community more widely and the willingness of advertisers to either continue to support the platform or to return to the platform (as many had taken an advertising holiday).

Indicative solutions to questions concluding the chapter (Chapter 11)