If ever there was a time to remind us of the futility of magical thinking, this is it. In real time, we watched the hopeful promise of easy solutions to the Covid-19 pandemic evaporate when confronted by unforgiving reality. Thinking the virus will “just go away” didn’t work, nor did a travel ban, warm weather, or hydroxychloroquine. For the foreseeable future, what will likely work best will be boring and costly solutions such as requirements to social distance and wear a mask. There’s a broader lesson here that we hope we remember after Covid-19 has been vanquished. The desire for sexy and easy solutions can be harmful if it preempts the implementation of homely but proven ones.
The flea-market in magical nostrums for global problems did not start with Covid-19. Before the pandemic, the most seductive new idea was that major societal challenges, such as climate change and inequality, could be solved at a profit. Capitalism was to be reinvented, we were told, by and for a new type of business leader. The Business Roundtable (led by Jamie Dimon, CEO of JP Morgan) and Larry Fink, CEO of Blackrock, both recently announced a visionary new theory of business, one in which taking care of the environment, communities, and workers would yield bottom-line profits. According to this new line of thinking, capitalism was being redefined and our problems soon would be solved. This talk then crashed against the pandemic, and as is often the case, the need for purpose proved less durable than the need for profits In April, the New York Times reported that signatories to the Business Roundtable statement “are furloughing employees, paying dividends to shareholders and provoking complaints from workers that they aren’t adequately protected from danger.”
Over our more than 25 years working as business professors or corporate managers, we have observed journals, sustainability consultants, executives, and academics (including, at times, ourselves) peddle magical solutions: to address poverty, companies can access huge, untapped markets by selling products to poor people; to solve climate change, we just need to encourage the use of more efficient gadgets; to eliminate waste and address resource scarcity, we can profitably recycle and reuse everything; and to solve remaining social and environmental challenges, we only need executives to realize they can grow profits by doing good.
We were once enthusiastic about such ideas, but now believe that many win-win solutions have been dangerously oversold. Cherry-picked case studies can suggest what might be possible, but not what happens on average. Patagonia, the privately- held poster-company for delivering social purpose and profit, may use organic cotton and recycle its products, but very few companies can follow their lead. Yes, corporations can be part of the solution, as many promise, but asking them to solve enormous societal problems by going beyond established rules, has not, and will not, achieve social stability or environmental balance. Consider that in the last 20 years, the number of corporate sustainability reports has grown exponentially, yet so too has atmospheric CO2.
It is time to give up on hopeful stories and get back to basics. When U.S. citizens faced dirty rivers and piles of trash in the 1970s, they didn’t expect executives to re-imagine capitalism, they demanded that pollutants be regulated. When smog overcame U.S. cities, activists didn’t invite heroic CEOs to create win-win solutions; they called for emission standards. When toxic chemicals turned up in Love Canal, citizens did not ask for a circular economy, they demanded regulations that tracked the location and use of dangerous chemicals; and when the world faced its first global threat to our shared atmosphere (damage to our ozone layer), citizens and lawmakers did not ask for companies to create “social purpose” charters — they forced global leaders to negotiate a worldwide ban. As a result, our rivers are healthier, our air is safer, and the hole in the ozone layer is closing.
Hope is not a strategy. If the global pandemic can teach us something, it is to remind us to return to those ideas, like regulation and good governance, that we know work, even if they are obvious or dull. Taxing carbon is not a shiny new idea, but it would redirect investment and effort to low carbon solutions. Mandating accounting and reporting standards for non-financial measures sounds like a notion from a previous century, but it works. Nobel Laureate James Heckman long ago showed that investing in early childhood education improves social justice and economic productivity. But it has upfront costs. Maybe it is time we listened to him, despite our dislike of taxes. For other global problems, proven interventions are available, but they require effort and sacrifice to deliver results.
We can reject such awkward solutions and look for slicker ones, or we can heed Thomas Edison’s warning that real opportunities, unlike magical thinking, often come dressed in overalls, and look like work.
This article was originally posted for the Harvard Business Review.