Tech is the best solution against tanks.
- Mykhailo Fedorov, Ukrainian Minister for Digital Transformation
Episode Summary
In this first Dial P audio podcast, Kelly Barner takes the newspaper dominating conflict in Ukraine and looks at the active role some companies and leaders from private industry have played so far. While companies have gotten involved in armed conflicts before, it has usually been indirect – as suppliers to the government or respondents to official orders and sanctions. In 2022, however, large global corporations have the ability to enable or disable communications, shipments, and access to funds with the click of a button – changing the course of history much more quickly than governments can make policy decisions. And in the ESG era, consumers expect the companies they buy from to act in accordance with their values, not stand by idly.
While we are all watching from the sidelines, some of us are sitting closer than others to the action. Each set of circumstances is an opportunity to think through what we would do… because we never know when the call will come, and a decision will be ours to make. What would you do?
Episode Transcript
Intro/Outro (00:00):
Welcome to dial P for procurement, a show focused on today’s biggest spin supplier and contract management related business opportunities. Dial P investigates, the nuanced and constantly evolving boundary of the procurement supply chain divide with a broadcast of engaged executives, providers, and thought leaders give us an hour and we’ll provide you with a new perspective on supply chain value. And now it’s time to dial P for procurement.
Kelly Barner (00:30):
Hi there. Thanks for joining me for the first episode of the second season of dial P for procurement, part of the supply chain. Now family of shows, I’m Kelly Barner, a career practitioner with a love for business news, and most of all good ideas, no matter where they come from. In addition to video interviews and live streams, I’ll join you each Thursday to share my point of view on a current news story that presents an interesting twist for business leaders or a good example of truly innovative thought. Now this week news headlines are undeniably full of news stories from Ukraine, depending on where you are based and who you do business with Russia’s invasion of the country may even be affecting you personally, but this conflict isn’t just a matter of geopolitics or supply chain disruption. It would seem that everything is now universal with very little division between industry and diplomacy.
Kelly Barner (01:28):
Any line that has existed in the past has likely been blurred further by the rise of activist, executive leadership teams with brands and CEOs speaking out loudly on issues from race to income, despair, government regulations, and more, once you step into that sphere, it gets harder to avoid waiting into new discussions. Now, one of the big recent trends in the corporate world is ESG or environmental, social and governance initiatives. This broad umbrella includes practices like sustainability, diverse equity, inclusion, and ethical accounting and trade practices, depending on the company and industry. This might be reporting on supplier diversity spend. So that consumers call for supporting certain communities is answered. In other cases, it has more to do with managing waste or keeping certain chemicals out of the supply chain told it’s just the cool new name for corporate social responsibility or CSR, which has been around for a long time.
Kelly Barner (02:31):
It all sounds lovely, but plenty of boards and executives have landed themselves in hot water by waiting into areas that were more political than they realized, or by making public commitments, they couldn’t ultimately deliver against. I certainly don’t know for sure, but oftentimes I think those cases occur when an executive wants to do something to signal their virtue and when no natural cause presents itself, they go off in search of opportunities to practice social activism instead of waiting for the right cause to happen on its own cue. The present moment on February 24th, Russia began a military invasion of Ukraine, a country on their Southwest border, Ukrainian president Zelensky and the people of Ukraine have taken up arms and are doing everything they can to defend their Homeland against the Russian military. It has led to a refugee crisis, high stakes attempts at diplomacy, skyrocketing fuel prices, and even worries about what might lead to a world war III.
Kelly Barner (03:31):
There are a couple of things that are very unique about this conflict. First of all, some are calling this the first TikTok war, nearly every Ukrainian citizen has a cell phone in his or her hand, which they can use to record what they see and almost instantly upload or even live broadcast that information to the world. Even from my safe little home in Shrewsbury, Massachusetts, I can see first person testimonials from fighters on the front lines, state by mothers in subways, double tasking, as bomb shelters and volunteers using borrowed vehicles and their knowledge of the country to help refugees over the border to a train station in Poland. It has been as fascinating as it is viscerally devastating to watch. And few of us will ever forget this experience. We are to really living this alongside the Ukrainian people on a daily basis, the United nations in NATO have gone through their usual emotions.
Kelly Barner (04:28):
Some more useful than others as have the European union and individual world leaders. They have options like sanctions, supplying ammunition to the resistance, and yes, even continued attempts to diplomacy. But there’s another group that I’ve been watching in this conflict, a group that has an outsized opportunity to affect the course of the war and therefore history. Who am I talking about? Major corporations for many boards and executives. The moment they have been waiting for is here. The opportunity to help others is real. Will they choose to act directly with the same conviction and enthusiasm that they have spoken out on domestic social issues? That’s the question we’re waiting for. The answer to this isn’t entirely new companies have played a role in major conflicts for a long time. World war II is a great example in January of 1942, president Franklin D Roosevelt established the war production board, which oversaw the transformation of private manufacturing, operations from appliances toys and hardware to ammunitions airplanes and military compass.
Kelly Barner (05:37):
But they functioned as suppliers to the federal government rather than getting involved directly. And as soon as the war was over, they went back to making their core products. Today’s global corporations may not be getting into the fight in Ukraine, literally, but they are playing a far more active part than just refiting their toy train production line to produce cartridges. Here are a few of the stories that stand out to me. The best example by far has been Elon mosque and the Starlink internet service run by SpaceX. Starlink is a mesh of satellites that work together to provide internet service from space on February 26th, just two days after the Russian invasion of Ukraine began Michaela, Federov used Twitter to send a message to Elon Musk asking for help Federov is Ukraine’s minister for digital transformation. He asked that Musk enables Starlink for Ukraine within hours.
Kelly Barner (06:33):
Musk responded that the service had been enabled for Ukraine and that ground terminals were on route to increase their access. They have advised leaders in the country how to camouflage the star lake terminals against Russian attack, how to minimize the risk of connection detection by placing them away from civilian populations and even how to minimize power usage, SpaceX changed their software development schedule to accelerate the availability of updates that would make it possible to lower peak power usage and function better from a moving vehicle. Both of those capabilities are of extremely high value to Ukraine and could very well extend their ability to resist the invasion access to Starling powered internet makes it possible for Ukrainian civilians to coordinate with each other and to work with organizations on the outside that are trying to help. It has made it possible for Ukrainian president Zelensky to hold video calls and meetings with world leaders.
Kelly Barner (07:28):
He has constantly been on TV and available via video meeting since the invasion began, something that would’ve been unthinkable in the past and in available ability, that is absolutely changing world perception of what’s going on. Even this idea of it being the first TikTok war is reliant upon Starlink. As soon as the conventional internet was taken down, they would’ve been completely cut off from the rest of the world. The Starling solution isn’t without problems, mostly because it was never intended for a mill application. Now, ironically, because the two sides are using social media to communicate, the world has been able to look on as information and questions have gone back and forth. Russia certainly isn’t happy about the development, but SpaceX’s actions have not been characterized by them as acts of aggression by the United States so far, are this may be the most covered private company involvement in the conflict, but it isn’t the only one by any means Google temporarily disabled live traffic data on their maps in Ukraine so that the information could not be used by Russia to aid in their invasion or track civilian movements.
Kelly Barner (08:37):
Google is also subject to a sanctions order from the European union blocking access to Russian state-owned media outlets, RT and Sputnik in Europe. The goal is to prevent Russian propaganda from being spread beyond the country’s own borders. Meta, you know, AKA Facebook is subject to the same order from the European union. They have both taken down the stations and are also preventing them from making any money on any global ads sold on those platforms. Previously, some companies are changing how they interact with both UK and Russia for different reasons. Of course, supply chain professionals may know that FedEx and ups have stopped making deliveries in Ukraine because of the danger to employees, but they are also not making shipments in Russia. All packages and route will be returned to senders free of charge. The same as true for AP mul, me and Mediterranean shipping company.
Kelly Barner (09:32):
The world’s two biggest container ship operators, even Airbnb has gotten into the action in two different ways. They are using their network of properties to provide temporary housing for up to a hundred thousand refugees. And they are keeping properties available in Ukraine online, which has made it possible for a viral social media campaign aimed at sending and monetary aid by allowing people around the world to book and pay for stays that they obviously don’t intend to use Airbnb chief executive Brian Chesky through his support behind the campaign by retweeting, one of the original messages giving it far more visibility worldwide, and they are waving all fees associated with these bookings. As of about a week before this audio will air more than 61,000 Airbnb nights had been booked in Ukraine from around the world, grossing nearly $2 million, a few hundred dollars at a time in the coming days.
Kelly Barner (10:32):
Additional sanctions may be levied by governments, but the reality of is private industry can move much faster and in some cases have an even greater impact. Now let’s take these examples and the potential impact they can have and tie it back to where we started looking at the objectives and results of ESG programs. The easy calls. Well, I shouldn’t call them easy. That’s not fair. They’re still hard calls because they’re complex and they’re costly, but let’s call them clear calls. The clear calls are ending business operations in Russia, a country that has become a pariah on the world stage companies like Ford Volkswagen, Toyota and Boeing have halted production in Russia and energy companies are exiting their stakes in Russian based oil producers, Accenture, McKinsey, and BCG are discontinuing their Russian business teams. No Western company wants to explain to their shareholders and customers why they are making money, doing business in Russia, indirectly funding their attacks on people and property in Ukraine.
Kelly Barner (11:38):
It is a far more complex decision to do something without a sanctions order to help the people of Ukraine resist the invasion. Arizona based ammo Inc announced this week that they will answer president Alinsky’s call for ammunition by sending them 1 million rounds without requesting a payment in return. That’s a $700,000 donation. The company’s owners, private plane is waiting, ready to take the shipment as close to Ukraine, as it is able to get Remington. Arms has indicated that they will do the same. Both companies are now wait for the us government to give approval before they can make the donation. Most of us work for companies that are not in such a direct position to help in this particular case. But I think this creates an important opportunity for us to think through as leaders, as teams, as individual professionals, what would we do in a situation?
Kelly Barner (12:33):
Our resources and capabilities do apply many procurement and supply chain teams have sanctions databases at their disposal, but have they been updated since February 24th to identify all companies in Russia? What about companies that aren’t specifically named is individually having sanctions against them, but are based in Russia? What about tier two, three and beyond in the supply chain? Are you willing to find more expensive alternatives? Not even to do distant business with Russia, will your suppliers be truthful with you about that? Will your customers bear the added cost willingly or maybe your company has to make a decision to take a margin cut. Now, are you waiting to be asked to make a change or have you done anything proactive to make whatever difference you can make at each point it is in consequences and perceptions that these decisions become very real to businesses. Meaningful ESG programs are rarely safe or fluffy changing your corporate logo to yellow does absolutely nothing to help the people of Ukraine.
Kelly Barner (13:38):
The fog of war is real and it applies far beyond the battlefield. None of us knows where this conflict is going. The Ukrainians have certainly held out a lot longer than anyone thought was possible. When you look back at your choices and your company’s actions from a safe seat in the distant future, what will you think? What about the actions not made the deal’s not ended? The communication’s not shut down for instance, as of recording this podcast, Coca-Cola Pepsi and McDonald’s are all facing criticism. And even boycots for continuing their operations in Russia. According to Reuters, each company has about 4% of its total at stake in Russia. And from McDonald’s it’s about 9% boycott Coca-Cola in particular has been trending on Twitter and yet be careful, nothing that is simple is also true and vice versa. It is easy to forget, or just not know that many fast food companies do not own their locations on foreign country soil.
Kelly Barner (14:38):
Instead, their franchises should an American owned brand be punished for simply abiding by foreign contractual guidelines that don’t give them the control to shut those locations down. Now McDonald’s does own their locations, but how many consumers actually research the details of that before they make spending decisions or share a post on social media? We all have a responsibility to understand the full story before we do something. And that holds true as individual consumers and in the decisions that we make as part of businesses, every situation has winners and losers and they aren’t always what you’d expect. The stakes for corporate teams are very high. The time is short and the criticism is harsh. There’s nowhere to hide in global digital business. And everyone has a voice. The air quotes, easy choice to start an ES G program because everyone loves trees and clean air, or because there should be more women or people of color on boards.
Kelly Barner (15:37):
Well, you don’t set the scope companies. Don’t set the scope consumers. Do the time to start thinking about what you would do is now because none of us has any idea what’s around the corner. What is going to be asked of you next? That’s my point of view. Anyway, before I let you go, I also wanna make sure you know, about an initiative called procure for peace started by Somali, Sam Corby and the team at Cavo based in Finland. The initiative is very specific in its scope. They’re helping people with the ability to get needed goods into Ukraine, to connect and exchange information. If you think you can help, or if you have a need that the community can meet, please go to procure for peace, the number for procure for peace.org or check out their page in group on LinkedIn. For more information, thank you for listening to this audio episode of dial P for procurement, but last favor, don’t just listen, join the conversation and let me know what you think on this topic or others. I can take it. Let’s work together to figure out the best solution until next time. This is Kelly Barner for dial P for procurement on supply chain. Now have a great rest of your day.
Intro/Outro (16:52):
Thank you for joining us for this episode of dial P four procurement and for being an active part of the supply chain now community, please check out all of our shows and events@supplychainnow.com. Make sure you follow dial P four procurement on LinkedIn, Twitter, and Facebook to catch all the latest programming details. We’ll see you soon for the next episode of dial P four procurement.
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