Hacking Human Thinking - How to make sense of language with DONAL CRILLY

[MUSIC] Hi, I'm Chris Goldow, and welcome to season three of Conversations on Climate. We sit down with the experts who are trying to solve the biggest challenge of our time, before time runs out. [MUSIC] We need a war footing for climate change, don't we? Our two-degree climate future is rushing towards us, isn't it? First, do no harm. That's true of the environmental movement, too, right? Well, if you answered yes to any of these questions, then you need this conversation. Today's guest knows that climate and sustainability are critically important for business strategy, but he argues that we need to think more deeply about the words we use to explain them. From metaphors of war to temporal tongue twisters, and for anyone stepping into leadership in business or sustainability, that really matters. Today, we welcome the brilliant Donal Crilly onto the podcast. Donal is professor of strategy and entrepreneurship here at the London Business School, and is one of those rare minds who has not just won, but two PhDs. He'll be our guide as we explore the fascinating intersection of leadership, psychology, and linguistics. In this episode, you'll learn the magic words to hack climate action. How to make sure ESG doesn't make polarization even worse. And how to turn your stakeholders from free riders into value creators. It's a masterclass, and for the next hour, it's all yours. So stay with us for another conversation on climate. Around 80% of people who listen to this podcast haven't hit the follow button. If you can ask you for a small favor, if you do enjoy our conversations, please do hit that follow button on your app. It would help us in the show more than I could possibly say. Thank you and enjoy the conversation. Okay, don't thank you so much for taking the time to come and speak to us today for you to be hosting us here at London Business School. It's my pleasure. So you work at the very interesting kind of intersection of kind of strategy, psychology, and linguistics. You know, and you're also one of the very kind of rarefied people who has not just kind of won PhD, but two of them. You have previously warned about two narrowly defining, you know, who we are, what we do. So rather than me making kind of a hamphys attempt of trying to try to define and describe, you could you describe in your own words, your philosophy, your backgrounds, your how you see yourself as a professional. Let me explain my background first. I initially was working for a Japanese corporation in Germany way before I entered academia. And you might say, why is that important? Well, when we think of stakeholder capitalism, we often think of Japan and Germany as being the stereotypical countries where stakeholder capitalism is practiced. I was working quite early on actually that what I was saying in my observations in Germany, but also in Japan when I went there to work later is that companies didn't always behave according to the rulebook. So it was interesting to see that there was a lot of heterogeneity. So German companies were not all like not all German companies gave priority to workers. Some took the shareholder very seriously. So I was interested from that initial professional experience in understanding how companies have some degree of flexibility where you would say strategy. So after that corporate experience, I decided to do a strategy PhD because I was interested in explaining how companies strategize around stakeholder relations. But once I'd done the strategy PhD and I was working on a lot of conventional strategy issues I realized, so actually fundamentally my home is linguistics. This is what I had studied in my initial undergraduate. I'm fundamentally interested in language because it provides an insight into how people make sense of complicated topics. And when we think of so many of the contested issues today, sustainability, social value, social rights, a lot of these issues are issues that are fundamentally very fuzzy in people's heads. And language is useful both for understanding how other people make sense of these issues, but also for communicating and shaping other people's responses. That's why I did a second PhD in linguistics. And today fundamentally my work, my research work is oriented towards understanding how corporations make or how corporate leaders make sense of these contested ideas, sustainability rights, etc. Using the lens of linguistics and language to get a sense of why they make the decisions they do and also how these highly decisions they make are actually communicated and ultimately move markets and influence other stakeholder responses. Okay, great. So, I used study kind of the paths of grammar and metaphor and how it maps onto business strategy. Indeed, yeah, cool. So, could you tell us what kind of paths the study of linguistics opens to better understand these ideas? Let's think about language from at least two different perspectives. The first would be to look at the structure of language. And one can think about structure in multiple ways. One way I like to think about language is complexity. Are we speaking in simple ways or complex ways? And in many cases, we sort of make this assumption that the more complex leaders, or language, maybe the more he or she is obfuscating something, he or she is hiding behind available words. However, when we have complex issues, for example, climate change, sustainability, would we expect leaders to use complex or simple forms of language? And in reality, what we find is that those leaders who take those issues the most seriously are using more complex forms of language. Now, what do I mean by complex language? Here, I mean they use lots of conjunctions. They use certain so-called function words that are used to express complex ideas. So, they will break down and answer into its constituent parts. They will use a lot of negations because if you ask them, what is your responsibility towards society? What is your environmental responsibility? They're not going to come out and say, well, it's everything. They're going to have a very delineated answer because they thought about this issue. So, they'll use a lot of negations to say, well, it's this, but it's not that. And the other hand, leaders who haven't really thought about this issue and want to sound socially responsible are very likely to use what we call inclusive language, simple language, lots of ans, they're being exciting, very inclusive. So, this first element is complexity of language. You also mentioned metaphor. And when we come to understanding how people understand these complex issues, almost always they understand and express these issues metaphorically. What do we mean? Well, we have something like time. We cannot see time. We cannot touch time. So, we have to make sense of it in terms of a metaphor. And we know that the dominant way of making sense of time would be in terms of space and motion. We can be approaching the future or the future can be approaching us. And that has how we, in this age time, in terms of motion, whether it's approaching us or we're approaching the future has really substantive importance for how we actually address future needs. But in terms of other issues such as climate change, for example, we often hear executive speaking about the race against climate change or the war against climate change. These are also clearly metaphors. We're thinking about climate change as an issue and we are engaged in a war or race to address it. Oftentimes people assume that this is purely rhetorical embellishment. It's not. It has real consequences for how audiences, i.e. your employees, your stakeholders think about these issues. War is a great, great one. So, a lot of the research I've done shows that fundamentally people react negatively to war language. It's very motivating. I mean, if you're fighting a war, clearly you're going to be energized. But it also really emphasizes what is at stake. And if there is literally life, if life and death, if this is an issue of life and death, then it's also clear that people will sometimes prefer to stick their heads in the sond. So, what we find in the case of normal financial communication is that war metaphors are almost universally rejected by analysts and by retail investors. And this is because, indeed, they give rise to the sense of fear, this excessive risk. Where it comes to climate change, however, and social issues, it's slightly different because there we find that war language is, to some extent, more useful. It's not quite as penalized because it does emphasize the urgency of the task at hunt, but if we use more docile metaphors, sometimes audiences simply ignore the issue. So, the idea of metaphor having an impact on audiences is one that's very important, but it's also almost always contingent about what it is that we want to describe. If it's something that is truly an issue of life and death, then maybe war metaphor is acceptable. But if you're simply conveying results to your shareholders or expressing an acquisition strategy, in that case, it's not. But surely there's some circumstances in business where war metaphor might be be useful, for example, if you are, if it is an existential crisis for the business. Andy, I mean, we, we, we, we, we find is that when companies are performing really poorly, in that case war language can sometimes be received more positively by the analysts, and war language may also be positively received by employees as well, because it's this idea of the squad against the outsider. So where you need some dramatic reorienting of the strategy, something that is truly radical than war language may be appropriate. Other times, nope. The other thing that's interesting here is, of course, we're speaking from the perspective of Europeans, we're speaking into European languages, you and I are both, or both English speakers. We find that war language doesn't have the same negative impacts in amongst Chinese speakers, amongst Japanese speakers, and there are particular linguistic reasons why. The Japanese and Chinese words for strategy and competition include the characters for war and fighting. So that here is that in some cases, in some languages, there may be a fit between war imagery and war language, but that's simply lacking in most European languages. Interesting. Interesting. Okay. So, one is, to take in climate first, there's a conflict in the general commentary. There's Bill Gidden, kind of approach saying that we should be talking about it as extensual crisis, and then we need to get to warfoot and try and try and solve this. But there's a big pushback against that, people who say, you know, it was that type of attitude that got us into this problem in the first place. So how can we be changing the linguistics and making an idea of how we should be thinking about these things in a different way, because the old ways of thinking about this has got us into this problem, so we need to be kind of reinventing. So is there a role that language has and how we speak about things, has in the solutions that we end up coming out with? Absolutely, Chris. So certainly we know that how we speak is also predictive of how we behave in most cases. By the way, applies especially to metaphor, and it applies especially to the kinds of linguistic structures I was explaining before, because we know that most people use metaphor without thinking. They use it not purposefully in order to convince others. So indeed, we know that certain metaphors are more predictive of certain kinds of behavior. But in terms of, again, here, if we come back to the war metaphor there, we do find that those people who use war metaphors a lot can also be depleted of energy quite quickly. My approach here would be to say that in many cases it's useful to vary the metaphors that we use. So war metaphors can be used sparingly, productively when we are speaking about these existential crises. We don't always want to be on a war footing because that kind of fleet of our energy. In many cases it would be productive to use different kinds of metaphors, the race against climate change. And occasionally when we need that burst of energy, then we can use the war metaphors and that can energize the troops, so to speak. Okay. So it's about being thoughtful about the metaphors we use a little bit more. Okay, perfect. And that kind of brings us to the idea of linguistic relativity. Is there a concept that the words we use in so many shapes outcomes and shapes our own actions? It's been a slightly controversial topic over the years. Where are we? Where's the economic consensus on it now? 200 years ago it was probably accepted that the language we speak, and that's to say the national language we speak, influences how we think. So this is summarized by Bitcoinstein who talks about the limits of my language, being the limits of my mind. So language gives us a series of categories which we use to make sense of the world around us. So looking at the trees around us, we can see different shades of green, but some languages lack the word for green altogether. So it was assumed that if there was no word for green, one would not necessarily be as sensitive to the shades that we see in the environment as if you're speaking a language which does have a word for green or even multiple words for green. And this became very important in the mid 1900s where there was a lot of research showing that certain communities, hard languages that had more words, for example, for snow. But from 1970 onwards, the paradigm shifted. It became, you know, Chomsky's generative linguistics. And this idea that there was a fundamental disposition common across all individuals in the process of language. Language was essentially simply incidental, however, to the fundamental thoughts that people had. So this is essentially universalism. That, okay, if you're a German speaker or a Japanese speaker, maybe it seems as though you have slightly different, you divide the color spectrum in different ways, but it has no influence for what you actually see. So even if your language locks the word for green or it has the same word for green as blue, actually, it doesn't really matter. You can still notice the difference even if you lock the word. However, in the last 20 years, we've come back to full circle again. What we're realizing is that linguistic relativity does matter, but it matters perhaps in more nuance that weighs than we thought. So it's not quite deterministically as saying, well, Japanese speakers, because they have this word for bluey green, which then leads to slightly different colors used on traffic lights. It doesn't necessarily mean that they're not aware of the colors, but there are at least cases where at the margin, these different categories, because of the vocabulary in different languages, will get us to think differently. And I mean, my own work looks at indeed how we express strategy and purpose in different languages. And as I was alluding to earlier, we are more likely to see war imagery being used productively in Japanese and Chinese precisely because these languages have words for strategy and competition that have characters for war and conflict. So there is something there's an inherent fit there that's locking in most European languages. It also comes to the fore by the way in understanding time, because I mentioned also the time is something that is inherently intangible. So how do we make sense of time? And language gives us some tools for that, or it imposes some structure in terms of how we think about time. Maybe the best example here would be tense. We take for granted in English that we express the future in terms of the future tense. So we say, well, tomorrow I will be in London, tomorrow I will be in Berlin. Think about it in German, however, it's quite likely that you would use the present tense. It's not, you know, Morgan, that Ichen-Belinzin, you'll say Morgan-Belinchen-Belin. And this use of the present tense to describe the future is actually common across quite a lot of languages, both in Europe as well as other continents. How does that influence our thinking about the future? Well, if you don't make a clear distinction between the future and the present in terms of your grammar, because you're using the same tense for both periods, now and the future, then actually the future isn't quite as distinct from the present as it is if you're an English speaker or a French speaker. He's almost always using the future tense to describe the future. And you might say, well, that's an interesting fact. Maybe it's inconsequential for behaviour. Only it's deeply consqueential for behaviour. There is research not my own, but it's colleagues in other schools have conducted research on corporations and there are some stateability ratings. And indeed, they find the companies that are headquartered in countries where languages are spoken where there is no future tense or no obligation to use the future tense when describing future actions have higher levels of social responsibility, even controlling for culture and these other factors that explain social responsibility ratings. These linguistic features also predict to some extent investment behaviour. Are we prepared to save a lot? So you may notice that the UK, Greece within the OECD countries conventionally had low levels of savings. These are also English and Greek or also languages that are very likely to use future tense to describe the future. Most Germanic languages, other than English, use the present often to describe the future and inhabitants of those countries typically have higher savings rates. Again, this analysis also controls for the fact that the economy may also be performing better in some countries rather than others. There are also institutional factors but even controlling to everything else, language seems to have an impact. Great. Let's take a look at the whole idea of time a little later if that isn't kind of proving your point. So, language evolves over time. It does. So like for example, did the kind of deleting search, like you're going to pick up kind of Chaucer and it seemed like an entirely different language. And he was like a couple hundred years ago, we like it this was not in English, in English that I recognized. But a couple of years back in the context of sustainability, you said that you expected the language of sustainability to become less nice, to become harsher as it goes on, and we understand the trade-offs that will be happening. Could you kind of now, kind of with the benefit of hindsight, I could have looked back and I'd think, tell us, how you feel the language sustainability has evolved for the last few years, has it indeed become less nice? - Well, I think the opposite, I think it's becoming nicer. - Interesting. - If you could go back to the 1970s and '80s, the dominant label use for corporation sustainability was responsibility. It later became sustainability. So sustainability became more dominant in the early part of this century. And in the last five or six years, the dominant label seems to be purpose, corporate purpose. So we see the trajectory from responsibility to sustainability to purpose. Does that matter? I think it does, because responsibility is perhaps a very bounded notion of what corporations are about. Maybe it's the responsibility to do well for society or it's the responsibility to clean up after one's actions. But the responsibility is also a, nine that is often qualified. We can have fiscal responsibility, we can have social responsibility. Sustainability, on the other hand, is a nine that, it's a mass nine, it's not a kind nine. What does that mean? It means that it is rarely qualified and rarely preceded by an adjective. Again, this may seem incidental, but the implication of this is that responsibility is then often associated with more concrete details. So when we look at corporations, reports on their environmental impacts, if they're using responsibility, they are typically using responsibility in the context of quite concrete action. On the other hand, when they are using sustainability as the label, they're using more abstract language around that word of sustainability. So it's more future-looking, it's more forward-looking, but it's also less associated with very concrete specific action. And I think with purpose, even more so, you're moving towards this idea that purpose is something that is aspirational. It's pleasing to most investors. They like everybody, like greats purpose, employees like purpose, society likes purpose, but the question is indeed, are you making these trade-offs or are you simply hiding behind a label that sounds good to everybody? This is clearly something that also applies to sustainability. Sustainability, I think, became such a common construct or label simply because it doesn't defend people in the same way as responsibility. Responsibility makes people feel fundamentally uncomfortable. Think about responsibility. You have a heavy responsibility. That's often the metaphor. It's something that weighs you down. It means that you could be liable to feel guilt. You could feel shame for your action. Sustainability, on the other hand, tends to be interpreted, differentially by different stakeholders. An investor who hears sustainability thinks of sustainable competitive advantage. The consumer who hears sustainability thinks of being green. So sustainability doesn't give people the same sense of potential guilt. It makes people feel better. They interpret it as they want. So my concern is that the language has actually become a little bit nicer and more aspirational, but maybe less rooted in reality. Interesting, but even so, even though the language has become nicer, there's an unprecedented backlash, in terms of the ESG, the code of bringing these things into the culture wars, that doesn't seem to fit with that kind of idea, that, well, no, no, it's all nice. As everyone can see what they want in it. So why would you possibly want a backlash against it? Well, there isn't a backlash against purpose per se, but indeed there's a backlash against companies taking stances on particular issues. And you do make a good point. That's certainly 20 or 30 years ago, when corporations spoke about responsibility or sustainability. There was an assumption that this was something positive. Maybe stakeholders were not enamored by responsibility, but they were not explicitly against the notion that corporations might inadvertent commas do good. So certainly within the last decade, we have seen an explosion of these hot button issues. And you could think about climate change as being one, some people may believe in climate change, other people may be skeptical of the scientific evidence or climate change. You could think of LGBTQ rights as another. You could think of regional conflicts that spill over and essentially oblige organizations or their leaders to take stances on these issues that are deeply polarizing. So we do indeed see that corporations take stances and that there are back lashes. And I think there are fundamentally two issues here at play. The first is values. Leaders are almost always sure of the values that they hold. This is great. It can also be deeply, deeply dangerous because we're often operating in a vacuum whereby we are speaking with other leaders, other executives, other colleagues who have similar opinions and values to our own. What the research and values show, however, is that there are conflicting values. And the best example here is the case study that I wrote almost a decade ago on Chick-fil-A. At that time, it wasn't quite as famous or infamous an organization as it is today, but it's this fried chicken chain from Blanta, Georgia. But it's also coming to the UK, by the way, I believe in 2024 after having made an exit from its initial foray into Reading in 2019. And the issue with Chick-fil-A is that it is a corporation that unlike McDonald's, unlike Burger King, takes a stance that is fundamentally socially conservative. The founding family has donated large sums of money to organizations that are in favor of, let's say, a traditional conservative understanding of the family. They would describe it as a biblical understanding of the family. If you look at the Bible, you will find there are many different kinds of family arrangements that have existed in the Bible, so I don't like using that term myself. But what's interesting there is then you have corporations that take a stance in favor of LGBTQ inclusion. You have another corporation that takes an opposite stance. And these are essentially about different conflicting values, because you can be quite sure that the founding family of Chick-fil-A is just as convinced of more so that their values are the appropriate values to take as the executives or leaders of McDonald's who take a more, at least formally take a more throw-inclusion stance, are convinced that their values are correct. And the word of caution would simply be that if you are convinced that you're taking a stance because of your values, just ensure that your values are as unobligiously correct as you believe them to be. You don't only speak to other like-minded individuals. That's not to say, of course, that taking a value-oriented stance is inherently wrong, but simply be open to the idea that your values may be contested. But even in a world where values don't play a role-- and again, I'm not saying value shouldn't play a role, but I'm saying corporations or their leaders are often motivated by financial gain. So even in this kind of a world, there are also competitive influences that state you. And you can think about this in terms of at least two different dimensions. Some social issues are important. We would say salient to consumers or customers. And some are not. So you could think about the death penalty, for example. These days, at least in the West, the death penalty is not hotly debated. It's not as though there's a major pro death penalty movement certainly in Western Europe. But issues, as well as being that important or unimportant, can also be polarizing contested. So you could think about issues such as animal rights. Few people are actively in favor of harming animals. On the other hand, you have issues such as maybe LGBTQ inclusion, where at least in the United States, there is some degree of contention. Where we have issues that are not very important to customers, actually there is little ability for corporations to gain financially simply because their leaders take a stance. So when Benetton, for example, over 20 years, go had this campaign against the death penalty or was in their advertising, I mean, that had very limited impact on the corporation, because actually consumers are simply not motivated by purchasing clothes or a company that simply takes a stance that seems irrelevant to them. There are other issues, however, that do become salient over time. And you can think, again, of LGBTQ inclusion as being an example. And when those issues are also polarizing, then what you find is that when the large companies take the stance that tends to be reflective of the majority opinion, they also see the ground to these other organizations such as Chick-fil-A that can take the opposing stance. can actually gain financially from taking the opponent. stands because what was interesting when Chick-fil-A or when it had become clear that Chick-fil-A had been donating money to some of these more conservative family associations actually consumers did not boycott the restaurant or some consumers did but there was also a counter boycott and Chick-fil-A has become immensely successful since and I'm not saying that Chick-fil-A success is primarily because of its social stance but certainly the social stance has not harmed the company as a whole except I will say that clearly it harmed the company in the United Kingdom so the idea here would be that if you are campaigning on certain social issues maybe you can be successful in certain regions but you're probably not going to have the same global scope because clearly the sense of the mood in the United Kingdom and some of these social issues may be different than it is in the United States. Chick-fil-A is a really good example there if we're using say social issues as a way of kind of doubling down on particular communities and trying to gain support within particular communities if you just gamify that out would that not actively encourage businesses to be promoting polarization as a as a strategy. Yes to the extent that there is some inherent disagreement within society on that particular issue and even if you are a leader who takes the majority stance so you're let's say socially liberal in a community that tends to be liberal by taking that explicit stance publicly your perhaps also creating space for the organization other organizations to do the opposite and also the risk of course is that you're making that issue salient so by making that an issue that perhaps wasn't important in society before more important you're also perhaps increasing the potential returns to smaller organizations that then seek to defy that issue and I think this is a tricky issue then for leaders to deal with because the idea is that yes you want to take a stance that maybe is important to you and that you believe fundamentally in but be aware of the competitive consequences so the recommendation is not not to take a stance but simply to be aware of the potential backlash not only in terms of maybe some consumers not liking it but actually that your competitors may also gain from it but how can we move beyond that as being a unacceptable strategy like I understand you're from with from the perspective of a few years ago that not taking a stance was seemed to be okay now this seems to be an awful and more pressure in these big corporations to be standing up and saying this is what I believe in and or you face a backlash almost as bad as not taking a stance at all silence indeed is silence golden or is is there an anticipation that if you're silent you're on the wrong side there is evidence that silence is often rewarded the issue is when there is a strong expectation that you belong to one side but you don't communicate it openly in that case some of your stakeholders may lose faith they may lose support having said that I fundamentally believe that corporations ought to or at least leaders ought to be very circumspect in the stances that they take precisely because if you're managing at least a public corporation you have particular responsibilities chickfilet I should say as a family-owned organization and that's why chickfilet leaders have a certain luxury in taking stances that they believe in but that might that normal shareholders might actually be quite reluctant to support we have so many issues these days and the Russia Ukraine conflict is a great example of one many corporations in the west have taken quite a vocal stance on that issue what erks some people however and I think for good reason is why take a stance on that issue but ignore what's happening in so many other countries and territories around the world so I'm not saying don't take a stance on that issue but I'm saying that by say by taking a stance on some very public issues these days corporations are also ignoring others so most on most issues corporations will be silent I mean that's that's for granted because there are innumerate potential issues in which corporations should take stances I think it's deeply it's deeply deceptive for some corporations to take stances on those issues purely because they believe these are popular issues stances we should support without necessarily showing any real resource commitment to supporting those issues understand of course you can get into get yourself caught into ulcer some message if you're a kind of let's say you look at a McDonald's approach to the conflict in the Middle East where you had different branches taking different stances and you know headquarters being being kind of pointed at from from all directions like how do you manage these things as a multinational precisely I teach global strategy here at London Business going one of the main topics these days is precise geopolitics and I always use the example of organization design organization design is essentially about where do you give decision rights within the organization do you give them to the CEO you give them to the top management team or do you give them to subordinates often in other countries and indeed in the case of McDonald's you have seen backlash because of the lack of centralization because of their the franchise model that McDonald's employees but you see that also in companies closer to home I mean WPP is a good example you know the great communications agency in the UK that ended up working in Argentina with the president show office before the London Olympics 2012 that having an advertisement that was filmed in the Falkland Islands or Las Malvinas suggesting that in order to compete on English soil we compete on Argentine soil so this is simply something that large organizations often deal with this issue of decision rights where they located and I think fundamentally wherever it comes to potentially contested political stances it is important that these policies dances at least be communicated at the scene at a senior level rather than letting individual managers across the organization make their own policies that's deeply dangerous also is implications by the way for social media usage and whether individuals here working for an organization are seen as representatives of that organization are purely as individuals because as individual employees we may have our own personal stances they may not always be in harmony with the stance of the CEO with the stance of the organization as a whole or again the organization may prefer to remain silent and so we can go back to to the point on time time for a little bit and you mentioned that time has got a linguistic aspect to to to how we understand it and but one thing that it's a it's a very particular important in the climate space where we are terrible at valuing the time at the temporary elements of climate change if we if we had a proper understanding of the costs that are coming down the line we'd be taking very different actions now in the world like in this business school here we spend a lot of time looking at the time value of money so there's a lot of research done on time value money so we cut we we're trained to have a look and and value that in a different way than we do in climate is there research going on that is trying to to cut across these kind of sustainability and impact value of temporal elements of that lots because as you're alluding time is integral to sustainability to the extent that sustainability is about doing well today without harming the well-being of future generations so indeed we know that people are fundamentally impatient and this goes back to early research but in the 1960s and 70s it was shown very clearly by Walter Mitchell the Austro American psychologist that some people are able to focus on long-term rewards so he had this famous or infamous marshmallow test where children could be take one marshmallow or they waited a little bit longer they could be rewarded to what he found was that those children who indeed waited who were able to delay self gratification they typically became were more successful later in life so we know that indeed then individuals differ in the degree to which they can take account of the long term and they are prepared to wait for long-term rewards but we also the corporations are the same there is this degree of heterogeneity this variance some corporations are short-term others are long-term is could be because of the CEO it could be because of the top management team it's also because of the investor profile some organizations are typically owned by investors with short-term orientations others will have patient institutional investors but so I think the part of the story is indeed if you want to be sustainable if you want to have a sustainable strategy it's important to be along the termists, but perhaps the bigger issue, the issue I like to flag is that patience is not always a virtue. And there are sometimes reasons why we want to be impatient. So again, looking at this landscape here, we see trees. And governments recently across the world have been engaged in programs for planting trees. And the question that I ask, well, to what extent should we be impatient for these trees to be planted, is it better that a thousand trees are planted today? Or would we prefer two thousand trees to be planted in years' time? So one thing we've been looking at here in LBS is the degree to which people are impatient for social benefits. Do you care whether these social benefits are delivered today, or will you wait longer? The bad news is people are less impatient for social benefits than they are for money. So they are indeed prepared to wait longer, which isn't good for society. I mean, we would ideally like people who would reward companies that were making commitments to achieve social good or environmental good in the short term. It's not quite what we see, but there is still some degree of impatience. There is still some, what we call social this kind of thing that takes place. So on average, people are more likely to invest in companies that have commitments to do good in the near future than the long future, the far future. So again, it's not that they are as impatient as they are for financial reward, but there is still some degree of investing in corporations that seem to be doing something quite concrete, tangible in the near future, rather than saying we will rescue the world in ten years' time. This comes back to the earlier point I was making, by the way, by concrete commitments. The reason we find why investors or potential investors dislike companies that claim to be making social investments in the far future is that what they claim seems to be simply too abstract. It's not sufficiently detailed for investors to have confidence that they will ever do what they have promised. Okay. And if you take it from that kind of, from the corporate strategy down to the units of the entrepreneur, you seem to suggest that while there is an irrational level of patience amongst entrepreneurs, if an entrepreneur sat down and did an accurate time value of assessments of the amount of time that they will take them to be achieving a particular goal, they would never do it. They would never come entrepreneurs. Yeah. A perspective of whether this is social entrepreneurship or entrepreneurship in general. It was often assumed, by the way, that entrepreneurs were more patient than non-optroponers. And the idea is that if you are investing, you're finding your own company, you're probably not going to make financial returns immediately. In other research we've conducted actually what we found was that entrepreneurs were not necessarily more long-termists, but they simply did not calculate the value of their own time appropriately. They were simply, you make, and this is the case with many people, by the way. We often make commitments very far in the future because we don't necessarily imagine ourselves to be as busy in one year's time as we are today, even though without any diet we will be just as busy in one year's time if not more so. So what we find was that would be entrepreneurs were actually over-committing to the future or to achieve certain things in the future. They were committing their time in the future. This speaks about this notion of time as a resource. Time as a resource for individuals, but also coming back to the notion of climate change time as a resource for society as well. So we find that would be entrepreneurs simply don't put the same price on future time as corporate employees, you're more protective of future time. So indeed there is something perhaps quite, you know, one could say it's not reflective, but rather unreflective, but in some sense it has a social good, just no extent, that people are over-committing their future time and undervaluing it. Right. So is there something fundamental to say this as an entrepreneur myself? Is there something fundamentally wrong with the way entrepreneurs are wired? I'm not saying fundamentally wrong, but it is simply that there are some dispositional differences. It comes back by the way to indeed, this fundamental understanding of time. I alluded earlier to this sense that we make sense of time in terms of space and motion. There's a very useful diagnostic question. Imagine you have a meeting next Wednesday that is moved forward two days, on which day will that meeting take place now that it has been rescheduled. And with other native English speakers, roughly divide equally between Monday and Friday answers. Monday answers reflect this idea that, well, the future is coming towards us. So as it moves forward, it moves closer to us Wednesday to Monday. Friday answers reflect what's called the ego-moving frame. It's this sense that people are moving towards the future you as an individual are approaching the deadline. So as the date is moved forward, it moves two days away from Wednesday to Friday. I knew our research we found out would be entrepreneurs were much more likely to answer Friday to that question than Monday. So this is the idea of they are ego-moving, they are more agentic. So it's not inherently worse. One can think of good reasons why one would want to be indeed agentic. And that does represent maybe the entrepreneurial spirit. On the other hand, when it comes to discounting financial returns, we find that those people who answered Monday had lower discount rates. So this is say they're they Monday people are on average, and I say on average because there are many exceptions, but they are more patient for financial returns than those who answer Friday. Okay. Does it matter how you how you term how you describe the future in your language in that way? Does that level of thinking have an impact upon whether you say you're more or less likely to be taking action on it? Absolutely. I mean, what indeed we we've conducted a number of studies showing that your answer to that question does predict your likelihood of it making some kinds of investments. Also, when communicating particular strategies, then investors are going to be maybe more long term oriented if you're communicating them in this way, suggesting that, for example, the future is approaching. If the future is approaching, it seems to be living large imminent. Investors are going to be more attuned to it. So indeed, how we speak about the future does at least at the margin influence our own action. It also influences at the margin how markets will react. Okay. And in the climate frame, what's the most empowering way of describing the future? Well, again, coming back to the sense of is is climate change approaching or are we approaching climate change? I have conducted studies showing that indeed if we are speaking about climate change approaching us, people are much more likely to see it as an urgent issue to be dealt with. On the other hand, you can imagine that if you are approaching climate change or an era of, you know, a 1.5 degree warmer world, it gives people perhaps the luxury of thinking, well, if we're approaching it, we've got we determine the speed. Whereas if that era is approaching us, then we kind of have to take it seriously. But on the other hand, there's something problematic about exclusively speaking, about, you know, this era of devastation approaching, which is that indeed, we are robbed of agency. So you have to combine that with the sense that we have some degree of self-efficacy, we're able to take remedial action as well. Because if it's purely fatalistic, then what we find is that stakeholders people give up and simply say, well, it's bound to happen, we don't need to take action to resolve the issue. So the idea would be to combine the sense of the proximity of the future with the sense that you have to do something. You're able to do something about it. Okay. And is that the same with talking about not just climate change, but say sustainability? Sustainability, this is not something I've looked at from this particular perspective. We don't know that sustainability, of course, is always linked to future oriented language. This is what we find in so many reports. And I think the issue I would have with sustainability is that then perhaps the as well as speaking about it in terms of the future, perhaps we have to combine it with concrete action, speaking what is being done today. Interesting. And if we could kind of have a slight kind of tension here, one of the biggest arguably, no, actually, I don't think there's any argument. The biggest conversation around language of the moment are LLAMs, large language models, artificial intelligence. What part do you think that AI will have upon the evolution of language in general, but particularly the language of in relation to climate change and sustainability? I must qualify my answer by saying that I'm not an expert on generative AI or even LOM. But it is something I've considered. And I worry a lot that our language is becoming almost more banal as a result of these technologies that exist. I'm noticing it in lots of assignments here at LBS. The amount of times I come across the expression pivotal role makes me wonder that language is actually we are losing had a road in the community. And what I explained at the outset of this discussion was that one of the things I'm interested in is difference, difference across people, difference across individuals. If communication is simply being generated by various technologies, the risk is that we lose that richness and that people fundamentally then lose the ability to create their own language. When we speak about when we speak to creative writers interested in using language in highly unique innovative ways, I mean they do speak about how learning language, how mimicking other styles actually helps them to have a sort of an assembly of tools from which they can draw that get them to think in different ways about issues. And I think the risk is that by having our language tailored or edited by chat GPT or something, the risk is that we reduce our ability to think we simply have thoughts made more simple, more parsimonious. So I'm worried about that. Another challenge of course comes from credibility. How can we assess the reliability or the credibility of the information, the communication, the corporate leaders are giving us? Because again, one of the techniques I like to do is to look at their grammatical choices. But if these, if their language I put, is not the result of their own choice, but an algorithm that we know very little about, then the risk is that we cannot make appropriate inferences. So this has implications for stakeholders. The problem that stakeholders have always had is one of information asymmetry. They don't know precisely what is true, what isn't, they don't have a great deal of ability to monitor what corporations are doing. But language has given us some ability to at least assess, to what extent is this likely to be a true statement, to what extent is it likely to be inflated? This robes stakeholders of that ability. Because if the language is generated by other tools, then it's even less likely to be a true reflection of what to see or things. Interesting. So stakeholder theory has obviously become increasingly important in the whole ESG debate. It's now really fundamental to everything that's talked about in ESG. What can a behavioral approach contributes to stakeholder communications? Behavioral approach would simply be understant what the antecedents to individual action would be. And I think it's, there are multiple attributes that influence leader behavior, that influence employee behavior. We've spoken a lot about corporations, values, and essentially financial returns. And I think the behavioral approach could begin from looking at reasoning. What are the reasoning styles that leaders use when they approach issues relating to ESG sustainability? So although I spoke about financial rewards earlier, research on moral reasoning would suggest that being attentive to rewards and sanctions is kind of the most basic level of moral reasoning that there is. Go back to the, you know, Colberg who spoke about attention to reward and sanctions is what is called a pre-conventional moral reasoning. So we can think about, you know, executives who are exclusively concerned about making financial returns and making, and taking sustainability related decisions purely on the basis that they will improve the financial performance of the corporations. They would be said to have pre-conventional moral reasoning. There's a higher tier of reasoning, which would be concerned with maybe social approval. So we may be think we're sensitive to reputation. So above and beyond whether this matters for shareholder returns, whether it matters for accounting performance, would we gain appropriate social approval for taking a certain kind of action or not? But there's also an even higher form of moral reasoning, which is more based around principles. In many cases, you may take certain actions because you believe that it is in principle right to do so, even by the way, if the so goes against generating higher shareholder returns. And even if it goes against the dominant social norm, it leads you to lose social approval. Because in many cases, the principle stance you believe in is simply not in harmony with the dominant norm of society. So we can think about different kinds of reasoning, again, from the very incentive-based reasoning to something that is more based on principles. But we know that reasoning is conditioned by many other elements. And we can think about values as I was speaking about before. So values would exist. I think the dominant sort of tension would exist between values of self-enhancement and self-transcendence. Self-enhancement would be values of achievement and power. Self-transcendence values would be values such as benevolence and universalism. Deeply important for stakeholder relations, but also different. Because benevolence implies that we are kind to those who are close to us. So maybe those stakeholders we interact with on a frequent basis, for example, employees. Universalism implies that we think about society in a broader way. So that's not only those stakeholders we interact with frequently. We treat well, but we treat well. Those stakeholders who may not be quite as salient. So we have this fundamental tension between the self-transcendence and the self-enhancement values. We also could think about emotions and affect. So how people, how they actually feel. And in many cases, we often think of emotions as leading to short-termist behavior. We often speak about somebody as being emotional as not being capable of rational thought. But again, there are certain higher order emotions. Think about guilt, shame, empathy. Guilt is an emotion that I think is fundamentally important for any form of socially responsible behavior. Guilt, we feel guilt, clearly, if we have done wrong. We anticipate guilt if we believe we might take an action that harms other people. And fundamentally, the capacity to feel guilt is highly, highly consistent with taking action that is. Good for other people or minimizes harm to other people. We know that then fundamentally these values that we have and these disability to feel. These together shape how we reason, how we deal with these moral dilemmas that we have. Whether we are purely focused on the financial gains, whether we think also about social approval, or whether we take principled stances and reactions. Sure. But in the context of a corporate individual's and corporate identity, with the Friedman-esque of the idea that a corporation is an individual and the individual's response, and that individual responsibility is shareholder primacy. And you're just looking after those particular aspects. Are you suggesting that if we also look at the other stakeholders in the relationship, that we may be able to look after shareholders' interests, and there's a role for the conscience of the individuals within the boardroom, as opposed to looking at the corporation itself as an entity? Perhaps. Let me explain. The Friedman, of course, did say that corporations have fundamental responsibility towards the shareholder, but he did qualify that by saying within the rules of the game. The question is, indeed, what are the rules of the game? It's not to say that one maximizes the shareholder value irrespective of anything else, but he was aware that indeed, how one treats other stakeholders could be important for creating shareholder value. But what he thinks about, second, when he then thinks about corporate leaders and what their own responsibility ought to be, if one is indeed focused on maximizing shareholder returns, and again, there are different obligations and different jurisdictions, then one could think about what are the competitive consequences of addressing the needs of particular stakeholder groups. To give you a short synopsis of some of the research here is that oftentimes corporations do well financially when they do what is less common in their institutional contacts. And that's to say that in the United States, when you treat your employees well, then often there will be benefits for your performance because essentially you have a competitive advantage. In Germany, that's not likely to be the case. Why? Because, well, corporations already on average treat their employees reasonably well. So, indeed, we don't find evidence that during extra special for employees is necessarily going to be a financial responsibility. However, apart from that, of course, coming back to this, these forms of reasoning I'm mentioning before indeed, this isn't purely, of course, about generating financial returns, even in the United States, even in Delaware, there is no precise specification that executives have to make every individual decision on the basis of what would maximize Sherhold the welfare or Sherhold their value. So, the idea here is that courts acknowledge the discretion to board members that they have to take decisions in the long-term interest of their shareholders, and these decisions will often involve value-creating decisions for stakeholders. That is not, however, to say that trade-offs do not exist. There are important trade-offs. These are indeed what come to mind when I speak about the language that executives use when they convey their responsibility. It's the more nuanced qualified statements that tend to be true, partly because, indeed, these qualified statements reflect the awareness of trade-offs. The kinds of stakeholder statements or mission statements that hurt me the most are we have to be good to everybody. We do see these stakeholder statements still quite often in many corporations, publications. It would be great if we could be nice to everybody, but we have to make choices as well. Right. Great. One of those distinctions that you've drawn at saying the past is, "Did you do good versus the do no harm?" "Mentalities amongst corporations." Why is that distinction important? The distinction between do good, do no harm is fundamentally about the motivational system. There are distinctions well-recognized in psychology between people with so-called promotion focus and a prevention focus. The promotion focus is when people are motivated by achieving gains, and you could think about executives who are very growth oriented. The prevention focus describes people who are concerned about minimizing losses. Again, you could think about executives who really want not to miss the quarterly earnings forecast. You have promotion, which is good. You have prevention, which is do harm. This is important for stakeholder relations because a lot of the research has shown that executives with a promotion focus tend to be more stakeholder oriented than those with a prevention focus. Why? Well, at least in the United States and in the UK, where corporations tend to be somewhat more shareholder oriented. Those who are prevention focus tend to be more sticking to the rules, so they tend to not want to take actions that might upset the shareholder's too much. Having said that, some of the research that I've conducted with colleagues shows that it's not quite as simple because there are lots of sustainability oriented actions or responsibility oriented actions that are fundamentally about minimizing harms. It comes to cleaning up environmental spills. It comes to ensuring that your employees are kept safe at the workplace. There are actually a prevention mindset that is deeply helpful. So what we find is that when CEOs have a prevention mindset, then they are less likely to have large number of employees getting injured at work, dying at work. The reason is that if they have a prevention mindset, they're more likely to put in place mechanisms to keep people safe. On the other hand, those who have a promotion mindset are very growth oriented, so they put their workers under greater time pressure. They increase the work burden. You mentioned earlier the idea of affect and the importance of bringing emotion into decision-making. It's obviously something that is completely outside of the treatment idea, but it's very really important in the climate space, in the environmental space, where we're like it sits climate anxiety as thing, caring about children, grandchildren, and this is thing. How do we bring that idea, the concept of affect into the boardroom and to these discussions? It comes into the boardroom naturally, but indeed one can think about different pathways of bringing emotion in. In fact, I study many political issues these days, so one of the issues I study is peace processes across the world, because peace processes are great examples of trying to bring stakeholders together who have conflicting interests. One thing that struck me was that whenever we introduce emotion here can be quite disdabilizing. You can think about emotionally charge discussions, people then stick more to their home territorial identities. But there are fundamentally different types of emotion. There is this hot emotion that can lead to polarizing discussions. There's also a cooler type of emotion that can lead to perfection and thinking about the future. An example of such a cool emotion is all. The sense that we are small in the presence of something so majestic, such as maybe the earth, for example. This is also related to what is called moral elevation. There are emotions that are cooler. How do we do this? One way is by getting people to think about the long-term versus the near-term. Once we describe very urgent challenges, we are more likely to elicit emotion. But of this hot visceral kind, if on the other hand we get people to think about the longer term and we show them pictures of landscapes at a large scale, they're more likely to have a sense of this elevation, this sense of awe, which is not emotion free. It's not effect free, but it simply means that they are more, they're using emotion in a different way that can stimulate discussion. So emotion can either harm or make discussion more difficult, but it can also favor certain kinds of discussion. So we have the hot emotion or have the cool emotion. Sometimes hot emotion is useful if we need earth induction, but if we need cool heads, we want to elicit a different kind of emotion. How do you synthesize the ideas of the logic, values and effect into your own work and your own sense of the impact that you'd like to make through your efforts? Fundamentally, I believe that reasoning, how we approach dilemmas, whether they be work dilemmas, moral dilemmas is fundamentally shaped by our values and it is fundamentally shaped by our effective disposition, whether we are positive or negative, whether we have the tendency to feel built or shame. So in my own work, I'm interested in indeed principles and I hope that I the projects I choose are not chosen purely because of the instrumental benefits of public and you publication, but because I think some of these issues are important or interesting. So this would be coming back to these different ways of reasoning. Am I purely as a scholar interested in getting good teaching evaluations and getting publications? Hopefully not. I aim to do work that is fundamentally important. Now let me be clear, in a business school we don't necessarily work on topics that are going to change the world, but if I can at least influence how leaders think, if I can increase their curiosity, I'm fundamentally happy about that. So that's the reasoning side of things. But it comes to values here, I think it's very difficult to state what my values are in the self transcendence self-enhancement I mentioned. What we'd always like to be in the self transcendence dimension is that true in my case, I don't know, where it comes to affect. I think fundamentally I'm probably not one of the scholars who would be most associated with positive psychology. I believe there's strong, strong benefit of having sometimes a negative effective disposition that may sound strange in a business school where there is so much focus on positives like college and I think some of the positive psychology work is very important. But a lot of research shows this sort of so-called "sodder" but "wiser" hypothesis that actually, if you have a negative effective disposition you can be quite careful. in, for example, analyzing situations and data, guilt or the potential to feel guilt, as I stated before, is also inherently a negative emotion. So I like to think of this tri-partite scheme of values and effect influence in how we reason. Reason being essentially about is it rewards or is it principles? And I like to think of effect as playing an important role in how we deal with, you know, make the choice between rewards and principles. And I think the negative effect, this capacity to feel guilt, can actually be quite beneficial. What are the gaps I've seen in kind of MBA type education, the kind of, really the case study kind of based, based education? It seems to be too much of a focus on the one company that does something really, really well. And so, well, we should just try and copy that. As opposed to, I think, effect brings in more of an idea of, well, what happens if it goes wrong? And it isn't just, so personally, I find you learn more from failure than you do from success. So if you can bring in the ideas of effect into this and kind of wondering and worrying, essentially about, well, what happens if it goes wrong, you know, should that be taught more in business schools? Should that be kind of brought more into the classrooms? I did personal resilience. This is what I teach a lot of my students that the difference between those who fundamentally fail and those who fundamentally are ultimately succeed is indeed the amount of times that they fall and pick themselves up. So I often draw on one of my favorite pieces of literature, which is Lumi to C.C. from the myth of Cicifus by Kammur. So you clearly know the Greek fable of Cicifus who was penalized for trying to defeat death and he is, you know, fated with having to roll this stone up to the top of a hill and each time it gets to the top, it rolls back down. And I think Albrek Hamou, the French Algerian author, has a very interesting take on this in his short story, where he says at the end of this story, he's fully imagine ACC over. We have to imagine Cicifus happy. And there's something about the purpose here of actually, you know, even though he knows he's going to be defeated at the end, you know, once the stone begins to roll back down the hill, what does it take for Cicifus to get up again and begin rolling the stone back up to the top of the hill? This piece of literature has become quite important for me and when I explain it to students from, you know, MBA students to PhD students, I hope it's important for them too. And it speaks to the idea that, you know, even in business schools, we often draw, you know, fundamental insights from the arts and humanities, the myth of Cicifus. That does take. Okay. Well, at Trapap, we always ask for a piece of advice. And if I could ask what one tip would you give leaders to hack the way the humans think about the temporal element, the time element, to try and drive more sustainable business behaviors? Read widely. Read widely. Because a lot of the issues regarding these dilemmas will not be the same dilemmas that have been approached or addressed in literature, but fundamentally these tensions that exist between stakeholders, these tensions between the short term they need for self gratification today and long term rewards are issues that philosophers have been dealing with for hundreds of years. If we are restricted to teaching in business schools and business books, I think we are deeply, deeply impoverished. We don't need to reinvent the wheel. Okay, that's great. Yeah, and there's also implications in AI in that as well. Seeing as AI has been on based built on training data from the 1990s of, you know, teenagers in their bedrooms on Reddit. Indeed. Whereas if we go back to Albert Kammur, indeed, maybe we can get richer insights. Fantastic. Good. Thank you so much for that. Thank you very much. Thank you very much for joining us on that conversation. Hope that you enjoyed it. I hope that you learned something. If you did enjoy it, please feel free to leave a five star review and subscribe to any of our channels and we'll be sure to keep you updated on future productions. These are conversations that you just can't afford to miss. [BLANK_AUDIO]