WEBVTT - Russia's Ivy League Enemy

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<v Speaker 1>These sees Bloomberg Business Week with Carol Messer and Tim

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<v Speaker 1>Stenovic on Bloomberg Radio. All right, everybody, you might remember

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<v Speaker 1>last month that we talked about that viral list that

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<v Speaker 1>turned a Yale professor into an enemy of the Russian state.

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<v Speaker 1>It is true. We're talking about Jeffrey Sonnenfeld, who has

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<v Speaker 1>assigned grades to four companies and in the process highlighted

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<v Speaker 1>the economic cost of sanctions that caught the attention of

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<v Speaker 1>Russian officials put him on the Russian stop list, which

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<v Speaker 1>there's a few other familiar names on that list. Yeah,

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<v Speaker 1>one might say he's in good company. First, Lady Joe

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<v Speaker 1>Biden is on their center. Mitch McConnell, they're both on

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<v Speaker 1>the list as well. We've got just Son and Felt

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<v Speaker 1>with us right now. Senior Associate Dean for Leadership Studies,

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<v Speaker 1>Lester Crown, Professor of Leadership Practice at the Yale School

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<v Speaker 1>of Management. He joins us this afternoon via zoom from Branford, Connecticut.

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<v Speaker 1>Good to have you with us, professor. Good to have

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<v Speaker 1>you back with us. I should say, Happy New Year.

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<v Speaker 1>And you know I'm eager to hear your thoughts on this.

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<v Speaker 1>Ever since the Business Business Week out this story in

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<v Speaker 1>the magazine. I've been curious to you know, and I

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<v Speaker 1>know you spoke to Business Week for it. Um what

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<v Speaker 1>you think now of seeing your name on that list? Well,

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<v Speaker 1>thank you, it's uh and it's good to be back

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<v Speaker 1>with you. Tim and Carla. Thank you so much for

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<v Speaker 1>the invitation, and happy New Year to you as well.

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<v Speaker 1>It's interesting I've gotten a huge amount of feedback because

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<v Speaker 1>everybody reads Bloomberg, Bloomberg, business Week and and and follows Bloomberg.

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<v Speaker 1>Uh so Uh, there's hardly a CEO I know that

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<v Speaker 1>hasn't either sent a note or a call or a

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<v Speaker 1>text message or something that sees it as a tremendous

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<v Speaker 1>badge of honor. And the H that is all of

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<v Speaker 1>them that are on the A, B, and C list,

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<v Speaker 1>the D s in the FS. Actually, i've heard from

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<v Speaker 1>a number that are on the D list. The D

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<v Speaker 1>list are people that they didn't pull out of Russia,

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<v Speaker 1>but they have curtailed some future investing. Uh. The reason

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<v Speaker 1>we came out, by the way, with the A, B, C,

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<v Speaker 1>D and F isn't just because we're a schoolhouse and

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<v Speaker 1>that's all we know how to do. Is that there

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<v Speaker 1>are some very artful public relations smoke screen some been

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<v Speaker 1>that was leading to a lot of atmospherics about people

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<v Speaker 1>who were saying nice things and not doing anything, and

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<v Speaker 1>we thought we should divide out those who who actually

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<v Speaker 1>physically pulled out permanently, who did so temporarily, who partially

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<v Speaker 1>pulled out, who did some atmospherics, and then some who

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<v Speaker 1>aren't doing a darn thing. And that's that's how we

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<v Speaker 1>divided them out into a through A through F. You

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<v Speaker 1>are someone that is a go to voice when it

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<v Speaker 1>comes to leadership and understanding what goes on in C suites,

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<v Speaker 1>and you talk with a lot of leaders, they reach

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<v Speaker 1>out to you as well, Jeff. But I do wonder

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<v Speaker 1>was there something different about the Russian invasion in Ukraine

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<v Speaker 1>that made it easier for companies to come out and

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<v Speaker 1>say we got to pull out of this. You know,

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<v Speaker 1>very good question, Carrol, because of course CEOs are under

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<v Speaker 1>a lot of pressure these days and getting involved and

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<v Speaker 1>using their voice and social issues. If we were having

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<v Speaker 1>this discussion two years ago, there's a stampede of enthusiasm

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<v Speaker 1>for getting involved in voting rights or the presidential succession issues,

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<v Speaker 1>and they've gotten some blowbacks in some states on positions

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<v Speaker 1>on whether or not it's on environmental issues or reproductive

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<v Speaker 1>rights for women. And CEOs have still been using their

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<v Speaker 1>voice on these various issues. However, on this one, there

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<v Speaker 1>is no controversy, none whatsoever. In fact, I just addressed

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<v Speaker 1>the attorneys general of all fifty states with their deputies

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<v Speaker 1>and lieutenants there. Uh, and there was rousing support for

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<v Speaker 1>this move state by state. Uh. And you can actually

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<v Speaker 1>see that doing well is not antithetical to doing good.

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<v Speaker 1>There's no dispute between shareholders and other stakeholders. The more

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<v Speaker 1>dramatically the companies pulled out, and our research shows this,

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<v Speaker 1>the better they were rewarded in their in their financial performance.

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<v Speaker 1>How is this different? Help me out here, though? When

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<v Speaker 1>I think about what happened to Jamal Kasogi in you know,

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<v Speaker 1>the journalist right um, that was killed assassinated? How is

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<v Speaker 1>this different from the mass killings in Syria? How is

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<v Speaker 1>it different that companies can come out and speak out

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<v Speaker 1>against what happened in terms of this Russian war in

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<v Speaker 1>Ukraine versus those? What's different? Uh? Those are you know

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<v Speaker 1>a great example? UM? I was worried after the killing

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<v Speaker 1>of Kashogi. Jamal Kashogi, the Washington Post columnist that was

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<v Speaker 1>I think the US resident at that point working on

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<v Speaker 1>a citizenship that there was condemnation, and there was a

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<v Speaker 1>slight delay, and ultimately there was a mass exodus from

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<v Speaker 1>that Davos in the desert. But Carol, you would say

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<v Speaker 1>a year later they went back. Uh, and some of

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<v Speaker 1>our top officials still went over in some companies. Uh.

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<v Speaker 1>There is mass suffering around the world. We can take

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<v Speaker 1>a look at an awful lot of hotspots where there's

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<v Speaker 1>a tremendous amount of injustice. And the question is, uh,

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<v Speaker 1>it's like a hospital e er right now we have

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<v Speaker 1>here at Yale New Haven Hospital, like around the country,

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<v Speaker 1>we have a rising tide of respiratory viruses. We have

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<v Speaker 1>the flu. We we of course have this new strain

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<v Speaker 1>of covid uh, and we have car accidents. To weather

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<v Speaker 1>here is horrible today. There are a lot of car

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<v Speaker 1>accident and after a while, you know, and you are

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<v Speaker 1>is gonna say, no, we don't want anymore. No, they

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<v Speaker 1>don't do that. They just decide on a triage basis.

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<v Speaker 1>What Some things are worse than other things. The mass

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<v Speaker 1>slaughter of of moms with their babies in their arms,

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<v Speaker 1>lined up for bread. Uh, that's different. Bombing orphanages, bombing hospitals,

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<v Speaker 1>the targeting civilians for this mass carnage, that kind of

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<v Speaker 1>those kind of level of atrocities are are are worse

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<v Speaker 1>than some horrible other types of injustices. But you're right,

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<v Speaker 1>and we need to take moral positions when we can.

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<v Speaker 1>In this case, the operational risk, the financial risk on

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<v Speaker 1>the reputation risk of staying in Russia was so high

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<v Speaker 1>that the companies who have stayed have suffered. And we

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<v Speaker 1>also have very little interest in being involved there. Some

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<v Speaker 1>bring up China, for example, and that's a way more

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<v Speaker 1>complicated because of the intertwined economics. Right now, Russia brings

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<v Speaker 1>I mean, the moral decision is easy because the pragmatics

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<v Speaker 1>are so easy. Russia brings nothing to the global marketplace

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<v Speaker 1>other than food and fuel. So, Jeff, is it then

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<v Speaker 1>a financial decison? It it's it easy financial decision when

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<v Speaker 1>it comes to Russia, but maybe not so much when

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<v Speaker 1>it's Saudi Arabia or China, for instance. Uh, it's it's

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<v Speaker 1>easier when when we take a look at Saudi Arabia,

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<v Speaker 1>what we did see, it's targeted. Uh, some kicking and

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<v Speaker 1>screaming and some enthusiastically, but every major fashion house pulled

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<v Speaker 1>out of the Shinjin province over that really fine cotton.

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<v Speaker 1>Of course that's made there with the alleged uh detainment

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<v Speaker 1>of you know, these awful conditions of the forced labor

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<v Speaker 1>of the weaker minority population. That's pretty horrible. And and

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<v Speaker 1>we've seen every fashion house pull out of there, and

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<v Speaker 1>that's that's really fantastic cotton. And that's that's made a

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<v Speaker 1>big difference. And uh, so we see that there are

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<v Speaker 1>are targeted uh. Uh. You know, people ask, what about

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<v Speaker 1>there's an invasion Taiwan? What about there isn't one yet.

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<v Speaker 1>If there is, we'll see. But right now we we

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<v Speaker 1>we we've seen there is a an invasion of a

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<v Speaker 1>sovereign nation, a democratic sovereign nation, uh and a mass

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<v Speaker 1>slaughter with mass atrocities. That this is in a category

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<v Speaker 1>by itself in the world right now out. But there

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<v Speaker 1>may be other situations that come to come to the

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<v Speaker 1>four where we need to get involved as well. But

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<v Speaker 1>right now, uh, this is the one. If it doesn't

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<v Speaker 1>look like we have fortitude here, there certainly will be others.

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<v Speaker 1>It's important to show that the world united as they are.

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<v Speaker 1>Only forty of these companies have pulled out. That these

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<v Speaker 1>three companies have pulled out. Our American there from every

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<v Speaker 1>part of the world that pulled out. Fantastic, professor. What

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<v Speaker 1>have you heard from the companies that haven't yet pulled

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<v Speaker 1>out yet? And I'm just going through their several versions

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<v Speaker 1>of this list that you can look at on Yale's website,

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<v Speaker 1>uh and then another one Yale Russian Business Retreat dot

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<v Speaker 1>com as well for a sortable version of that list

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<v Speaker 1>if our listeners and viewers want to check that out.

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<v Speaker 1>But some are you know, business as usual, still operating

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<v Speaker 1>in Russia, still selling products to Russia. What have you

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<v Speaker 1>heard from these companies? Well, it's surprising, you know. I've

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<v Speaker 1>been tracking for forty five years now, looking at corporate

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<v Speaker 1>social impact issues with the Business Roundtable, with the founding

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<v Speaker 1>generation of the Business Roundtable, and that old and the

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<v Speaker 1>first movers in this case aren't the usual one. The

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<v Speaker 1>ones who pulled out early were big oil, big tech,

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<v Speaker 1>and professional service firms for various reasons. You can imagine

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<v Speaker 1>that those three clusters are not usually on the front

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<v Speaker 1>lines of social justice issues they were in this case.

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<v Speaker 1>Those who are staying are a weird mix across industries.

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<v Speaker 1>Places like international paper. What what are they doing there?

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<v Speaker 1>Match group here, you give them an F grade match

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<v Speaker 1>dot Com. What in the world did they They're trying

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<v Speaker 1>to bring social harmony in to to the Soviet and

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<v Speaker 1>to Russia right now. I mean, there's some twisted belief

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<v Speaker 1>that some had that these global brands. If you remember

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<v Speaker 1>Tom Friedman in the New York Times, I hope he's

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<v Speaker 1>not your best friend, but one of his most naive

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<v Speaker 1>columns was a column that that was very widely circulated

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<v Speaker 1>a few years ago on the Golden Arches rule of

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<v Speaker 1>diplomacy that any two countries with the McDonald's would never

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<v Speaker 1>go to war with each other. And this led some

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<v Speaker 1>US brands to think that this is a way of

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<v Speaker 1>a refutation of old Soviet repression from celebrating that's that's crazy.

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<v Speaker 1>But no, they shouldn't be there. Benetton shouldn't be there.

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<v Speaker 1>Georgio Armanio is still there. It's Jeff, we gotta run uh.

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<v Speaker 1>And of course that was Jeff's perspective and opinion. Ipertinately,

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<v Speaker 1>when it comes to the New York Times calumnus, this

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<v Speaker 1>is Bloomberg