At the top DealBook, unraveling the present and the future
This article is part of our special section on the DealBook Summit which included business leaders and politicians from around the world.
Last week at DealBook Summit, I interviewed some of the world’s most influential executives, including Janet Yellen, US Treasury Secretary; President Volodymyr Zelensky of Ukraine; Mark Zuckerberg, CEO of Meta; and Andy Jassy, the chief executive of Amazon.
A common theme ran through almost every conversation.
It was that every decision – big and small – is ultimately a compromise: sometimes it’s a moral compromise, sometimes it’s an economic compromise. Sometimes it is an economic trade-off versus a moral trade-off.
Either way, a leader must rationalize the compromise. Sometimes this can earn the leader popularity points and sometimes it is the opposite. And sometimes the decision itself turns out over time to be simply wrong.
When times are less clear – like right now – trade-offs become harder and more complicated to make.
The public doesn’t always see compromise – or doesn’t like compromise or doesn’t appreciate the practical reality of compromise. But when you’re sitting in the decision-maker’s seat, the trade-off is real.
Benjamin Netanyahu, the recently re-elected Israeli prime minister, has been reluctant to supply air defense missile systems to Ukraine. Why?
At first glance, you would think he would want to support Ukraine. Still, he told me his relationship with Russian President Vladimir Putin is important because it helps preserve Israel’s access to Syrian airspace, which he considers vitally important to his people.
“There is always a balance,” he says. “Leaders do this every day. In general, foreign policy and democracy are a combination of moral principles and expediency. What supposes primacy? Interests or values? The answer is neither. You balance the two.
Is it moral to support Mr. Putin’s war against Ukraine? Of course not.
But Mr. Netanyahu had a different explanation: “I will tell you where you draw the line,” he said. “When things relate to your very existence, that comes first.”
A framework of compromise seems to underlie the relationship between the United States and China. The Biden administration is clearly concerned about the impact of China’s zero-Covid policy on supply chains, its stance on Taiwan, and its human rights abuses. And yet, Ms Yellen told me that although she worries about over-reliance on China for essential supplies, “I expect and hope there will be strong ties between China and the United States in mutually beneficial trade and investment”.
Does such a position make the United States hypocritical? Maybe. But what would be the other side of the equation if the relationship completely broke up? Massive economic pain for Americans that usually manifests in ways that affect people’s actual health.
In times of prosperity, companies can afford to pursue projects or invest on moral grounds in ways that may not seem economically viable. But the second the economy gets tougher, and that’s where we are right now, trade-offs develop into bigger stakes.
While ESG (socially responsible investing) has been generally popular for years, the tone of the conversation has changed as companies have tightened their budgets and the war with Russia has caused the price of carbon to skyrocket. energy. Today, the promise and commitments of moving to net zero carbon emissions are being rescinded as fossil fuel investment has become tied to national security.
Larry Fink, the chief executive of BlackRock, has long said that climate change is the greatest existential crisis and has likely caused more American companies to act aggressively to reduce emissions. Yet he confessed to me, “Actually, I think we’re going to need hydrocarbons for 70 years,” when asked about Republican opposition to ESG and to him personally.
The list of compromises is long: Mr. Jassy, the chief executive of Amazon, spoke about the compromises related to the extraction of objectionable content sold on the website, including the anti-Semitic film shared by Kyrie Irving. Reed Hastings, the co-CEO of Netflix, explained how he came to see ad serving as a valid trade-off to hitting the company’s low-cost subscription tier. TikTok chief executive Shou Chew said he was in the process of moving data on US servers to cloud infrastructure owned by Oracle – a compromise he is making to assuage security concerns from US authorities national.
Often when leaders take a stand or leaders make a business decision, there isn’t much voice given to the other side of the compromise. We evaluate decisions as if they were made in a vacuum, while the process for leaders is much more like moving the pieces of a puzzle.
As DealBook Summit executives have noted time and time again, there is no such thing as infinite flexibility.