GlobeScan Director Femke de Man recently interviewed David to gain insight on the value De Beers puts on stakeholder intelligence to help build recognized leadership in an uncertain world.
It often feels like we are in a period of constant change. How do you think expectations for corporate leadership are changing? How does leadership fit in – does it matter more or less?
That is the question – particularly for us at De Beers. We are dealing in a luxury product that fills an emotional need, not a utilitarian need, so we have this ongoing understanding that the expectations of the consumer are critical to what we do.
We’ve certainly seen over the past few years that consumers expect more of corporations, from the provenance of a product to ethical behavior to transparency. They also understand that as a consumer base, they have power and they are demanding more. This is good and healthy. Businesses that can respond to this will do well and those that can’t, won’t. There is also the millennial generation, who are influencing how businesses communicate on social media.
The engagement that stakeholders want has to be authentic. My view is that in order to be authentic, any good business needs to find a way to be empathetic. Empathy needs to be at the root of all that we do. We need to understand what communities think, what government thinks, and what partners think. We need to understand how those impacted by the business – both positively and negatively – think. We need to understand what consumers believe, what they want to believe, and how they identify with our product.
In short, we need to be in their shoes. As Corporate Affairs professionals, we then take the intangible signals from stakeholder groups and bring them back into our large multinational organizations to guide policy and help understand how to interact with the world.
How is De Beers responding to these changing expectations? Are you doing anything differently now than you were five years ago?
We aren’t necessarily doing different things, but we are doing more and we are doing better. Because of the product we sell, we have always understood consumer perceptions and expectations of what we do. That is the basis of the value of our product. If consumers didn’t believe that a diamond on their finger was consistent with the values in their life (such as love, enduring commitment, marriage, the birth of a child), if the product didn’t come to market in way that was consistent with their values, then we would have had a major flaw in our business model. We have always worked to make sure we could assure this to consumers.
Now, however, more consumers are voicing the need for that assurance. So a greater imperative is now placed on us to provide that information more robustly – something that we think we are pretty good at. It’s a point of differentiation. We have a responsibility that if we are going to sell this product, we need to provide assurance that it does not harm, and that it also does good.
Doing no harm is the price of admission. You have to find a way to prove that you are creating societal good that would not be there had we not existed. That is both a challenge and an opportunity. We have to be good at articulating that case, and if we do it well, we have a segment of the population that yearns to hear that story.
How important is building trust among stakeholders for De Beers? How can companies build more trusting relations with their stakeholders?
Trust is just another byword for authenticity. We have a long history in southern Africa – some of it positive, but some is challenged. What is clear is that there is a good case to make in terms of the role we play in the economy of southern Africa.
It is important to build an emotional connection among stakeholders – be it consumers, government, or civil society. Working with them to understand their point of view, what is important to them, meeting them at their agenda. When we are operating in a country and mining someone else’s natural resource that can’t be replaced, we are guests in that country, and what is important to us is secondary. For the sustainability of our operations and license to operate, it is really important to understand what is important for governments, for communities. We need to meet them at that point.
Other companies think about what “I” need to communicate. We take a different view. We don’t need to tell everyone everything. We need to engage on subjects that our stakeholders care most about.
Thinking over the past few years, what initiatives or commitments at De Beers are you most proud of?
The De Beers BPP – Best Practice Principles program. This program started ten years ago as a framework for social, labour, and environmental standards that not just suppliers, but every client, every Sightholder*, must subscribe to. They are audited by a third party if they are to receive supply from De Beers. I don’t know of many other companies that make it a condition of selling around social, labour, and environmental standards. This is down the supply chain rather than up.
We have a market leadership position, so how can we leverage that market leadership position to compel businesses to do better? To lift the operations and reputation of the industry at large, which is a benefit to us as well as to the industry. We estimate that over 350,000 people who work across the diamond industry for Sightholders and other associates have benefited from the BPP program.
The program is very simple. There is a list of standards, and you are audited on these standards. If you are not living up to them, you either have a penalty imposed on you all the way up to a breach or suspension or abdication of supply from De Beers. As the market leader, this has enabled us to create demonstrable change in how the industry operates.
Looking ahead, what opportunities and future initiatives are you most excited about?
The Forevermark proposition is around beautiful, rare, responsibly sourced diamonds. We are finding new and innovative ways to tell the De Beers responsible sourcing story, to connect with millennials on the story of where diamonds come from and the communities in which they are found.
We are looking for ways within our communities to understand what the people we care about care about, and meeting them at their agenda, not ours.
The thing that presents the most risk to our producer countries is that this finite product will run out – its value is its finite nature, but commercially it will eventually run out. How can we work with them to prepare for that day when it does run out? We are focused on creating shared wealth, and also protecting the natural world, so that there is something to enjoy post-mining.
We also think that the role of women has a particularly important role to play in the development of economies. With the product we sell and the stakeholders we engage with, we feel we have something to offer around the role of women and of girls.
Shared value, protection of the natural world, and empowerment of women and girls – if we focus on these three things – we can build a “forever” platform around them. Not only do we have a winning proposition to our government partners and communities where we work, but also these focus areas would resonate with consumers who want to better understand the role their luxury product has in society.
What do you think makes for an effective corporate leader in the 21st century? What does the future of strong leadership look like?
As I mentioned previously, a leader has to be authentic. What we are seeing in society is a craving for authenticity – it’s not polished, not focus-group tested, but rather “I can believe what they are saying and I can connect it with their brand.” This is something millennials have come to expect and believe they are entitled to.
Also, a leader needs to be empathetic – understanding that we are in a place where corporations cannot ignore the impact of their operations on communities and countries. They need to be able to express that empathy. They don’t need to agree with everyone, but they can internalize what stakeholders are telling them and make sure the business responds to it.
Lastly, a business needs to be responsive. I don’t mean reactive. They understand that communication is the price of entry. You have to communicate, have to explain yourself and have to respond to the concerns of stakeholders wherever they are. It’s not OK to close up shop. They have to be responsive, engaged, seen as part of the solution to some of the issues happening in society without being responsible for all of them.
That we have to protect the value of our product and the emotion that people ascribe to it is a motivator to sustainability strategy, but people now also want to know what the right thing to do is. We are now opening meetings with that in mind, which is new.
* A company on the De Beers Global Sightholder Sales’s (DBGSS) list of authorized bulk purchasers of rough diamonds.
