- Michèle Flournoy, the cofounder of WestExec Advisors, advises top CEOs on geopolitical events.
- In an interview with Insider, she shared the questions CEOs are asking about Russia’s aggression.
- The consultant also spoke about why CEOs can no longer stay silent on pressing world issues.
For over two decades, Michèle Flournoy has advised some of the world’s top leaders on how to navigate geopolitical events. She served as a defense official for both President Bill Clinton and President Barack Obama. Now she helps CEOs navigate a changing world.
In December, Flournoy’s phone started to buzz constantly with emails, texts, and calls. It was some of the world’s top business leaders on the other end. President Joe Biden had just given public remarks on Russia’s then-suspected plans to invade Ukraine. “What should I make of this?” CEOs asked her.
Since then, Flournoy has been working behind the scenes with other “CEO whisperers” to help business leaders respond to Russia’s war on Ukraine. The invasion is changing the role of the CEO to be not just a leader of profits, but also a leader on the global stage, said Flournoy, the cofounder and managing partner of the geopolitical consulting firm WestExec Advisors.
Indeed, CEOs have faced increasing pressure to speak out on issues like racism, police violence, voting rights, and more since 2020. And in the past two months, nearly 500 companies including the likes of ExxonMobil, McDonald’s, and Disney have pulled operations from Russia, closed offices or store locations, or cut ties with the country altogether.
WestExec’s list of clients is elusive. Flournoy declined to share current or former client names due to privacy stipulations in their contracts, and public records don’t provide client names.
“CEOs have choices to make that will set which side of history they’re on,” she said. “They may not like it, but it is a fact of life in the world right now.”
Insider spoke with Flournoy about the top questions CEOs are asking her about Russia’s war on Ukraine, the high stakes, and what this moment means for the future of business leadership.
This interview has been edited and condensed.
CEOs have responded strongly to Russia’s invasion of Ukraine. Why?
The business response has been surprisingly strong, stronger than almost anybody anticipated. I don’t think any of the CEOs we talked to bought Putin’s narrative. They don’t believe he has a just cause for military intervention in Ukraine. The second, and bigger, thing is the tactic of directly and relentlessly targeting civilians. It’s so horrifying. It’s not only illegal, but immoral, and just horrible to watch. I think there’s been a visceral reaction on the part of CEOs where they’re thinking, “I can’t be part of this. I can’t be seen as not caring about this or sanctioning it by association.”
What types of questions are CEOs asking you about Ukraine?
There are lots of questions, specifically, “How long will the conflict go? How long will the sanctions be in place? What are the longer-term economic impacts on supply chains, on Europe’s dependency on Russia’s oil and gas? What will Europe look like after this? How will this end? How do I take care of my employees?”
Over the past two years, the world witnessed George Floyd’s murder, a pandemic, the rising demands from investors on environmental, social, and governance goals. How did these events affect CEOs’ actions against Russia?
I think over the last several years, CEOs have been sensitized to the fact that you may try to avoid policy, but policy is going to come find you. You may try to avoid Washington, but Washington’s going to come find you. You may try to avoid geopolitics, but geopolitics is going to come find you.
CEOs have to have a point of view on these very significant moral and often policy questions. And if you don’t, it will pose a great reputational risk to you and your company because your shareholders care, the market cares, and often your customers care.
To give them credit, CEOs are also proactively thinking about how to take care of their people, their employees. They’re now thinking about the next geopolitical conflict — what if China-Taiwan happens? They’re now coming up with contingency plans.
CEOs clearly have to deal with geopolitical events today. Is this a new phenomenon? Or has this always been?
I personally believe that the best CEOs have always understood this part of their job, but I think what’s happening now is with greater economic integration, with supply chains that were built primarily for efficiency, it’s very hard to separate us. It’s the nature of economic integration, of globalization — the trend of the last 30-plus years. It’s tightened the world’s connections.
Geopolitical issues are now forcing their way onto CEO agendas. Then you combine that with greater public awareness and concern and judgment of companies for how they behave in these situations; geopolitics are taking a much higher level of priority on CEO and board agendas.
There’s been some pushback against this trend of CEOs being increasingly involved in geopolitics. The CEO of Goldman Sachs, David Solomon, said it’s not business leaders’ job to ostracize Russia.
And yet Goldman Sachs was the first financial institution to pull out of Russia.
You know, it’s not their job to make policy. It’s not their job to represent the US government, but they are players in the system because of their financial heft and economic weight.
Is the conflict in Russia a turning point in business history?
I do think it is a major event that will decide not only the European order but also will influence the behavior of other authoritarian leaders based on whether this turns out to be profitable for Putin. Other authoritarian leaders are looking at this moment in thinking about using force to achieve their objectives.
I also think this will be a key moment for business leaders in energy. I think that this crisis will force the Europeans to invest over the next decade in weaning themselves off Russian oil and gas. I think there are sectors where supply chains depend on rare minerals from Russia. Many in these businesses will be scrambling to find other sources. It will also impact the export of wheat and grains to certain countries.
How do you see your role evolving with CEOs over the next five years?
I think we are in an era of greater competition internationally. The real name of the game is ensuring that the US maintains its economic and technological edge while also trying to be true to our values. That means that our company leaders are key players in that equation, and helping them maintain a competitive edge is very important. It’s especially important during a time when we have the rise, sadly, again, of authoritarian states who are really trying to dictate a different kind of international order.