‘There is no rebuild without small business’: Andrea Jung on economic recovery, crisis leadership, and the future of consumer behavior

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Andrea Jung has a front-row seat to the U.S. economy.

Grameen America, which she leads as CEO, has invested $1.5 billion in 131,000 entrepreneurs across the country since the 2008 financial crisis. The micro-lender's 52,000 borrowers meet weekly with Grameen coaches and each other to workshop strategies for growing their businesses. That has continued — virtually — during the coronavirus pandemic and economic downturn.

Jung also has a deep lens into the beating heart of the consumer. She is the longest-serving female leader of a Fortune 500 company, having helmed Avon as CEO from 1999 to 2012. Today she serves on the boards of Apple, consumer-products juggernaut Unilever, and e-commerce star Wayfair.

I recently had the chance to catch up with Jung to discuss how Grameen America, which was founded during the last recession, is now viewing this downturn. We also discussed how Jung has approached this period as a CEO, her outlook for the consumer and for consumer brands, and why she believes this crisis is a blessing in disguise for career-starters.

Below are excerpts from the conversation.

What are you seeing from Grameen's vantage point during the coronavirus crisis?

Grameen has been in the United States since 2008. I say that as an interesting data point, because it was in the middle of the last major global economic crisis we had.

We were bringing a loan program to low-income entrepreneurs at a time when, as you recall, everybody was pulling back on lending. So there was a lot of "why would you bring a loan program to the most vulnerable, who don't have good credit or are unable to access credit? The risk tolerance must be ridiculous." It's important context because the founding vision was that's actually when people need it the most. That access to capital is fuel. It’s oxygen for economic recovery, for entrepreneurship.

Over the next 12 years, it not only proved not a risk, it proved to be an extraordinarily important way to deal with income inequality. That mentality started to really begin to solve one of the intractable issues, which was fair and equal access to capital, particularly for low-income, minority women entrepreneurs.

There was already an issue pre-COVID-19 of only 4% of loan capital going to women entrepreneurs — $1 out of $23. You've got half of female head of households unbanked, and one out of eight women living in poverty.

From a mission point of view, I would say COVID-19 only doubles down the need for the program. Even in a period of high economic growth, there was still the concept that if women could participate equally, if they could have equal access to capital, equal wages, equal employment, then there could be 6% global GDP growth — trillions of dollars of additional economic growth.

I feel very similarly that we've got to make sure that women participate in the rebuild of this economy. There is no recovery and there is no rebuild without small business. But I think we even have to define small as being, say, six employees or less, not 500 or less. It's really Main Street USA. That is critical.

As we look through all that's taken place in terms of the stimulus packages and whether the money is really getting out to businesses, clearly in phase one it did not. In phase two, it's been a little bit better. But net net, I think we're still going to come into the opening-up phase with the stark reality that until and unless we can bridge micro and real small business owners in every city, all across the country, we're going to have a much harder time bouncing back.

In addition to the capital needs, which are huge, small business owners and entrepreneurs are now looking to understand how to operate in this new normal.

How have you pivoted Grameen America as a result?

We had to pivot pretty quickly, in two ways in particular: going virtual, which is interesting given our particular lending model; and then providing economic relief on loans and the essential capital support in the most dire business environment.

One of the hallmarks of our model is that its alchemy is social capital, where 25 to 30 members are getting together in groups every single week for peer mentoring and financial training from our coaches. And they are not six feet apart from each other.

We didn't want to stop this. Just as a side note, micro finance is a huge piece of the movement of money in many economies, like India and Bangladesh. And when there hasn't been an ability to virtually pivot, they've essentially shut down and stopped money movement. But we, luckily, had invested in technologies knowing nothing about COVID-19.

There were three things that went virtual right away. First of all, the meeting itself: 2,450 Zoom meetings a week with 30 entrepreneurs each. So, a little chaos at first. But we have well over 80%, and in some cities 100%, of our members attending these because, even in self-isolation and stay-at-home, the need for community and collaboration, social advice, and sharing is super important. That's been inspiring.

Then, the loan products itself. We had established, thank goodness, a very aggressive strategy to move to digital banking, even for the poor. Our members, when they get a loan, they get a card — it's a Grameen Mastercard that's loadable. So even though, pre-COVID-19, we wanted our members to meet at the branch and discuss how they were going to use their loan, how their business was going, that can be done by video now and the payment rails have been set, so we can get cash onto anybody's card in a minute. That, fortunately, has allowed us to continue to get cash out.

And then, likewise, on the repayment side, we have been promoting ACH and debit repayments. Even those who are using cash, they are coming in to some partnerships that we've established with 7-Elevens and CVS stores, which are essential institutions open during this time in every city.

So, those digital financial, disbursement, and repayment tools allowed us and our members to keep going. Had we not had them, we also, like many micro-finance organizations in some of the emerging markets, would have had to really pause.

I keep telling our team now, "Necessity is the mother of adoption."

I'm seeing this even on the other boards that I'm on — Apple, Unilever, Wayfair — which is that trends that were already happening have been put under a spotlight, and this situation is a catalyst for accelerating them, particularly around digital behaviors. If you have been a slow adopter, you're now a required adopter.

What kind of relief have you offered borrowers?

The issue of how businesses bridge to the reopen is critically important.

We waived interest on all of our loans during this COVID period. It is a zero-interest loan.

Also, normally whenever they transact and use digital repayment, those have a small fee attached to them. But even those amounts — it can be 90 cents, it can be $1 — it counts right now for people. So, we are covering all the costs of any transaction fees.

Then, importantly, we're giving them more time on their loans. We've extended them up to six months. Our loans are only six months to begin with, so we are giving them another cycle if they need it. So, they can choose to reduce their weekly payments, because we know that they just don't have customers right now in many cases.

And then, we've been raising a fund to offer emergency recovery products in order to bridge members — to give them extra cash to rebuild inventory that had to be destroyed, to help them with working capital costs that took a real hit. They're starting from zero in some cases and have to build their business back up so that they, in fact, can reopen.

There are also some interesting things that we're helping translate, literally and figuratively. If you're not truly understanding exactly what your governor is saying about when and how you can open your salon, and salons in your neighboring state are opening but not in yours, or you're unclear about how many customers you can have in at one time, what the protective gear that's expected of them and yourself is — it sounds very micro, but that is exactly the kind of practical help our small business owners need.

Can you make it work if you only have 25% of your normal business, or if you're only allowed to have 25% to 50% of the customers or tables that you had before? How do you make that work, literally and economically? So, it's by business type that we are trying to offer, in a microsite, the real tools and tips for the gradual recovery and resilience of their models.

How have you adapted managing the organization during this time?

Three things come immediately to mind — one is humility, one is empathy, and one is hyper-communication.

I see this even in the public boards that I'm on, which is that leadership is both challenged and inspiring right now. More than ever, every leader is looking at their people, their community, the economics — cash and cost — of their company, and trying to weigh all of these stakeholders.

I've seen almost everywhere that employees and community are taking an outsize prioritization in the stakeholder map. I think that has been critical in the resilience during this time.

There has never been so much ambiguity and uncertainty. Nobody knows the right approach. But certainly one of the things that I learned was the outsize importance of employee stakeholders and their safety.

We've made the decision that whenever a city or state has a reopen phase begin, we are going to wait a month after that, at minimum, to make a decision regarding reopening our offices for employees. Because, again, we just don't know — we're exercising humility in acknowledging that, and we have communicated it clearly to employees because people are anxious when there is ambiguity.

So, I think all of us as CEOs have learned that you can't communicate too much, because there's a high level of anxiety right now.

We've also increased our communication around paid time off and making sure that people take a breather, take a vacation. Because once it's virtual, no one wants to have no line of difference between Saturday, Sunday, or summer.

When it comes to behavior, strategies, culture — with an eye to the glass being half full — now is an opportunity to take changes that sometimes take months or years and make them in weeks. That's what crises have the power to do.

Some of the things that we had on a PERT chart of initiatives for the back end of 2020 or early 2021, they've already been checked off and done.

Culture is just the great things that your organization does that you want to amplify. And this is a great opportunity for leaders to amplify their cultures. That is a positive that can emerge from this.

From your extensive experience in consumer and retail — as CEO of Avon and now as a director of Apple, Unilever, Wayfair — what do you see happening coming out of this crisis?

I see changes on two fronts — to brands and to the channel.

I think there's going to be a bifurcated recovery. From a brand point of view, this is an amplification event, meaning if you are a weak brand it's going to be hard to survive this crisis, and if you are a strong brand you will survive and become even stronger.

Certainly Apple is well positioned. All the years of extraordinary, important work on the strength of the brand, even the retail experience, is going to serve the company extraordinarily well coming out of COVID-19.

Unilever, the same thing. Here is an example where the focus on ESG and on community continues to breed customer and brand loyalty. And those focuses were alive and well; there's huge authenticity in it. It's not just because of COVID-19 that they're giving back hundreds of millions of dollars to their communities. It's now what's expected.

I think the biggest change is going to be in the channel. The e-commerce disruption of physical retail has a huge potential shift, and we were already seeing diverging growth lines between traditional retail and e-commerce.

Now, while there were some slow adopters, this period has forced all of us to only buy through e-commerce. And whether it's my 89-year-old mother, who would have never purchased groceries online unless this happened, or anyone else, after not just two weeks of it, but after three or six months of this, does consumer behavior change? I think we have to ask that question. I believe that unless there's an extraordinary retail experience, and if you're selling a commodity product, you will struggle going forward unless you pivot or innovate around the e-commerce channel.

People are now accustomed to being able to get those products at a great price and very efficiently. We have to ask if that becomes a permanent change in consumer behavior.

You've had a unique career, but what do you tell young women and others seeking to follow a similar path right now?

I think it's a really fascinating and opportunistic time career-wise.

Periods of intense change and crisis can yield that. We've seen it time and time again. These are the times when companies rethink everything from talent to how people work.

I would say to young people, this really is going to play into your sweet spot. There isn't a corporation that I know or am on the board of where the ‘new way of work’ isn't now a major initiative.

This has thrown into warp speed the thought of, "Do you really need to be there? Do you have to relocate if you want to go and run a certain part of the business?"

I believe the new generation of resilient, bright professionals will adapt and innovate more quickly. That really works in their favor. It's in this kind of disruption that there will be companies thinking of new opportunities, new initiatives, where business as usual would have kept them in a rut.

For everybody — young women and men — this is a time to capitalize on it, because the skills, the technological fluency, the fluidity, and just the ways they work and live are highly suited to the new ways that companies are going to have to work. I think that if you're fluid, if you have humility, and if you're able and willing to innovate or reinvent yourself, there is probably even more opportunity coming out of this than there was in December of 2019.