How the power of the consumer will drive change

NRF 2022: Morgan Stanley’s Carla Harris on the economic recovery, consumerism and diversity
Peter Johnston
NRF Contributor

In a high-speed, high-energy presentation at NRF 2022: Retail’s Big Show, Morgan Stanley Vice Chairman and Managing Director Carla Harris took the stage of the SAP Theatre to do three things: make her case for a strong 2022, describe two important shifts “that will markedly affect you as we go forward” and share her thoughts on what it will take to be a powerful, influential, impactful leader as we go forward.

Regarding 2022, she said, “Capital markets hate two things — uncertainty and surprise — and we have a lot of that on the horizon.” Among potential sources of uncertainty and surprise, she noted, are geopolitical uncertainties, inflation, supply chain issues and a tight labor market.

NRF 2022: Retail's Big Show

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“However,” she added, “the good signs outweigh the bad. Personal consumption is at an all-time low. Over two trillion in savings is sitting with consumers.”

Interest rates will rise, she conceded, but we will still be in essentially a low-interest environment. “The stimulus that has transpired is an indication of a very accommodating monetary and fiscal policy.” Dollars in the hands of consumers, in other words, means good news for retail. It looks like a good year.

The rest of Harris’s presentation centered around two major changes in the larger culture, which she identified as the amplification of choice and voice. As to the amplification of choice, the pandemic, she noted, has helped make it clear that the employer/employee contract has changed in some basic ways.

The old contract, she said, is about control. Employees were hired to deliver a good or a service, or some combination thereof. They were valued on their ability to do what they were told in the way they were told to do it, often including the location where the work was to take place and even the clothes the workers were to wear.

“Now, the contract is different,” Harris said. “I am still delivering the same good or service, but I am delivering it how and when I choose. Also, where. I have choice now.”

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Another part of the old model relates to who gets hired and who gets promoted. Some of that has to do with a certain lack of diversity — “When I graduated from Harvard Business School in 1987,” she said, “leadership looked like six white men in a room” — but a lot of it, as Harris describes it, has to do with basic assumptions about what constitutes leadership. The people who get promoted are the best producers, of sales dollars or courtroom victories or dams built or whatever it might be.

Which doesn’t work when you don’t know what’s going to happen next. “If you’re going to lead people into uncertain territory,” Harris said, “you have to earn their trust. In uncertain times, people crave stability, and the ability to be transparent is essential to providing that stability.”

She added that an impactful leader in today’s environment must create clarity. “You must create clarity,” she said, “even if you cannot see. You cannot allow unclarity to impede your forward motion.”

Speaking of a new capitalization program at Morgan Stanley she was leading, she said, “Even when I couldn’t see what would happen in the next quarter or month, I would define success for a couple of days.”

Finally, harking back to the need for clarity and transparency, she said a leader must have a voice. “If you want to be a powerful leader in today’s environment, you must be willing to call a thing a thing, no matter how bad the thing might be.”

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