[Dialogue] Change belief

Wed Aug 10 15:36:44 EDT 2011

As I recall, you gave that speech in at least the last dozen gigs we did together.  It's a powerful story when you add the context for the survey and the people who participated in it.

Lee

On Aug 10, 2011, at 12:29 PM, R Williams wrote:

> Jack,
>  
> I agree, the crux is in the requirement in the corporate charter to "maximize" profits, and the usual unwritten addendum, "this  quarter."  I think if the requirement could be restated to emphasize "reasonable" and "sustainable" rather than maximum profits, meaning over the long-term but not necessarily every quarter, then serving the entire stakeholder network could be possible.  Over the long-term, if the business does not treat employees fairly, does not deliver value to customers (on the customers' terms) and at least "do no harm" to the community (can't have a healthy business in a sick community), then consistent and sustainable profits are not possible.  This requires that serving stakeholders not be extra-curricular (charitable donations and volunteerism), but be done in the course of the day-to-day conduct of the business itself.  I suggested in a seminar I did that customers want products that work, organizations that perform and people who care.  Employees want equitable compensation, meaningful work and opportunities to grow professionally and personally.  Communities expect business to  provide products and services that directly or indirectly add value to the overall quality of life of the community, operate in an ethical manner, and grow in a way and at a pace that is sustainable both for the business and the community.
>  
> I am told that even Adam Smith insisted the business serve the general welfare.
>  
> Randy
> 
> From: Jack Gilles <icabombay at igc.org>
> To: Colleague Dialogue <dialogue at wedgeblade.net>
> Sent: Wednesday, August 10, 2011 9:36 AM
> Subject: Re: [Dialogue] Change belief
> 
> Randy,
> 
> Every company or organization, has three demands it must balance.  Customers, Employees and  remainder on the Balance Sheet (stockholders for a traded company).  These three always require consideration, with no one of them taking priority over the others, though at any given time there may be strategic reasons to focus more on one than the other.  I like to talk about Balance Sheet because there are competing and necessary investments that require judgment and often sacrifice.    Unfortunately, because we tend to start with the bottom line, that is, what's left over after spending on operations, investment, payroll, promotion, donations, etc. it gives management and stockholders a big club to minimize the "expenses" and maximize their share.  But the killer in all this is that most companies by the very act of their incorporation are legally bound to maximize shareholder return.  So all a conscientious CEO and management team can do is try and protect the other demands on the balance sheet, but so often the Board will squeeze and squeeze until a good person just opts out.  This happened to Ben & Jerry's when they were taken over.  At first they were left alone and allowed to continue their "odd" path because it was a powerful part of the brand.  But slowly the tentacles spread and started to squeeze.  It's not a pretty or pleasant sight.
> 
> Jack
> On Aug 10, 2011, at 7:57 AM, R Williams wrote:
> 
>> John,
>>  
>> Excellent point.  I know of one highly successful company whose mission statement is that its purpose is to serve its employees, and that the way it would do that was to provide excellent products and services to its customers.  All this, in the long run, benefits the community as a whole and sustains consistent, reasonable profitability.  So why must business choose one stakeholder over others when it's possible to serve them all, including stockholders? 
>>  
>> Randy
>>  
>> 
>> From: "jlepps at pc.jaring.my" <jlepps at pc.jaring.my>
>> To: Colleague Dialogue <dialogue at wedgeblade.net>
>> Sent: Tuesday, August 9, 2011 9:16 PM
>> Subject: Re: [Dialogue] Change belief
>> 
>> This is a fine article, and Michael Porter will give it considerable credibility. He's the recognized spokesman for business analysis and strategy.
>> 
>> The problem with Milton Friedman's notion ("The purpose of business is to increase its profits") is that it ignores stakeholders and focuses only on stockholders. A company DOES impact society, and whether for good or for ill is up to the company. I like to say that the purpose of a company is to deliver a product or service that benefits society, and profit is a measure of how good it is doing at that purpose.  Unfortunately too many in business have bought into Friedman's simplistic notion (he's a Nobel laureate, so don't write him off too easily!), and we're attempting to alter that basic misunderstanding. Charles Handy is another who advocates the more comprehensive purpose, saying something like: to say profit is the purpose of business is like saying the purpose of life is eating. It's necessary, but as a means rather than as an end.
>> 
>> At 07:41 AM 8/9/2011, you wrote:
>> 
>>> This would not be bad . . .
>>> 
>>> 
>>> 
>>> 
>>> Companies (add in governments, etc.) cannot continue to pretend to serve society while simultaneously acting against it. Neither can they continue to give shareholder's interest primacy above the interests of the public. No amount of investment in charitable causes or employee volunteering can change that fact. The purpose of a company will be to create shared value, where business and society achieve success together.
>>> 
>>> 
>>> 
>>> 
>>> 
>>> 
>>> CSR is dead, long live social enterprise
>>> 
>>> 
>>> 
>>> We must move in to an era were companies do not separate themselves from the consequences of their operations, we must champion shared values
>>> 		• Share56
>>> 		•    reddit this
>>> 	• Comments (2)
>>> 	• Dermot Egan
>>> 	• Guardian Professional, Tuesday 9 August 2011 06.00 BST
>>> 	• Article history
>>>   
>>> Companies cannot continue to pretend to serve society while simultaneously acting against it, says Dermot Egan Photograph: Issei Kato/REUTERS
>>> 
>>> Corporate social responsibility (CSR) has been around as a term since the 60s but it really came to prominence in the last decade when large multinationals began to adopt the phrase to demonstrate that they were serious about delivering a positive social impact on the communities in which they operated.
>>> 
>>> Some cynics felt that CSR was simply a marketing exercise, an attempt to reassure employees, garner consumer favour and stave off government regulation. Other more hawkish economists such as Milton Friedman were uncomfortable with the notion that companies had any moral obligation to society, famously stating "the social responsibility of business is to increase its profits".
>>> 
>>> To communicate their efforts companies such as PepsiCo, Shell and Barclays began to produce CSR reports which laid out all their positive impacts from charity donations and employee volunteering to supporting renewable energy production and promoting diversity. CSR reporting became so popular that even much maligned companies such as British American Tobacco felt that they too needed to communicate the benefits of their operations to society.
>>> 
>>> As climate change and the environment came to the fore, CSR reports quickly evolved into sustainability reports and their emphasis became more focused on driving low energy solutions and mitigating the environmental impact of a company's operations.
>>> 
>>> While the language and emphasis of CSR has changed, one key problem remains. The adoption of CSR has been and continues to be reactionary, a response to a growing concern from employees, customers, and to an increasing extent investors, about the conduct of businesses. The principal drivers have been largely external rather than internal, calling into question whether those principals are core to the companies DNA.
>>> 
>>> The explosion in popularity of social enterprises recently is a direct consequence of the inability of existing companies to grasp the new reality that a company's core purpose must be to deliver positive social impact and not to simply minimise negative impacts while ultimately focusing on maximising profit in the short-term.
>>> 
>>> As esteemed Professor at Harvard Business School, Michael E Porter wrote corporations must "create economic value in a way that also creates value for society by addressing its needs and challenges".
>>> 
>>> The comments are taken from a remarkable article in the Harvard Business Review where Porter lays out his concept of "shared value". Companies are urged to "reconnect company success with social progress" and "take the lead in bringing business and society back together".
>>> 
>>> You could be forgiven for thinking that these words had been lifted from the speech of a social entrepreneur to describe their business philosophy. But Porter is the father of modern business strategy and his Five Forces model has been universally taught to students of business for the last 30 years.
>>> 
>>> While Porter doesn't mention the term explicitly, he is in effect calling on all businesses large and small to reinvent themselves as social enterprises and redefine their operations beyond profit maximisation towards addressing societal needs.
>>> 
>>> Placed in this context, CSR initiatives appear hopelessly inadequate. Particularly, as they have tended to exist as peripheral activities connected to the marketing function of companies and leveraged as a means to enhance reputation.
>>> 
>>> The extent to which companies, particularly large corporations, are able to embrace the shared value concept will depend on the attitudes of those leading them and the foundation on which they were built. In some cases, they will be able to seek inspiration from their history. Companies such as General Electric, Johnson & Johnson and SC Johnson have delivered profound positive social impacts, raising people's quality of life, improving healthcare and helping to develop basic hygiene standards. What inspired these companies was a combination of the profit motive and the desire to innovate and improve people's lives.
>>> 
>>> For other companies whose motive and inspiration is profit above any explicit social purpose, it will be more difficult to adjust.
>>> 
>>> As we move towards the shared value model, more questions will be asked of companies. The measure will not simply be profit, but to what end profit is pursued, how it is gained and what is its impact. Whether it's the pollution of the environment by energy companies pursuing fossil fuels or the effect on child obesity from food companies promoting unhealthy snacks to infants; companies will no longer be able to separate themselves from the consequences of their operations, with taxpayers and governments paying for the resulting negative outcomes.
>>> 
>>> Companies cannot continue to pretend to serve society while simultaneously acting against it. Neither can they continue to give shareholder's interest primacy above the interests of the public. No amount of investment in charitable causes or employee volunteering can change that fact. The purpose of a company will be to create shared value, where business and society achieve success together.
>>> 
>>> CSR is dead, long live social enterprise.
>>> 
>>> 
>>> Jim Wiegel
>>> 
>>> Life isn't meant to be easy, it's meant to be life. -- James Michener, The Source
>>> 
>>> 401 North Beverly Way, Tolleson, Arizona 85353-2401
>>> +1 623-363-3277 skype: jfredwiegel
>>> jfwiegel at yahoo.com www.partnersinparticipation.com
>>> 
>>> 
>>> 
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>>> 
>>> --- On Tue, 8/9/11, John Cock <jpc2025 at triad.rr.com> wrote:
>>> 
>>> From: John Cock <jpc2025 at triad.rr.com>
>>> Subject: [Dialogue] Change belief
>>> To: "'Colleague Dialogue'" <dialogue at wedgeblade.net>
>>> Date: Tuesday, August 9, 2011, 6:11 AM
>>> 
>>> So what belief do you really want to change in the "entire community," bro
>>> Jim? 
>>> 
>>> John
>>> 
>>> 
>>> -----Original Message-----
>>> From: dialogue-bounces at wedgeblade.net
>>> [ mailto:dialogue-bounces at wedgeblade.net] On Behalf Of James Wiegel
>>> Sent: Tuesday, August 09, 2011 8:49 AM
>>> To: James Wiegel; Colleague Dialogue
>>> Subject: [Dialogue] Any colleagues connected with Rensselear
>>> PolytechnicInstitute?
>>> 
>>> All it takes to change
>>> Globe and Mail 8/9/2011
>>> 
>>> "To change the beliefs of an entire community," says Discovery News, "only
>>> 10 per cent of the population needs to become convinced of a new or
>>> different opinion, suggests a new study done at the social cognitive
>>> networks academic research center at Rensselear Polytechnic Institute.  At
>>> that tipping point, the idea can spread through social networks and alter
>>> behaviors on a large scale."
>>> 
>>> 
>>> Jim Wiegel
>>> Jfwiegel at yahoo.com
>>> 
>>> When physicians were given a gift a bag of candy they were better at
>>> integrating case information and less likely to become fixated on their
>>> initial ideas and coming to premature closure in their diagnosis.  --  Some
>>> study I read about somewhere
>>> 
>>> 
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