[Dialogue] Change belief

M. George Walters m.george.walters at verizon.net
Thu Aug 11 10:39:14 EDT 2011


(This may met too long to meet the wedgeblade limits)

 

Marilyn et. al.

You probably know that young Rick Walters adopted you and Ray Caruso as role models when he was in college to understand what it meant to operate in the corporate sector as a change agent.

 

Three things occur to me regarding the private sector that are sub-threads in this dialogue.

First, systemic change for structural revolutionaries acknowledges what they are dealing with in the private sector. There is a hierarchy that is not the one we think we see. We think CEOs and CFOs run companies and in some cases they do, but generally they do not.

 

At the top are the shareholders and the majority (determined by who holds together 51% of the shares) of shareholders elect the Board of Directors and the top executives (CEO and CFO). In most publicly traded companies the Board of Directors are paid and they meet regularly (generally quarterly). In their meetings they represent the shareholders who meet annually. 

The Board of Directors meets with the elected executives to hold them accountable for meeting the objectives of the shareholders  - make profits, driving the stock upwards, and avoiding any negative publicity.

Whatever the executives do, they are looking ahead to the next board meeting to keep their jobs. If they do well they get bonuses and if they do not they get replaced.

 

Second, stacking the deck in favor of the employees and customers is possible only when you can manage the expectations of the majority of the shareholders. A company like Kanbay founded as a privately held (not publicly traded) company where the executives of the company were also the majority of shareholders, could forge a new model for a socially responsible company. Make no mistake – without profitability any company goes out of business. If they can manage to be profitable and create a new model, the public will notice and clamor to invest. If you are private, an accredited investor with 1.5 million in liquid assets or more they can invest through Private Placement Memos, but they want to be assured that down the road they can recover that investment with a  5 to 10 fold profit. That is called their exit strategy and that strategy generally has to do with the company being acquired (like Kanbay was by Cap Gemini) or going public so their stocks can be sold and bought on the stock exchange.

 

Kanbay did a masterful job or convincing private investors of the significance of their approach on their way to being acquired. They built out their innovative model following their principles and values. Once acquired or going public, there is then the possibility that the bean-counters take over, the new shareholders have no interest in the principles and values of the company they acquired, just the product, selling more of it and getting wealthier. 

 

But there is also the possibility that once acquired, the majority of shareholders in the acquiring company have through their due diligence discerned the secret ingredients in the innovation, principles and values that grew this company and want to preserve them. One methods is to simply make them a wholly owned subsidiary and let them have the larger advantage of the bigger company framework, while maintaining their approach that made them great. Sometimes this is time delimited, like 5 years, after which it is all up for grabs.

 

Third: We relied heavily on the private sector for support and recognition of innovation in doing things like the Band of 24, and in providing professionals on leave to consult with and work in our Human Development Projects. Companies also assuage the interests of those concerned with the well-being of society where their customers reside, but forming foundations and charitable giving divisions. There is frequently a “nest” of sensitive and responsible persons associated with those divisions, but they are only representative of those spread throughout the company. CEOs and CFOs of these companies are frequently among the “sensitive and responsive” and in the best position to maintain the balance and tensions involved in being profitable and socially responsible. While all the earth may belong to all the people, all the company belongs to the shareholders. It is a delicate tension.

 

Labor organizations may see that labor in both private and public companies and even government. Pro socially responsible NGOs and lobbies may act on behalf of society. But structural revolutionaries weave an entirely different trans-establishment web that includes both the pro- and dis-establishment humanity.

 

For me this is why JWM felt there was the need to have a force of people large enough to impact that 10% who represent the tipping point in social change, to do this kind of work, living with the dis-inherited and those who would protest the status quo while walking with the privileged and elite, who both found within themselves the willingness to care and make a difference. What is that force today? If us individual consultants could get it done, maybe it is a force that operates out of a consensus on direction. If not, a new force will arise because it always does. We may watch or we may help it emerge. There is still value to be discerned, found and engaged in the millions of matchboxes with pins on them (steeples) as forces that have in their roots the consciousness needed to make a massive difference. Not only that with our work on profound humanness and the new religious mode we have mosques, temples, and others to add to that picture. Many of you are embedded there now and are making a difference. The shape of a new movement is unfolding even if we cannot see it. And guess where all the shareholders of those private sector entities are located J?

 

With kindest regards.

 

M. George Walters

 

Resurgence Publishing Corporation

4240 Sandy Shores Dr

Lutz, FL 33558

USA

Tel: +1 (813) 948-7267

Fax: +1 (813) 333-1787

Mob: +1 (813) 505-9041

 

URL: www.ResurgencePublishing.com 

Professional Profile: http://www.linkedin.com/in/mgwalters

 

 

 

 

From: dialogue-bounces at wedgeblade.net [mailto:dialogue-bounces at wedgeblade.net] On Behalf Of marilyncrocker at juno.com
Sent: Wednesday, August 10, 2011 18:24
To: dialogue at wedgeblade.net
Subject: Re: [Dialogue] Change belief

 

Hi Guys(and the few gals who have spoken up thus far),

 

I have finally decided to "weigh in" on this interesting dialogue.

 

I was an Order permeator who left my first love, secondary and higher education (1960s/70s), for better income-producing positions at the time (the late 1970s/early 1980s): first with a small privately owned Chicago fundraising consulting firm (one that deeply cared about clients and employees as first and second priorities, and yet was able to be profitable); then with McDonald's Corp., later with Red Lobster Restaurants.  With respect to the latter two multinational corporations, I found the public story about priorities (customers, employees and stockholders) was quite different from the reality (stockholders, customers, employees).  This was in the 80s before the time of massive takeovers and mergers, and those of us "permeating" such companies hoped/intended to catalyze transformation.

 

In each of these work settings my position was "high" enough in the organization that I could hear, often by accident, sometimes in formal meetings, the "truth" about what was really going on.  I found that "truth" was more often than not antithetical to the purported public story.

 

Now, thirty years later, I would love to have the then "young ones" -- Raymond Spencer, John Patterson and Cyprian D'Sousa -- speak with us.  Cyprian spoke movingly at the Symposium in DC in 2009 about the Kanbay model -- a newer, more fine-tuned version of what many of us had attempted as permeators in the 70-90s.  

 

I'm guessing the Kanbay leadership stood on the shoulders of permeators like me.  But in Kanbay the transformational impetus came from the top leadership, the CEOs.  In our years of permeation experiments we documented the sine qua non for organizational transformation:  CEO approval and support.  This was immensely ironical, antithetical to our 1960s song, "local man, shall rise again, shall rise again, to build the earth..."

 

I look forward to your comments, and hope that our women who were the strong presence in the work force  (and so have longitudinal data easily at hand) will join in this chat.

 

Grace and peace,

 

Marilyn Crocker

 

 
Dr. Marilyn R. Crocker
123 Sanborn Road
West Newfield, ME 04095

 

On Wed, 10 Aug 2011 14:06:44 -0700 "David Walters" <walters at alaweb.com> writes:

I live in Alabama where here are auto plants paying any where from 14 to 18 dollars an hour.These workers are living next door to people making minimum wage, if they are lucky enough to be working. When a large textile yarn plant opened here in the early 80s the powers that be urged them to offer a starting pay at half of what they had planned and gradually work the pay up over time. These new plants are doing the opposite and making a differrence in peoples lives. $14 sounds mearger compared to Detroit but given the local wage scale and the local cost of living.  We are now working to expand the local retail base so that these folks can spend more of their earnings locally.  Every weekend I go my favorite  local social node- Walmart Superstore and watch people and their baskets. When the economy blewup in 08 , I notice that their baskets were not as full as they had been and they generally contained the basics. That has now changed baskets are now over flowing and some families are checking out with 2 baskets. I have also have noticed that their children are dressing differrently. 

 

This is on the other side of my earlier unscienitific observations in the old Walmart in the 90s when Clinton changed the welfare program that meant a single woman with 3 kids living on ADC had two more years and the payments would stop. When it did stop,  these woman were working all over town. Some moved to better housing, drove better cars and their children were involved in the community in ways they had not before.  .  

-David Walters

--- icabombay at igc.org wrote:

From: Jack Gilles <icabombay at igc.org>
To: Colleague Dialogue <dialogue at wedgeblade.net>
Subject: Re: [Dialogue] Change belief
Date: Wed, 10 Aug 2011 15:20:42 -0500

Randy,

 

Yes, the push for this quarter returns does skew things terribly.  And I agree with your statement on what is desirable for companies that want sustainability.  The issue that usually keeps this from happening is that companies can often get away with adverse behavior without government pressure (I think of Shell in Nigeria) and the fact that the lifetime of most companies is quite short, (takeovers and buyouts), and then add into the equation that not only is there a global market, but there is a global capacity to locate and do your dirty work elsewhere and polish your image at home.  I know that Nike is very keen to keep its image clean, but not only have they been caught a few times with wretched working conditions in some plants, the fact is they could afford to pay a few cents an hour more to all their overseas cheap labor and you'd never see it in the sneaker price.  I know there are shining examples out there and there are truly some great CEO's doing the right thing, but I've been in this field for a lot of years and gone to a lot of conferences on transformation etc. and still I don't see much of a groundswell to do the right thing.  Perhaps the answer is with the next generation of business leaders and the new MBA's that are graduating.  It's one thing to teach these things, it's quite another for it to go deep within and withstand all the pressures to do otherwise and not succumb to the big bucks and perks.  And all this talk about jobs, jobs, jobs; well look at all the new auto plants located in the South paying $14 and hour and people too scared to complain because there are a dozen willing to take the job at that price.

 

Just one story before closing.  One of our metro colleagues in Cleveland, the Battershells, had a daughter who headed up BP's green and renewable energy sector for a number of years.  She finally quit because it became crystal clear that although their slogan ("BP means beyond petroleum) and green logo was up front in all the adds etc, the company not only gave priority to the oil and gas sectors but really weren't willing to invest and gamble on alternatives.  She now is in the Dept. of Energy at the highest level that doesn't require confirmation.  She also says that department is a mess!  Seems the "professor" who runs it has no clue on how to manage a hugh complex of people and missions.  I could go on, but that's enough for now!

 

Jack

 

On Aug 10, 2011, at 2:29 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 
*	 <http://www.reddit.com/submit?url=http%3A%2F%2Fwww.guardian.co.uk%2Fsocial-enterprise-network%2F2011%2Faug%2F09%2Fshared-value-csr-social-enterprise&title=> [] <http://www.reddit.com/submit?url=http%3A%2F%2Fwww.guardian.co.uk%2Fsocial-enterprise-network%2F2011%2Faug%2F09%2Fshared-value-csr-social-enterprise&title=>   reddit this <http://www.reddit.com/submit?url=http%3A%2F%2Fwww.guardian.co.uk%2Fsocial-enterprise-network%2F2011%2Faug%2F09%2Fshared-value-csr-social-enterprise&title=>  

*	Comments (2) <http://www.guardian.co.uk/social-enterprise-network/2011/aug/09/shared-value-csr-social-enterprise#start-of-comments>  
*	Dermot Egan 
*	Guardian Professional <http://www.guardian.co.uk/guardian-professional-networks/all> , Tuesday 9 August 2011 06.00 BST 
*	Article history <http://www.guardian.co.uk/social-enterprise-network/2011/aug/09/shared-value-csr-social-enterprise#history-link-box>  

Man passes electronic board displaying Nikkei share average in 
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 <http://www.pepsico.com/> , Shell <http://www.shell.co.uk/>  and Barclays <http://barclays.co.uk/PersonalBanking/P1242557947640>  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 <http://www.bat.com/>  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 <http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=6532>  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 <http://www.ge.com/uk/> , Johnson  <http://www.jnj.com/connect/> & Johnson and SC Johnson <http://www.scjohnson.com/en/home.aspx>  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 <http://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 <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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Dr. Marilyn R. Crocker
123 Sanborn Road
West Newfield, ME 04095



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