A Reformation, Really?
At the close of Drucker Forum 2017, Charles Handy called for a reformation of business enterprises. Frederick Bird and Henry Mintzberg responded with a tongue-in-cheek revision of Luther’s 95 Theses, their 9.5 Theses which included this paraphrase of Luther’s thesis #32:
Those who believe they can be certain of their salvation because they have achieved higher share value will be eternally damned, together with their consultants.
In the US, government seems to gladly allow enterprises to set their own scopes of responsibility, mainly shareholder value, even when that directly conflicts with the best interests of the employees and the communities affected by the production, transportation, and disposal of their products. (Here's a recent glaring example).
Could it be that in our zeal to separate economic and political considerations, we’ve absolved businesses of moral responsibility and stalled the conversation about the equitable distribution of costs, income and wealth?
Commerce and Damnation?
This is a sensitive topic, but we need to be clear about who business is serving. As we produce more, how do we determine how gains are distributed? Already 13% of the world’s population is undernourished, despite an abundant food supply. As W. Brian Arthur of McKinsey recently wrote:
The economy...produces enough in principle for everyone, but the means of access to these services and products, jobs, is steadily tightening. So this new period we are entering is not so much about production anymore—how much is produced; it is about distribution—how people get a share in what is produced. Everything from trade policies to government projects to commercial regulations will in the future be evaluated by distribution. Politics will change, free-market beliefs will change, social structures will change.
Who Reaps Technology's Rewards?
As automation makes production and labor cheaper and shareholders lock in gains via share repurchases, some are already insisting on more equitable distribution of profits, like the $15 minimum wage movement in the US, or a Universal Basic Income.
Arthur anticipates “a Scandinavian solution: capitalist-guided production and government-guided distribution. Europe will find this path easier because a loose socialism is part of its tradition. The United States will find it more difficult; it has never prized distribution over efficiency.”
Avoiding the Evils of Socialism?
Let us be clear, not all Americans are misinformed about the extent to which our country is already a corporate welfare (or socialist) state. Our Medicaid system pays premium prices to big pharma, taxpayers clean up and pay for the collateral damage of innumerable industries: opioid abuse, corn, snack and tobacco companies whose products cost Medicaid billions, farm subsidies, bailouts for banks and auto companies, subsidization of highways, defense contractor premium pricing, security for oil producers in the Middle East and beyond. Nevertheless, socialist wealth distribution to individuals remains anathema for many politicians. Here in the US, the conversation about access and distribution will most likely remain the responsibility of individual citizens and a few “radical” elected officials until reason returns to conservatism.
If we let enterprise and government leaders define the scope of their responsibility, we can assume that many will be self-serving. Public company management teams seek to manipulate their stock prices (and bonuses) by repurchasing shares rather than investing in creating jobs, minimizing impacts, increasing production capacity or new offerings. In fact, Goldman Sachs recently reported that stock buybacks are exceeding capital investment in 2018.
We can also expect that the communities who are absorbing the incidental damage of our industries will be demanding a larger role in future decisions. Robert C. Wolcott in HBR states, “history suggests that concentration of wealth in too few hands leads to social pressures that will either be addressed through politics or violence or both.” If inequality continues to grow, automation causes significant unemployment, a recession hits, and/or geopolitical conflict flares, our liberal democracies will require morally reinvigorated leadership to survive (France's gilets jaunes protests are only one recent example).
We can wait for governmental regulations, which will be mired in political torpor and which corporations will most certainly fight, or we can recognize our own power as workers and consumers of products and begin to affect change ourselves.
What’s an Effective Moral Response?
Both leaders and workers are implicated in the actions of enterprises they work within or patronize. If you participate in an industry that earns profits by exploiting workers, natural resources or the environment in ways that are damaging and unsustainable, then you are morally implicated in those actions. As a consumer of the products of these industries, you are implicated, too.
“Tell me what company you work for and I will tell you what kind of human you are.”
- Emmanuelle Duez at GPDF 2018
As individuals, we each have at least three forms of capital: labor, money, and social capital (our networks and reputation). It is time to take stock of both our own values and our own power.
How are we implicated in the larger impacts of the businesses we serve, invest in, and patronize?
What is the quality of leadership we are offering and accepting?
Who and what will we be optimizing for?
Who do we want to be in this time of great change and opportunity?
How do we begin to hold ourselves and our leaders more accountable for impacts on ourselves, our society, and our world?
We should not fool ourselves into believing that our work has no impact on our ontology, or who we are being in the world. I can imagine a future in which I am asked, “How did you help fight inequality, climate change and mass extinction, Grandpa?” Today is the day I am given to start creating my answer to that inevitable question.
At the Humane Leadership Institute, we’re interested in creative conversations around what might be a more humane approach to leading ourselves and each other. How can we actually produce the greatest good for the greatest number effectively, profitably and humanely?
We believe that individuals empowered to communicate, collaborate, hold accountable, and humanely lead can conduct business in a way that generates productivity gains, engagement, shareholder returns and benefits to our communities. These empowered citizens, workers, and leaders can use their own capital to hold themselves, others and enterprises true to their values while creating the goods and services we all need.
We hope that you will join the conversation at the Humane Leadership Institute. We are collaboratively developing the tools for individuals and teams to practice identifying and clarifying the values they want to bring to their workplace and the world. We seek to make those aligned with their own highest values even more effective at self and team leadership.
Join us, there’s still time and much to do.