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Issue Highlight — A Sign Of Hope
- Peter Block addresses the importance for corporations to work in the public interest as well as the interest of shareholders, building strong communities and promoting social equity.


Online Edition - November/December 2000

 In This Issue...
Tackling Leadership
Generation X And The Baby Boomers At Work
Heeding The Call
A Sticky Situation: Creating Innovative Climates

Motivation Made Easy

Peter Block Column
Views for a Change
Heard on the Street

Return to NFC Index

  One From Column B                                                                         Peter Block

A Sign Of Hope

  Much has been written and said about how corporations have lost their connection to communities. They move from place to place depending on tax breaks and labor costs. They externalize social costs so that, for example, someone else pays the price of environmental decay. They have led the attack against government regulations, which represent the interests of the larger social good.

  I recently heard a corporation executive make some statements that caught my attention. It was a small sign of hope that businesses might get more deeply involved in building community and become bigger players in solving social problems. This is no small matter in a time when economics and shareholder value reign supreme. The question of whether anyone in this culture is in a position to solve social problems is a good question. For the most part, the primary measure of value for businesses is their stock price, while their social responsibility has been a marginal interest.

A Cry for Help

  We are in a period where the loudest cry for government is to get smaller and quieter. And where businesses have been about shareholder value, individuals are into householder value. The people who ran the election campaigns believed that we would vote for President of the United States based on whether we would get another $500 deduction for our children, a $100 tax refund and pay less for our prescription drugs. Who is to say they were wrong?

  If we care about how we build and sustain our communities, and what we do about the large social and economic inequities between rich and poor people and rich and poor cultures, then businesses have to become a bigger force. After all, transnational corporations are larger than countries, large corporations seem to have a lot to do with picking our politicians and directing our laws, plus political leaders now feel honored when they spend time with business leaders.

  Getting business to place real priority on societal concerns is no easy task. The pressure on businesses for shareholder value runs deep. It is so intense that famous economist, Milton Friedman, speaking for many economists, has said for years that if a company spent any money on solving community or societal problems this was a violation of their compact with shareholders and he personally would consider suing the management for dereliction of duty.

Enter Mr. Levin

  Something happened, though, this August at an Aspen Institute conference on "Understanding Globalization." Gerald Levin, Chairman and CEO of Time Warner, was a member of a panel discussing globalization and culture. He made a statement along the following lines: He said that we have reached the point where corporations have to start operating in the public interest as well as the interest of the shareholders. Since corporations hold so much of the wealth and resources in society they are going to have to take responsibility for such social issues as poverty, the digital divide and the well-being of the "third world."

  He argued that social and community values have to be built into the center of companies, on an equal footing with shareholder values. He also spoke to the need for corporations to respect national cultures and stall the homogenizing impact of globalization. He went on to acknowledge the existence of American economic imperialism, and included himself in that category. As actions, he recommended we:

1. Change the laws.

2. Wake up the financial marketplace to social responsibility.

3. Develop new corporate leadership among government, academic, non-government     organizations and private foundations.

  Granted, his statement was buried in an obscure panel discussion and carried over unwatched C-SPAN, but he did make the statement. Importantly, he said that not only will business have to play a more significant role in worldwide education and poverty, but that this role should stand at the center of a business' concerns. This would mean that social and community well-being would shift from being on the edge of concern, where it now resides, to a central concern. The social fabric and health of communities would then no longer be an act of philanthropy, but would be directly aligned with the essential purpose of a business.

  This is radical. It does not matter if Mr. Levin really means what he said, nor whether Time Warner becomes a leader in the social responsibility of business. The fact is, he said it. He voluntarily used strong language and he is part of the ruling class. That is worth marking on your calendar.

  If corporations do not shift their thinking and action, then social equity and strong community, both of which seem important to sustain democracy, will continue to deteriorate in the face of our abundance.

Giving Back

  Now, you might think that corporations already do their fair share, through foundations such as Lucille Packard, Ford, Carnegie, Rockefeller, Kellogg and the like. But these foundations are financed more through the individual wealth of the families. Businesses themselves give mostly lip service to community and society concerns. For example, one of the largest donors to social services is State Street Bank in Boston. While they rank among the largest donors around, and are rightly proud of their leadership, they return only 5 percent of their profits back to the community-hardly on par with what they return to shareholders. And please, do not argue that businesses contribute to community through the jobs they create or the employee hours they contribute. These are valuable, but hardly meet the criteria of making larger human needs central to the business.

  There is no reason not to believe that Mr. Levin was sincere in his vision of a more responsible social role for the transnational corporation. In fact, I think we should all write to Mr. Levin at Time Warner and thank him for his comments. We should let him know we look forward to hearing how he plans to follow up on his comments. He is in the position to lead the way: He is the boss of CNN, Time Inc. Publications and vast motion picture resources, and with AOL as his new partner, he has the reach to create important changes to the thinking and values of the private sector.

  Granted, if he really made poverty, hunger and the economic well-being of the underclass a central immediate concern of his corporation, he would be questioned, and perhaps even sued by the financial community and Mr. Friedman (or his successors), but maybe that would not be so bad. It would bring the question more into the mainstream debate. Plus, I am hopeful that C-SPAN would carry the trial and solve the problem of what TV show to watch in those long early morning hours.

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