“For years I thought that what was good for our country was good for General Motors, and vice versa.” Charles Erwin Wilson, GM CEO, in 1950s hearings.
Yes, much virtual ink has been spilled (including here at I&I) on The Business Roundtable’s recent change of sides in the “shareholder versus stakeholder” debate — a controversy that, as Wilson’s quote demonstrates, goes back far beyond Nobel Prize-winning economist Milton Friedman’s 1970 declaration that advancing other interests ahead of owners’ was “pure and unadulterated socialism.”
But maybe just a few additional insights are still worth sharing.
In a purely business sense, the shareholder/stakeholder brouhaha represents form over substance. Duh: Every company needs a clear sense of mission and values that form its brand promise, defining how it serves customers, employees and communities. In turn, successfully living out that promise determines the entity’s ability to deliver returns for shareholders.
Yet culturally and politically, as Friedman recognized, the import is massive: the collective CEOs’ statement culminates decades of leftward corporate drift.
Years ago, Big Business learned it could (or thought it could) gain breathing space to operate by buying off — and pandering to — “stakeholders,” a.k.a liberal interest groups. Corporate “philanthropy,” once the province of community charities, museums, libraries and symphonies, refocused on leftish foundations, think-tanks and advocacy groups. And expanded into payoffs of the very environmentalist organizations seeking to take companies down and radical social organizations seeking to shake them down.
All that morphed into a souped-up PR specialty — “Corporate Social Responsibility” — and then into “sustainability,” which has now mushroomed well past its environmental connotations to swallow up social, ethical (“governance”) and, of course, the mother of all stakeholder issues: “diversity.”
In parallel, the positive development of “strategic communications” — systematic, proactive outreach to advance corporate objectives with various “audiences” — flipped over time into the fad of “purpose-driven” organizations.
It’s admittedly somewhat of an oversimplification, but companies across America turned to “stakeholders” to help define their corporate “purpose,” which often then led to “alignment’ of business plans.
Who’s The Boss?
As Procter & Gamble’s chief marketing officer once described the concept: “This is not corporate social responsibility, it’s not cause marketing, and it’s not a strategy for philanthropy; it’s a business strategy. … (O)nce you choose your purpose, everything else should come out of that.”
General Electric’s former chief communications officer has stated, “I’m a big believer that companies whose values are aligned with widely held social values are the ones that will win.”
In other words: corporate communications and marketing departments, configured in particular to cater to liberal audiences, increasingly steered the ship on business strategy — not vice versa.
(How fascinating, and telling, that GE’s current outsider boss, Larry Culp, was one of very few Business Roundtable dissenters — after all, GE is now in a fight for its very existence after a stock freefall under previous purpose-driven leadership that wiped out $100 billion of shareholder value. And that P&G’s stock is recovering after the intervention of an activist — read, performance-driven — investor following a decade of disastrous underperformance.)
Meanwhile, once-conservative corporate cultures have been fully commandeered by the sustainability police. It seems quaint to think about when a divorce could derail the career of even the most promising executive, or morality advocates such as the American Family Association and Focus on the Family could spook entire organizations with boycott threats.
Quite a contrast to those now running the show: leftist organizers (Google employees’ revolts over Defense and Homeland Security contracts) and “me-too”-inspired feminists demanding 100% female corporate leadership and expelling dissenters (RIP James Damore).
Not to mention the explosion of “impact/ESG investing” and young people’s demands for “meaning” at work. Or companies such as Nike envisioning whole generations of kids growing up desiring not to be “like Mike” but rather like foul-mouthed, flag-and-president-dissing, and flagrantly lesbian soccer star Megan Rapinoe. Plus Gay Pride sponsors representing a who’s who of Corporate America.
Boycott? As noted previously, only if you don’t plan to converse, charge, compute, lodge, launder, invest, bank, fly, drive, drink, eat, medicate, spectate or be transported. Upset that a company like Starbucks advocates for far-out causes? “Sell your shares,” snorted its erstwhile honcho. And buy what?
Funny, though, how fervent “sustainability” backers turn decidedly less enthusiastic when corporate structures advance conservative perspectives. Don’t the evangelical owners of, say, Chick-fil-A and Hobby Lobby deserve equal respect and space for serving their “stakeholders”? Both are closed on Sundays, and the latter closes early on other nights to ensure family time for predominantly women employees. And both have been light years ahead in providing livable wages, and giving 10% of proceeds to charitable causes.
The Business Roundtable manifesto would seem to signal the ultimate waving of the white flag to power-hungry fanatics. But it actually launches open season for radical change agents to further up their expectations.
Start looking for “stakeholders” to demand representation on corporate boards (similar to labor reps in Europe) and greater say over companies’ strategies, human resource policies and even business choices (e.g., out of not just defense and border security contracts, but also fossil fuels and other out-of-favor sectors).
In short: what’s good for “stakeholders” is good for the Left.
Bob Maistros, a messaging and communications strategist and crisis specialist, is of counsel with Strategic Action Public Affairs, and was chief writer for the Reagan-Bush ’84 campaign, three U.S. Senators, and the U.S. Chamber of Commerce. He can be reached at firstname.lastname@example.org.
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