John Bussey, a business journalist for the Wall Street Journal, on Nov. 22, 2010 interviewed the WSJ CEO Council on “what can companies do to help the economy improve?”
The group took to heart the poll data that showed very low approval ratings or confidence in business. That was albeit in large corporations. The numbers are much higher, interestingly, for small business. The council met and issued a report on what they recommended to the business community. The Responsible Business blog has some bones to pick as well as accolades to offer. Here are the top five recommendations they made and my assessment.
The Top Five Recommendations of WSJ CEO Council
1. A NEW STAKEHOLDER APPROACH
Companies should talk less about benefits to shareholders and short-term profits and instead focus on customer needs, investment in workers and sustainability (from ecology to education). We talk too much about benefits we provide to shareholders. We should be talking about benefits provided to our employees, customers and to the public. This will boost public confidence in business.
2. LONG-TERM RECOMMENDATIONS
Business needs to advocate for long-term solutions such as education reform, more research and development, changing the U.S. visa policy to keep foreign students working in the U.S. after they graduate from schools here. The discussion is too focused on the short term.
3. FACE REALITY
The U.S. needs to engage in the global marketplace, rather than complain. This effort needs to be led by the Obama administration and business. The public needs to understand that there are benefits to be had from engaging globally, and business needs to do a better job of explaining what we’re doing well in the international market.
4. PRESIDENTIAL LEADERSHIP
The president must advocate for a competitive business environment to create healthy companies, jobs and rising standards of living. He must be an advocate for business in general.
5. INVEST IN AMERICA NOW
Winning public confidence is all about job creation. Business and government should stimulate long-term investment in the U.S. and make U.S. companies more competitive globally. Should include: cut of 10 percentage points in corporate tax rate; 100% depreciation on capital equipment through 2012; permanent R&D tax credit; cut in taxes on repatriated earnings, provided earnings are reinvested.
The Responsible Business’s View of the Recommendations
First recommendation: Companies should talk less about the benefits to shareholders of short-term profits and focus on customer needs, investment in labor, and sustainability. We should be talking about benefits provided to our employees, customers and to the public. This will boost public confidence in business.
I am sure everyone noticed the choice of words being “talk about” instead of engage with, but let’s give them the benefit of the doubt for a moment and assume they mean do something about. The real problem here is the arenas for work are listed as separate items and not seen as a system that cannot function independently.
Customer is the launch point since that is the definition of business. A product or service is offered that can make a difference for someone who is willing to pay for it. Of course, the idea of needs, in responsibility terms, is too low a threshold. What will bring confidence to buyers is the belief and experience of businesses seeking to improve our lives in ways we could not do on our own. “Needs” assumes we know what that is and can tell you. As Steve Jobs, Apple CEO is fond of saying, “don’t ask because people are too caught up in there now, to know what the future could hold.” They cannot answer the question. I would have confidence if I believed a business was seeking ways to help me lived a fulfilled life in ways I never saw possible. But they have to understand my life before they can do that. And that means getting market research and customer feedback out of the way as an intermediary. When companies do that, innovation takes off and meaningful offerings emerge. Many case studies on this website.
Co-creators (employees, suppliers, contractors) Once the real life of the customer is put in mind, the next step is to fully enable employees and suppliers to innovate and implement improvement strategies that manifest as increased customer fulfillment. The connection of cp-creators of offerings, directly to the life of real people, IS WHAT makes an employee’s life meaningful. Now they can produce inspired work that embeds something of them selves in it. They can bring their creative energies to bear. But this requires structuring work to make that possible. The best systems are self-organizing designs that are managed by “promises-beyond-ableness, professional and personal development plans”. The promises are made my employees in alignment with the business strategy and in service of bringing something Umari Hague would call “awesome. ” The primary criterion to be met is that is produces the effect of contributing to all stakeholders, simultaneously. (Download the origin of this idea from P&G in the 1960s on this website under articles and books.) Such approaches have a six-decade history of working but are still rare because of cautious leaders, not capable workers.
Sustainability: Now charter co-creators with understanding how Earth and living systems work, particularly in regard to all the materials they affect with their decisions. This is a different paradigm than sustainability offers. Real planetary health do not come from seeking agencies who tell the people if they are certified, but rather from an organization educating itself and every member in it about living systems. Just doing less harm is not enough. They learn how to improve the capacity of Earth to regenerate itself in all places on which they have an effect. This also empowers workers to integrate the science that affects their work into professional development. Kingsford Charcoal line operators, invented close system briquetting operation in 1990, as a result of such knowledge gained in a “promise-beyond-ableness” commitment. It was not lead by a sustainability initiative, but people who were did the work of briquetting, pulling in R&D to educate and work with THEM.
To work effectively with living systems, the business will also connect with communities they effect, not on the list of the CEO council Or more accurately, executives will make it possible for every part of the business to do so. When this happened in Kingsford, the community was able to grow what it needed in economic development that uniquely fit the region, prevent damage from downsizing and closing and to foster pride in communities in regard to their business partnerships. This was not led by a community relations department but by individual and teams of employees as part of their “promises-beyond-ableness”. Kingsford was awarded the Toyota Community Service Award (you cannot apply for it) for workers changes communities.
Investors: Still on the list of course. Investors profit as a result of this dynamic system at work. Not by focusing on efficiencies and analyst reports, but by having each employee and contractor understand their direct connection to earning, margins and cash flow. They know how to calculate the return on the “promise-beyond-ableness” in terms of financial effectiveness and it must be in the plan. Financials are the responsibility of everyone, not the CFO.
As long as businesses continue to treat the stakeholders of customer, employee, supplier, Earth, community and investor as a list, they will be juggling plates as the circle performer does. Once they see them as a system, they have a chance of boosting not only confidence in business, but better performance for themselves and the economy.
I will add more comment on recommendation two on Wednesday’s posting.