Blog: Reframing

Round and Round goes the Business Roundtable

16 November 2019

Recently, with much fanfare, the Business Roundtable—the association of CEOs of major American companies—discovered stakeholders beyond shareholders. Or, at least, rediscovered them, again. For this roundtable, what goes around really does come around. Here is an excerpt from each of its four proclamations over the years. Together, they are telling.

This year, The Purpose of a Corporation avowed that “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.”  

In 2012, the Principles of Corporate Governance avowed that “it is the responsibility of the corporation to deal with its employees, customers, suppliers, and other constituencies in a fair and equitable manner…”1

Recently, with much fanfare, the Business Roundtable—the association of CEOs of major American companies—discovered stakeholders beyond shareholders. Or, at least, rediscovered them, again. For this roundtable, what goes around really does come around. Here is an excerpt from each of its four proclamations over the years. Together, they are telling.

This year, The Purpose of a Corporation avowed that “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.”  

In 2012, the Principles of Corporate Governance avowed that “it is the responsibility of the corporation to deal with its employees, customers, suppliers, and other constituencies in a fair and equitable manner…”1

In contrast, the 1997 Statement of Corporate Governance declared: “The notion that the board must somehow balance the interests of stockholders against the interests of other stakeholders fundamentally misconstrues the role of directors. It is, moreover, an unworkable notion because it would leave the board with no criterion for resolving conflicts between interests of stockholders and of other stakeholders or among different groups of stakeholders.”

Coming back around to 1981, the Statement on Corporate Responsibility avowed that “Balancing the shareholder’s expectations of maximum return against other priorities is one of the fundamental problems confronting corporate management. …giving enlightened consideration to balancing the legitimate claims of all its constituents, a corporation will best serve the interest of the shareholders.”

If the CEOs were right in 1981, why did they go wrong in 1997? And if they reversed that wrong in 2012, why do they have to repeat that reversal now? The abuses of Shareholder Value did not exactly diminish in the last seven years, so why should we take the latest proclamation any more seriously?

Most telling is the claim in 1997 about having no criterion for resolving conflicts among different stakeholders. How about judgment? Did the CEOs of America lose their judgment in 1997? Jack Welch apparently did. I have been told that this renowned CEO of GE—no longer quite so renowned with his company’s subsequent performance—championed that 1997 statement. Then in 2009, he came around, declaring Shareholder Value to be the “the dumbest idea in the world.” Whoops, looks like he made a little mistake in 1997. Sorry about that!

Will the CEOs of America regain that judgment now, so that their stakeholders will get a fair shake this time around? We had the words in 2012; will we get the actions now?

Here’s an idea for action: Reserve half the seats on the board of American corporations for elected representatives of the workers. No, I have not lost my mind. I am simply stating what Germany did in 1976:  By law, employee representatives have been filing 10 of the 20 board memberships in companies of more than 2000 people. The German economy has hardly been suffering ever since.

If the CEOs of corporate America don’t like this idea, here’s another: Get rid of executive compensation schemes and quarterly reports that drive their attention toward short-run gains in the stock price, so often at the expense of worker security. And another:  Stop lobbying for tax changes that favor corporate shareholders over other people in society. And, while you are at it, support a living minimum wage for workers. How about ending the lobbying that has being doing so much damage to American democracy? The possibilities are endless…for leaders who deserve that label.

These days, words go round and round while behaviors carry on. Being bombarded with proclamations and so much else, we lose memory, alongside judgment. The CEOs of corporate America now have the opportunity to come around finally: put their actions where their mouthpiece is.

© Henry Mintzberg 2019. For my own record on this, please see "Who should control the corporation?” (1984: 517-645; book out of print but available as a pdf free download)

Quoted in “Why Corporate Social Responsibility isn’t a piece of cake”, but removed from the Business Roundtable site.

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Can a loose cannon have a strategy?

30 April 2018

So…can a loose cannon have a strategy? Sure, once we realize that we use the word strategy in a way that we never define it.

Strategy may be defined by intention, but it has to be realized in action.  An intended strategy looks forward, as some sort of plan or vision into the future—whether or not it will be realized. A realized strategy looks back, to some existing pattern in action, namely consistency in behavior—whether or not it was intended.

So…can a loose cannon have a strategy? Sure, once we realize that we use the word strategy in a way that we never define it.

Strategy may be defined by intention, but it has to be realized in action.  An intended strategy looks forward, as some sort of plan or vision into the future—whether or not it will be realized. A realized strategy looks back, to some existing pattern in action, namely consistency in behavior—whether or not it was intended.

How about Donald Trump? With regard to migrants and refugees, Muslim and Mexican, he has certainly had strategy, intended as well as partly realized: keep them out and get them out. In other words, his actions have been consistent with his stated intentions: With regard to much else, however, by the dictionary definition of strategy, Trump has been a loose cannon, shooting off his mouth in all directions, frequently contradicting, not only reason, but also himself. Where’s the strategy in that?

As for realized strategy, a host of Trump’s actions speak louder than his words, and differently, in fact rather consistently. Consider the following ones: picking fights with established allies while cozying up to autocrats; challenging existing trade agreements and long-standing alliances; repeatedly attacking the FBI, the Justice Department, and the intelligence agencies; emasculating the Department of State by leaving so many posts unfilled while proposing drastic reductions in its budget, alongside that of other major departments; and championing tax cuts that could paralyze the government and wreak havoc in the society.

Pattern may be in the eyes of the beholder, but it is tough not to behold this one, however outrageous it may seem: Donald Trump appears to be taking down the government of the United States of America. This is not your usual neo-con agenda of less government; it looks to be a concerted attack on the American state itself. 



Why would the president of the United States do such a thing? In his own terms, what’s in it for Donald Trump? Maybe more to the point, what’s in store for Donald Trump if he does not do this? To answer these questions, please understand that realized strategy need not be driven by an actor’s own intentions; it can be driven by the force of circumstance, even by the intentions of some other person able to exercise power over that actor.

Who might be able to do that? The answer seems evident enough. Were Vladimir Putin president of the United States, could he be doing any better for Russia? “Trade wars are good” said Donald Trump. Sure, for Putin’s Russia. It looks like Donald Trump’s realized strategy is executing Vladimir Putin’s intended strategy.

On the other side of this coin, the Mueller Inquiry has indicated that the Russians were determined to see Donald Trump elected. But why would they want a loose cannon in the White House, such an obvious threat to their security? Because, in Putin’s pocket, Trump has not been a loose cannon at all, but a straight shooter—consistently in the direction of Russian interests. (Has his recent rash of actions in the Ukraine, Syria, and the sending home of Russian diplomates changed that? Coming suddenly and all together, they look suspicious: a smokescreen to obscure his real agenda?)

What might Putin have on Trump? Some video shot in a hotel room? Undisclosed evidence of Russian collusion in the Trump election? More likely, the capacity to call in loans that would bankrupt Trump’s businesses. Regardless of the reason, what matters is Trump’s behavior. What matters more is the threat this poses to the security of all of us.

© Henry Mintzberg 2018. Following on this, I am preparing an article entitled “Donald Trump is not the problem.”

About this business of government, Mr. President

5 April 2017

[Another version of this was posted on hbr.org last week under the title “The U.S. cannot be run like a business.”]

Dear Mr. President

As a neighbor in Canada who has long worked with businesses and governments around the world, I have some important news for you. America is not suffering from too much government so much as from too much business―all over government. Please understand this to avoid pouring more oil on the fires of America, and this planet.

[Another version of this was posted on hbr.org last week under the title “The U.S. cannot be run like a business.”]

Dear Mr. President

As a neighbor in Canada who has long worked with businesses and governments around the world, I have some important news for you. America is not suffering from too much government so much as from too much business―all over government. Please understand this to avoid pouring more oil on the fires of America, and this planet.

Business in its place is essential, just as is government in its place, which is not all over business. Now, however, thanks to you and your cabinet, business need no longer just lobby government to get its way; it is government. You were elected to challenge the establishment; will the executives who came into your cabinet from ExxonMobile and Goldman Sachs do that? They are the establishment: that other, more powerful business establishment that has now displaced the weaker political establishment.

This is an old problem now being carried to a new extreme. In the early days of the Republic, Thomas Jefferson expressed the hope that “we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength...” Instead, later in that century the U.S. Supreme Court recognised corporations as “persons” in the law. Not long after that, in the new century, President Teddy Roosevelt was railing about the power of corporate trusts in American society, and in the 1960s President Dwight David Eisenhower warned of the “unwarranted influence…by the military-industrial complex.” Nevertheless, in 2010 the Supreme Court gave those corporate persons the right to fund political campaigns to their heart’s content. When “free enterprise” in an economy becomes the freedom of enterprises as persons in a society, to paraphrase Abraham Lincoln, government of the real people, by the real people, for the real people perishes from the earth.

Should government even be run like a business, let alone by businesspeople? No more than that business should be run like a government, by civil servants. As you well know, when an entrepreneur says “Jump”, the response is “How high sir?” You are now finding out what happens when a U.S. president says “Jump”. So far, so bad. Governments are relentlessly subjected to a plethora of pressures that many businesses, especially entrepreneurial ones like your own, cannot easily understand.

Business has a convenient bottom line, called profit, which can easily be measured. What’s the bottom line in government, say for terrorism? (Countries listed? Immigrants deported? Walls built?) What’s the bottom line for climate change? (Do you really believe it is jobs created?)

Running government like a business has been tried again and again, only to fail again and again. You must remember the debacle in New Orleans when Homeland Security was run by a businessman…of sorts. How about when George W. Bush’s Secretary of the Army promised to bring in “sound business practice”? He came from Enron, just before its spectacular collapse.

In the 1960s, Secretary of Defense Robert McNamara introduced PPBS (Planning-Programming-Budgeting System) to run government like a business. The obsessive measuring led to the infamous body counts of the Vietnam War. That bottom line was about as low as it can get. Then in the 1980s came the “New Public Management”, a euphemism for old corporate practices: isolate activities, put a manager in charge of each, and hold him or her responsible for the measurable results. That might work for the state lottery, but how about foreign relations or education, let alone, dare I mention it, health care? And now, at your request, your own son-in-law heads yet another effort to run government like a business. Back he comes with that old buzzword of citizens as “customers.” (Al Gore was using this misguided metaphor when he was vice-president.) You know what? I am not a mere customer of my government, thank you, as if I buy services at arm’s length. I am an engaged citizen of my country.

The place of business is to supply us with goods and services; that of government, aside from protecting us from threats, is to help keep our marketplaces competitive and responsible. Do you really believe that recent American governments have been overdoing this job, let alone even doing it?

I have a little book for you, Mr. President, called Rebalancing Society. It contends that a healthy society balances the power of respected governments in the public sector with responsible businesses in the private sector and robust communities in what I call the plural sector (“civil society”). The most democratic nations in the world today function closest to such balance, including ours in Canada and those in Scandinavia, likewise your own when Alexis de Tocqueville wrote about the community “associations” that helped to maintain democracy in early America. Indeed, during the decades following World War Two, the U.S. was far better balanced, as it experienced striking prosperity and development—economic as well as social―despite high taxes and generous welfare programs. Now, however, the country has lost that balance, and needs the plural sector to offset the fruitless swinging back and forth between left and right—government interventions by the public sector and market forces in the private sector.

Think back to the Berlin Wall, Mr. President. That wall fell on our Western democracies, because we misunderstood what brought it down. The pundits of the West claimed that capitalism had triumphed. Not at all. Balance had triumphed.  While the communist states of Eastern Europe were utterly out of balance, on the side of their public sectors, the successful countries of the West retained a relative balance across the three sectors.

But with this misunderstanding, capitalism has been triumphing since the fall of that wall, and throwing America and many other countries out of balance the other way, in favor of their private sectors. Look around, Mr. President, at income disparities, climate change exacerbated by excessive consumption, and the unregulated forces of globalization running rampant around the globe. That is why we have seen votes like Brexit and your own, by distraught people unsure which way to turn, except against the “establishment”.

When enough people realize what has been going on, if not you, then a subsequent president, will have to restore the balance that made America great in the first place.

Sincerely

Henry Mintzberg
Cleghorn Professor of Management Studies at McGill University in Montreal

© Henry Mintzberg 2017. For elaboration of these arguments, please see Rebalancing Society…radical renewal beyond left, right, and center. Also my Harvard Business Review article “Managing Government, Governing Management”. 

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Jefferson and Lincoln anticipated Trump. What’s next?

30 December 2016

Donald Trump is not a new phenomenon in the United States, just an extreme form of an ongoing one. For years theatre has been prominent in the country’s public life, although never quite like this. This latest farce may be entertaining, but it could prove to be disastrous. The so-called “leader of the free world” will soon be a loose cannon loaded with nuclear warheads.

The winner of the presidency loses the election (although not, conveniently, in four key states—kind of makes you wonder).   The great tax evader is expected to stop the evasion of taxes. He accused his opponent of giving speeches to the very bankers who are staffing his new administration. A hunt is already underway in the Environmental Protection Agency for whoever has dared to protect the environment. And please welcome ”clean coal” back to an atmosphere near you.

Donald Trump is not a new phenomenon in the United States, just an extreme form of an ongoing one. For years theatre has been prominent in the country’s public life, although never quite like this. This latest farce may be entertaining, but it could prove to be disastrous. The so-called “leader of the free world” will soon be a loose cannon loaded with nuclear warheads.

The winner of the presidency loses the election (although not, conveniently, in four key states—kind of makes you wonder).   The great tax evader is expected to stop the evasion of taxes. He accused his opponent of giving speeches to the very bankers who are staffing his new administration. A hunt is already underway in the Environmental Protection Agency for whoever has dared to protect the environment. And please welcome ”clean coal” back to an atmosphere near you.

This is quite literally business as usual. Just look at the stock market: it’s having a ball.

Business as usual began early in the Republic. It was barely a quarter century old when Thomas Jefferson expressed the hope that “we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength...” A half century later, Abraham Lincoln “tremble[d] for the safety of my country….  Corporations have been enthroned and an era of corruption in high places will follow…until all wealth is aggregated in a few hands and the Republic is destroyed.… God grant that my suspicions may prove groundless.”

Instead, two decades later, the Supreme Court granted corporations the right to personhood. Not your usual personhood, however: corporate persons do not go to jail when they commit a crime (otherwise the ranks of the great enterprises would have been decimated by now). More recently, for anyone who missed its message, the Supreme Court granted these persons the right to fund political campaigns to their heart’s content. Do you think Brazil is corrupt? Its corruption is criminal, and is being prosecuted. The corruption in America is legal, and therefore beyond challenge: the U.S. Supreme Court legalized bribery.

There is noble America and there is nasty America: on one hand, the America of World War Two, the Marshall Plan, and the upholding of basic freedoms; on the other hand, the America of repeated incursions all over Latin America and into Vietnam and Iraq, and at home travesties from McCarthy to Trump.  Yet even rather liberal commentators have been blindsided by noble America. “Somewhere in the back of their minds, a lot of people seem to be realizing that the alternative to a United States–dominated world . . . is a leaderless world” (Thomas Friedman).1 “To regain the identity it enjoyed during the Cold War, the United States ought to become the leader of a community of democracies…. [It] would still need to retain its military might, but this strength would serve to protect a just world order” (George Soros).2 Shall we all sit back and hope that Friedman and Soros will not have to eat their words?

Guess what? Nasty America is on its way back in. Indeed, 2017 is looking to be the year of the bullies: Trump, Putin, Erdogan, Duterte, and the rest. Will people around the world who care about this planet and our progeny finally realize what has been going on and do something about it?

What has been going on is imbalance. Private sector forces now dominate the “free world” much as public sector forces dominated the communist world of Eastern Europe. In the name of globalization, “free enterprises” ride roughshod over free people and sovereign nations. Something is rotten in the state of democracy.

No wonder so many people are angry about globalization. The trouble is that they don’t know where to turn, so they vent their rage indiscriminately—in favor of the likes of Brexit, Trump, and Le Pen. The world is on fire and the inclination is to pour oil on it (all too literally in the case of climate change). Many of the more  established people don’t turn to reckless leadership; they are just waiting for corporate social responsibility to fix it—as if CSR will compensate for all the CSIrresponsibility we now see around us. These people should be taking tranquillizers (on patent). 

How to escape what Albert Einstein defined as insanity: “doing the same thing over and over again and expecting different results”? There may, however, be a silver lining in the Trump election: it issues a wake-up call, that we shall have to do things differently, sooner or later. Given his latest Twitter pathology about the American nuclear arsenal, sooner looks better.

Doing things different is possible. Imagine, for example, a council, a coalition, and communities.3 The Security Council of the United Nations is an insecurity council, arguably a war council. All five permanent members have large arsenals of nuclear weapons and histories of bullying—whether in the form of colonialism or belligerent incursions. They are also the five largest exporters of armaments in the world. Aleppo is their most recent accomplishment. Imagine instead  a Peace Council, made up of democratic nations with no nuclear weapons and no recent history of belligerence. Vested with legitimacy by concerned people all over the world, such a council could shift the whole thrust of international relations.

Non-governmental organizations (NGOs) each have their own cause: human rights for Amnesty International, the environment for Greenpeace, the medical consequences of calamities for Doctors Without Borders. Yet these problems share common cause, namely the imbalance that distorts the world today. Imagine if a coalition of respected NGOs issued a compelling vision forward—a manifesto for action to restore balance—around which these concerned people everywhere, left and right, could coalesce.

One message of the Trump, Sanders, Brexit, and other votes is that never before have so many regular people been prepared to act on the resentment they feel. With such a vision to replace the deceptive rhetoric of populist politicians, there could emerge a groundswell of people in communities, connected around the world, intent on restoring decency and democracy. They could pressure their governments to legislate and regulate for better balance, promote an international Peace Council, and support businesses that act responsibly while targeting those (and governments) that do not. We should be using the marketplace, with boycotts, to let the sellers beware.

Is any of this utopian? All of it is. But that makes none of it impossible, not when the alternative is to hope for the best. Everything in Donald Trump’s behavior indicates that what we see is what we are going to get.

It must have seemed impossible in 1776 that a popular groundswell could create a new form of democracy that would change the world. Thomas Paine, pamphleteer for that effort, did write that: “We have it in our power to begin the world over again.” And so they did. And so we can.

© Henry Mintzberg 2016. Some of these ideas are elaborated in my 2015 book Rebalancing Society

Follow this TWOG on Twitter @mintzberg141, or receive the blogs directly in your inbox by subscribing hereTo help disseminate these blogs, we also have a Facebook page and a LinkedIn page.


1 Friedman, T. 2009, February 25. Paging Uncle Sam. New York Times.www.nytimes.com/2009/02/25/opinion/25friedman.htmal?

2 Soros, G. 2004. The bubble of American supremacy: The costs of Bush’s war in Iraq. New York: Perseus Books, pp. 167-168.

3 These were discussed at greater length in an earlier TWOG entitled “We couldn’t vote, but we can act.

 

We couldn’t vote, but we can act

23 November 2016

We in Canada, alongside other people around the world, did not get to vote in the recent American election. Yet we are meant to suffer the international consequences of it. Shall we sit back, as usual, and watch events unfold, including the possibly catastrophic effects of climate change left unchecked?

Moreover, shall we continue to look on, in Aleppo and elsewhere, as communities are blown apart while a few great powers maneuver behind the scenes? Now another of these powers will have a bully at the helm—a loose cannon with his finger on the nuclear button. Bullies may admire each other, but what happens when they cross each other?

On the other hand, perhaps Donald Trump has done the world a great service, by bringing to a head long festering problems that can no longer be tolerated.

We in Canada, alongside other people around the world, did not get to vote in the recent American election. Yet we are meant to suffer the international consequences of it. Shall we sit back, as usual, and watch events unfold, including the possibly catastrophic effects of climate change left unchecked?

Moreover, shall we continue to look on, in Aleppo and elsewhere, as communities are blown apart while a few great powers maneuver behind the scenes? Now another of these powers will have a bully at the helm—a loose cannon with his finger on the nuclear button. Bullies may admire each other, but what happens when they cross each other?

On the other hand, perhaps Donald Trump has done the world a great service, by bringing to a head long festering problems that can no longer be tolerated.

Enough of the Great Global Powers    Imagine a city with weak government and no police force. Gangs would roam the streets, seizing territory and battling with each other for advantage. Well, this is the world we live in today. Three political powers roam the globe, exercising their influence, while an economic force called globalization empowers the affluent of the world to ride roughshod over everyone else.

We all know about noble America, the defender of freedom, as in World War II and the Marshall Plan that followed. Nonetheless, we had better not forget about nasty America, with its wars in Vietnam and Iraq as well as its repeated incursions throughout Latin America. Are we about to experience another round of nasty America—America made great again? Power does corrupt, whether it speaks English, Russian, or Mandarin.

We may not choose the leaders of the great powers, but we can certainly challenge the outsized control that they, and globalization, exercise over our destinies. Consider a council, a coalition, and connected communities.

A Council of Peaceful Democracies    Five countries dominate the United Nations: the permanent members of the Security Council. This should be called the War Council, since all five have large arsenals of nuclear weapons and histories of bullying—whether in the form of colonialism or belligerent incursions—and are the five largest exporters of armaments in the world.

Imagine instead a Peace Council, of democratic countries with no nuclear weapons, no history of military incursions in recent times, and relatively insignificant exports of armaments.  

Does this sound impossible? It could be made possible simply by creating it. Imagine if Pope Francis, perhaps the most respected leader in the world, convened an initial meeting of several such countries, to define the mission and determine the membership of such a council. This could include countries that have been particularly active in peacekeeping (such as Sweden and Canada), democracies in South America and Africa (for example, Uruguay, Ghana, and Brazil when it gets its political act together), Costa Rica (which got rid of its armed forces in 1948), and perhaps South Korea, from Asia (once it resolves its current difficulties).

Before ridiculing this collection of peripheral powers, consider how many such countries there are, and the influence they could have when working together for a safer world. Get your head around this form of influence—peace in place of power—and the ridicule could instead be directed at the obstinate permanent membership of the Security Council.

Such a council could take positions on issues such as the inequitable distribution of wealth in the world and the recent demise of so many democracies. With no official status, or even one day with it, the power of such a council would  depend on the efforts of institutions and people on the ground.

A Coalition of Engaged NGOs   Non-governmental organizations (NGOs) abound in the world, each with its own mission. Amnesty International deals with human rights, Greenpeace with the environment, Doctors Without Borders with the medical consequences of calamities. Yet many of these problems share a common cause, namely the imbalances that pervade the world today: the domination of all things economic over anything social, the capacity of global corporations to intimidate sovereign governments, and the lop-sided influence of the three great powers. Imagine, then, a coalition of engaged NGOs that could champion the establishment of a compelling, constructive vision—a manifesto for balance—around which concerned people everywhere could coalesce.

Connected Communities of the “good folk”   One message of the Trump, Brexit, and other votes is that never before have so many people been prepared to act on the resentment they feel. What they have lacked, however, is this compelling vision to replace the deceptive rhetoric of populist politicians. That could provide a groundswell of collaboration among what can be called the “good folk” of the world—people concerned with decency and democracy.

Collaboration happens in communities, not networks. (If you doubt this, ask your Facebook “friends” to help paint your house.) Thus, the real force for change exists in community groups on the ground, albeit networked around the world. If Amnesty International alone has seven million members, think about how many other people now function in groups in particular communities, and how many more groups would form given a clear rallying call for change.

Well, then, what are we waiting for?   All the necessary elements are in place for a groundswell of global action: Peaceful nations perhaps now ready to work together; the mass media to highlight the excesses of our imbalanced world; the NGOs to articulate a compelling vision for change; community groups of concerned people determined to make the necessary changes; and the social media prepared to connect these communities into a worldwide movement.

These community groups could pressure their governments to legislate and regulate for better balance, to promote an international Peace Council, and to support businesses that act responsibly while targeting businesses as well as governments that do not. Think of how powerful the tool of boycotting would be—so well-honed by international alliances—when executed at the grass-roots level, across the globe.

Is this vigilante justice?  Not at all. It is making good use of the marketplace, a concept that corporations understand well, as does President-elect Donald Trump, not to mention Vladimir Putin and Xi Jinping. We do, after all, have the right not to buy, also to let the buyer be aware—and the seller too.

Am I dreaming in color? Sure, for good reason. The likely alternative could well be one of the nightmare scenarios that would destroy our planet and our progeny.

© Henry Mintzberg 2016. A similar version appeared in the Huffington Post on 22 November. See my book Rebalancing Society…radical renewal beyond left, right, and center. 

Follow this TWOG on Twitter @mintzberg141, or receive the blogs directly in your inbox by subscribing hereTo help disseminate these blogs, we also have a Facebook page and a LinkedIn page.

Customer Service, or serving customers

23 June 2016

It’s been said that there are two kinds of people: those who believe there are two kinds of people and those who don’t. I don’t know about this. But I do know that there are two kinds of companies: those that believe in Customer Service and those that believe in serving customers (leaving aside those that believe in neither). I’ll call them CS and sc (asking government people to read sc as serving citizens, so as not to contradict last week’s TWOG).

Serving customers is not some sort of technique, not a program. It’s a way of life, a philosophy of doing business. Treating customers well because that makes you more $$$ is not sc; it’s CS. In contrast, sc is making more money because you treat your customers well. There’s a difference, namely what comes first in your head. Sure you charge properly for what you give, knowing that if your customers are satisfied, they will come back.

It’s been said that there are two kinds of people: those who believe there are two kinds of people and those who don’t. I don’t know about this. But I do know that there are two kinds of companies: those that believe in Customer Service and those that believe in serving customers (leaving aside those that believe in neither). I’ll call them CS and sc (asking government people to read sc as serving citizens, so as not to contradict last week’s TWOG).

Serving customers is not some sort of technique, not a program. It’s a way of life, a philosophy of doing business. Treating customers well because that makes you more $$$ is not sc; it’s CS. In contrast, sc is making more money because you treat your customers well. There’s a difference, namely what comes first in your head. Sure you charge properly for what you give, knowing that if your customers are satisfied, they will come back.

What do the employees see when a customer walks in the door: $$ or a person? Put those employees on commission and guess what they see. (“Now, how about a luxurious little Lincoln to go with your beautiful new Rolex watch? Try it on and see how good they look together!”) Put the company on the stock market, under the influence of people who can’t see past $$, and guess what everyone else is expected to see. Most big companies started with sc—that is what enabled them to grow big.  I admire the few that have managed to remain so after they went public.

I am told by someone inside Johnson & Johnson that it is one of these. Its website says that its Credo was developed by Robert Wood Johnson in 1943, “just before it became a publicly traded company…. Our Credo is more than just a moral compass. We believe it’s a recipe for business success. The fact that Johnson & Johnson is one of only a handful of companies that have flourished through more than a century of change is proof of that.” I can’t vouch for this, but the following, excerpted from the Credo, does sound right: 

We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services….

We are responsible to our employees, the men and women who work with us throughout the world…. They must have a sense of security in their jobs…. 

We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens….

Our final responsibility is to our stockholders… When we operate according to these principles, the stockholders should realize a fair return.

What does sc feel like? That’s easy; you can’t miss it. For example, recently we couldn’t find an iPhone and reported it lost to our phone company. Later we we found it and called back. There was no voice saying “We appreciate your business” while forcing us to wait interminably. (If a company appreciates my business, why doesn’t it treat my time as important as its own?) Instead, Patricia (can’t remember her actual name) answered quickly and was genuinely delighted to hear that we found it. Genuinely—the two of us were charmed by the delight in her voice. I can’t speak for that whole company, but I can tell you that the Patricia’s of this world should be staffing the call centers, not to mention the executive suites.

Then there’s that wonderful waiter in a delightful restaurant in Quebec City, charmingly called Le Cochon Dinge (The Wacky Pig). The happiest, jolliest, friendliest waiter we have ever encountered. I can’t tell you his name because he was not programmed to say when we arrived: “Hello, my name is Mestipho and I will be your server today!!”

What does CS feel like? For me, alienating. How about the programmed greeters at the entrance to the Walmart stores. One time, on a weekday afternoon, I wished they had put this person inside the store, to clean up the god-awful mess of merchandise strewn all over the shelves. And then there’s our dear old airline, so devoted to CS. Try booking at the last minute an Air Canada flight from Montreal to Boston, which takes less than an hour in the air. The fare is $1066, one way ($2132 return, if you are not good at math).  Guess what:  Air Canada has a monopoly on that route. Guess what: Air Canada can’t see past this monopoly, to its customers who fly elsewhere too. To hell with those who need to go to Boston. How about to hell with Air Canada when we need to go elsewhere.

And this brings us to $CS$: treat well only those customers with tons of $$$ who spend it lavishly. This requires that they sort the customers the moment they walk in the door, between those who get CS and those who get dismissed. I said to a Honda salesmean [whoops, a typo!]: “Can you please give me your best price.” He replied: “Are you here to buy now? Otherwise, why should I tell you that. You will just go to another dealer and tell him our price.” I’m sorry, I didn’t realize that I am not allowed to do that. The nerve of me for trying to comparison shop for the second biggest purchase I make (after a house). So I went to another Honda dealer. He gave me his best price and I bought the car, right then and there. I couldn’t care less if the other guy’s price was lower.

Of course, there’s another side to all this: respecting sellers (rs). Customers who don’t do that, even ones with $$$, may get CS, but they don’t deserve sc. That is because, if the employees are not treated well, by the company as well as the customers, how can they truly treat the decent customers well? 

© Henry Mintzberg 2016  Follow this TWOG on Twitter @mintzberg141, or receive the blogs directly in your inbox by subscribing hereTo help disseminate these blogs, we now also have a Facebook page and a LinkedIn.

Saving the planet from governments and markets

12 May 2016

Think back to the Paris Conference on Climate Change last December and ask yourself which had greater influence on your personal behavior: the clips you saw from that conference on television, or the ads that sponsored those clips?

While governments imagine that pledges and plans will deal with the problem of climate change, markets barrel ahead with business as usual, namely the consumption of goods, and of this planet. We are hooked on a malignant model of more. To paraphrase Hannibal facing the Alps, we shall have to find another way, or else make one.

Think back to the Paris Conference on Climate Change last December and ask yourself which had greater influence on your personal behavior: the clips you saw from that conference on television, or the ads that sponsored those clips?

While governments imagine that pledges and plans will deal with the problem of climate change, markets barrel ahead with business as usual, namely the consumption of goods, and of this planet. We are hooked on a malignant model of more. To paraphrase Hannibal facing the Alps, we shall have to find another way, or else make one.

The politicians pledge, and then their professionals plan, in the hope of driving actions on the ground. But think of all the talk required before any feet can walk on that ground: all the discussions, debates, and deliberations, all the planning, programming, and budgeting that have to work their way through countless public agencies, private businesses, and plural associations. Such a top-down process may be fine for building oil refineries, but is it any way to deal with the environmental consequences of these refineries?  

Politicians Pledging in Paris

Meanwhile economic globalization continues to undermine the sovereignty of nation states around the world. Now trade pacts even give international corporations the right to sue countries that legislate contrary to their private interests. Can the corporations that benefit from the warming of this planet—for example in coal and petroleum—be expected to cease their covert lobbying if not their overt litigating.

The private sector offers another way to deal with the problem of climate change: markets. The very same markets that have been firing on all cylinders with carbon energy are supposed to save the planet from that energy—as if the money to be made in fossil fuels will disappear because there is money to be made in solar panels.1 The problem is not markets per se, but the fact that markets have become so dominant in a world that requires balance across social, political, and economic forces. (See my book on Rebalancing Society and the TWOG on it.) 

Markets barreling ahead

If not governments or markets, then what other way can there be? Look in the mirror: you could be seeing the answer. We buy, we vote, we march. We can refuse, we can reduce, we can replace. As consumers, voters, and doers, we can change our own behaviors while driving our governments and markets to face their responsibilities—if we can act together.  

This will require recognition that there are three consequential sectors in society, not two. The battles that have raged for so long over public versus private—governments versus markets, left versus right, collective needs versus individual rights—have obscured the importance of this other sector, which functions largely at the community level. I believe it should be called the plural sector, instead of inadequate labels such as the third sector or civil society, to help it take its place next to the sectors called public and private.

While many of us work in the private sector and most of us vote in the public sector, all of us live in the plural sector—in our many groups and communities as well as associations (owned by ourselves as members, as in cooperatives, or else organized as trusts owned by no one, as in Greenpeace). This sector is also home to mass movements and to the many community initiatives we see around us, whether to encourage recycling or to support the poor.

Is it utopian to expect us to rise up in some sort of groundswell within this hitherto obscure sector? This question needs to be put differently: Is it really utopian to mobilize ourselves for the survival of our progeny and our planet?

We have seen significant groundswells before: in 1776 in the American colonies, in 1930 in the Indian salt march, in the Prague Spring of 1989. The best example may be the “Quiet Revolution” of Quebec in the 1960s, because of the remarkable shift it brought about in collective behavior. In that one decade, as the people threw off the yoke of the Catholic Church, the birth rate fell from among the highest in the developed world to one of the lowest.

In none of these movements did public pledges, commercial markets, or established leadership play the major role. People did, together. Tom Paine wrote in his 1776 pamphlet Common Sense that “We have it in our power to begin the world over again.” How prophetic that proved to be. How prophetic that will have to be now.

It is not plans from some elite “top” that will begin the world over again, but actions on the ground. We are the feet that will have to walk all the talk, connected to heads that will have to think for ourselves. We shall have to confront the perpetrators of climate change—and that includes ourselves—not with violent resistance or passive resistance, but with clever resistance. Some years ago, the angry customers of a Texas telephone company paid 1 extra cent on their telephone bills. This tied the company in knots. It got the message.

Beyond resistance will have to come the replacement of destructive practices by more constructive ones, as has been happening with wind and solar energy. There will be more of this when we “human resources” pursue our resourcefulness as human beings. Imagine, for example, an economy based on growth in qualities instead of quantities, of better instead of more—in education, health care, and nutrition.

Facing the issue of imbalance last week in our program RoundTables for Experienced Managers.

That conference in Paris was not a wake-up call so much as an event. Pledges and plans will not not wake us up to the problem of climate change, nor will markets. We wake up when our house is flooded, or our crops fail. But surely we cannot await the pervasion of such calamities to drive our actions. Addressing the specific problem of climate change, and the broader problem of imbalance, will have to begin with ourselves, together—locally and globally.

Progeny on the planet

© Henry Mintzberg 2016. A version of this was published on HuffingtonPost.com earlier this week. Follow this TWOG on Twitter @mintzberg141, or receive the blogs directly in your inbox by subscribing here. I also just started a new Facebook page to disseminate these TWOGs.


1 The International New York Times reported from the Paris conference on December 11 that “diplomats and policy experts” believe that, for any accord to work, it will have to convince “companies and investors that it would be more profitable to invest in renewable sources of energy” than traditional fossil fuels. On this our survival is supposed to depend!

 

Which country is more corrupt: Brazil or the United States?

18 February 2016

I have Brazil on my mind, since I will be giving a major speech there in two weeks (which I will explain in next week’s TWOG). The country has been experiencing a serious scandal in recent years, centered around Petrobras, the national oil company, with many prominent people in government and business having been accused of bribery. The economy has been suffering, and Dilma Rousseff, the President of Brazil, is in danger of being impeached.

The question I wish to raise early in my talk is this. Which country is more corrupt: Brazil or the United States? This may sound irreverent, but I believe that in one critical respect, the answer is obvious, and it’s not Brazil.

The corruption in Brazil is criminal, and can be prosecuted. In fact, it is being prosecuted. Over a hundred people, including a former prominent executive of Petrobras and a former senior minister of the government, have been sentenced to prison terms.

I have Brazil on my mind, since I will be giving a major speech there in two weeks (which I will explain in next week’s TWOG). The country has been experiencing a serious scandal in recent years, centered around Petrobras, the national oil company, with many prominent people in government and business having been accused of bribery. The economy has been suffering, and Dilma Rousseff, the President of Brazil, is in danger of being impeached.

The question I wish to raise early in my talk is this. Which country is more corrupt: Brazil or the United States? This may sound irreverent, but I believe that in one critical respect, the answer is obvious, and it’s not Brazil.

The corruption in Brazil is criminal, and can be prosecuted. In fact, it is being prosecuted. Over a hundred people, including a former prominent executive of Petrobras and a former senior minister of the government, have been sentenced to prison terms.

The contrast with the United States is stark. The most significant corruption facing the country is legal, and its perpetrators cannot be prosecuted. The  “Citizens United” decision by the U.S. Supreme Court in 2010 threw the doors wide open to private donations—institutional and personal—in public elections and that is having a devastating effect on the country’s renowned democracy. The Supreme Court legalized bribery, and it has spread throughout the political process and is having dangerously effects in the society. The most evident manifestation of this has been the repeated refusals of Congress to legislate on gun controls, thanks to the money its members receive from the gun lobby.

Meanwhile, in September the Brazilian Supreme Court ruled that donations from private legal entities to electoral campaigns were no longer allowed. Eight of the eleven justices considered such private financing to be in direct violation of the country’s constitution.

For two hundred years, the United States stood as the world’s model for progress and democracy. Might Brazil now assume this role? It is in pursuit of the answer to this irreverent question that I will be going to Brazil.

© Henry Mintzberg 2016 Follow this TWOG on Twitter @mintzberg141, or receive the blogs directly in your inbox by subscribing here (link now fixed).

The Justices of the Supreme Court of the United States of America (Scalia has since passed away)The Justices of the Supreme Court of the United States of America (Scalia has since passed away)

A prosecutor and justice of Brazil (as depicted by fans at Carnival)