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Often perceived as acting in ways that harm the economy, society and the environment due to a short-term focus on profits, big business is now starting to use its power for long-term good, according to Lucy Parker and Jon Miller, authors of Everybody’s Business: The Unlikely Story of How Big Business Can Fix the World. In an interview with Wharton management professor Witold Henisz, Parker and Miller explain why a new norm is evolving and why some of the very companies that have been singled out for “crimes and misdemeanors” are leading the way in creating a focus where doing good is at the core, rather than at the periphery, of their businesses.
Following is an edited transcript of the conversation.
Witold Henisz: In this time of skepticism and hostility toward big business — where the profession of management has fallen below even lawyers in terms of its reputation, according to a long-standing Pew research poll — what inspired you to come together and write this book?
Jon Miller: The clue is in the subtitle: The Unlikely Story of How Big Business Can Fix the World. If you talk about big business to most people out there in the world, you get a quite instant allergic reaction. Often it is a very, very deep-seated suspicion and hostility toward big business. It’s kind of easy to understand why. These companies have a long history of crimes and misdemeanors that are well documented. Everybody knows it. It is great that people are holding them to account.
But … big businesses can also be really powerful, positive engines for social change. It is a missed opportunity for the world. If the only story around is that big businesses are the bad guys, then we miss the opportunity to harness that power and direct it at some positive change….
Henisz: The book follows a structure of bringing the reader along on a journey, in which executives from a number of leading multinationals – Coca-Cola, Pepsi, SabMiller, IBM, Unilever, Mahindra, even mining companies, which people may be surprised at, such as BHP and Anglo American – try to effect social change in a profitable manner. You referenced your own personal backgrounds. How did you meet these individuals? How did you choose the protagonists for the chapters? Where did you first learn about their journeys?
Lucy Parker: Both of us have worked for a long time in the corporate universe. We have known about some of these companies. There is also a leading pack of corporates really showing the way on this. We were turning to them and [asking], “When they are doing it well, what does it look like?”
We are in no way arguing that all businesses act like this. In fact, part of the reason for writing the book is to [ask], if we could see more clearly what the ones who are doing it effectively are doing, would it help make more of it happen?…. We were also asking, can we be sure we have really gone across the sectors to show that this isn’t something unique to any sector?
“It is easy to think of these big companies as faceless monolithic entities, whereas they are just collections of people, organizational structures and relationships. That is where the change happens.” –Jon Miller
You mentioned mining. A lot of people even said to us, “How can you have mining in a book about how business does good?” On the other hand, virtually everything – the equipment around us – counts on mining. So the question isn’t do we need the industry or not. The question is how can the industry act in a way that is positive for the world around it? That was the question we were asking of every single sector.
Miller: But you are absolutely right to say that it is a journey. We were very keen from the outset to make sure that the heroes of this book are the people in the companies, because that’s where the real energy is. It is easy to think of these big companies as faceless monolithic entities, whereas they are just collections of people and organizational structures and relationships. That is where the change happens.
We wanted to see what it looks like at the front line when these big companies are interacting with the big communities around them, when they are really tangling with the issues that are confronting them. What are those people going through? What are their experiences? To bring that to life is what we tried to do.
Henisz: Were you drawing on prior experience in the field with these companies? Or did you actually embark on your own journey around the world to draw from some of these sites and communities?
Miller: Very much both. Lucy and I have seen this independently in our own histories. I was working for brands like Coca-Cola. I spent a lot of time out in Africa where I would expect people to see Coke as the bad guys…. I remember meeting a whole bunch of people in Ethiopia who were absolutely clear that … very few institutions that have invested over a long time frame in Africa have done more in terms of creating wealth … than Coca-Cola working with the farmers through their distribution networks and training people in their operations.
I remember some of these guys who worked for the UNICEFs and Save-the-Children types of this world saying that these big companies can achieve more in a place like Africa than many of the NGOs. It was a shock to me at the time to hear that. [Closing] that loop, in a way, is partly why we have written the book….
Henisz: It is amazing to think how few employees of the companies you are studying and how few customers know about the stories you are telling. Why do you think the story has not been effectively told – either by the protagonists you interviewed and featured or more broadly by the media affairs of the companies with which you are working?
Miller: To some extent, it is a new story. There is no doubt that business has a long history of interacting with communities, and there are lots of examples of enlightened self-interest stretching back decades. What we are looking at with this book are very much a leading bunch of companies on a new edge of figuring out how do we really deal with society, deal with all our relationships in the world to create the broadest possible set of positive outcomes? And that is really a new story.
The headlines have been dominated by leaks and spills and tax avoidance and an absolute litany of corporate wrongdoing. That is the story that people have. That is what is in the public imagination. This is an antidote to that, but it is nascent. And I think the reason for writing the book really is to try and give that energy – to try and put winds in the sails of that nascent movement….
Parker: One of the questions that would come from the skeptics would be, “Ah, yes. I know businesses do some good things, but usually they are just on the side, aren’t they? They’re just peripheral.”
The thing that is particularly new is the dialogue about how a business takes this way of interacting with the world into its core. How do we reconnect the core of business to wider society?…
“When I started to advise corporates a long time ago, it was quite natural for a CEO to say that the purpose of this company is to deliver shareholder value. There are not many CEOs who say that now.” –Lucy Parker
Henisz: One of the constraints that many companies face is time horizons – the different time horizons of investors, of analysts and even of managers who are looking for their next promotion or their next lateral move. The payoffs from the strategies you are describing by bringing society into the core are often five, 10, maybe 20 years out – creating an African middle class, India rising, new customers, new products, new services, new technologies. What tools and processes have you seen in place to focus attention on the longer term and avoid the short-term pressures at the individual or at the corporate level?
Parker: One of the reasons it is shaping up in the way that it is is that the crash, and all the fallout from that, is opening a new conversation about long-term capitalism, long-term shareholder value. It is not an accident that some of the industries that are leading in this are some of the most problematical industries that have had to forge an answer. If you are a mining company, a big engineering company or a pharmaceutical company, your horizon is longer. For the leading CEOs, there is quite an opportunity in being able to talk to your shareholders about the long term again, and about saying that some of these issues are about delivering strategic long-term value, not short-term quarterly value.
Miller: Think about license to operate. You look at an issue like water, for example, and you see the long term and the immediate term collide completely. Water is clearly a very long term issue, and managing water stewardship is a long term question. However, then you get the likes of Coca-Cola and PepsiCo, almost kicked out of India overnight for their behavior around water and issues surrounding that. It wasn’t a question of short-term versus long-term, but rather this is a big issue that we need to address now.
Miller: Shareholders often understand it as risk management. In a mining company, it will actually be the non-technical risk – social and political risk – [that] is stopping your project. There is a marriage of these two themes, but it will take a while.
Henisz: Many of the stories begin with a crisis or a billion-dollar loss. Do you think the companies who want to follow in the footsteps of these leaders need a jolt that big? Do we really need a crisis – a billion-dollar loss, deaths – to focus attention on broader societal issues? If not, what else separates the companies that are engaged in more superficial philanthropy on the side from those that are bringing it into the core?…
Miller: Yes. There is no doubt that a lot of the companies we talk about that really are breaking new ground in terms of the way they deal with environmental issues or social relationships have been through … a “dark night of the soul.” They have had some terrible times. They have had to dig really deep and figure out who [they are]…. But if other companies want to wait until they have that moment? Fine.
Business is good at changing and adapting. Businesses that don’t do that go extinct. That’s the nature of business. Those companies that are the leaders now are the leaders because they had to adapt to some extreme situations that they found themselves in. Other businesses may learn from that and may get ahead of the game. Or they may wait until their own dark night comes. They would be smarter to get ahead of it.
“There is a new norm being created, which is that you are really derelict in your duty unless you are understanding the long term and unless you are understanding the breadth of stakeholder value.” –Lucy Parker
Parker: There is a new paradigm emerging because short-term shareholder value is being so heavily questioned…. When I started to advise corporates a long time ago, it was quite natural for a CEO to say that the purpose of this company is to deliver shareholder value. There are not many CEOs who say that now. It is because people are beginning to realize that it does have to work for everybody – shorthand for all stakeholders. There is a new norm being created, which is that you are really derelict in your duty unless you are understanding the long-term and unless you are understanding the breadth of stakeholder value. There is a new norm arriving that may mean that not everybody has to go through that jolt to get that thought in their heads….
Henisz: If managers want to get their companies to embrace this sort of change, what should they do? For students, what skills are important for them to acquire or build? Within a company, how do you press and influence strategy to embrace these kinds of initiatives? If contemplating a career shift, what sort of companies should people choose to work for?
Miller: We have a couple of frames of reference for people starting to think about this area that provide a really useful way of thinking: What are we actually talking about when we talk about the role of a business in society? In the book, we have a model called the prism, which essentially is when you are talking about a business in the world and the effects it can have, what you are talking about generally is one of five things.
1) You are talking about the purpose the company has – the sense of purposefulness that it acts with. 2) You are talking about the product – what it actually sells. 3) You are talking about the practices that it uses to take those products to market – to manufacture them, to distribute them. 4) You are talking about any philanthropy that a company chooses to undertake. 5) Then we have the point of view of a company – what does it actually think about the big issues that are really relevant to it?
We have suggested that because it can be a daunting, complex and slightly vague area with all of these terms hitting each other. The prism is just a simple way of looking at what are we talking about when we are talking about the role of a business in society. There is a leadenness still in the language around this. [In the] world of business, you talk about words like sustainability and responsibility and citizenship. Important and great – these all come from very good places. But there is a large [part] of the business world that just switches off when they hear those words. What they hear is, ‘This is about tradeoff. This is a cost center.’ What we are trying to say is that this is an opportunity for business and for the world. That is a different way of looking at it. To get out of that mentality and think of the role a business plays in society is really the key to getting started….