Blog: Rebalancing Society

Nailing Corporate Reformation to the Door

2 October 2018

Co-authored with Frederick Bird

In the sixteenth century, there were calls for reforms of the Christian Church, which was then the largest, wealthiest, and most global institution in the world. Some critics engaged in protests, others offered advice or called for a gathering of leaders. But what eventually sparked action was a poster nailed to the door of the All Saints Church, Wittenberg, in the fall of 1517, by Martin Luther, a monk and professor. He posted 95 theses about fundamental issues to be addressed. Thus began the Reformation.

Photo credit: Martin Luther [Public domain], via Wikimedia Commons

Co-authored with Frederick Bird

In the sixteenth century, there were calls for reforms of the Christian Church, which was then the largest, wealthiest, and most global institution in the world. Some critics engaged in protests, others offered advice or called for a gathering of leaders. But what eventually sparked action was a poster nailed to the door of the All Saints Church, Wittenberg, in the fall of 1517, by Martin Luther, a monk and professor. He posted 95 theses about fundamental issues to be addressed. Thus began the Reformation.

Photo credit: Martin Luther [Public domain], via Wikimedia Commons

At a meeting last November at the Drucker Forum in Vienna, Charles Handy called for a reformation of our time, concerning the business corporation.  David Hurst and Nick Hixson, both Drucker Associates, responded by asking a number of management thinkers to reflect, in the manner of Luther’s 95 theses, on ills and remedies concerning the corporation today.

As management professors, one of us trained in religious studies, we have taken up this call, rather literally. We propose 9.5. theses (Luther’s were highly repetitive!), directed at fostering reform of an institution whose influence today is arguably comparable to that of the Christian Church at the time of Luther.

These 9.5  theses are not meant to be comprehensive, only, like those of Luther, a possible starting point for reformation. One thesis is taken straight from Luther, and all but one of the others have been modified from, and inspired by, Luther’s own words. (An # designates the number of Luther’s original thesis, with our modifications of his original in italic.) Like Luther, we state these theses without comment: they should speak for themselves.

1. They preach only human doctrines who say that as soon as the money clinks into the money chest, the soul flies out of purgatory. (#27)

2. Those who believe they can be certain of their salvation because they have achieved higher share value will be eternally damned, together with their consultants. (#32)

3. Why do so many corporations, whose combined wealth is today greater than the wealth of most nations, build their one basilica of globalization for their own benefit rather than for everyone? (#86)

4. Away with all those economists who say to the people “more, more, more” when the people need better, better, better. (#92)

5. … for the souls in purgatory, fear by downsizing should necessarily decrease and distribution of wealth increase. (#17)

6. Leadership indulgences must be preached with caution, lest people erroneously think that they are preferable to the good works of communityship. (#41)

7. The true treasure of business is to add value to society. (#62)

8. Because love grows by works of love, businesses become better when they engage in love of the people and the planet. (#44)

9. To repress these very sharp arguments of the laity by force alone, and not to resolve them by giving reasons, is to expose the corporations and their CEOs to the ridicule of their enemies and to make citizens unhappy. (#90)

9.5. Blasphemous is the dogma that greed is godly and markets are sacred.

We believe that this dogma has taken our world out of balance, in favor of self-interest over collective needs and the common good. As a consequence, tyrants are being elected, only to undermine further the very democracies that put them into office. With no countervailing power to stop them—no serious global government, no reliable superpower—these tyrants threaten peace on earth. Faith will have to be restored in our institutions, including a reframing of corporate social responsibility, to favor balance in society.

© Frederick Bird and Henry Mintzberg 2018. For more on balance, see Rebalancing Society…radical renewal beyond left, right, and center.

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Please welcome CSR 2.0

7 December 2017

I address this especially to business executives, but as citizens of their societies and neighbors in their communities.

Why do we focus on the conditions of our problems instead of addressing their root causes? Medicine, for example, gives far greater attention to treating diseases than to preventing what caused them in the first place. Jonas Salk provided a telling exception: instead of treating polio, he created a vaccine to eradicate it.

0.0, 1.0, 2.0

I address this especially to business executives, but as citizens of their societies and neighbors in their communities.

Why do we focus on the conditions of our problems instead of addressing their root causes? Medicine, for example, gives far greater attention to treating diseases than to preventing what caused them in the first place. Jonas Salk provided a telling exception: instead of treating polio, he created a vaccine to eradicate it.

0.0, 1.0, 2.0

Much the same can be said about corporate social responsibility, or CSR. A corporation is considered responsible when it attends to the evident conditions of some social or environmental problem. But imagine how much more responsible it would be to address the underlying cause of that problem? Finding a new way to recycle waste may be good, but helping to reduce the generation of that waste is better. Not good, however, is Coca-Cola’s promotion of exercise programs for obese children, because its own products are a significant cause of that obesity. This, like greenwashing—pretending to be environmentally friendly—borders on what we can call Corporate Social Irresponsibility, or CSI.

We are inundated with CSI these days, some of it verging on the criminal—for example, banks that register customers for accounts they never requested or automobile companies that cheat on emission controls. And how about the massive private funding of American election campaigns This is a form of legal corruption tantamount to bribery.

Let’s label the irresponsible activities, CSI 0.0; the responsible attention to conditions, CSR 1.0; and the substantial addressing of cause, CSR 2.0. While we should be appreciating CSR 1.0 for its damage control, we should be welcoming CSR 2.0 for helping to reverse the damage. We need as much serious corporate social responsibility as we can get.

Imbalance as the root cause

I see imbalance in society as the root cause of many of our major problems, including global warming and income disparities. In my book Rebalancing Society, I trace the tipping point toward the current imbalance back to 1989, when the Berlin Wall fell, signaling the end of the communist regimes of Eastern Europe.

Western pundits at the time declared that capitalism had triumphed, over communism. They were mistaken. Balance had triumphed, over imbalance. A healthy country balances the market forces of the private sector with the democratic needs of the public sector and the community concerns of the plural sector (“civil society”).  Those regimes of Eastern Europe were severely out of balance, on the side of their public sectors, while the successful countries of the West were better balanced across their three sectors.

Since 1989, however, there has been a marked decline in the health of many countries, most notably the United States. The country now faces alarmingly high rates of incarceration, obesity, income disparities, and drug taking, accompanied by, of all things, a sharp decline in social mobility (particularly the chances of poor children moving up the social ladder). All of this reflects the escalating imbalance in American society.

The mistaken belief that capitalism triumphed in 1989 has enabled capitalism to triumph since then, tilting the country toward the private sector. Think about the lop-sided lobbying that now overwhelms Congress, as a result of that legal bribery—most of it in favor of business interests. How ironic that the very problem of imbalance that brought down communism is now bringing down democracy.

In much of this, corporate America has hardly been an innocent bystander. This is most evident in the congressional lobbying, but also in the intensification of global warming by the promotion of fossil fuels as well as by the stock markets’ relentless demand for MORE. Likewise have income disparities been widened by the shift to contract work that has diminished workers’ wages while weakening their protections. And at the root of this has been the investor obsession with Shareholder Value, as if no other stakeholders, let alone basic human values, matter.

The business fix? 

Most of our major problems reduce to a single foreboding one: how to reverse the imbalance before it’s too late? There is widespread belief In America that if the country has a problem, business will have to fix it. Proponents of this fix point to private (so called win-win) ventures for example, that bring down the cost of windmills and solar panels. No doubt ”doing well by doing good” is beneficial. Not beneficial, however, are the many companies that do well by doing bad, or else do well by doing nothing. There is no win-win wonderland out there.

Now we see a whole spate of proposals for what can be called adjectival capitalism: Sustainable Capitalism, Caring Capitalism, Regenerative Capitalism, Inclusive Capitalism, Conscious Capitalism, Democratic Capitalism (this one with democracy as the adjective and capitalism as the noun!). All of this indicates the problem more than the solution.

Capitalism certainly needs fixing, especially the frenetic stock markets and the deplorable pursuit of Shareholder Value. But that will happen, not by capitalism getting itself right so much as by society getting capitalism into its rightful place, namely the marketplace. How did a word coined to describe the funding of private enterprises become the be all and end all of human existence? It is the balance in society that we need to get right, and that will not be done by business alone, or, for that matter, by government or community action alone.

Responsible Responses

What, then, can responsible businesses do? They can start by recognizing the role they may have played in creating these problems—if not deliberately, then as a byproduct of their economic activity—so that they can address their causes. Moreover, decent businesses will have to challenge the indecencies of other businesses, not least by supporting legislation intended to correct these indecencies.  Above all is the need for responsible businesses to engage in more collaboration with government organizations and community associations. Consequential solutions, especially for the problem of imbalance itself, will have to come from consolidating the capabilities of the major institutions of all three sectors: communities engage, governments legitimize, businesses invest.

Is the private sector prepared to recognize that it has too much power? Are many of us ready to temper our self-serving individualism for the sake of our collective and communal needs in society? Will international businesses and the international agencies so beholden to economic dogma acknowledge the social, political, and environmental downsides of globalization (to be discussed in a forthcoming TWOG)? History offers scant evidence of centers of power voluntarily relinquishing power. But these are no ordinary times, with the looming threat of global warming and the prevalence of nuclear weapons in a world of so many thugs in high office.

So, please, enough of business as usual, especially in the form of CSI 0.0. Beyond CSR 1.0, it is time for CSR 2.0—time for the citizens and neighbors who work in business to get serious about corporate social responsibility.

© Henry Mintzberg 2017. For more on this issue, see Part V (“Who Should Control the Corporation?”) of my book Power In and Around Organizations (out of print, but available for downloading at no cost, also in a summary article). This lays 8 positions around a horseshoe, from state control to full autonomy, with the CSR position in the middle (Chapter 20).

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Brexit and the rest: it all adds up

6 July 2016

I have written frequently in these TWOGs on the need for rebalancing society, but I feel that recent events have made the message more compelling. I will keep conveying it until that message gets through, or I can no longer write. So if you agree with it, please circulate this so that I can move on!

Question: What might explain the following? Brexit. Trump. Sanders. Democracies in retreat. Thugs in presidential palaces. Backlash against globalization. Add to these: climate change and corruption in America (worse than Brazil). Answer: Imbalance in society.

In 1989, the Berlin Wall fell, and that set off our relentless march to imbalance. The wall fell on us, thanks to our misunderstanding of what brought it down

I have written frequently in these TWOGs on the need for rebalancing society, but I feel that recent events have made the message more compelling. I will keep conveying it until that message gets through, or I can no longer write. So if you agree with it, please circulate this so that I can move on!

Question: What might explain the following? Brexit. Trump. Sanders. Democracies in retreat. Thugs in presidential palaces. Backlash against globalization. Add to these: climate change and corruption in America (worse than Brazil). Answer: Imbalance in society.

In 1989, the Berlin Wall fell, and that set off our relentless march to imbalance. The wall fell on us, thanks to our misunderstanding of what brought it down

It was claimed in 1989 that capitalism had triumphed. This was dangerously wrong. Balance had triumphed. While the communist states of Eastern Europe were severely out of balance, with so much power concentrated in their public sectors, the successful nations of the West balanced their power more effectively across their public, private, and plural (civil society) sectors. But a failure to understand this has been throwing the world out of balance ever since, with power increasingly concentrated in the private sectors, in favor of the forces of economics and individualism. Since 1989, capitalism has indeed been triumphing, globally and domestically.

Now consider these happenings in light of this imbalance.

Brexit. Was there dissatisfaction with the European Union? Of course. Was there xenophobia? No doubt. But these evident explanations do not justify the knee-jerk reactions of an establishment press to the pro-Brexit vote: “stupidity”, “lies”, “cynical politicians”, “dumb down”, “hucksters”—to quote from two recent columns in the New York Times, by Roger Cohen and Thomas Freidman. It’s too easy to dismiss the lashing out of disadvantaged and disoriented people instead of probing into the source of their angst, especially when that questions the globalization dogma that these two writers have promoted blindly for years.

Beneath this vote lies the social imbalance When people have lost their way, while their established leadership offers no viable alternative, they find somewhere to go. And this can cause them to act no less stupidly than their leaders. The prevailing paradigm, the American dream, has become a nightmare for too many people around the world. (Especially in America, where social mobility—the odds of getting ahead when born into a poor family—has dropped startlingly.) One inconvenient truth behind the Brexit vote is the anger felt about globalization, in this country directed at the powerful elites of the London financial establishment.

Trump and Sanders. Take your pick—rednecks or liberals, manifesting their frustration as anger or angst. Again we find the same social imbalance, here directed more explicitly at the brazen power of Wall Street.

Democracies in retreat.  Not long ago, democracies were in ascension, all over the world. No longer. Thanks again to the imbalance, they are in retreat, left and right, with the unimpeded rise of elected thugs in presidential palaces (Russia, Venezuela, Turkey, etc.), or through the bribing of elected politicians by private interests. In Brazil this corruption is criminal, and at least is being prosecuted. In the United States this corruption is legal, and so it continues to fester.

Global Warming. Is there excess use of carbon energy? Of course there is. But behind this is the imbalance inherent in the domination of economic interests over social need: the obsessive drive for quantity over quality—for more and more GDP and Shareholder Value instead of better and better lives. We and our planet are being consumed by consumption.

Exaggerated individualism and rampant globalization. These are two sides of the same coin. Instead of balancing individual needs with collective and communal needs, we allow one to dominate the other two. And who are the prime beneficiaries of this? The wealthiest individuals, many of whom are the greediest—and the ones behind a globalization movement that allows an unelected economic autocracy to undermine national sovereignties and social communities. No wonder so many disrupted people vote Brexit, Trump, Sanders, Le Pen, et al. Who else acknowledges their concerns?

And how about terrorist attacks?  Angry at the established forces and unimpeded by a balanced alternative to the prevailing paradigm, some people lash out in horrific ways, with indiscriminate killing. They express no concern for the consequences of their actions. (Does the 1% express concern for the consequences of their particular actions—less horrendous but more widespread?) After the latest carnage in U.S., we have the spectacle of the National Rifle Association giving elected representatives permission to legislate against assault weapons.

Need I go on? Need we go on? There is another way. It’s called balance, across the sectors: respected governments and responsible businesses with robust communities. Constrained greed. Concern for the disadvantaged. The Western democracies were closer to all this in the four decades following World War II. (Recall the welfare programs of the Johnson administration in the U.S. and the higher levels of taxation in many of the developed countries.) The world needs to restore its balance, and reject the oxymoronic “democratic capitalism.” (Notice which is the noun and which the adjective.)

Once we understand what has been going on, we can appreciate that the conventional solutions will not work. The problem will not be fixed in or by the private sector. Capitalism certainly needs fixing, but this will require rebalancing across all the sectors—which means putting capitalism in its place, namely in the provision of goods and service. Period. Nor can we expect public sector governments to take the lead, because most have become too coopted by private interests domestically and overwhelmed by corporate forces globally.

This leaves the plural sector, comprising those associations that are neither private nor public, most of them community-based: our clubs and groups, NGOs, not-for profits, cooperatives, social initiatives and social movements. This sector is massive, yet it has been lost in the great debates over public versus private, namely the linear politics of left versus right.

Please understand that the plural sector is not them; it is you and I, in our everyday lives. Some of us may work in the private sector and most of us may vote in the public sector but all of us live in the plural sector. We need to recognize that it is here, on the ground, that the restoration of balance will have to begin.

© Henry Mintzberg 2016. Please see Rebalancing Society…radical renewal beyond left, right, and center for a full rendition of this message. For earlier comments on this theme, please see the TWOGs under Rebalancing Society (This TWOG was delayed pending the appearance of a related version on the Huffington PostFollow 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.