Seeing Potential in Controversy

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On August 19, 2019, a headline caught my attention: “Business Roundtable Redefines the Purpose of a Corporation to Promote an Economy That Serves All Americans.”

The Business Roundtable (BRT) is a non-profit association whose members are chief executive officers of major U.S. companies including Apple’s Tim Cook and Amazon’s Jeff Bezos. By releasing a new “Statement on the Purpose of a Corporation” signed by 181 CEOs who have committed to leading their companies for the benefit of all stakeholders — customers, employees, suppliers, communities and shareholders, it essentially ended, on paper, nearly half a century of shareholder primacy. Or, at the very least, we are now seeing a new narrative emerge that legitimately challenges the Friedman doctrine with the explicit support of big corporate players.

Skepticism ensued almost immediately following the release, with critics citing inconsistencies between the talk and the walk. A few days later, a full-page ad appeared in the New York Times where the B Corporation community implicitly called BRT Chair and JP Morgan CEO Jamie Dimon’s bluff, pointing out BRT’s “all rhetoric, no action” PR ploy by asking its 181 CEOs to do some real work.

Cathy Clark, a pioneer of the stakeholder capitalism movement, aptly observed that most reactions to BRT’s statement fall under two polarizing categories:

1. The Air Traffic Control Group: Some see asserting a broader purpose of business as heretical. And coming from the CEOs, it’s like the pilots of 181 airplanes telling air traffic control to change their routes in midflight. They may be leaders of these engines today, but they are temporary stewards and have been engaged within a larger system to do a specific job. To many, their insistence that purpose must change seem at best idealistic, and at worst, illegal since fiduciary duty is generally interpreted as requiring maximization of returns to shareholders. Still others believe the idea is simply flawed. How can you be beholden to more than one kind of stakeholder and still succeed? These CEOs might just not be able to land their planes, especially if they are redrawing the map in midflight to include multiple destinations. 2. The Show Us the Money Group: On the other side, there are growing sets of people, businesses, and institutions who have been experimenting with stakeholder capitalism for several decades. And the alternative seems morally wrong to them because maximizing self-interest of the few may not leave us with a society most people want to live in. These groups are happy to see their view voiced by some of the largest companies in the US, but they know that there are many ways for these CEOs to follow their bold intention with even bolder and realer actions and the release didn’t include many. So to many of them the words alone make them skeptical. They want to know where the actions are that make this real. Otherwise, this is a distraction from the work already underway to build great stakeholder-driven companies.

As I was pondering Clark’s analysis, I encountered another response that stands in its own category, an article in The Economist that argues “competition, not corporatism, is the answer to capitalism’s problems.” Its author asserts, “[however] well-meaning, this new form of collective capitalism will end up doing more harm than good. It risks entrenching a class of unaccountable CEOs who lack legitimacy [to tackle social issues].” The author further argues that “the way to make capitalism work better for all is not to limit accountability and dynamism, but to enhance them both,” continuing, “accountability works only if there is competition.”

I don’t think I necessarily have a moral or intellectual problem with these arguments, but I do find them lacking nuance in the context of our current global cultural zeitgeist. It’s clear to me that BRT’s statement came out in an atmosphere of worsening economic inequality and increasing distrust of big corporations. Powerful Fortune 500 CEOs are under pressure to respond to a cultural shift that has been emerging these past few decades. The mad flurry of reactions seems to be missing a very important point one way or another: socio-economic progress and cultural production are completely intertwined, especially at a time of intensifying and accelerating change at a global scale. To change culture and/or to be changed by culture both play a pivotal role in shaping society.

The “Air Traffic Control” camp fails to understand how technology is changing society. For instance, traditional capitalism must evolve in the age of AI regardless of how attached people are to economic models that have worked in the past. “Redrawing the map in midflight” should be the least of our concerns as AI continues to mature at an exponential rate, amplifying our intelligence and computational power without the social values and norms calibration that can only come from meaningful cultural exchange.

The “Show Us the Money” camp raises valid concerns but underestimates the power of narrative, therefore potentially missing the opportunity to seize that power. The BRT is signaling a significant transformation in corporate culture. It almost doesn’t matter what the CEOs’ intention vs. accountability gap looks like today. We must recognize this as a historic moment when those in the position of power acknowledge the necessity to change their narrative, therefore exposing themselves to the risk of massive cultural backlash for failure to deliver on that narrative. Our response to the changing narrative should not be limited to dogmatic critique. That narrative stands a better chance of full embodiment if we focus our attention on smoothing and incentivizing the path to accountability.

And yet the most salient point for rebuttal comes from The Economist article: while it might be true that “accountability works only if there is competition,” let’s not forget that competition must be based on defined rules. Our biggest problem today is that most economic and social systems operate with outdated rules, and we don’t seem to have any agreement on how to go about defining new sets of rules. In our age of ideological balkanization, we have lost the motivation, ability and proper channels to carry on productive debate and healthy discourse. The result is an endless perpetuation of echo chambers, which only reinforce old and familiar rules to sustain the status quo. Competition based on such archaic and unfair rules does not lead to the kind of accountability necessary to adequately address the complex challenges of our time.

Regardless of words or actions, intention or accountability, competition or corporatism, shareholder primacy or stakeholder capitalism, we cannot overlook the fact that we are currently living in a big chasm between technological promise and values alignment — and that is both a social and cultural problem. All the wonderful and terrible things that technology allows us to do are being done without much time and space for stakeholders to establish agreed upon values. Simply put, if we can’t see eye to eye on what’s important in this world at a level beyond ideological allegiance, business-as-usual competition is more than irresponsible; it is outright dangerous. I would argue that the answer to capitalism’s problems can be found somewhere between collaboration and competition. We must first establish an effective mechanism to collaborate on values alignment before we can move into a healthy ecosystem of competition. To do so, we need to shift mindsets and produce cultural conditions that enable effective collaboration at scale. Here enters what I consider to be the most powerful opportunity coming out of BRT’s statement: taking advantage of these CEOs’ fear of “cultural sanctions” and encouraging them to collectively establish new values systems with all stakeholders, thereby they would co-create a set of socially responsible rules for fair competition grounded in the belief that winning a zero-sum game is no longer the social norm. At a time of dramatic societal change, competition can continue to be the key driver of economic prosperity only if we collaboratively reframe what it means to win. If we fail to dedicate our attention and resources to that critical stage of collaborative values alignment, we will soon find ourselves losing all forms of social cohesion under the growing pressure of extreme inequality.

As a dynamic knowledge organization and collaboration incubator, the Guild of Future Architects is using the mechanism of a Shared Future to facilitate values alignment. A Shared Future is defined as an intersectional and interdisciplinary collaboration with the goal of radical imagination, deep exploration and prototyping in service of catalyzing or evolving an industry, field, or social system to operate with greater justice, equity, inclusion and beauty. One might argue that collaborations can happen anywhere. The most fundamental and critical aspect, however, is not that they simply take place, but whether they can effectively bridge old and new systems by fostering innovations that bring about prosperity instead of externality. To do so requires a basic and powerful act of naming and framing — so a Shared Future becomes not just the practical mechanism but also the cultural reference for such collaborations.

The Economist article did get one thing absolutely right: “It is not clear how CEOs should know what ‘society’ wants from their companies. The chances are that politicians, campaigning groups and the CEOs themselves will decide — and that ordinary people will not have a voice.” To avoid pitfalls and blind spots, and to allow the CEOs to continue doing what they do best, we must leave the responsibility of figuring out what society wants to a cohesive, independent and scalable mechanism. I would urge all the BRT CEOs to support the establishment of multiple Shared Futures that focus on collaborative values alignment with their stakeholders. As they reach variety and scale, these Shared Futures will provide the blueprints for inclusive innovation that bridge the gap between economic opportunity and social responsibility beyond our current imagination.

Originally published at on October 27, 2019.


Future Architect and Founder of the Guild of Future Architects

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