A NEW CONNECT FOR COMPANIES TO ENGAGE WITH SOCIETY, OR CAN THE EMPEROR HAVE NEW CLOTHES?
I was pleased to be asked to review the excellent book CONNECT, written in 2015 by John Browne (former Chairman of BP) and his two McKinsey collaborators Robin Nuttall and Tommy Stadlen.
As the book’s principal author Browne, now Baron Browne of Madingley, takes the reader on a historical voyage that begins with China’s early history and its negative view of business, through the social consciousness of the US journalist “muckrakers”, to the present-day view of businesses and the experiences of their leaders including amongst others Enron, BP, IBM, Johnson & Johnson, Novo Nordisk, Pepsi, Google, Goldman Sachs, Unilever and Walmart.
On the CONNECT trip we are presented with historical vignettes that illustrate how companies have exploited societies and their governments. These short but clear stories include the East India Company, Cecil Rhodes’s British South Africa Company and crusading American journalists like Ida Tarbell and Upton Sinclair. Nicknamed “muckrakers”, they wrote exposés of major industries such as the Standard Oil monopoly which was broken up by the US Supreme Court in 1911, and described the treatment of workers in Chicago’s meat packing industry: “It is difficult to get a man to understand something when his salary depends on his not understanding it”. It was Sinclair’s book The Jungle that led Congress to pass the US Pure Food and Drug Act and the Meat Inspection Act, which had been sponsored by President Theodore Roosevelt in 1906.
On the positive side the authors provide details on socially friendly companies like Hershey, the US chocolate manufacturer. Founder Milton Hershey offered his employees excellent working conditions including a home to live in, financed by the company, and education for their children. Other examples of employee supportive companies were in the United Kingdom with Quaker families like Cadbury, Rowntree and J.S. Fry, who also specialised in chocolate manufacturing.
Most of these histories are compelling in suggesting an interest in the corporate weal, although many others in the list of those interviewed have been less than perfect. Perhaps by the evolution of company’s culture since the 20th Century, they’re taking more of an interest in providing socially responsible elements in 21st century investing and within their corporate culture. Volkswagen may not be listening!
As Browne states it: “History tells us that success over time is only possible when companies connect effectively with external stakeholders and contribute positively to society.”
One thing that emerged as the authors visited and interviewed corporate, government and business executives in several countries, is that the term Corporate Social Responsibility (CSR) or Environmental Social Governance (ESG), has passed its sell buy date. New terminology needs to be used and as you may have guessed the new word is CONNECT.
The perception that CSR is a dead duck hasn’t been voted on, instead it is Browne’s business executives who regard it as “a fluffy, largely irrelevant cost centre” and “For civil society groups, it is meaningless propaganda that fails to achieve their goals.” Browne goes on to declare that “as one of the earliest CEO proponents of CSR, I feel well placed to call for its final demise.” I fail to understand who chose Browne, other than himself and a couple of unconnected CEO’s, to make that judgement although it’s clear that for some titans of industry Social Responsible has been dropped from their vocabulary.
So, if Social Responsibility is a spent force what are the alternatives? Fortunately help is on the way in the form of Browne’s Four Tenets of Leadership (BFTL):
- Map your world
- Define your contribution
- Apply world class management
- Engage radically
Each of these is covered under the guise of CONNECTED Leadership of which businesses “should manage like any other corporate function, using the four core tools of management: creating capability; organising to win; establishing processes; and measuring outcomes.” I did ask myself why Corporate Social Responsibility couldn’t evolve and be accounted for using these very same tools. All we can hope is that Browne is correct and that companies using the CONNECTED Leadership method can deliver businesses that care about their employees, demonstrate their role as positive members of society and still make money for their stakeholders. Is Browne’s idea the solution to corporate social responsibility? It’s at this point that I’ll refer you to one of the subtitles to the last chapter, “Vague but Exciting.”
Unfortunately, the book does make use of quotes by Goldman Sachs’ CEO Lloyd Blankfein “there has been no real shift in human character that wasn’t expressed in Greek tragedy” and “outliner” Hank Paulson “Since the beginning of history, if you really get down to the fundamentals, every financial crisis has been caused by flawed government policies”. Conveniently Brown seems to have forgotten that Paulson (a former Chairman and CEO of Goldman Sachs), was the US Treasury Secretary with the policy to bail out the banks during the Lehman period and who also belonged to that part of the government with the power to make the changes he now believes are necessary. Both Blankfein and Paulson would do well to remember the 2016 $5.1 billion fine imposed by the US government on Goldman Sachs (the largest in US history), for its role in the secondary mortgage housing scandal!
This book is a good read if only for the stories of personal business successes such as the relationship between BP boss Michael Savage and an Inupit elder in Alaska over the building of an oil pipeline on land settled by indigenous people; businessman George Mitchell’s pioneering techniques to extract shale oil in an economically viable way, and inventor Sebastian Thrun’s unshakeable belief in the future of driverless cars. So, if any of these stories whet your appetite then I would urge you to read this book.
However, if you’re hoping that CONNECT will encourage businesses to provide socially responsible platforms the corporate world is likely to embrace, then let me draw your attention to the words of Mark Twain: “De Nile is not just a river in Egypt”.
Reviewed by Sanford G Henry
