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Title: The Responsible Capitalists: Will Anyone Fill Their Shoes?
Date: 06-Apr-2010
Category: Opinion Essays
Source/Author: Stephen B. Young, Minneapolis Star Tribune

Whitney MacMillanWheelock Whitneyken Dayton
 
Denny Hecker has certainly been in the news, with his failed marriages, failed businesses, and seemingly endless difficulties with the law and lawyers.

Earlier this year we saw the conviction of Tom Petters -- local exemplar of Bernie Madoff's business orientation.

Is this what Minnesota business leadership has come to represent in the public mind? Are Hecker and Petters merely extreme exceptions to the rule of the business game in Minnesota? Or has something changed in our business culture?

I think the answer is yes to all these questions.

Business ethics in Minnesota are still of a high caliber; Hecker and Petters truly are exceptions. But at the same time, I fear that our state's business culture today places ever more importance on simply "making the numbers." This value, more typical of the national business scene, has risen in prominence as senior corporate leadership here has been drawn more and more from the ranks of professional, have-gun-will-travel style MBA contract managers, and less from local families or in-house talent.

We have seen this change in business leadership coming over the last 20 years. The first sign was the disengagement of CEOs from personal involvement in local arts organizations and other nonprofits.

We saw it in the closing of St. Paul's Minnesota Club and the Athletic Clubs in both St. Paul and Minneapolis. Honeywell is gone; so is the St. Paul Companies, now Travelers. Pillsbury is now part of General Mills. 3M now really is a global company almost accidentally headquartered in Minnesota. West Publishing in now a part of Thomson Reuters. International firms now own once-proud local brokerages and investment advisers.

But has anything important been lost?

In public affairs, I think so. We no longer have a business community stepping up publicly to demand that politicians solve pressing problems in a fair manner. Business leaders worry most about "job one," which is blocking intrusive regulations and higher taxes from state and local governments or getting helpful regulations and subsidies from those same governments.

But most of all I fear we have lost spokespersons for a vision of responsible capitalism.

Consider a few examples of past Minnesota business leaders' public pronouncements:

In November 1971, Wheelock Whitney, then CEO of the Dain investment bank here, gave a talk to the University of Minnesota business school. He spoke candidly about how many corporate boards were falling short in meeting their governance responsibilities:

"There is a considerable difference," he said, "between what directors are supposed to do -- how they would really like to function if they could ... and their actual performance. This performance gap presents ... a direct challenge to the American business system. And there are factors at work that ... will make the problem even worse in years ahead unless steps are taken to reverse the trend.

"It turns out to be easier just to go along with the management recommendations, which is the reason boards have gotten to be considered by many as ... rubber stamps, or as window dressing. Directors are not meeting either the legal or moral requirements."

In a Nov. 5, 1975, letter to the employees of Cargill, then-CEO Whitney MacMillan set forth his understanding of integrity:

"Business secured by any means other than legal, open, honest competition is wrong," he said. And: "Cargill does not want to profit from any practice that is immoral or unethical. Should we discover our business being done in any other than an absolutely proper manner, disciplinary action will be taken."

And: "Should there be a question concerning a particular practice, open discussion will surely resolve the issue. If a practice cannot be discussed openly, it must be wrong."

In September 1987, Ken Dayton, CEO of the Dayton Hudson Corp., wrote that "governance is trusteeship." He explained that this means that running a company is not a selfish affair but a matter of taking care of others. Governance is more than management of a business; it is stewardship of the power inherent in the business.

These are apparently not the kinds of principles with which Hecker and Petters built their business careers. And they may sound a bit idealistic and unrealistic to many business leaders today.

But they are the core of an old and invaluable Minnesota business culture of good stewardship, which understood business governance to be about taking care of responsibilities, not just taking profits for the sake of illusory self-importance.

Stephen B. Young is the Global Executive Director of the Caux Round Table



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