|Thank you, Ron (Baukol), for your kind words. I am grateful to the Caux Round Table for this recognition….it means so much to me. And I thank Steve Young and for his leadership.
To be standing here accepting an award from an organization that is so consistent with my personal philosophy is particularly rewarding. I do wonder, however, where did my philosophy come from? In large part, I believe it comes from this community that I’ve lived in all my life.
I don’t have to look too far into the history of this organization to see the role models who have surrounded me and have been so formative in my thinking. We all owe a debt of gratitude to the early leaders like Bob MacGregor, Win Wallin, Chuck Denny, Roger Parkinson, Tony Anderson, Ed Spencer and Ron Baukol.
And of course, we continue to be inspired by past award winners Sally and George Pillsbury and Bill George.
The truth is, that we are all honored – (but not surprised) - to have an organization based here in our community that is respected the world over for its focus on ethical leadership in business. Caux’s principles for responsible business of integrity, transparency and value creation were forward looking in 1994, when they were first declared, but today have never been more relevant.
To my colleagues and friends, The Honorable Amy Klobuchar, Governor Pawlenty, Secretary of State Ritchie, Dean Brian (Atwood). I am truly humbled by your words. For a moment, I wasn’t sure if I was being recognized or eulogized. Either way, it was absolutely “heavenly” and I thank you.
To all of you, my family, friends, Carlson employees and colleagues who have chosen to be here today to share in this special moment with me, you honor me so much with your presence.
Several years ago, while my father was still alive, three generations of our family engaged in the arduous exercise of writing a mission statement for our family.
In it we committed to, “contributing broadly to society from our collective human, intellectual and financial wealth.” And it goes on to say, “We have an obligation to create a platform from which succeeding generations can continue to fulfill this mission.” This award feels like an affirmation that perhaps we are fulfilling on our mission and so I eagerly share it with our family.
Since the publication of my book, “How We Lead Matters,” I’ve been doing a great deal of speaking around the country and the world for that matter, on the topic of ethical leadership and in particular how to lead through challenging times.
There doesn’t seem to be much debate about the challenges that confront us: We know we must stimulate job creation and innovation, we must re-tool our education system to better compete with the world, we must preserve the environment, combat terrorism, work to alleviate poverty and disease and continue to elevate America’s position in the world as a respected global citizen and a competitive nation.
The list is easy to compile, but the answers, of course, aren’t nearly so simplistic …nor are they clearly assigned to anyone to solve.
In the face of these daunting challenges, we, of course, ask ourselves, “But who will lead?” “Who will lead?” It’s a critically important question.
And, I must tell you that I love questions…
My favorite poet Rainer Maria Rilke had this to say about questions:
“Try to love the questions themselves, like locked rooms and books written in a foreign language. At present you need to live the question. Perhaps you will gradually, without even noticing it, find yourself experiencing the answer, some distant day.”
I had a very interesting question asked of me last year while I was in Vienna to accept an award in business leadership which was founded by Mikhail Gorbachev.
It was one of those lavish, formal affairs with an eclectic assortment of people from Queen Noor of Jordan to Nobel Peace Prize Winner, Betty Williams, to the designer, Massoni, popular entertainers and international human rights activists, all being recognized for their life’s work.
Everything was exquisite down to the last detail - until dinner. A distinguished European gentleman leaned over and asked me a question. “Tell me,” he said, “can you really be successful in business and have integrity?” He was polite – but very earnest.
Given the global economic environment, I guess I shouldn’t have been surprised, but I was a bit taken aback. I have always felt strongly that business can be one of the greatest forces for good in the world.
It’s business that fulfills needs and encourages global partnerships. It’s business that stimulates innovation and links people across the globe around a common objective. It’s business that funds many of our philanthropic causes and it’s business that provides the very best philanthropy there is – a job.
Furthermore, it seems to me that one clear lesson from our current crisis is that you must have integrity in business or you won’t be in business for long. I expressed all of this in my answer to the gentleman and was determined to not let his question spoil my dinner.
It wasn’t until a couple weeks later that I realized I was actually very grateful for that question. I worry that it’s the unasked question that should cause us discomfort. It’s the unasked question that gets us in trouble. Because it’s the unasked question that gives us permission to disregard how the choices we are personally making in our professional and personal lives that impact the common good.
Take for example, the current economic crisis. It’s covered with the finger prints of business leaders who made reckless and greedy decisions which have had severe and widespread consequences for us all not just in the U.S. where it originated…but in the remotest corners of the planet where many of those left behind were beginning to get a toehold in their own economic empowerment.
It saddens me to say that far too often over the last decade, business leadership has let us down. So discouraged was I about the cultures at Enron and Worldcom, I composed a letter to my company’s shareholders….my children, grandchildren and those to follow to help guide them in their choices.
Isn’t it interesting, that at a time when business is less respected than ever before, business is also expected to get more involved in society than ever before? And, this will only intensify for the next generation of business leaders.
Recently, I was asked to co-teach an MBA class in corporate responsibility at the Carlson School. Fortunately, my partner in the classroom is the very accomplished and dynamic Professor of Strategic Management and Organization, Myles Shaver, who I’m pleased to say is here with us today.
When I retired as CEO, I had envisioned the opportunity to share my experiences with our future business leaders, and I would have been pleased teaching on just about any subject.
But Myles told me that over the last few years, there has been a persistent and increasingly loud drum beat from students to offer a course in “corporate social responsibility.” This should be music to all of our ears.
Here’s the question students are asking: “How do I balance priorities of profit and responsibility to society?”
“If I focus on the profit piece, my cost may go down, but the cost for society may go up. If society asks me to do too much…take care of poverty, illiteracy, HIV/AIDS, malaria, pollution…than my costs will go up…I won’t be competitive…I won’t generate a profit, I will have to lay off people and I can’t be a contributor to the solution to these problems.”
This is a highly complex dilemma that every single one of those students will need to grapple with during their business careers. That certainly wasn’t the case when I was studying international economics and beginning my business career.
Just think how far we’ve come since the economist Milton Friedman proclaimed in 1970 that businesses’ only job is to make a profit. He made it easy…that is if you only had to focus on maximizing profits for this quarter!
But today, thoughtful business leaders make decisions not just for this quarter or the quarter after that…they are making decisions that will quite possibly have an impact on generations well into the future.
As the former Norwegian Prime Minister Gro Harlem Brundtland reminds us, “We must meet the needs of the present without compromising the ability of future generations to meet their own needs.”
In 1970, of course, business was not subject to the pressures of intense globalization which ties the world’s economic markets together in startling ways – witness the sudden downturn in our economy when Greece’s economy took a dive.
In 1970, the ability of technology and social networking to coalesce activists and socially responsible investment communities wasn’t as great an influencing factor on business strategy as it is today.
In 1970, there were basically only “shareholders” to please. That was pretty straightforward…return a profit.
That was the prevailing thinking prior to the Caux’s introduction of its principles around the belief that this framework for business could “provide the necessary foundations for a fair, free and transparent global society.” In 2009, Caux then expanded its principles to key stakeholder groups: customers, employees, shareholders, suppliers, competitors and communities.
Yes, business leaders now think in terms of “stakeholders” – all those who are impacted by and have an impact on the business.
The “compact” between business and society has clearly evolved since Friedman’s proclamation. After all, if we tout the fact that business can be one of the greatest forces for good, we must also concede that, if irresponsibly managed, it can also be a destructive force.
And there’s one other important differentiator between now and 1970, and that is a growing group of business leaders who have demonstrated that it is possible - even desirable and defensible from a competitive standpoint - to find that place where a business can create “Shared Value” for both itself and society.
“Shared Value” is a concept put forth by Harvard professor Michael Porter in 2006. Porter basically bridges the duality of profit generation and societal need. He actually helps us sort through the multitude of needs and the multiplicity of stakeholder passion so that business can thoughtfully prioritize when and how to engage.
Because Porter points out that the short-term performance pressures companies face rule out indiscriminate investments in social value creation.
He says, “Strategy is always about making choices. Organizations that make the right choices and build focused, proactive and integrated social initiatives in context with their core strategies will increasingly distance themselves from the pack.”
Social entrepreneurship which commercializes a product to solve a social problem is perhaps the ultimate example of creating “shared value.”
On my way to the Carlson School class the other night, I was reminded that one of my very early jobs at Carlson was an example of “social entrepreneurship” – and a very clever one at that.
Our company at the time was primarily a stamp company providing loyalty for merchants who issued stamps to their customers. The more people saved, and the faster they saved, the happier our merchants, the more profit for Carlson. The idea which qualified my father the title social entrepreneur was to convince churches, synagogues, schools and clubs that if all their stakeholders saved they could pool their stamp books for the “common good.” Carlson bought school vans, band uniforms, choir robes and more. Of course, Curt Carlson loved the idea that preachers and principals and PTAs were all “pitching Gold Bond Stamps.” It was a win/win and a great success.
We know that business is an excellent problem solver. But our only hope of making the right decisions about how to allocate scarce resources against the problems that most threaten our way of life is to find efficient and productive ways to partner with others. Business can’t do it alone. Government can’t do it alone. Civil society can’t do it alone.
But we can’t partner effectively if we don’t have an appreciation for each other’s roles and speak each other languages. And by the way, Caux has adapted its principles to governments and non-profits to use as an ethical foundation for their missions.
In an effort to help stimulate a forum in which cross sector partnerships could be more successfully formed, I gave a speech at the University of Minnesota in 2005 in which I advocated for what I call “Integrative Leadership.”
I’m proud to say there is now a Center for Integrative Leadership at the University researching and teaching cross sector problem solving with oversight by what was - heretofore - two very unlikely bedfellows: The Carlson School of Management and the Humphrey Institute for Public Affairs. Thanks in large part to the leadership of Dean Brian Atwood and the support of President Bob Bruininks.
With us today are several representatives from the Center for Integrative Leadership including its executive director, Laura Bloomberg, one of its academic directors, Jodi Sandfort, and several fellows. Thank you for coming, we are all counting on you.
In its most pure form, ethical leadership is about choices…the choices we make every day in all our endeavors because we are all stewards of something.
From the top floor, to the shop floor - from the board table to the kitchen table - the fact is that each one of us is responsible for something – our organizations, our families, our work teams, our communities. All of us make leadership choices every day…and collectively they do matter. They define us as individuals, as a nation, as a global society.
That’s why it’s my belief that one of the most important “corporate responsibility actions” a company can take is to create a responsible culture. A culture that provides a clear context for individual decision making.
Creating a culture is not something you do in the middle of a crisis. Of course, the first step is to avoid the crisis. But sometimes there are externalities that we can’t avoid.
I was on my way into the office when the towers were hit in New York…
On 9/11 and for many days and months afterwards, I was extremely proud of the decisions made by our people.
It has been so very gratifying for me to watch Carlson President and CEO, Hubert Joly, along with the next generation of leaders continuing to strengthen the culture and live out The Credo.
Hubert happens to be a Frenchman, so let me tell you a quick story about Napoleon that I’ve been telling the Carlson “troops” for some time.
Napoleon is said to have convinced his foot soldiers that they each had an imaginary Field Marshall’s baton in knapsack. The day will come he told them that all around you have fallen. You are left standing and must take the baton and lead!
No one knew if they would be the one standing at the end of the battle. I submit it is time each of us take up the baton of leadership, while we are still standing. We have the obligation and privilege to lead responsibly.
Because we know this to be true:
To be trusted, we must be trustworthy.
To govern others, we must govern ourselves.
To bring discipline to our organizations, we must practice self-discipline.
To sustain, we must balance performance with stewardship.
And so I ask the question once again, “Who will lead?” I think we know the answer…You and I will lead – together – inspired by the Caux Round Table’s visionary principles of responsible leadership. Who will lead? We will. Let us “live” the answer.