Book Excerpt—The Challenge for Business and Society: From Risk to Reward

Stan Litow’s new book, The Challenge for Business and Society: From Risk to Reward published by John Wiley & Sons, presents a fact-based assessment of the role that corporations have played in society both historically and currently and perhaps most important, offers a road map for a more promising future.

The genesis of Stan’s book was the current round of criticism of business, some justified and some not, from both the left and the right as being the cause of all societal ills from income inequality to the shredding of the social safety net and stable employment. Stan uses the lens of history and fact, as well as his deep experience across sectors of the economy, as opposed to rhetoric, to provide a clear assessment of how the private sector, government, and civil society might work together to address some of the most daunting, critical challenges facing society, and do so, in a more scalable and sustainably effective way.

Read a passage from the book’s introduction below.


 

For those who knew me well at the beginning of my career, my writing a book about corporations and their role in society would really be odd. I began my professional career in the mayor’s office in New York City, and after four years of helping shape city policy and managing the largest public-service internship program in the country, I founded and led a not-for-profit think tank and community advocacy organization. Following that I served as deputy schools chancellor, helping lead the nation’s largest school district through a period of turbulence. My experience in city government, education, and not-for-profit enterprise expanded my views on public policy and provided knowledge on issues like education, but a deep knowledge of corporations was not among my assets. I basically saw the private sector as just another funder for my reform ideas. I lacked substantive knowledge about the private sector. Of course, that all changed when Lou Gerstner, then IBM’s CEO, while leading a massive corporate turnaround, recruited me to IBM to lead corporate citizenship. In over two decades, and under the leadership of three IBM CEOs, I’ve gained intimate knowledge of the private sector and specifically its role in society. That is why the most recent U.S. presidential election sparked my interest in writing this book.

The 2016 presidential campaign focused a good deal of attention—overwhelmingly negative—on the role of corporations in society. Big companies were accused of a range of sins—profiteering, plundering the environment, ignoring (even exacerbating) societal ills ranging from illiteracy and discrimination to obesity and opioid addiction. Income inequality, a particularly contentious and divisive issue, was laid squarely at the doorstep of billionaires and the private sector. Wall Street, in particular, was a convenient target for the blame for growth in income inequality, by contrasting the lack of growth in wages with the growing number of billionaires.

But the angry rhetoric hardly stopped at Wall Street, and wasn’t restricted only to financial services. Quite the contrary: companies with manufacturing plants outside the United States were criticized for sending jobs abroad, companies that cut jobs in the United States, even in the face of declining revenue, those that embraced or created technology that could eliminate jobs. In fact, while some of the criticism was justified, nearly all companies were vilified regardless of whether their behavior justified it.

At the same time, there is another side. President Donald Trump, who joined in a good deal of the criticism of the private sector during the campaign, shifted. He moved federal policy and rhetoric in a totally different direction. He got rid of fiscal, social, and environmental rules that purportedly hobbled business, reduced or shut down cabinet offices historically protecting the public good, and rolled back clean power, consumer protection, civil rights, and living wage and healthy eating initiatives, and he endorsed moving basic public funding from public to private schools—all in the spirit of addressing the need for private-sector job growth and a reduced public-sector role. The privatization of public services seems to have gained renewed interest from some in government, including expanding the privatization of the military. While some view this positively, it may have another effect, exacerbating the negative views held by increasing numbers of Americans who see corporations, especially large corporations, in a decidedly bad light.

To many, this ushers in a new era of “cowboy capitalism.” Big companies, unfettered by regulation, encouraged by the presidential bully pulpit, are freed up to go about the business of making money—no matter the consequences to consumers and the commonwealth. If there is little or no growth in wages, especially among those on the wrong end of the income inequality spectrum, we can expect the negative rhetoric, coupled with demonstrations and community actions, to escalate. If history tells us anything, this new era will stimulate a counterreaction at the state and local levels. This would certainly not be the first time a period of corporate ambition led to a negative reaction. In the 1920s, corporate behavior led to the worst financial crisis America had ever seen, with the Great Depression, resulting in the onset of the New Deal in the 1930s, which increased governmental authority over business. In fact, America’s views about corporations wax and wane. Efforts to over-regulate in the 1970s led to the election of Ronald Reagan and a very different set of actions during the 1980s.

Where are we today? Frankly, it seems like a train wreck waiting to happen. But we do have a choice. We always do. We can simply sit back and let it all unfold before our eyes, or instead, beginning with a fact-based assessment of history and reality, we can actively participate in efforts to balance the growth of business with the needs of society to produce genuine shared benefit.

Where are we today? Frankly, it seems like a train wreck waiting to happen. But we do have a choice. We always do. We can simply sit back and let it all unfold before our eyes, or instead, beginning with a fact-based assessment of history and reality, we can actively participate in efforts to balance the growth of business with the needs of society to produce genuine shared benefit.

Some corporations, freed from regulations, will abuse the public trust. Others will respond effectively in their communities and with their employees, investing more, not less, in social and environmental areas, working hand in hand with local and state governments and non-profits to address societal challenges, especially the critical issues of education and job creation. How many will act this way and how they do it will be the major issue—whether there are one-shot efforts to counter bad behavior by others, or instead systemic solutions; whether they are scalable, sustainable, and a model for others. While President Trump has promised to reduce “foreign aid,” some big companies might actually do the opposite, and step up efforts to engage with communities around the world, not just in the United States, assisting in job creation, poverty alleviation, and improvements in education and health.

Some might choose to address the growing jobs and skills crises. They may do this for a range of reasons, such as to impact their bottom line, advantage civil society, engage employees, and reflect positively with their shareholders. But the motivation for this action will be critically important. Some will see it as in their business interest to focus on actions designed to impact favorably on society. Others will see it as core to their corporate culture, values, and beliefs, understanding its value in attracting and retaining top young talent. Some will combine both, and hopefully influence others.


Excerpted with permission of the publisher, Wiley, from The Challenge for Business and Society: From Risk to Reward by Stanley S. Litow. Copyright (c) Stanley S. Litow 2018. All rights reserved. This book is available at all booksellers.

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