Stakeholder Management: Profit-Seeking, Nietzsche, and Fiduciary Duty

Part I Profit-Seeking

The Johnson & Johnson Credo says in part, “We believe our first responsibility is to the doctors, nurses, and patients. . . . Our final responsibility is to our stockholders. Business must make a sound profit” (Bowie, p. 18). Final here does not mean last but not least; nor does it mean first among equals. Instead, this credo, which I contend is tailored for marketing purposes, denies the residual profits feature of commercial property rights. To place a cap on profit such that the residual can go to stakeholders without the majority and minority owners’ approval is to violate property rights in favor of redistribution.

Part II Nietzsche

Nietzsche contends that modern ethicists seek to impose their Thou Shalt Not in order to dominate the strong out of weakness. The normative subterfuge used by these new birds of prey masks their hypertropic (exaggerated) instinct to dominate. Whereas the strong naturally dominate, the weak who feel compelled to do so must resort to subterranean means in order to beguile the strong into renouncing their native strength. Imagine, for example, a wan-looking business ethicist in a small academic office trying to dominate Donald Trump, Bill Gates, or Warren Buffet, for instance. Nietzsche wonders how in the hell the strong ever got roped into being ashamed of their strength by the sordid moralists whose instinct to dominate is somehow immune from such shame.

Part III Fiduciary Duty

“A growing number of business experts advocate adjusting the conventional view of a company’s purpose—to generate wealth for its stockholders—to a more holistic view that recognizes that business doesn’t operate in a vacuum. Everything a business does affects someone somewhere—not just the stockholders—and those other someones deserve consideration from every business that affects them” (Bowie, p. 14).

The full essay is at "The Stakeholder Subterfuge." See also the book, On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management. Both are available at Amazon. 

Off-Shore Drilling off Virginia’s Coast: The Stakeholder Framework Applied

By the early 1990’s, the U.S. had banned drilling off the Atlantic coast. In the wake of BP’s deep-water-drilling disaster in the Gulf of Mexico in 2010, President Obama cancelled his go-ahead of drilling leases off Virginia’s shore. A few years later, Doug Domenech, the Secretary of Natural Resources in Virginia, and that republic’s head of state, Bob McDonnell, teamed up with Virginia’s two delegates in the U.S. Senate to “put Virginia’s coast on the energy map through an act of Congress.” Domenech said, “I personally believe that the East Coast of the U.S. does have the ability to be the prolific economic basin.” The Bureau of Ocean Energy Management estimated based on two-dimensional seismic surveys that 3.3 billion barrels of recoverable oil exist under the Atlantic’s outer continental shelf and 31.1 trillion cubic feet, or 886.3 million cubic meters, of natural gas. However, the executive arm of the U.S. Government alone is more than that bureau. Moreover, lest this conflict over drilling be viewed as primarily between Virginia and the U.S. Government, it should be noted that the East Coast is not exclusive to Virginia.

 

Respecting the integrity (i.e., valid claims) of both frameworks requires integrity, or self-discipline.   Worden 

The full essay is at "Drilling Off-Shore: Strategic and Societal Leadership Applied."

Toward a Definition for Ethical Leadership: Disabusing the Pessimists

One consultant suggests that “the definition of leadership ethics is still unclear; its scope is broadening, making it a moving target.” This is not good news for the topic. Fortunately, the field may be making the task of definition unduly arduous. Scholarship is needed to ferret through the debris so a concept of ethical leadership can be constructed that is both academically rigorous and of use to practitioners, whether in advising and “doing” ethical leadership.

The complete essay is at "Toward a Definition for Ethical Leadership" For more, see also The Essence of Leadership at Amazon.

Social Harmony and Toxic Chemicals in China

According to the New York Times in 2012, the Chinese had become increasingly willing “to take to the streets despite the perils of openly challenging the country’s authoritarian government.” Even more surprising, government officials had actually acquiesced in some notable cases. Given the raw nature of power, particularly under authoritarian auspices, revolution rather than gradual reform may still be the most likely means by which democracy can bloom under the golden, albeit hazy, sun.

The full essay is at "Chemical Pollution in China."

Social Media Marketing: The Social Element as an End in Itself

In the religious domain, some people struggle with the inherent incongruity of acting selflessly while believing that the righteous are rewarded in heaven. Resolving this oxymoron in practical as well as theoretical terms may come down to “one hand not knowing what the other hand is doing.” Whether innate or a “learned skill,” disentangling a practice from any hope of reward can be applied to social media marketing. This application is easier said than done, especially in a culture of greed saturated with opportunism at every opportunity as a strong norm and custom. Indeed, the underlying question may be whether a “strong personality” once well-engrained is able, not to mention willing, to “park itself out back” if even for a much-needed break.

Gary Vaynerchuk, the author of several books on social media marketing, preaches a two-step approach, which can be characterized as the marketer becoming a native in whichever (social media) platforms he or she is in and then consummating the (ultimately) desired transaction. Ideally, the selling fuses with becoming a native (or recognized as one), so the two phases are “phased” into one.

Crucially, being able to come across as a native is not the same as “going native.” Whether in business or government, putting up a front in order to be perceived by the masses as one of them is not the same as being one of them. Even though Vaynerchuk emphasizes the need to respect the nuances of a given social media platform (e.g., values and mannerisms), he may be interpreted by some readers as maintaining that presenting the appearance of respect is sufficient to “become” a native, at least for marketing purposes. In other words, a marketer need not “go native”; going through the motions is sufficient as long as the other participants believe that the entrant is satisfying their social or informational objectives.  

Unfortunately, learning how to come across as a native in sync with a platform’s distinctive “cultural” mores and norms may be too short-sighted not only in terms of “going native,” but also in achieving marketing objectives. In fact, the approach itself may be too self-serving—too close to those objectives—to render the marketer as a native. Positing a distance between engaging the social element and being oriented to making the sale, Vaynerchuk advises that in contributing to the social or informational dialogue at the outset, “you’re not selling anything. You’re not asking your consumer for a commitment. You’re just sharing a moment together.”[1] The experience shared is essentially an end in itself, eclipsing any further motive, as in to sell a product or service.

It may seem rather strange to find a marketer oriented to exploiting any opportunity “just sharing a moment together” with electronic strangers as an end in itself; serial opportunists in an enabling cultural context are used to treating other rational beings as mere means at any opportunity, rather than as ends in themselves (i.e., violating Kant’s Kingdom of Ends version of his Categorical Imperative). Vaynerchuk may undercut his own depiction of the shared experience as sufficient unto itself by reminding his readers that the “emotional connection” they “build through [participating in social or informational dialogue without selling but to “become” a native] pays off [when they] decide to throw the right hook [i.e., make the sale’s pitch and consummate a transaction].”[2] With such a payoff in the offing, I doubt that virtually any marketer oriented to “maximizing” any opportunity to tout, brag, or hard-sell would just share an emotional connection at a moment without being motivated by, or at least mindful of, the hidden agenda.

A "stakeholder model" approach to social-media marketing. This framework is inherently self-centric, whereas a web-like structure would be more in line with "shared experiences." Both frameworks are distinct, and yet can be managed, or related, such that neither encroaches on the other unduly.

(Image Source: irisemedia.com)

As difficult as it may be for a marketing personality to simply share a moment with another human being—especially a stranger narrowly glimpsed through electronic means—Vaynerchuk rightly situates the feat as a requirement for “going native,” and thus, ironically, for being able to ultimately make the sale. In the context of authentic social and informational reciprocity in a given social-media platform, a wax figure easily stands out. Even so, all too many marketers come across as stiff, or contrived, in social media as if self-centeredness and lying advances rather than detracts from sales. Hence, I suspect that a rather intractable marketing personality and a related and thus enabling culture, such as that of American business, stands in the way of business being able to fully integrate social-media marketing.[3] 

Similar to why it is difficult to fall asleep without taking a break from trying to do so, marketers have trouble not letting their marketing hand know what their other hand is doing. At the very least, managers overseeing marketing would need to permit and even encourage the marketer(s) tasked with social-media marketing to spend time online without worrying about having to sell anything (even oneself). In hiring such marketers, managers ought to highlight rather than sideline those applicants who enjoy being on a social media platform.

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[1] Gary Vaynerchuk, Jab, Jab, Jab, Right Hook (New York: Harper, 2013), p. 22.

[2] Ibid, p. 23.

[3] The fixation on using any opportunity to sell one’s wares is exemplified in CNBC’s Jim Cramer’s choice of response as another host mentioned on March 14, 2014  that Jim had worked that weekend at his restaurant. Rather than share the moment by regaling his colleagues and the viewers with a tale of something enjoyable from his weekend at his restaurant, he remarked as if by script that he had worked that weekend because “we were trying out a new chicken sandwich” and a new drink. The sheer contrivance belied any semblance of authentic passion, as might be realized in relishing simply experiencing being in his restaurant (e.g., the atmosphere) and later telling people about it instead of selling as if it were an end in itself. Underneath the obsession with getting as much as possible from any opportunity is greed, a motive and value that knows no limitation. Ultimately, it is a well-worn grove that keeps marketers from “going native” and thus being able to fully inhabit social media. 

Strategic Leadership: Disentangling Strategy and Leadership

Strategic leadership relates an organization’s differentiated core competencies to its ideologies, identity, mission and view of the macro environment system. Relates implies that strategic elements are not identical with a vision containing values. In fact, a tension can be involved, as interest applies one way to core competencies and another to the social reality that a leader promotes in line with an organizational mission (and identity). For one thing, the basis of a competitive advantage can be rather limited temporally, due to technological changes, for example, while values espoused are presumably long-lasting in their validity and thus not easily changed. 

Ethical leadership as a means of managing strategic leadership (Worden, 2003a and 2003b)   
   

 Material from this essay has been incorporated into The Essence of Leadership: A Cross-Cultural Foundation, which is available in print and as an ebook at Amazon. 

The Processes of Innovation at Google and Apple: Clash of the Titans

How exactly innovation reaches the surface of human consciousness, and how widespread this process is or could be, elude our finite grasp even if particular managers assume the potion can be applied in our bewindowed linear towers. It is all too easy to willow the question down to a matter of which floor is best suited—the top or the lower ones. We can contrast the approaches at Google and Apple (under Steve Jobs) to understand just how little we know about innovation, which is ironic as we are living in an age in which change is the only constant.

The ways in which the folks at Google and Apple have sought to capture innovation can together be taken as illustrative of the “archetypical tension in the creative process.” So says John Kao, an innovation consultant to corporations as well as governments. Regarding Google, the company’s innovation method relies “on rapid experimentation and data. The company constantly refines its search, advertising marketplace, e-mail and other services, depending on how people use its online offerings. It takes a bottom-up approach: customers are participants, essentially becoming partners in product design.” To be sure, customers, or "users," are not “participants” in a company; neither, I suspect, are subordinates. As stakeholders to be appeased, neither customers (or "guests" at Target) nor employees (or "partners" at Starbucks) can be reckoned as "participants." 

The innovation method at Google is inductive, meaning that major product improvements come at least in part from going over the feedback of individual customers. According to the New York Times, “Google speaks to the power of data-driven decision-making, and of online experimentation and networked communication. The same Internet-era tools enable crowd-sourced collaboration as well as the rapid testing of product ideas — the essence of the lean start-up method so popular in Silicon Valley and elsewhere.” The emphasis here should be placed on a multitude of specific product ideas rather than on the collaboration, for “while networked communications and marketplace experiments add useful information, breakthrough ideas still come from individuals, not committees.” As Paul Saffo, a technology forecaster in Silicon Valley, observes, “There is nothing democratic about innovation. It is always an elite activity, whether by a recognized or unrecognized elite.” Therefore, we can dismiss the presumptuous use of "participant" to describe the inclusive involvement of customers. 

The Times goes on to describe the "Apple model" (under Jobs) as "more edited, intuitive and top-down. When asked what market research went into the company’s elegant product designs, Steve Jobs had a standard answer: none. ‘It’s not the consumers’ job to know what they want.'" Jobs strikes me here as an autocrat or aristocrat of sorts pointing out that the masses don’t really know what they want. The Dowager Countess of Grantham, a character in the PBS serial Downton Abbey, would doubtless readily agree. The assumption that transformative innovation can only come from an elite fits with Apple’s deductive approach wherein a few true visionaries, such as Jobs himself, at the top present the innovative product ideas (e.g., ipod, ipad, smartphone) to be implemented by subordinates. Clearly, neither employees nor customers are participants in this approach.

King Steve Jobs. Does transformative innovation depend on visionary leadership?  (Image Source: www.fakesteve.net)

The tension between the two approaches comes down to their respective assumptions concerning whether many people or just a few are innately creative in relating imagination back to "the real world" co-exist only in tension; each of the assumptions is antagonistic toward the other. In the political realm, the same tension manifests in terms of whether a democracy is likely to end in mob rule and aristocracy in plutocracy (the rule of wealth). 

As elitist as Job’s statement may be even with respect to employees, he may have had a point that virtually no customer could have anticipated the ipad even five years before it was designed inside Apple. Moreover, it is nearly impossible to project in the 2010s what daily life will be like for people living in 2050. Could anyone in 1914 have anticipated the movies and airplanes that were commonplace by 1950?  People alive just before World War I broke out on August 10, 2014 were still getting used to the electric light, the telephone, and the strange horseless, or auto, “carriage.” As the Dowager Countess remarks in an early episode of Downton Abbey, “First electricity, now telephones. Sometimes I feel as if I’m living in an H.G. Wells novel.” As for electricity in her house, she provides an explanation that might remind us a century later of the advent of cell phones amid concerns about brain cancer. “I couldn’t have electricity in the house,” the countess insists. “I couldn’t sleep a wink. All those vapours seeping about.”

A century later, only from retrospect can we say that the smart phone and ipad had been inevitable developments of computer technology. Anticipating innovation, let alone figuring out  how to institutionalize it, provides a glimpse of a wholesale deficiency in the human brain. The sheer distance between the respective assumptions at Apple (under Jobs) and Google demonstrates just how little we as a species know about the emergence of creativity. Should we concentrate on uncovering gems like Steve Jobs, or spread out our attention to a thousand points of light? Making matters worse, the human brain may be designed to be oriented predominantly backward (with the very significant exception of anticipating an upcoming danger, such as a predator), rather than to predicting even the next transformational innovation.  

Source:

Steve Lohr, “The Yin and the Yang of Corporate Innovation,” The New York Times, January 28, 2012. 

Has Facebook Been Too Invasive?

A general or basic distrust of business can show through in charges that a particular company has just gone down an unethical path on the road to perdition. In such cases, the societal concern is not only applied to what a company is doing publically; the fear is also that a subterranean activity is also going on, which is unethical. The generalized distrust finds fertile ground in the dark recesses that are possible in private enterprise. For example, government regulators as well as some ethicists raised concerns about Facebook’s face-recognition feature when it came out. Specifically, the concern was not so much regarding the feature's stated purpose, but, rather, any other uses of the technology that the company was not divulging.

The full essay is at "Taking the Face Off Facebook."

Stakeholder Management: Property Rights

Stakeholder theory can be interpreted as containing a series of prescriptive leaps in the direction of giving stakeholders a greater and greater share in the property rights of stockholders. The final leap issues in what can be called radical stakeholder theory, for it represents a fundamental challenge (or usurpation) of property rights. Perhaps the most astonishing thing about how stakeholder theory unfolds is its presumptuous claim that its prescriptiveness is merely description (i.e., pertaining to what is the case, rather than what is ideologically desired).

The full essay is at "The Stakeholder Subterfuge."

Stakeholder Management: Property Rights

Stakeholder theory can be interpreted as containing a series of prescriptive leaps in the direction of giving stakeholders a greater and greater share in the property rights of stockholders. The final leap issues in what can be called radical stakeholder theory, for it represents a fundamental challenge (or usurpation) of property rights. Perhaps the most astonishing thing about how stakeholder theory unfolds is its presumptuous claim that its prescriptiveness is merely description (i.e., pertaining to what is the case, rather than what is ideologically desired).

The full essay is at "The Stakeholder Subterfuge."