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The closing speaker at the Page Spring Seminar, Judy Samuelson, challenged us to make sure that our enterprises align business decisions with the long-term health of society. She brings significant credentials to this as the founder and executive director of the Aspen Institute Business and Society Program and the author of The Six New Rules of Business: Creating Real Value in a Changing World.
Samuelson’s view that shareholder primacy still prevails for many of our institutions is a welcome reminder that we have much work to do in making our enterprises authentically focused on the long-term, societal-value approach that Page has endorsed. This insight goes to the heart of the challenge that Page encourages our members to address, and her recent testimony before the U.S. House-Senate Joint Economic Committee (where I once worked as press secretary early in my career) is a tour de force argument for this point of view.
Her negative interpretation of the word “stakeholder,” however, is at odds with Page’s point of view. She said that employees ARE the company, not JUST a stakeholder, and seemed to suggest that “stakeholderland” – a term that she later admitted was an unfortunate pejorative – was a wasteful place to spend our time. Instead, she asserted, we should be focused on the business model, systems and processes of our institutions, with an eye to long-term value creation.
I always welcome challenges to my thinking, and Samuelson’s critique caused me to go back and re-examine the Page approach. Having done so, I can reconfirm my strong conviction that, in fact, the multistakeholder focus that Page embraces not only isn’t in conflict with her views about the importance of operations, systems and processes, but rather is a powerful ally in our efforts to advance that imperative.
Having reviewed the references to stakeholders in Samuelson’s book, I’ve concluded that her issue isn’t with the word stakeholder itself, but rather with her sense – supported by good evidence – that many CEOs think they are already taking a multistakeholder view when they actually still have in place systems and processes, including management incentives and rewards, that place shareholders ahead of other stakeholders.
She is absolutely correct in insisting that we must transform our enterprises’ operating models, systems and processes away from the short-term, shareholder-value model that still unfortunately predominates in too many of them. Supporting that view, Page has argued, since its publication of its report setting out the Page Model a decade ago, that the CCO must be “A systems designer – not only systems of marketing and communications, but of how these relate to the company’s operations and management systems.”
Beginning with The Authentic Enterprise, throughout the Page Model report and the more recent study, The CCO as Pacesetter, Page has advocated for CCOs to work across the C-Suite on business issues. It’s not enough just to articulate the principles – mission, purpose and values – that will guide a company; the CCO also has a responsibility to influence the enterprise strategy, business model and operations to ensure that these principles are adhered to in everything that the enterprise does. That is, in fact, the core argument of the Page Model concept of corporate character, and also a key part of the heritage of Arthur W. Page, who famously said, “Public relations is 90% doing and 10% talking about it.”
What Samuelson misses, in my opinion, is the incredibly powerful opportunity that the CCO has, as the voice of the stakeholder in senior management discussions, to make the case for the longer-term and broader-value-creation approach that she asserts is essential. Merck Executive Chairman Ken Frazier, who once served as CCO there, powerfully made this point at the Spring Seminar when he, quoting John Lewis, said that the role of the CCO is to "cause good trouble" by representing the views of stakeholders inside the company.
Prompted by Samuelson’s criticism, I looked up the word stakeholder. Merriam Webster defines it as “one that has a stake in an enterprise,” and it defines stake as “an interest or share in an undertaking or enterprise.” So, I asked myself: Do employees have an interest or a share in an enterprise? Certainly, as she suggested, the activities of employees essentially ARE the business. But they also are a group of people who are affected by and have a stake in activities of that enterprise, and therefore should have a voice.
What about customers? Clearly, yes. Suppliers? Of course. Shareholders? No doubt. Communities where the business operates? Absolutely. Anyone on the planet whose lives might be touched by the activities of the enterprise? Yes, indeed.
Does this matter? Yes, as set out in Page’s new, as-yet-unreleased CCO Guide on Stakeholder Capitalism:
"At Page, we see stakeholder capitalism not as a synonym for 'societal value creation,' or 'ESG,' or 'corporate social responsibility,' but rather as a better way to think about value creation, confirming the approach that Page has supported throughout our history and our thought leadership work over the past two decades: Specifically, we believe that enterprises thrive best when they engage authentically with all of their stakeholders. We have argued that the CCO is and should be at the center of this multistakeholder approach.
"All of those stakeholders – including employees, customers, investors, partners, suppliers, governments, regulators, communities and civil society – are newly empowered today, and expect the enterprise to provide them with value, if they are to affiliate with or support it. In particular, they expect that business can and should be a force for positive change in society. A new generation of employees cares about the higher purpose of the enterprises for which they work. Many customers are motivated to buy from companies that live by a purpose and values that align with their own. Increasingly, investors like Larry Fink of BlackRock are demanding a long-term, societal value commitment.
"Understanding, engaging with and creating value for a company’s stakeholders is an emerging business discipline, requiring new management systems that span the entire enterprise and ensure that commitments are integrated into the corporate strategy and lead to tangible results. It requires a disciplined approach to understanding stakeholder expectations and using them as a platform for innovation. These are now board-level and senior management priorities."
I appreciate Samuelson’s reminder that we have a responsibility to focus on reforming the operating model and systems that still are aligned with shareholders, but I must also assert that the CCO’s focus on the multistakeholder approach is the right way to convince the enterprise do exactly that.
