Robert Frank provides an elegantly simple explanation of the individual and collective behaviors & motivations that cause asset bubbles, and the means to prevent them.
Brad Stone wrote an interesting article that speaks to societal differentiation between success from building something and risking your own skin to achieve it, vs. enrichment from financial engineering risking other peoples’ money.
Mike Edwards questions whether the trendy concept of philantrocapitalism exemplified by Bill Gates is as effective as the uncritical buzz it is generating. And he raises questions worthy of consideration, including this one in his q&a:
…what are the actual effects of business involvement in activities that are intended to promote social change? Where is business involvement useful, where might it be damaging, and do we have the evidence to separate one from the other? Here’s a list of things that business could usefully do:
- pay your taxes
- don’t produce goods that harm people
- pay decent wages and benefits
- stop subverting politics
- obey regulations in the public interest
The problem is, philanthrocapitalism does none of these things.
Well, business actually has a pivotal role to play beyond the basic code of decency Mike Edwards lists above. As the primary force in the 21st century, the private sector can make enormous positive contributions into our lives.
I am a strong advocate of engineering market forces to achieve positive change, marrying the business model to the social mission, as we’ve endeavored to do for the last fifteen years at PeaceWorks.
And I am similarly an advocate of using entrepreneurial and creative practices commonly found in the private sector to maximize impact in civil society, as we try to do at OneVoice.
But beyond critical appraisal of "philantrocapitalism’s" effectiveness advocated in Mike’s article, what most resonates and troubles me about the unexamined noise with this and the broader concept of "corporate social responsibility" is that often it is used to mask dishonest or noxious behavior from corporations, to create bland appearances about business contributions to society while hiding under the carpet abhorrent behaviors that may be the primary driver of a business.
Certainly, a company cannot justify or sugarcoat ruthless practices, or an underlying business model that harms people just by affixing the "csr" motto to its ads. Unlike when people purchased indulgences from the medieval Church to swiftly absolve them for abominable sins, you cannot (or should not be able to) donate your way into brand heaven in the 21st century.
In sharp contrast to Mike’s provocative article, take a look at this piece in TIME Magazine where Bill Gates discovers the field of social entrepreneurship for humanity, dubbing it "creative capitalism." Gates first announced this discovery in Davos back in January, where he was given 45 minutes to share how he conceived a utilitarian servile version of social responsibility. It struck me he had just discovered and repackaged a field long in existence, just as he appropriated the netscape browser and apple’s operating system.
Social contributions should have a soul, a sentiment, and a sincerity of purpose. Corporations are driven by human beings, so hopefully they will be driven to make our world better because this too is their world. I have yet to meet a business person (or a human being) that does not care about the world. But the trouble is that sometimes some corporate business models or junctures present people with concentrated profit-maximizing opportunities that cause harm to society overall. And no amount of "CSR" should exculpate taking the wrong path – whether by lobbying the government to help a specific industry at the expense of the community or the environment, or by undermining competition, or any of the items in Mike’s list.
In the end, consumers will see through corporate efforts to manipulate causes just to make them look hip and responsible. Alas, along with the unscrupulous corporation so too will fall the credibility of this important space – the sincere intersection between doing well and doing good.
What do you do when your formerly fun and irreverent brand has been threatened by months of media criticism over alleged corporate missteps? Regardless of where you stand on whether Microsoft tried to manipulate Yahoo or Jerry Yang missed an opportunity to drive shareholder value (or far harsher assessments including this one from Joe Nocera – and the counter-reply from the "fake Steve Jobs"), if you are part of Yahoo’s management – you need to get your team’s spirit back up, and you need to re-focus the world on the deep base of greatness and funk you’ve established over the years.
In a quirky way, this is exactly what this video, which is getting a lot of play and coverage, such as here, is achieving.
Whoever came up with this move at Yahoo deserves a lot of praise.
Thanks to Stacy Perman for a profile about PeaceWorks, KIND, and OneVoice in BusinessWeek yesterday.
I heard Ron Pundak (the CEO of the Peres Center) most recently attended a meeting of a coalition of NGOs working for peace, and he was struggling because he is fighting a particularly noxious type of cancer, currently going through treatment.
I have always secretly and quietly admired Ron, and have always felt we need more people like him. In a world filled with well-meaning mediocrity down to cynical manipulation, Ron never succumbs and always applies the highest standards to what he does. We seldom speak about people we admire with the candor they deserve, unless they are no longer with us, which means we lose the opportunity to do the right thing at the right time. Hoping that Ron will get stronger as we need him to continue to lead, I want to share why I so deeply am impressed with this man:
Pom Wonderful did something, err, wonderful for the food industry by fighting to uphold the standards of the category in which it leads, pomegranate juice, to the point of successfully suing unscrupulous new entrants who tried to ride on its coattails by marketing lower grade products as if they were the real thing:
"Consumers buy the products to gain the health benefit – if that is not present then there are problems for the category. The Federal Trade Commission (FTC) and the Food and Drug Administration (FDA) should be more active in this area but we all know how under resourced they are. We are trying to protect the integrity of the category." Rob Six, spokesperson for Pom Wonderful
"Purely Juice", a company that claimed to sell purely pomegranate juice that was in fact primarily cane sugar and corn sweetener was ordered to pay $1.5mm to Pom.
The category for healthful snacks where KIND leads gets similarly hurt when consumers are duped into buying "natural" "nutritional" and "energy" bars whose ingredients contain refined sugars like high fructose corn syrup and refined flowers and hydrogenated oils, contributing to the diabetes and obesity epidemics overtaking America. Similar enforcement action should follow for companies – big or small – that manipulate what it means to be "all natural" and "healthful."
Two articles recently posted on PeaceWorks and OneVoice and our efforts…
JEWCY.COM: 
Peace Through Pesto: Daniel Lubetzky Schools Us on Building Bridges and Empowering Moderates, 
by Helen Jupiter, July 11, 2008
and
JERUSALEM POST, Don Quixote comes to Israel, Jul 24, 2008, by Heather Robinson
I was struck at this Fancy Food Show at how many companies are starting to tie their new products to commitments to give donations to social causes.
You’d think that is great and to be encouraged, but I was quite turned off, because it was so clear that to a lot of these companies it was not a true mission with sincerity of purpose, but a shallow gimmick.
The concept of "we donate X% of our profits to Y Cause" is being manipulated to the detriment of efforts that are sincere and real. I wish some third party organization fostering transparency in socially responsible business behavior would audit/inspect claims in this field.
I asked a few of them which organizations they donated to, or how much they had donated, and most said, "well, we are not profitable yet, so we haven’t donated anything." [And some had been in business for a few years already]
Isn’t it unethical to claim you are donating something when you are not? Ok, you are not profitable yet? And you can’t find it logical to donate something? Then you are not entitled to make the claim that you are donating!
David Ricardo introduced the theory of "comparative advantage" – advising that each country has the ability to produce a good at lower cost, relative to other goods, compared to another country.
Ricardo’s theory advises countries to specialize in the production of goods and services they can produce most efficiently – or with lowest relative costs.
Complementary Comparative Advantage involves identifying countries (or parties or companies) where each has a comparative advantage over complementary areas of production – so that partnering will bring both economic benefits.
This was the language I used in my college thesis and law school work to explain the economics of peacemaking.
When we started PeaceWorks in 1993, we relied on this theory to encourage Israeli food manufacturers to purchase their olives from Palestinian growers, their sun-dried tomatoes from Turkish growers, and their glass jars from Egyptian manufacturers.
Another requirement of PeaceWorks is to ensure symmetry in economic relations, which is another prerequisite to ensuring or maximizing the chances of positive impact from economic cooperation. Besides the agricultural field, where Israelis and Palestinians and other Arabs can make symmetrical contributions, other areas in the Middle East where there are symmetrical complementary comparative advantages include the textile sector, and the area of Dead Sea cosmetics, where we dabbled in 1993. Furniture (where Palestinian craftsmanship from Gaza has a lot to offer) is another area ripe for collaborative cooperation, as is construction, and of course tourism. Business leaders like Dov Lautman have spearheaded cooperation in the textile industry between Israel and Jordan, between Israel and Egypt, and within Israel between Jews and Arabs cooperating side by side.
As my prior post notes, Zvi Schreiber has now also proven that even in the hi-tech world you can achieve worthwhile synergies between Israelis and Palestinians.