Tuesday, October 25, 2011

Business to Join Occupy Protest - Friday, Oct 28th at 4pm

As you're all quite aware, the occupation that started on Wall Street in New York has ballooned into a social movement, extending to a number of cities around the world, including Toronto. Although its cause ranges from corporate greed to social inequity to the financial crisis, the underlying theme is an immense discontent with our current socio-economic system. More than 33% of Americans are in support of Occupy Wall Street and anyone who might argue that this is not relevant to Canadians overlooks the clear reality that we are all subject to the whims of a global economic system, that social inequity in Canada has reached unprecedented levels, that Canadian debt levels are tops in the world, and, more generally, that businesses in today's economic system are increasingly prospering at the expense of society.

I'm showing my support for these protests because I believe business needs to be part of the conversation. I recently posted on my blog why all Business Schools around the world should be part of this:

My colleagues Andy Crane and Dirk Matten at the Schulich School of Business posted a blog on why the protests should be top of mind for business leaders and employees in general.

This is a call to business students, business professors, business graduates, and business employees to join my peaceful walk around downtown Toronto on Friday, October 28th beginning at 4pm in front of the St James Anglican Cathedral on the corner of Church Street and King Street (65 Church St.). Anyone who would like to join me, please meet me there.

For those of you not in or near Toronto, I encourage you as actors of business (e.g. graduates, employees, faculty, students) to join the conversation in your municipality.

Feel free to pass this along.

Friday, October 14, 2011

Why Business Schools Should Join "Occupy Wall/Bay Street"

The Occupy Wall Street protests have ballooned into one of the most powerful grassroots social movements since the Great Depression and there doesn’t seem to be an end in sight. Once perceived by the elite to be a trivial display of immature angst by a bunch of hippies, the mainstream media has had no choice but to cover the protests to the chagrin of their corporate owners. For this protest, as Caplan and Grzyb explained, is of “the larger, ugly truths about modern capitalism” and as business professor Michael Porter explains, reflects the perception that corporations are “prospering at the expense of the broader community”. I think Finance Minister Jim Flaherty and Central Bank Governor Mark Carney overlook the broader message the protest is conveying when they focus on the financial crisis as the source of angst among protesters. I would argue that his was only the catalyst for a greater march against the inequities of the existing capitalist system. As Ed Clark, CEO of TD Bank said, "If you think this system is working for everyone, it's not".

A rather polarized dynamic has played out between the right and left sides of the spectrum with the right relegating protesters to a bunch of “left wing nut bars” (Kevin O’Leary) or “a collection of ne’er doers” (Murdoch’s WSJ) and the left asserting that we live in a society of “government of the 1%, by the 1%, for the 1%” (J. Stiglitz) and that “we the people have found our voice” (Professor Cornell West). More than 33% of Americans are in support of Occupy Wall Street and anyone who might argue that this is not relevant to Canadians overlooks the clear reality that we are all subject to the whims of a global economic system, that social inequity in Canada has reached unprecedented levels (81% of Canadians agree with this), that Canadian debt levels are tops in the world, and, more generally, the troubling trend that business in today's economic system is increasingly prospering at the expense of society (51% of Canadians agree with this).

So where are business schools in all of this? Naturally, business is expected to side with the right, defending their powerful position in society by putting forth rhetoric that touts the societal benefits of free markets such as job creation, access to cheap goods and services, and (perhaps taken to the extreme) individual freedom. Yet, I would argue as a business academic, perhaps paradoxically, that business schools should be an active voice in the protests not as a mouthpiece for the right but as a stark supporter of the need for change.

Here are three reasons why:

First, the last decade has proven unequivocally that Adam Smith’s original supposition that the pursuit of commercial interests leads to optimal gains for society is misguided at best. An unprecedented number of circumstances have emerged where the pursuit of corporate interest has left society worse off. Smith’s ingenuity presumed that business would make decisions using a moral lens and therefore fit a time when business represented a relatively small actor in society shadowing the power of the church and the state. Since then, we’ve seen business become the dominant societal actor with the power to not only ignore broader societal interests but to circumvent those interests. As I’ve written before, why should business be passive players responding to regulatory constraints or market demands when they can wield their growing power to influence regulation and what the market demands. To that end, many executives have essentially taken business school fundamentals to the extreme by deliberately shaping those environments to their liking with little regard for society. Wall Street’s active suppression of government regulation of derivatives and their relentless effort to defer risk to the public is one such example. Reducing these behaviors to "corporate greed", as many protesters have voiced to be the crux of their cause, overlooks the broader fundamental practices of our current economic system. So business schools, in my view, are obligated to occupy wall/bay street to voice the need for change in the fundamentals of the business discipline.

Second, I think it’s important to make sure that we don’t paint all businesses with the same brush. There are a growing number of companies, large and small, that define their purpose and operations on precisely what these protesters stand for: equality, human rights, and environmental sustainability. They adopt triple bottom line businesses with the purpose to co-create value along social, environmental, and economic systems not as isolated endeavors but as an integrated value proposition to society. Businesses like Grameen Bank, Interface, Patagonia, Better Place, Frogbox, Terracycle, and SEKEM represent the hope for business in a sustainable society. They are challenging the practices of those companies in the previous paragraph and redefining the purpose of business in society. Business schools should be marching to demonstrate their commitment to understanding these sorts of businesses and to build theories and frameworks that educate future managers to replicate this role.

Finally, any academic at a university is held to an obligation to engage in activity that advances new knowledge for the purpose of contributing to the welfare of broader society. If we’ve reached a stage in history where our business school teachings and research are partly responsible for the negative impacts on society, then is it not our duty to lead the charge in understanding what needs to change? One approach of business schools, which I presume is the most common, is to distance ourselves from the protest thereby further fueling the polarization of society. Another is to be part of the conversation so that we are truly doing our job as academics and understanding how the private sector can better respond to the needs of society. This takes a combination of courage and humility because it suggests that what we’ve taken for granted in the classroom and in our management journals might need radical change.

Saturday, October 1, 2011

Canada at Odds with Peace Laureates

Of the first 50 and most popular comments in response to last Wednesday’s web-based front page Globe and Mail article describing the Nobel Laureates’ efforts to persuade Stephen Harper, and by default Canada, to cancel expansion of oil sands development, all 50 were harshly blasting the Laureates’ cause as repugnant and revolting. Some of the more common responses included the following:

  1. The exploitation of Canadian resources is a decision left to Canadians…so mind your own business!
  2. The demand for oil will persist and so it’s better to get it from a democratic nation with large reserves than a human rights suppressing nation in the Middle East, Africa, or Latin America
  3. The environmental implications are overstated. Industry has put in impressive measures to reduce environmental issues
  4. There are worst things in the world right now and Canada’s oil sands are way down the list. Why bother with us? These Laureates must have some kind of hidden agenda.

Aside from the complete embarrassment I felt in reading these highly ill informed, rash, and toxic comments, I thought it necessary to put forth my own response to these comments:

First, climate change is a global and complex issue. Decisions we make in one part of the world have huge consequences on other parts of the world not privy to those decisions. To suggest that we have a right to make decisions as one country that will undoubtedly leave other countries under water, plagued by drought, overwhelmed with forest fires, and/or bombarded with hurricanes and typhoons is either a demonstration of our blatant disregard for humanity, our primitive emphasis on national sovereignty at the expense of everyone else, or complete idiocy. On top of all this, future generations not yet born will be looking back at our ignorant, arrogant, and uneducated rants demonstrating our lack of understanding of complex systems such as the climate. I’m in a time warp if a good chunk of Canadians mistakenly strive for national sovereignty over global sovereignty now that we know how interconnected national decisions are to the welfare of the planet and our future generations.

Second, any environmental improvements made by the oil sands sector can only be evaluated with a starting point of how catastrophic this process is to begin with. I have not seen any evidence to refute the very common claims that the resources required to produce 1 barrel of oil from the oil sands are several times that of light crude and that the CO2 emissions to produce one barrel is several times more than that of other sources of oil. When scientists link the systematic extraction of oil sands to the planet’s tipping point on climate change – the point of no return – there is no way that incremental efficiencies by industry are going to make any difference.

Third, as I’ve written many times before, our continual reliance on fossil fuels is no accident. To make comparative judgments on other renewable sources of energy at a point in time when government policy has supported non-renewable sources and demand for these sources pale in comparison to other environmental devastating sources is preposterous and overlooks the role of inertia and momentum in locking societies into particular sources of energy. We are so dependent on oil that movement away from the substance is going to take more than just silver bullet technologies. It’s going to take political, economic, and social courage to be part of the transition to renewable sources.

Fourth, clearly many people do not understand how interconnected our planet really is. Many of the comments I read were blasting the Laureates’ decision to prioritize Canadian actions over other atrocities that are occurring in the world today. But as the article rightly mentioned, many of the issues we’re seeing today is largely brought on by climate change. Tribal conflicts in Sudan and Kenya are primarily based on drought conditions. Imagine what will happen for several countries in the future if we continue to exploit these resources. So the Laureates are bang on because they know exactly what sorts of decisions take place in the Western world that fuel the fire of conflict in other regions.

The proliferation of these sorts of comments and other articles in defense of the oil sands puts to rest any confusion I might have had about why the conservatives are in power. Even if these comments represent a minority, it’s very clear that this is indeed a rather pervasive sentiment in Canada. I for one do not want to be included in the company of my prime minister or anyone else who doesn’t recognize the sensitivity of this issue, perceived by Nobel Laureate Williams as someone “who doesn’t really care”.

It took all but an hour to remove this article from the front web page of the Globe and Mail to several screens down and then another few minutes before it was relegated from front news altogether. We can only speculate why G&M did this. Is this what they normally do? Are they responding to public sentiment rather than putting forward the facts? Or were they influenced by some powerful individuals who would prefer that Canadians not learn about this story?