Corporation, Reputation, and Society
You are reading the first lines of a new blog dedicated to a discussion of the changing relationship between corporations and society. Well before the credit bubble burst, the revolution in information technology brought an uninvited transparency to corporate life—and changed it forever. The unprecedented ability of anyone with a computer and an internet connection to gather information and draw conclusions about the effects on society of government and corporate actions—and to communicate with others having similar interests—brought a need for large organizations to take responsibility for their conduct as they’d never done before. The need to assume such responsibility became closely associated with their ability to compete and thrive.
The progressive transformation of relationships between corporations and society provides the subject both of this blog and of my book: “CRISIS OF CHARACTER—Building Corporate Reputation in the Age of Skepticism,” to be issued in October by Union Square Press / Sterling. The book initiates the conversation, and the blog will extend it. Where all this leads will have a great deal to do with the contributions of the blog’s readers.
I can think of no better way to begin our discussion than to see what today’s news tells us about the relationship between transparency and power. It seems that, on the 20th anniversary of what we call “Tiananmen Square,” the Chinese Government is demanding that new computers sold in that country contain censoring software that determines what its citizens are allowed to see on the Internet. As history has played out, the government that directed its military to fire on masses of democracy demonstrators two decades ago has since then presided over one of the most remarkable economic expansions in history. Yet today its leaders believe that their continued power still depends on limiting what their citizens know. Through this censorship, they concede that they govern against the wishes of the people.
The association of power with restriction of information is hardly limited to governments—repressive or otherwise. Corporations have, for the most part, also believed traditionally that limiting the information their investors and other stakeholders receive plays to their advantage. Unlike China’s government, however, many corporations are now coming to accept the opposite: That, while information is power, it is not in the hoarding of information where power resides, but in its distribution. That is the great message of the Internet, itself.
For an individual company, power lies in providing information in a way that enables it to influence the terms that investors and the public use to discuss its affairs (in the book I call this the “communications of convergence.”). In addition, transparency has become a value in itself, so a company’s willingness to interact openly with its constituencies has become an expression of its confidence and self-belief. In my own practice of the Open Perception Study™, I’ve found that the demonstrated desire of companies to solicit their investors’ views increases those investors’ trust that its processes are open and subject to their influence. A company’s recognition of its own openness as a pre-condition of investors’ commitment is, in my experience, a primary factor in its ability to build market value.
Coca-Cola has received considerable criticism in the past for its diversion of water from communities to service its beverage plants. I’m not aware of its ever having done this without proper authority, but the effect of this practice on the social surroundings of some of its plants has brought bitter criticism, nonetheless. Coke has now made water conservation one of its “sustainability platforms” and is committed to becoming “water neutral” by 2020, meaning that it will restore as much water to the environment as the company uses. In response to objections to its water use, Coke began a few years ago with measures whose small scope made them seem to be more for PR purposes than to exert any palpable benefit. But it has apparently heard its social constituency now, and the procedures and technologies it is developing to meet its 2020 commitment are likely to find application well beyond the company’s own operations. This provides us with a memorable example of relentless public dialogue as the foundation of progress. Global companies will eventually respond to such dialogue, and, when they finally undertake a cause, their fundamental competence is likely to provide wide benefits.
China presents its filtering software as a means of protecting its children from pornography. It is not clear that this is all it does, and the government’s blocking of Hotmail and Twitter ahead of the Tiananmen anniversary betrays a broad censoring agenda. Any good propagandist can create enough confusion around small points to prevent firm conclusions from forming on those points. But no significant organization—from the Chinese government to a listed company—can dissuade its observers from making clear judgments based on the totality of its actions. Coke learned that. The Chinese haven’t.
