I attended a meeting of the Henry Jackson Initiative for Inclusive Capitalism last Thursday at Bloomberg. Among the participants were Larry Summers, former Secretary of the Treasury, Dominic Barton, managing partner of McKinsey, John Peace, chairman of Standard Chartered Bank, Laura Tyson, former head of the Council of Economic Advisers and Joe Schoendorf, senior partner at Accel, the venture capital firm. Given the focus on job creation and fairness in the U.S. election, it is entirely proper for a business community, scarred by the events of 2008, to reconsider its role as wealth creator and contributor to society.
Among the important points made at the meeting:
A) Three Pathways—The Jackson Group proposed that business focus on the skills gap, committing to internships, apprenticeships and adoption of schools. The Time Warner Cable CEO Glenn Britt talked about his company’s “Connect a Million Minds” campaign that works on the demand side of Science, Technology, Engineering and Math (STEM), to get kids interested in science. One example is the Robotics Competition for high schools, where a team gets a box of parts and must build a robot. The second pathway is nurturing start-ups and small businesses, in particular by offering access to the supply chain of large companies. The third pathway is a reform of incentives so that short-term performance is supplanted by long-term shareholder value.
B) Support Government in Its Essential Functions—Larry Summers said that business should invest its “influence capital” in issues that are of national concern, not just of parochial interest. “You should support government in its essential functions. When you come to Washington, be prepared to give something and not demand everything.” He was critical of tax avoidance by corporations and its push for “non-regulation.”
C) Edison as Important as Einstein—Summers made an excellent point on invention and application being as important as theory. He argued that the growing disparity between rich and poor is partly a function of discontinuous change led by entrepreneurs such as Steve Jobs, who said, “If you want to predict the future, go out and invent it.”
D) Business More Flexible Than Government—John Peace said, “I am unashamedly a capitalist. When things go wrong, it is a lot easier to fix a problem.”
E) Business to Set Specific Goals for Education—Laura Tyson said that the U.S. needs 10,000 more engineers to graduate each year. “Business has to help fix the skills gap.” One good example of this type of program is GE’s* “Get Skills to Work” program with the Manufacturing Institute, Alcoa, Boeing and Lockheed Martin, aimed at getting 15,000 veterans with military experience to corresponding advanced manufacturing opportunities.
F) Business Ethics Need a Near Revolution—There is nothing wrong with paying bonuses for outstanding performance, said Peace. “But you must provide incentive to behave the right way.” The Jackson Group wrote, “The regrettable behavior in the recent crisis was mostly unethical rather than illegal. Only if people become more aware of the moral dimension and bring them into business decisions will we avoid a repetition of the problems we have suffered.”
I am persuaded by the Jackson Group’s central thesis that “business needs to take the lead in the areas that need the most improvement.” I take note of the disparity in the views expressed by Harvard Business School graduates and the general populace on the direction of the U.S. in key areas such as entrepreneurship and capital markets, with the public substantially more skeptical than the elites. This gulf in attitudes makes policy change more difficult and prone to politicization. It is in business’ interest to spend the time and money to educate voters on issues such as free trade, and to be willing to do the same within their own companies. This must be done in the context of inclusion and responsibility so that the benefits flow to all stakeholders, not just shareholders.