InvisALERT Solutions – ObservSMART

The Economics of Recovery: When Worlds Collide

To quote Rahm Emanuel, “You never let a serious crisis go to waste – it’s an opportunity.” In the past decade, it’s been one crisis after another: 9/11, Iraq and Afghanistan, Katrina and tsunamis’, Wall Street meltdown, global warming, the gulf oil spill, Haiti, bankrupt governments, even the safety of our food, medicines and toys!

Many feel our problems are beyond the capacity of government to solve. Governments are felt to be too big, bureaucratic and political to react quickly and effectively.

A recent public opinion survey found almost two-thirds of Americans believe: “Corporations are better able than government to respond effectively to disasters.” Three-quarters also believe: “Businesses bear as much responsibility as governments for driving positive social change,” and eighty-six percent agree that, “It is important that companies stand for something other than profitability” (Good for Business, 2010).

Opinion studies have also shown that as the crises multiply, so do the public’s belief that corporations can and should do more to solve them. If, as the Supreme Court decided this year, corporations have the same legal rights as “natural persons,” then they are also expected to accept the responsibilities that come with being a part of the human family.

With the almost universal access to the internet in recent years, consumers have been able to wrest control of the dialogue away from corporations with product ratings, posted comments, hostile websites and leaked memos. Transparency was only a click away. The traditional top down, command and control style of doing business was out. The Internet had firmly put the consumer in charge – the only tenable business strategy left was to “just do the right thing.” Be open, honest and helpful with your customers. Some corporations realized they needed to go beyond being “helpful” – they had to genuinely become world citizens. They realized that a solid reputation was worth its weight in gold and only deeds, not words, would get them there. Corporate Social Responsibility (CSR) was their ultimate solution. Today nine out of ten Fortune 500 companies have initiatives focused on CSR.

However, there are perhaps only a few dozen U.S. Corporations that are fully engaged in this exciting new social movement. IBM is, in my opinion, the world leader. As stated by Samuel J. Palmisano, Chairman, President and Chief Executive Officer of IBM, “As a global citizen, we believe that the issues facing the world are too critical and far too urgent – and the opportunities to make meaningful progress on them too immediate – not to act now. Indeed, the most interesting result of our Smarter Planet initiative, to me, is how it is causing our business strategy and citizenship strategy to merge. The barrier is no longer technology. What we make of this new reality will depend, rather, on how we pursue the timeless goals of all social and economic prosperity and individual empowerment.”

The many issues IBM is seriously addressing include the environment, safe water and food, sustainable/empowered cities, smarter work force, education, energy and healthcare. (

Other CSR leaders’ initiatives include Pepsi-Cola and Walmart. Beginning in August, the Pepsi Refresh Project will support a number of community projects, including “refreshing” the Gulf in the wake of the tragic oil spill ( Walmart has used its buying power to reduce its carbon footprint and save over three billion dollars a year by requiring their over sixty thousand suppliers to reduce their energy consumption and packaging.

When you study these CSR websites (and I hope you will), what these leaders of tomorrow all seem to understand is that their company’s futures are determined by the quality of people they are able to attract. Fortune’s “100 Best Places to Work” lists a core purpose that goes above and beyond the bottom line. Increasing sales and shareholder value depends on attracting the best employees which means you’d better be a positive force in the community (The Responsibility Revolution, J. Hollander, 2010).

Here in New York City, we are very fortunate that Mayor Michael Bloomberg, self-made billionaire and social entrepreneur, has chosen to donate his extraordinary business talents to the betterment of the citizens of New York City. One of my favorite “Mayor Mike” stories illustrates how a minor and inexpensive collision between the worlds of business and government can produce a lasting increase in efficiency. The story I heard was that the weekly meetings of the five Borough Presidents, their aides and the Mayor typically lasted three hours, until the Mayor had the chairs removed! The subsequent meetings took less than an hour as folks learned to summarize and speak faster. (Oh how brief our endless meetings could be if there were no places to sit!) Bloomberg and his staff have developed a unique set of governance tools which demonstrates the power of everyday citizens to create change. The public-private partnership models they’ve created can turn dreams into reality throughout the country. But to accomplish this, we need courageous leaders. As stated by Mayor Bloomberg, “What we can’t afford is to continue upholding a failed status quo by funding programs and sustaining approaches that don’t work. The silver lining in any economic crisis is that it can force government to take necessary steps that, in more comfortable times, would fall victim to the forces of inertia – but it is up to us, all of us, to seize the opportunity.”

A survey of over one-hundred social entrepreneurs across the country conducted by Duke University found the greatest barriers to systemic reform were “the network of relationships that develop among government bureaucrats, politicians, agency heads, and funders who believe that more of the same will make a difference. This iron triangle produces barriers to entry for new actors.” “The political economy of social systems induces providers to seek protection over performance.” An oligopoly develops when a group dominates decision making via its control over knowledge, resources and communication (CASE, 2007).

The study also found that these civic entrepreneurs, armed with innovative thinking, a bottom-line sensibility, and a willingness to tackle some of the nation’s most intractable social problems, are tapping into a powerful energy and sense of purpose via the Internet. “This growing cadre of change agents is shattering traditional policy approaches and replacing them with creative solutions and unique partnerships to produce dramatic results” (The Power of Social Innovation, Goldsmith 2010).

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