With Thanksgiving this week, the holiday season—in all its chaotic consumerist glory—is officially upon us. REI made headlines earlier this month for its decision to buck the annual retail race to the bottom that is Black Friday, and instead close its doors on the biggest shopping day of the year. The company has received heaps of praise in the wake of the announcement for the perceived kindness to employees, the social good of encouraging its customers to do something healthy, and also for what is an incredibly savvy marketing move. REI has been purposely public about its decision in online, print, and in-store advertising and via its social media campaign #OptOutside. Many will be watching the numbers carefully to see if REI will benefit, but if it does, will that lessen the fact that it’s doing something good? How comfortably can these two things coexist? Looking for purity of intentions with business is wrongheaded, as most companies can only do good when it’s also good for business. The mean men I’ve discussed on this blog rely on the misapprehension that one must be mean to be effective, when, in fact, study after study shows us that empathy and humility makes leaders more effective.
I’ve noticed a similar conundrum being presented as I follow the increasingly profitable and socially acceptable work of “activist investors” as they’re called: venture capitalists who buy large or controlling interests in a company with the intention to effect big changes within it. The investors—once referred to as “vulture capitalists”—used to suffer from a rather villainous reputation and were feared for the sweeping changes they’d make once they were in the driver’s seat of a corporation. But they’ve undergone something of an image makeover in the past several years, and I’m struck by the success their newer strategies have had in changing corporate behavior. Certainly these investors are motivated by profit rather than goodness, but they’ve also shown us how a powerful outsider can bring to light failures of leadership in unprecedented ways. Carl Icahn, Nelson Peltz, Bill Ackman, Dan Loeb, and others have honed their ability over the past decade to use the media for marshalling empathy from the masses for their own self-serving needs. They announce their large stake in the company’s stock and simultaneously make us feel sorry for the everyday shareholder who is getting screwed by inept management. The activist investor nimbly positions himself as the iconic hero on the white horse, ready to save the company in return for a few board seats. If their argument resonates with shareholders, the stock marches up in price, and they ultimately sell for a profit. Again, their motives are profit driven, but when bad CEOs are ousted, or obvious strategic decisions for the good for the firm are ignored, everyone wins.
Rethinking the role of capitalism—from the retail industry to hedge funds in finance—to make it a more robust system for serving societies is a necessary step in undermining ruthless corporate cultures that remain far too present and are just bad for business. William Greider’s The Soul of Capitalism and Bill McKibben’s Deep Economy: The Wealth of Communities and the Durable Future are great road maps for moving in this direction, providing solutions where there becomes little collective tolerance for mean men in power. In these tomes, reform appears in a surprising variety of characters, from conservative business managers to small-town civic leaders, social agitators, and labor activists.
American capitalism can and must be aligned more closely with what people want and need in their lives, with what American society needs for a healthy, balanced, and humane future. Increasingly, there’s greater acknowledgment of the flaws in corporate governance and enforcement models, more pushback against an over-the-top and even ruthless retail-industry culture. We may have a long way to go, but the realignment of our business strategies with our human values is making progress—something to be thankful for.