The Power of Engaging With History

 

The power of engaging with history does note rest merely in the knowing and remembering of it; though, in any society, remembering is vital.

 

Nor is the power solely in the learning and applying of history’s lessons today; though, in the face of any injustice or challenge, doing so is imperative.

 

No, I believe perhaps the most powerful impact of engaging with history is also the most personal:  that to engage with history, is to know you are not alone.

 

The great American writer James Baldwin said this better than I or just about anyone else could:

 

“You think your pains and your heartbreaks are unprecedented in the history of the world, but then you read.  It was books that taught me that the things that tormented me were the very things that connected me with all people who were alive, or who have ever been alive.”

 

Baldwin was writing, in part, about the strength he drew from history when confronting the racism and anti-gay discrimination he faced in mid-20^th century America.

 

But in his eloquent description of personal inspiration, he captures the deep, profound, and universal impact that history can have on the individual standing up for change or facing a major challenge.  It has had that impact on me.  

When facing a challenge or addressing an opportunity like Procter & Gamble's entering a new country, I inevitably came back to recognize I was standing on the shoulders of giants, famous and unknown, who had taken on these challenges and opportunities before me.

 

This is one of the reasons I suppose that I’ve had  pictures of  my two most esteemed previous CEO's--William Cooper Procter and John Smale--on the wall of my office for years. When facing a tough decision, I have asked myself-- what would they have done.  In other words, what action will be in accord with the Purpose and Values of this great Company of ours?

  

The Pursuit of Truth

 

One of the handful of mandates which I have tried to keep front and center in my mind—and in my actions—is the pursuit of truth.

 

When asked what I most took away from my education at Yale, it was the respect for the pursuit of truth.  When asked what I discovered at Procter & Gamble which most surprised me in the beginning and which was most foundational to my decision to stay with P&G for a career, I cite my recognition of the ever-present commitment to pursue truth no matter where it led and no matter how inconvenient the finding.

 

Little would I have imagined that now in my 80^th year I would have felt the concept of truth being so challenged or feel so compelled to reignite my commitment to taking the time to dig deep enough to try to find it.

 

Undoubtedly, the presidency of Donald Trump has driven much of this animus.  My appreciation of the challenge we face has also been deepened by my re-reading George Orwell’s novel 1984.  Now,  a few weeks after doing that, I have been further motivated by reading the “biography” of 1984, called The Ministry of Truth, written by Dorian Lynskey, This book describes Orwell’s life experience which led to his authoring 1984 shortly before his death in 1949.  It also illuminates the many writers whom Orwell had come to know who influenced his thinking.  Still, with all those influences, there is no doubting the originality of Orwell’s work.

 

The most influential chapter of Orwell's experience came from his participation in the Spanish Civil War.  He went to Spain to support Communists who formed part of the coalition fighting Franco’s Nationalist, Nazi-supported opposition.  His experience in Spain was sobering and disillusioning.  He came to see the cynicism, cruelty and dishonesty of the Communists.  He left this experience feeling there was really no difference between the debilitating totalitarian control of Communism and Nazism.

 

It is mind-opening, though probably not surprising, to see how 1984 has been viewed differently depending on the bias of the beholder.  Liberals viewed it as an indictment of Russia, which it surely was in part.  The right viewed it as an indictment of the liberal left, including the Labor Party in the UK.  The ambiguity in 1984 was part of Orwell’s design, but there was one constant overarching caution in his message, that being the recognition of the challenge we face in pursuing truth.  And how different forms of fanaticism and totalitarianism, enabled more than ever today by technology, can challenge the very existence of the possibility of truth.

 

Orwell’s pronouncement on the importance of the moral value of truth is registered again and again.  Without a consensus reality, Orwell argued, “there can be no argument; the necessary minimum of agreement cannot be reached.”  As Lynskey writes, Orwell was clear-eyed enough to know that one can’t always get to the objective truth but if one doesn’t at least accept that such a thing exists, then all bets are off.

 

 

The dangers of group think are also highlighted again and again.  As Franz Borkenau, an Austrian writer, scribed:  “Civilization is bound to perish not simply by the existence of certain restrictions on the expression or thought...but by the wholesale submission of thinking to orders from a party’s center.”

 

Orwell worried about fanaticism of any type.  In 1940, he wrote, “The future, at any rate the immediate future, is not with the ‘sensible’ men.  The future is with the fanatics.”  How right he was—and still is.

 

Orwell draws the “connection between personal happiness and readiness to believe the incredible.”  It is this “frame of mind” that has induced whole nations to fling themselves into the arms of a Savior.”

 

In 1984, Orwell describes a picture “in the earliest 20^th century” that could well describe today.

 

In an essay called “Looking Back on the Spanish War,” written seven years before 1984, Orwell understood better what he had seen unfolding in Spain:  “For the first time I saw newspaper reports which did not bear any relation to the facts, not even the relationship was implied by an ordinary lie. I saw, in fact, history being written not in terms of what happened but of what ought to have happened according to various ‘party lines.’”

 

This was new, he thought.  Totalitarian regimes were aligned on such a grand scale that Orwell felt that “the very concept of objective truth is fading out of the world.”  Orwell continued, “If the leader says of such and such an event, ‘it never happened’—well it never happened.  If he says that two and two are five—well, two and two are five.  This prospect frightens me much more than bombs.”  Orwell wrote. And well it should.  

 

Here is the moral and intellectual foundation of 1984.

 

Orwell’s generation experienced the consequences of Big Lies so absurd that they could only be sustained by the extreme control of totalitarianism, the kind depicted in 1984.  As Lynskey points out, and I agree, 21^st century authoritarians don’t need to go that far.  “They don’t require belief in a full-blown ideology, and thus they don’t require violence of terror police,” writes the historian Ann Applebaum, in a 2018 essay for The Atlantic.   “They don’t force people to believe that black is white, war is peace, and state farms have achieved 1000% of their planned production.”  Instead, they rely on “medium-sized lies:  all of them encourage their followers to engage, at least part of the time, with an alternative reality.”

 

All this brings Lynskey, at the end of his book, to Donald Trump.  “Donald Trump is no Big Brother,” he writes.   Nor is he simply a throwback to the 1930s.  “He has the cruelty and power hunger of a dictator but not the discipline, intellect or ideology.”  Lynskey depicts a more apt comparison being Joe McCarthy, “a demagogue who displayed comparable levels of narcissism, dishonesty, resentment and crude ambition and a similarly uncanny ability to make journalists dance to his tune even as they loathed him.”

 

 Lynskey cites chilling precedents in Orwell’s 1984.  For example, referring to Hillary Clinton, Trump’s call to his supporters to “lock her up.”  Trump meets most of the criteria Orwell used to define fascism:  “Sometimes cruel, unscrupulous, arrogant, obscurantist and anti-liberal.”

 

Capturing our own moment I believe, Orwell contended that such men could only rise to the top when the status quo has failed to satisfy people’s need for justice, security and self-worth.

 

Social media has undoubtedly made the process of disseminating “fake news” (ironically being used to attack “real news”) far easier as it has become the primary news source for millions of Americans without meaningful editorial oversight.

 

In conclusion, Orwell feared that “the very concept of objective truth is fading out of the world.”  As Lynskey writes, perhaps Life magazine’s original review of 1984 identified the essence of Orwell’s message best:  “If men continue to believe in such facts as can be tested and to reverence the spirit of truth and seeking greater knowledge, they can never be fully enslaved.”

 

That outcome can never be taken for granted—not today, not ever. 

 

 

                                                  

Courage--An Irreplaceable Element of Character

In some ways, courage is the most important quality. That’s because it enables everything else to happen. It enables us to act on our deepest convictions and move forward, even when faced with incomplete information. It gives us the strength to stand alone when necessary. In early 1986, a few months before becoming president of P&G, I made this journal entry to express the deep emotions I was feeling at that point in my life:

To be greatly ambitious while knowing one’s limitations takes courage. The counsel of timidity is to stay low rather than to risk great failures. The counsel of cowardice and prudence is to avoid getting hurt. I need to lead boldly and with confidence. I will. Courage is basic. Without courage there is no virtue.
Nelson Mandela said it well: “Courage is not the absence of fear, but the triumph over it.”

My own experience has proven this to be true. To me, courage means:

• Being willing to put aside fear of failure, recognizing that to accomplish anything of real value, we must risk
  wrong decisions.
• Being willing to take a stand long before I’m certain of success.
• Standing firmly for something I believe in and not allowing the views of others to deter me.
• Fighting for what I believe in, especially if it’s controversial.
• Being willing to ask others for their commitment: To ask “I need your help now”; “I need you to believe in
  each other.” Not always easy requests to make, but often necessary.
  
  Courage is the willingness to follow your deepest instincts, even if the future is not clear. I’ll always remember what a speaker said at my oldest son, John’s graduation: “Sometimes you have to leap before you look.” You're called to embark on something you’re not sure you can do, but you know it’s right and you know you need to try. I have found many of the most important things in my life have been like that.
  
  That was the case when we entered new business categories in China and Eastern and Central Europe. It was also the situation when we undertook Organization 2005. As I’ve said, I wish I had done differently many aspects of that organization change, but even so, I know it was right to move ahead.
  I called on the strength of courage in early 1999 when I agreed to lead the Development Campaign for the National Underground Railroad Freedom Center. I didn’t know then exactly how we would achieve our fund-raising goal of $110 million, but I felt certain that this institution could bring great benefit to racial understanding and cooperation in this country, and that I should play a part in making it happen. These decisions were ultimately sound. They were guided, in the words of Bart Giamatti, by the combination of all my “sometimes contradictory inner truths, the visceral, the open-hearted and the tough-minded.”
  
  I’ve found that you cannot make important changes or introduce new ways of working without controversy. Today, the notion that effective teamwork is critical to achieving a high-performance work system would cause little disagreement. But my journal notes reveal that this idea was not readily accepted as I introduced it to our U.S. organization in December 1986:
  
  Still a lot of controversy within the division manager group on the role of teams. I need to make my position clear and spell out more effectively the direction I want to go. I’m plowing ahead, saying as boldly and as clearly as I can what I believe is the right course for us to follow and why.
  
  “Plowing ahead” is usually what it takes. I was reminded of this recently as I contemplated the anguished words of a distraught U.S. State Department official lamenting the world’s prolonged lack of response to the mass killings in Bosnia: “If you want to take ownership of an issue, you have to do more than hold meetings. You have to make risky decisions and prove you have the courage of your convictions.” 
  1
  Courage is an intensely personal matter. It is physical and moral. We muster and strengthen it in the depths of our hearts and souls, sometimes during the lonesome dark of night. We are tested and challenged. But in the end, it is the defining strength from which great achievements are born.

Sometimes we’re conscious of acting courageously, and sometimes we’re not.
Laurent Philippe, who led our business magnificently in Morocco, then Russia, then Greater China, and who is now leading our Western Europe Market Development Organization, recently shared this recollection with me:

It was October 1998 in Moscow, only a few weeks after the dramatic devaluation of the Russian currency. You and I had been store checking the whole day. Moscow was gloomy, as only Moscow can be at the early approach of winter. I recall we did not see a single P&G shopper that day. We had abruptly priced up to recover dollar sales, but local ruble salaries had been kept under close check by the government. I was pretty depressed. But you were forward looking, as always. First, you bought a tube of Blend-a-Med for yourself, gently pretending that you had forgotten your toothpaste from home. So we had at least one P&G purchase decision made that day. More importantly, several times you expressed to the group your strong conviction that the leading brand equities and share positions
we had built in Russia before the crisis would serve us well, and that after the crisis we would emerge stronger than ever before. As we now know, this is exactly what happened. What a great lesson of courage and of leadership you gave me on that very day!

What I said to Laurent and our team that day wasn’t calculated. It wasn’t a special intervention. In fact, I didn’t recall it at all until Laurent brought it to my attention more than six years later. All of which can serve to remind us that often our most meaningful acts of leadership are spontaneous, drawing on our commitment to service and to our deepest-held values of courage and persistence.

While acts of courage are intensely personal, we can nurture and encourage courageous acts from others, as well. I often ask individuals participating in a large group for their personal point of view. For a moment, I sense the hesitation. People would rather not speak up. But with just a little coaxing, someone does speak up and others follow. They say what’s on their minds. We benefit from their points of view and they have, perhaps, experienced an act of courage whose Impact lasts long after the event.

Mark Ketchum did this with brand and advertising agency teams. He refused to accept an “agency point of view”that allows the opinions of individuals to be hidden behind a single, unilateral recommendation.
Mark said:
I go around the room and make everyone in attendance declare their personal point of view on a storyboard, a concept, a selling line or whatever. I know this has made an impact, because my long-term agency partners play back the positive effect this has had in cutting through the politics — and sometimes dysfunctional hierarchies — in the world of advertising.

It does more than that. Motivating others to act courageously becomes habit-forming and character-building.
Acting bravely is easier said than done, of course. Making the right decision — especially what could be a “gutsy”one — can be very lonely. You’re going against the grain; against the majority. You believe you’re right, but you can’t be sure. In a speech he gave at Harvard in 1886, Oliver Wendell Holmes Jr. described in stern terms the role of the leader when facing the toughest decisions:

Only when you have worked alone, when you have felt around you a black gulf of solitude and isolation like that which surrounds a dying man, and then entrust [yourself] to your own unshaken will, then only will you have achieved.

Decisions that rise to that level of tension will not happen often, but happen they will. And it is only with courage that they will be made well. As Edmond Burke, the 18th-century British statesman said, “The only thing necessary for evil to prevail is for good men to remain silent.” 2
The choice is ours:

• Will I speak up? Do I act on behalf of what I know is right? Or, do I opt to go with the flow, even if I believe
  the flow is going in the wrong direction?
• In a meeting when I hear something unfair or inappropriate being said about another person, do I speak upor let it pass?
  
  • If I see misalignment among people who need to work together to achieve a goal, do I do my best to correct it? Or do I let the situation pass in stony silence, hoping somehow it will correct itself, as unlikely as that may be?

In making choices like these, we draw on the deepest foundations of our character, which have been built over the years through countless, individual decisions. No one of them may seem that important, but collectively they are the cornerstone we draw on as we make the most significant decisions in our lives and careers.

This was certainly true for me. I drew on the lessons learned from past decisions as I made every major decision —whether it was changing an organizational design, expanding a major brand, entering a new country, or handling a weighty personnel matter.

I have always come back to three simple checks in order to test if my decision is a correct and courageous one:

• Is it consistent with my own vision, my beliefs and my understanding of the facts?
• Am I doing what I believe is morally and ethically right? Does it feel right? (If it doesn’t feel right, it probably
  isn’t.)
• And finally, would I feel comfortable telling my wife, Francie, and my children what I have done and why I have done it
  
  *****************************************
  
  This blog is drawn from a chapter of my book, "What Really Matters"
  
  
  

How Times Have Changed in Our Nation's Antitrust Policy

How Times Have Changed—Antitrust Policy:  FTC Vs. The Procter& Gamble Company

 

On April 11, 1967, the Supreme Court of the United States ruled in favor of the FTC’s finding “that the acquisition (of Clorox) by Procter & Gamble in 1957, eliminated Procter, the most likely entrant into the liquid bleach field, as a potential competitor, was supported by the evidence.”

 

The Supreme Court’s ruling overruled that of the Sixth Circuit Court.  Divestiture of Clorox by Procter& Gamble was affirmed.

 

It is hard to believe how far antitrust legislation and the Supreme Court’s ruling on it have changed during the course of the last 50+ years.  Here was P&G being required to divest Clorox on the predicate, unproven by any evidence, that it might have entered the liquid bleach field.  The elimination of P&G as a potential competitor to Clorox, which would have been an outgrowth of the merger, was the primary factor leading to the denial of the acquisition.

 

Contrast this ruling with what is now being allowed in mergers and acquisitions.

 

Facebook acquires Instagram, a smaller growing competitor, in the very same market.  A vertical integration if there ever was one.

 

Or Google acquires Waze, an up and coming competitor in the maps and traffic management.  Or Amazon acquires Whole Foods, despite already holding a substantial on-line business in the majority of product lines which Whole Foods sells.

 

Since roughly the 1980s, antitrust policy has been anchored more or less single-mindedly on the “test” as to whether the proposed merger would have a lowering effect on the consumer prices.  That has always been one key “test,” but by no means the only one that guided anti-trust policy. 

 

The trust-busting actions taken and supported by the Supreme Court during the early part of the 20^th century, and led by the Roosevelt, Taft and Wilson administrations, were focused just as much on preventing the accumulation of concentrated economic and political power in the growing combinations of railroads, banks, steel and oil.  The potentially nefarious impact of over-concentrated political and economic power should not be ignored today.

 

I am well aware of the enormous benefits to consumers provided by corporations like Google and Facebook and Amazon.  But I am also aware of the anti-competitive impact of their acquiring companies that otherwise would have been separate competitors, providing alternative and potentially fresh innovation streams.

 

The history of antitrust law and policy has been one of alternating permissiveness and restriction.  I believe we are in a situation of gross permissiveness today.  If not reversed, I believe it carries a significant risk of long-term harm to our country.

 

 

Getting the Balance Right: To Whom is a Corporation Responsible?

We are witnessing a continuing debate as to whether a corporation is solely responsible to its shareholders to maximize profit or whether it carries a broader responsibility, not only to its shareholders to provide an acceptable, competitive profit return, but also to its employees, its consumers and the communities in which it lives.

This question has been argued from almost time immemorial and continues to be argued today, including under new vocabulary:  the pursuit of “socially responsible capitalism” and “inclusive capitalism.”

I believe we risk complicating an issue which, at least for me, in its essence, is quite simple.

Certainly, a corporation has the responsibility to provide a fair, competitive economic return to its shareholders as produced through the value of its stock (influenced mightily by its profit) and by its dividends (also enormously influenced by its profit).  It has the responsibility to do this over time.  

It also has the foundational responsibility to better serve its consumers, for without consumer satisfaction flowing from the purchase of its product or service, a corporation will not exist let alone thrive.  A corporation also has the responsibility to provide its employees, who make the corporation go, a sustainable financial existence and an environment which nourishes their growth.  Finally, a corporation has a responsibility to contribute to the community in which it lives and in countless ways it depends.

Now you can try to have it both ways.  You can postulate that the asserted singular mandate of maximizing profit for the long-term depends on honoring these responsibilities to other stakeholders.  You could go on to say that, only to the extent that honoring these other responsibilities maximizes the long-term profit is it appropriate to bring energy against them.

While seemingly convenient, I regard this as a cop-out.  Specifically, I would argue that maximizing profitability is not the right goal, per se.  Maximizing profitability could lead one to cut corners in the sustainability effort for a company, or cut corners in the benefits being provided to its employees, or cut corners in terms of philanthropic support for needy people in the community in which the company resides.

The notion that corporations should devote themselves to maximizing profits is often taken to be one of the bedrock principles of corporate law and governance, especially since Milton Friedman’s famous article in 1970 which asserted just that.

In the history of corporations, however, business corporations were much different.  As Blackstone wrote in his Commentaries, corporations could only be formed if they served public purposes.  Today that rule no longer applies.  Legally, modern business corporations are considered private entities that need not serve any explicitly public objective.  Indeed, corporate officers who fail to focus on the profitability of the business for the long term would be a breach of their fiduciary responsibilities.  And properly so.

I recently came across a fascinating historical case bearing on this in Adam Winkler's fine book, "We the Corporations".   It occurred in 1916 as Henry Ford was sued by two business partners, James and Horace Dodge.  The Dodge brothers, who built Ford’s engines and owned 10% of Ford Motor Company stock, had been made immensely wealthy from their relationship with the company; their $10,000 investment netted them more than $32 million.  Yet, the brothers were unhappy that Ford refused to maximize profits even more.  They saw him running the company in ways designed to benefit employees and the larger community instead of solely its stockholders.

In 1914, for example, Ford announced that he would begin paying workers $5 a day, double their previous wages.  Every year the company lowered the price of cars even as significant improvements were introduced and inventory sold out.  Ford had decided the stockholders were earning enough, explaining that he did “not believe that we should make such an awful profit on our cars.”

In 1916, Ford announced that his company would not distribute a special dividend to stockholders despite having on hand an extraordinary surplus of $60 million.  Ford justified this decision as necessary to avoid “the discharge of a large number of employees in case there should be a sudden depression of business,” something he felt possible following the end of World War I.

The Dodge brothers condemned Ford for not running the company “as a business institution.”  Helping employees and the largely public goals were “worthy of themselves but not within the scope of an ordinary business corporation.”  They agreed.

During the trial, the outspoken Ford insisted that his company had the right to make business decisions in the interest of the public even if stockholders had to sacrifice.  The Ford Motor Company was organized “to do as much good as we can, everywhere for everybody concerned,” Ford testified and only “incidentally to make money.”  “My ambition,” Ford said, is to “spread the benefits for this industrial system to the greatest possible number, to help them build up their lives and their homes.”

Citing Ford’s testimony, the Michigan Supreme Court ruled against Ford and his public spirited view of the corporation.  While corporations might lawfully make “an incidental humanitarian expenditure of corporate funds,” the court held they could not commit to a “general purpose and plan to benefit mankind at the expense” of stockholders.

Ford could have claimed that his corporation would benefit in the long run from his policies, as he should have and as executives often do today when pressed to defend socially responsible policies.  But Ford stubbornly refused on principle.

“A business corporation is organized and carried on primarily for the profit of the stockholders,” the court explained.  “The powers of the directors are to be employed for that end.  The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself.”

There we are, facing the question, “What is the end we seek?”

I believe the corporation must fulfill its responsibilities to its shareholders and its other stakeholders, all in the context of maximizing the sustained, healthy life of the firm.  Yes, shareholders have every right to expect a fair competitive rate of return in their investment.  But they should also expect the corporation to be a responsible citizen in its relationships with its employees, the community and the consumers it serves.

I don’t find it surprising that surveys of long-term financial performance show a consistent, even if not perfect, correlation between companies that deliver the best financial returns and those which rank highest in social responsibility.

As Roberto Goizueta, the brilliant former CEO of the Coca-Cola Company once said, “While we were once perceived as simply providing services, selling products and employing people, business now shares in much of the responsibilities for our global quality of life.”

Or, even more directly, as John Smale, former CEO of Procter & Gamble, wrote: 

“It isn’t enough to stay in business and be profitable.  We believe we have a responsibility to society to use our resources—money, people, and energy—to the long-term benefit of society, as well as the company.”