Rewriting the Rules | Brunswick Group

Rewriting the Rules

Much of the corporate world remains wired for practices that favor shareholder primacy and a short-term outlook. Author Judy Samuelson talks with Brunswick’s Maria Figueroa Küpçü about how to promote change.

In March, Brunswick Partner Maria Figueroa Küpçü hosted a webinar for Brunswick clients, advisors and journalists, in which she interviewed her guest, Judy Samuelson of the Aspen Institute. A longtime expert on corporate affairs and a former leader of the Ford Foundation’s office of Program Related-Investments, Ms. Samuelson is the author of a book that seeks to show how old business practices should be realigned with the current climate, which demands the practices of commercial enterprises be more engaged with society. This conversation below is an excerpt of that webinar.

Maria Figueroa Kupcu: First of all, let me say welcome to everybody. It is my pleasure and delight to welcome you all to this conversation today with a person who has been not only a friend but an important influence in Brunswick’s development around business and society issues: Judy Samuelson. We’re here to talk about her new book, The Six New Rules of Business: Creating Real Value in a Changing World.

Judy started out in legislative affairs in California understanding the public sector perspective. She went on to finance, where she was a middle market lender, and then came to the Ford Foundation at a time when it was starting to really put its head around social impact and needed people with a financial background to provide perspective. That work spurred her to found the business and society program at the Aspen Institute where she is now.

Initially these aspects of leadership were all lumped together as CSR (corporate social responsibility). Now we see it in so many different variants. Judy’s career has given her really a front row seat to a lot of different management teams, industries, companies, and how they have confronted a whole array of social issues and I know each of you has some experience in these areas that you would be interested to share.

So Judy, welcome.

Judy Samuelson: Thank you so much. Let me just tell you how much I’m going to enjoy this. I feel like I’m with some real friends here who have been at this table a long time, so it’s a pleasure to do this with you at Brunswick.

MFK: You say at the beginning that you hope this book strikes a chord with individuals who seek change but are still focusing on rearranging the deck chairs rather than setting an entirely new course of action. You write that, “The purpose of the corporation is not a slogan. It is the key to unlocking the value of intangible assets,” and that “it’s when profits get confused with purpose that the problems begin. If purpose is only a statement in the CSR report it’s only a matter of time before the real purpose of the enterprise is revealed.”

I’m sure everyone on this call wants to avoid getting into a situation where they’re rearranging the deck chairs, as opposed to making real, bigger shifts. Can you talk about your motivation for writing the book and focusing on this particular theme?

JS: I have a lot of respect for business. I wrote this book because I believe so deeply that we need business at the table as we take in the kind of scale and complexity of the problems that we’re facing socially and environmentally. It’s hard to imagine addressing any of them without using the remarkable capacity and global reach and distribution systems and talent and problem-solving skills that business represents in abundance. This a remarkable moment of change. And I wrote this book with the hope of focusing in on the real leverage points.

As an organization, we really focused in on business agency, less on policy, although business has a role to play in that domain as well. But I’m drawn to systems change. And that does take us back to purpose, because that is the organizing principle. It’s true that not everybody takes it seriously and we all know the cartoon versions of purpose. I write a little bit about that. Purpose to me requires stepping back and saying, “What are we really about? How do we connect it with something larger than solely the success of the enterprise in conventional terms?” That kind of process is really critical. If we want be part of the solution space here and help move things forward, I think that’s an important first step.

Then we need to look deeply at what does that mean we actually need to measure? I’ve been toying with this idea of what are some surrogate measures of success. Things like retention, customer service, employee engagement. We have enough knowledge of these things closer to the ground that we can measure without going into this domain of profit and shareholder primacy that has gotten so many companies in trouble.

So, start with purpose and get the metrics right. And then of course, what are the incentive systems inside driving in the right direction, and where are they holding us back?


Judy Samuelson is founder and executive director of the Aspen Institute Business and Society Program and author of Six New Rules of Business: Creating Real Value in a Changing World.

MFK: How are you seeing the struggle between short-termism and long-termism? How does CEO compensation figure into that?

JS: We started working on short-termism in business and capital markets within a couple years after Enron imploded. We were seeing an inability to tackle these complex problems in part because of the short-term pressures that were embedded in lots of protocols and incentive systems, as a result of the intense focus on shareholder primacy.

If we’re going to try to put something as complicated as tackling climate change on the table—or inequality or economic opportunity or racism—it’s only when you push out far enough that you see the lines really start to converge between the health of the enterprise and addressing these considerable problems.

Short-termism is still present because of the power of capital markets, because of our tendency to respond to and amplify the noise surrounding short-term investors. Some investors consider themselves long term but still rebound to short term because of their internal measures of success. What investors ultimately want is for the stock price to go up—we must not be silly about it. We’ve gotten a rise in socially responsible investors, but it doesn’t mean that anybody gets a free pass if they’re involved in managing somebody else’s money.

Change requires real intention, being authentic to that intention and keeping our promises. None of it is easy. And I do think the degree to which shareholder primacy continues to dominate CEO pay and the pay of our most senior people is one of the things that really holds us back.

When we started working on short-termism, one of the mantras was, “Amplify the voice of long-term holders.” Stop this quarterly guidance treadmill. Like, just remove yourself from that noise. What are you possibly accomplishing by doing that? Paul Polman, on the very first day on the job as CEO of Unilever, spoke out on that very strongly and is still remembered for that. Even Jamie Dimon of JP Morgan Chase has. We have colleague, David Langstaff [founder of the aerospace and defense company Veridian and now Executive Vice President of the Aspen Institute] who when was taking his company public, insisted on going to the middle of the country on the road show. He said, “Get me off the coasts. Get me into places where I’ll meet a different kind of investor than I could typically see in New York or Silicon Valley.”

And why are we so obsessed with the investor? It’s because noisy investors and activist investors can make your life miserable—we’ve designed that into the system. We’ve designed it into pay, so that executives are actually drawn to the metrics that include share price and all of that.

MFK: Some businesses have this wired into their DNA. For others, they have to really retrofit, to change the mindset of the board. Where change is needed is there a way to approach it that’s better than another?

JS: On pay itself, it’s a sticky problem. Shareholder return is by far the loudest signal in CEO pay packages in our public companies. So it’s a board problem. And this has been a “third rail” issue; nobody really wants to start talking about the CEO’s pay.

We are literally now stepping back to say, “How does a change take place?” We think more women on boards is going to make a difference. We think starting with companies that are still newer, maybe organizing around companies that are going through IPOs, and making sure that they’ve been thoughtful about this. We’re collecting examples.

One way change happens is because systemically important enterprises get caught in this squeeze play between an NGO or public campaign that has a larger point they’re trying to make and sees a brand as a convenient way to elevate an issue. McDonald’s, Amazon, Walmart are obvious examples. We’re starting to see some significant change because of the force of campaigns aimed at these enterprises.

Employees are a huge force for change today. We could talk a lot more about that. It's really important driver. But we also see these innovators inside companies. We have a fellowship program that targets them and helps them build the skills to drive change from within. Remarkable innovations happen because of an individual who’s well-placed and who stays at something for a long period of time, in a way that can be heard.

And we’re seeing incredible change from the top. Mary Barra on electric vehicles. Obviously, she didn’t make this decision on her own, but it’s identified with her as a leader and I think that’s powerful. Satya Nadella at Microsoft. Some of these other newer CEOs like Dan Schulman and Marc Benioff, who speak easily somehow to these questions around equity.

Coalitions are also emerging for a host of different reasons. So, there’s a lot of ways that change gets anchored, and I think it’s very case specific and depends on the industry and the company.


MFK: Your book lays out six new rules of business that replace old rules—old ways of thinking about business. The old rule for instance, “Shareholder value of profit maximization is the organizing principle of the corporation,” is replaced by “Businesses serve many objectives beyond shareholder value.”

I want to bring up one of these rules specifically. Where the old assumption would be, “Labor is a cost to be minimized,” you say the new rule is “Employees give voice to risk and competitive advantage.” That’s a really interesting point and an interesting way of putting it. Can you talk about that?

JS: You think about the remarkable companies that really have excelled because they put employees at the center. You know, customer serving enterprises. Southwest comes to mind—the business that Herb Kelleher built and how clear he was about the importance of the employee. Costco would be another one. I write about Herman Miller. You know, design was their thing, but that meant they need to honor the designer, and then ultimately the emphasis that they put on their employees as innovators is what enabled Herman Miller to jump ahead and kind of identify design and sustainability as intertwined ideas, ahead of their competitors and other industries.

It’s not that people didn’t always want to be able to harmonize what they thought at home and what they thought at work. But the current generation and its digital natives, and their ability to deploy social media to very interesting ends, is a massive factor of change in this moment. If you think about Me Too, for instance, or the Google walkout, or Amazon saying it’s behind a federal minimum wage of $15 an hour. Those are game-changing moments, with employees at the center. This recent decision of so many companies to put the pause button on their political spending, is a very recent one. So, we’re seeing a lot of change. I think basically it’s good news in the sense that perhaps we can figure out what governance looks like if we’re actually listening well to the employee voice. It’s an incredible source of competitive advantage for companies that kind of lean in on this, rather than let it happen around all you.

MFK: What’s the rule where you see the most friction, where maybe the majority of organizations you’ve looked at struggle more with the old versus the new?

JS: Well, I’d take us to the last rule around co-creation. When the system itself is at risk, whether it's fisheries or coral reefs, inequality or the national conversation we're having in the US over racism—you just don’t address it one company at a time. It requires collaboration. And if we need an example of the potential of collaboration let’s look at this remarkable pace with which countries have developed vaccines. That didn't happen without some collaboration that I think we’ll learn more about when we get to see the movie version of COVID. Collaboration not just between and among private entities, but also with the government.

What are the skills we actually need to collaborate well, and do that without killing competition? Competition continues to be, obviously, a force of innovation and change. But somehow getting the balance right in that seems to me to make a lot of sense.

MFK: Yes, it’s something that we’re definitely picking up in the climate change narrative, where there’s been a lot of emphasis on risk and risk mitigation. Now you’re starting to see more communication and comfort with the idea of opportunity, and how do we kind of shift into messages of opportunity around all of this adaptation that will be required.

How do you feel about the role of regulation as a driver of change? And maybe as part of that, are there other things that you are seeing that give you hope?

JS: I don’t know that I could talk generally about regulation. Living in the United States, it's just been such a crazy period of time. You can’t get anything done in the legislature and so you do it by executive order. Then the next administration comes in and rolls back all the regulations that the last one put in, or re-regulates some things that they had deregulated.

I believe the real agency is inside companies. The general noise we’re hearing from investors is a contributor to change. It’s a voice that we're hearing more clearly. But I’m interested in metrics. Metrics for companies and metrics that help you diagnose and analyze what’s going on. That is not usually what investors are looking for.

They want simplicity. They want things that are easy to compare between and among companies so that they can make simple comparisons and decide who’s in and out. I don’t think that gets us very far. I think that’s amplifying the voice of the investor over those who actually have the real motivation to manage differently. What are we trying to do and what are the metrics that help us understand if we’re making progress? That’s where metrics like employee engagement scores and retention scores make sense.

There’s a lot of things that help us understand whether or not we’re making progress. I don't think any of them are particularly easy to make comparisons between and among. Maybe carbon is one, with the goal of a net zero gain. That might be a profound exception. But that’s a piece that I've been wrestling with.

In her book, The Six New Rules of Business: Creating Real Value in a Changing World, Judy Samuelson poses six ways of thinking about how businesses operate and demonstrates how traditionally accepted assumptions need to be reimagined to be brought in line with contemporary thinking. In each case, she presents the new rule as both better for the business and more productive to society as a whole.




"Hard assets determine firm value."

"Reputation, trust, and other intangibles drive business value."

"Shareholder value of profit maximization is the organizing principle of the corporation."

"Businesses serve many objectives beyond shareholder value."

"Corporate responsibility is defined by host communities and fence line neighbors."

"Corporate responsibility is defined far outside the business gates."

"Labor is a cost to be minimized."

"Employees give voice to risk and competitive advantage."

"Capital is king, shareholders rule."

"Culture is king, talent rules."

"Compete to win."

"Co-create to win."

Maria Figueroa Küpçü is a Partner, the Head of the New York Office of Brunswick and the leader of the firm’s US Business and Society practice, specializing in purpose narratives, campaigning and ESG.

Additional reporting by Brunswick Account Director Jace Gilmore and Marketing Events Manager Caitlyn Esposito.

Illustration by Fabio Consoli.