Starbucks’ CEO Howard Schultz shouldn’t run for US president because he’ll be torn to shreds
He is guileless, and he wears his sincerity on his sleeve. These qualities may make him a decent human being and a charismatic CEO, but he’ll be ripped to shreds if he goes into politics.
Before Howard Schultz came along, the most famous example of a chief executive trying to use his company for social good was William Norris, the CEO of Control Data Corp. Based in the suburbs of Minneapolis, Control Data was a highly successful maker of so-called supercomputers; by the early 1980s, it was a US$5 billion company with 60,000 employees.
But Norris, who was a superb computer engineer, also believed that corporations had a social mission to improve the communities in which they operated. He took to spending about 7 per cent of Control Data’s revenue on social programmes, including opening factories in struggling urban areas. Alas, Norris and Control Data missed the moment when supercomputers gave way to workstations and desktop computers, and by 1985 the company was deeply in the red. Norris soon left the company, and by 2000 Control Data had ceased to exist.
Critics claimed that Norris’s emphasis on social programmes is what caused him to take his eye off the ball. Had he been more focused on profits — and on the business itself — he might have seen the coming competition and adapted to it. It seemed an affirmation of one of Milton Friedman’s maxims: “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.”
In the intervening years, two things happened. First, the emphasis on profits, especially short-term profits, became ever-more pronounced, as shareholder activists became ever-more powerful. And second, the “corporate social responsibility” movement took hold. But the latter always struck me as more for show than for accomplishing something significant.
For instance, in 2004 Ford Motor Co., which considers itself an environmentally conscious company, overhauled its River Rouge factory complex to make it “green.” But the vast bulk of its profits still came from gas-guzzling pickup trucks.
