James O'Toole, a professor emeritus at USC and author of "The Enlightened Capitalists," discusses the evolution of ethical leadership in business. He delves into historical figures like Robert Owen and the struggles modern CEOs face against shareholder primacy. O'Toole analyzes Whole Foods' John Mackey's battles with shareholders and the rise of legally binding ethical values among small companies. The conversation emphasizes the need for genuine corporate responsibility, balancing profit with social impact, especially in today's gig economy.
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Robert Owen's Mill
Robert Owen, a British industrialist, created a successful cotton mill prioritizing employee well-being.
Despite success, his partners bought him out, prioritizing short-term profits over Owen's methods.
insights INSIGHT
Shareholder Primacy
Shareholder primacy, the idea that businesses solely serve shareholders, predates Milton Friedman.
This concept gained prominence in the 1920s due to a lawsuit between the Dodge Brothers and Henry Ford.
question_answer ANECDOTE
Whole Foods Sale
Whole Foods CEO John Mackey's values-driven approach led to lower profits than some shareholders desired.
This pressure ultimately forced the sale of Whole Foods to Amazon to protect its culture.
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Cautionary Tales of Business Pioneers Who Tried to Do Well by Doing Good
James O’Toole
The Enlightened Capitalists by James O'Toole explores the stories of business pioneers who attempted to create organizations that were both profitable and socially responsible. Through vivid storytelling and extensive research, O'Toole highlights figures like William Lever and Robert Owen, who implemented forward-thinking practices to benefit employees and communities. However, many of these initiatives were eventually dismantled as companies changed hands, raising questions about the compatibility of virtuous practices with shareholder capitalism.
James O'Toole, a professor emeritus at the University of Southern California, talks with Recode's Kara Swisher about his book, The Enlightened Capitalists: Cautionary Tales of Business Pioneers Who Tried to Do Well by Doing Good. O'Toole discusses the first such "enlightened capitalist," British industrialist Robert Owen; why, like Owen, do-gooder CEOs can't or won't make change today; and the history of the belief that corporations only exist to serve the shareholder. He also talks about how Whole Foods co-founder John Mackey's battle with values-adverse shareholders forced him to sell the company Amazon, and why a growing number of small companies are writing their ethical values into legally binding paperwork.
Kara Swisher (@karaswisher), Recode co-founder and editor-at-large
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