Business leaders must accept responsibility for the mess we're in and assist President Obama in restoring the U.S. economy to health
In spite of the gloom about the economy I witnessed at this week's World Economic Forum in Davos, hope was in the air about a new era of global collaboration resulting from President Barack Obama's inauguration. After a decade of declining respect for American leadership, the time is ripe to get the U.S. back on the track of economic growth, well-run government, and world respect.
In his inaugural address, President Obama called on all Americans to serve their country—a clear message that applies directly to business leaders. In spite of the pro-business orientation of the Bush Administration, every industry and sector has been harmed by the failure to create a fiscally sound, sustainable economy.
As business leaders, we must accept our share of responsibility for this state of affairs. We let self-interest, greed, and instant gratification take precedence over the country's long-term needs. Our failure to provide visionary leadership cost us the trust of the people we serve—our customers, employees and fellow citizens.
President Obama expressed genuine anger over Wall Street bonuses and excessive executive compensation, especially for those taking government money. Calling this "the height of irresponsibility," the President's words stung, but were well deserved. Either corporate board members bring this situation under control or we will abdicate our responsibilities to the government.
No Place at the Table for Business
As President Obama has moved quickly to fill key government posts with a highly competent group of leaders, it is noteworthy that not a single business leader has been named to a key position, not even Commerce or Treasury Secretary. As a result, business does not have a place at the table.
This does not mean the voice of business is unwelcome. The President has indicated he wants inputs from business leaders, as he received on the stimulus package this past week. But we cannot sit back and wait for the government to propose solutions and then commission our lobbyists to work behind the scenes to shoot them down.
Business leaders need to step up and propose solutions that benefit the entire country. Either we get engaged, or we'll suffer unintended consequences from well-intentioned new programs that don't work in the real world.
Here's a short list of areas where business leaders should contribute to the nation's long-term problems:
Health care. Health care is back on the national agenda. With escalating costs, declining availability, and mixed quality outcomes, employers have been hurt by the absence of sound national policy. The solution is not to take health care away from our employees or to get the federal government to take these problems over. Instead, we should support President Obama's proposal to make health care available to all Americans through the combination of private and public insurance pools.
We need to contribute to creating more efficient and affordable health care, while engaging our employees to take responsibility for living healthy lives. This means supporting an aggressive public health program, supplemented by employer and community initiatives, to cause people to improve their health through regular exercise, nutritional diets, and stress-reduction programs. People with chronic disease should be offered integrated healing plans that combine evidence-based care paths with lifestyle improvements.
Energy and the Environment. The decline in oil prices from $147 to $41 per barrel shouldn't make us complacent about the severity of the energy crisis. Near-term, the best opportunity to reduce dependence on foreign oil is through a massive efficiency program. Increased fuel efficiency and emission reductions for vehicles should be combined with a national initiative to drive efficiency improvements throughout industry and homes. Meanwhile, we need to create cost-effective sources of renewable energy through technology breakthroughs and the formation of startup companies developing innovative solutions.
Financial Services. Business contributed to the current economic crisis by advocating that institutions like hedge funds and instruments like credit default swaps go unregulated and operate without transparency. Lack of "fair value" accounting has shut down the credit markets because no one knows how to value these instruments. Leaders of financial institutions should advocate for full transparency, fair value accounting, and sound regulation in order to restore healthy financial markets.
Innovation. Innovation and entrepreneurship are America's competitive advantages in the global world. Saving jobs that are no longer viable will never restore a sound, sustainable economy. Instead, we need to leverage our strengths by creating new companies and high tech jobs enabling America to dominate high-tech fields while exporting our products and services.
Education. American education is rapidly devolving into a two-tier system that cannot provide enough well-trained employees for the technology age. Nor is it providing an adequate supply of scientists and engineers to compete with India and China. Business should support innovative solutions to K-12 education like Teach For America and expanded grants for engineering and science students.
President Obama's new administration is working to create long-term solutions to all these problems. It's time for business leaders to get behind them with our own initiatives that will restore the U.S. economy to sustainable growth and world leadership.
As former WalMart CEO Lee Scott said in a recent interview in The New York Times, "Businesses have a responsibility to society…There is no conflict between delivering value to shareholders and helping society solve bigger societal problems."
Bill George, professor of management practice at Harvard Business School, is the author of two best-selling books, True North and Authentic Leadership. The former chairman and chief executive of Medtronic, he serves on the boards of ExxonMobil, Goldman Sachs, and Novartis.