Dear EarthTalk: Some friends of mine were talking about a book called “Plan B” that proposes a plan for rescuing the environment and ending poverty around the world. Is it a realistic plan or just some utopian pipe dream? -- Robin Jackson, Richmond, VA

What started as a book has grown into a movement known as “Plan B” which presents a roadmap for achieving worldwide goals of stabilizing both population and climate. According to Lester Brown, author of the 2003 book, Plan B (and three subsequent updates) and founder of the non-profit environmental think tank, Earth Policy Institute, the plan is based on replacing the fossil-fuel-based, automobile-centered, throwaway economy with a new economic model powered by abundant sources of renewable energy.

Brown argues for transportation systems that are diverse and aim to maximize mobility, widely employing light rail, buses and bicycles. “A Plan B economy comprehensively reuses and recycles materials,” he says. “Consumer products from cars to computers are designed to be disassembled into their component parts and completely recycled.”

Brown even proposes a budget for eradicating poverty, educating the world’s youth and delivering better health care for everyone. “It also presents ways to restore our natural world by planting trees, conserving topsoil, stabilizing water tables, and protecting biological diversity,” says Brown. “With each new wind farm, rooftop solar water heater, paper recycling facility, bicycle path, marine park, rural school, public health facility, and reforestation program, we move closer to a Plan B economy.”

Plan B is an integrated program with four interdependent goals: cutting net carbon dioxide emissions 80 percent by 2020, stabilizing population at eight billion or lower, eradicating poverty, and restoring the Earth’s natural systems. Where Plan B really hits home is in the numbers: Brown puts realistic dollar values on the various aspects of his plan, and compares these costs with current military spending. Needless to say, restoring the environment and economy looks like a bargain when viewed against what the developed nations of the world spend on being ready for battle.

The beauty of Plan B is that it is feasible with current technologies and could well be achieved by 2020 with a concerted international effort. Brown reportedly wrote the latest incarnation of Plan B as a warning call for leaders of the world to begin “mobilizing to save civilization” given that time is more than ever of the essence. Luminaries from Bill Clinton to E.O. Wilson to Ted Turner have spoken highly of Plan B, and at least one university (Cal State at Chico) has made the latest version of the book (Plan B 4.0) required reading for all incoming freshmen.

Those looking for more up-to-date information on the evolution of the Plan B model and progress toward its goals should tune into the website of the Earth Policy Institute, the think tank started by Brown in 2001 and currently used as a central node in the growing network of thousands of entities and individuals around the globe supportive of making Plan B into reality. Prior to founding Earth Policy Institute, Brown was well known in environmental and policy circles for his work with the Worldwatch Institute, a pioneering environmental think tank he launched back in 1974.

EarthTalk® is written and edited by Roddy Scheer and Doug Moss and is a registered trademark of E - The Environmental Magazine (www.emagazine.com). Send questions to: earthtalk@emagazine.com. Subscribe: www.emagazine.com/subscribe. Free Trial Issue: www.emagazine.com/trial.

Start Something that Matters

by Blake Mycoskie

Reviewed by Blake P. Robinson

Blake Mycoskie, the founder of Toms Shoes, has written Start Something that Matters “with the aim of inspiring, entertaining and challenging you to start something that matters.”  In a breezy, familiar tone that doesn’t take itself too seriously, he succeeds in encouraging readers to do just that. Unless you’re quite resigned to the status quo, you’ll find it difficult to avoid daydreaming about your own personal entrepreneurial dream while reading this book – and when you’re finished reading, the odds are you won’t be resigned to the status quo.

The book is organized around six traits or lessons that Mr. Mycoskie believes “everyone should follow to start and sustain something that matters.”  Each lesson is supported by a host of stories from a variety of sources, including a powerful tale from his mother, Pam Mycoskie, the author of a best-selling diet book, Butter Busters, which she self-published with much perseverance and more than $30,000 in personal loans. The entrepreneurial spirit, it seems, runs in the family.

A native of Arlington Texas, the 35-year-old Mr. Mycoskie speaks with authority about start-ups, having launched four entrepreneurial ventures ranging from a laundry service to an all-reality-TV network (the cultural merits of which will not be commented upon here). He founded Toms Shoes in 2006 and pioneered a novel cause marketing concept called “One for One,” which means that for every pair of Toms Shoes that someone buys, a pair is given away to someone who needs it in the developing world.

In just four years, Toms has given away over 600,000 pairs of shoes to people in need – suggesting revenue for the privately-held company of at least $33 million, according to the Wall Street Journal. Meanwhile, “One for One” has become a media sensation: Toms’ first drop of ten thousand shoes became the subject of a documentary; Mycoskie has been written up in dozens of magazines and newspapers. And every April 5^th thousands of people mark an event called “One Day Without Shoes,” forgoing their shoes for a day in solidarity with those who don’t have any.

Critics claim Toms’ philanthropic marketing practices undermine local shoe production and distribution.  Toms is certainly aware that giving away shoes potentially undermines local businesses; the company says it tries to avoid that by partnering with established charities that presumably have the expertise to give strategically.  Although it is outside the scope of this article to investigate the merit of the criticism, the effectiveness of Toms’ giving program does matter.  And, the book, in my opinion, could have benefited from engaging with this thorny question.

Before starting to read Start Something That Matters, one of my concerns was that Mr. Mycoskie would overemphasize the grand, socially transformative endeavor at the expense of the small improvements that we each can and do make to our world each day. He goes out of his way to dispel that concern, opening the book by quoting from a poem entitled “Success”: “To know even one life has breathed easier because you have lived | This is to have succeeded.”  Mr. Mycoskie is faithful to this line, which offers some solace to those of us who are unlikely to start a socially conscious business that changes the world.

Indeed, Start Something that Matters will provide inspiration and motivation for current and upcoming social entrepreneurs. The pitfall that Mr. Mycoskie does not avoid is that of looking down upon “mainstream” businesses – such as ExxonMobil, Union Carbide, Philip Morris and Goldman Sachs – the focus of which, he argues, “will always be on making money above all else, a perfectly defensible capitalist motivation.” While it is true that from most perspectives these companies have a less compelling story than Toms, they nonetheless have achieved much that matters.

Start Something that Matters is aimed squarely at the Toms demographic: young, fashion-conscious men and women who want to change the world.  The book maintains integrity with the simple, folksy style of the Toms brand.  It’s a style that certainly is not for everyone, and it can, at times lead a reader to look for more substantive analysis and justification for the principles in the book.  On the other hand, if Start Something that Matters gets people dreaming their entrepreneurial dreams – and not accepting the status quo – it will have indeed accomplished something that really matters.

A financial advisor at Fulcrum Securities, Blake P. Robinson helps individuals and foundations with a strong set of values to invest in a way that supports those values. Blake writes and speaks frequently on the topic of ethical investing.

We First: How Brands & Consumers Use Social Media to Build a Better World by Simon Mainwaring

Reviewed by Michael Connor

The only thing hotter than social media these days may be the business of writing about it, with pundits by the Google-load now relentlessly analyzing the impact on everyday life of technology platforms like Twitter, Facebook, YouTube and dozens of new social apps that promise to connect us all in ways that we’ve never before imagined.

The same might also be said of corporate social responsibility (CSR), with observers and analysts of that movement sometimes seeming to outnumber true practitioners in the field, speculating on how the world could be a much better place if only companies would try harder.

Combining the two – CSR and social media – can lead one to believe a revolution is just around the corner. The theory seems to be that if one could hit a CSR “reset” button on traditional corporate attitudes toward environmental and social issues – while at the same time inspiring consumer action through millions of tweets and status updates – we’d be well on our way to solving many of the world’s pesky and complicated problems.

We First: How Brands & Consumers Use Social Media to Build a Better World is not the first book to suggest a linkage between digital media and social change.  But author and advertising executive Simon Mainwaring is more forceful than many, making a powerful argument to “temper the excesses of free-market capitalism” before proceeding to outline nothing less than a consumer-driven “comprehensive system to build a better world.”

“The application of We First means that corporations must recognize that they are part of society and have a responsibility to create something more than profit,” Mainwaring writes.  “As for consumers, they, too, need to understand that they play a role in preserving the Earth and helping a better form of capitalism take root by requiring the businesses they deal with to become responsible corporate citizens.”

The We First plan for building a better world has two specific elements.  The first, which builds on fundraising precursors such as 1% For the Planet, is what Mainwaring calls “contributory capitalism,” in which every single consumer transaction for products and services globally “would include a contribution toward building a better world.”  The second element is what he calls the Global Brand Initiative, an association of hundreds or thousands of leading corporate brands working together to put their “collective power and resources” to work addressing some of society’s most difficult problems.

Simon Mainwaring

It’s difficult to imagine this becoming reality.   Then again, CSR was a nascent movement only 10 years ago; WalMart embracing sustainability would have been impossible to imagine in 2001.  And the modern Internet was still being born only 20 years ago, before web browsers were introduced.  Who would have imagined then that democratic movements in countries like Egypt and Tunisia could harness the power of status updates and tweets to help overthrow entrenched dictators?

Social media has its limitations, and Mainwaring acknowledges a phenomenon that critics of these new platforms call “slactivism” – slacker activism – wherein “it is easy to sign up on a fan page for a cause and do almost nothing.”  But Mainwaring says the future will be more complex than that, and he outlines six levels of engagement offered by social media which provide “a complex and rich infrastructure for the activist processes of social transformation.”

The hope, of course, is that such “social transformation” will be positive.  It’s also possible that new forms of media could be employed more nefariously for less desirable social outcomes.

In an interview, Mainwaring admits the challenges are huge. “In the context of being realistic, if consumers do not shift their behavior sufficiently, none of this will happen,” he says. “At the same time, we should not underestimate the engagement of consumers both with social technology and with their responsibility to improve the world that they want in the way that they want.”

“Still, the world we want will not be built by fiber optics, cell-phone towers, or social media platforms,” Mainwaring writes. “It will be created choice by choice, in our hearts and minds, and with our hands.” The process could take many years, he says.  At the moment, “we're at about 3 o'clock on Day One.”

Where can you find a company where employees are happy, have high energy, great morale, and speak the same organizational language? Where people know not only what the organization’s values are, but use those values as their basis for making decisions?

No, we don’t need to go to Shangri-La to find it. The road map, according to Joel Kurtzman, leads to common-purpose companies.  Kurtzman has spent more than 30 years working with global companies and their leaders.

Common purpose is a term Kurtzman uses to talk about a quality of leadership that creates an enormous impact in an organization’s culture and spirit – its soul, if you will - that drives success beyond financial statements. While the concepts aren’t novel, when taken together he has observed significant patterns of success for leaders and in companies when they are integrated and authentically and consistently applied.

In a recent interview, I asked him for some current examples of common purpose organizations: American Express , FM Global and Li & Fung Limited were on his list. Common purpose is about the type of leader a company has, he says: Amex’s CEO Ken Chenault has followed in the footsteps of former CEO Henry Golub who put a high priority on people, values and brand, helping employees understand the brand and values sufficiently that they make good decisions based on them.

Common purpose occurs, Kurtzman says, “when a leader coalesces a group, team, or community into a creative, dynamic, brave and nearly invincible we.”

“We,” that elusive grail which is the subject of countless team building exercises, Human Resources’ angst, and management books, is an outcome when the CEO creates a bigger purpose for the organization than just making money or reaching quarterly numbers. Kurtzman cites as examples Microsoft’s aim to change the world and NASA’s executing President Kennedy’s vision to put a man on the moon. In both, everyone knew what they were focusing on and what the organization stood for – a common purpose.

As a result of the financial crisis, the focus for most CEOs now, says Kurtzman, is thinking about making money, meeting next quarter’s numbers. As an economist he knows all about the importance of numbers, but what he sees changing and engaging cultures is more fundamental: tapping into the passion behind what a company stands for, to drive a common purpose.

Too many organizations, he points out, develop company values and purpose but don’t use them in decision making, so they exist on paper, or on a web site, but don’t become a daily way of creating and reinforcing a shared culture, a sense of “we.”

The sense of “we” starts with the leader. Leaders in any organization are under intense scrutiny, Kurtzman says. Those watching CEOs copy their style and behavior. In his extensive interviews with CEOs over the years, leaders have admitted the connections they have to their respective organizations are fragile, and can be easily broken.

CEOs need to know how to read their organizations’ emotional tone. Committed-to-developing-a-shared-“we” CEOs need to engage in a number of behaviors that build trust including leading-by-listening, building bridges, showing compassion and caring, demonstrating their own commitment to the organization, and giving employees the authority to do their job while inspiring them to do their best work.

Excessive executive compensation is a big barrier to being a common-purpose company Kurtzman says. “When people feel compensation is too much for those in leadership roles, it creates mistrust.” Leaders think they can survive with mistrust but ultimately they can’t,” he says.

More than 20 years ago, when Kurtzman was business editor at The New York Times, he asked leadership guru Warren Bennis a question: How do leaders inspire and encourage followers to take action? Bennis replied that good leaders are deeply integrated into the business and emotional life of the organization and have a deep connection, a real fit.

That question became the catalyst for Kurtzman’s most recent book, Common Purpose: How Great Leaders Get Organizations to Achieve the Extraordinary. The book is essentially a collection of leadership stories from Kurtzman’s interviews and research that illustrate how those in charge have developed or lost common purpose in their organizations, or whose styles precluded its possibility.

Kurtzman refers often to the success of 175-year-old FM Global, a commercial insurance company, and its current chairman and CEO Shivan Subramaniam in building a common-purpose company. The company is united around the purpose that most losses are preventable. One-third of employees are engineers and the other two-thirds are trained to think like engineers. Their focus is help clients identify and mitigate risks that would impact property, product or lives.

Common purpose is reinforced in several ways at FM Global: people hired are a fit with its goals and purpose; leaders are accessible, seek out opportunities to learn from employees, and believe knowledge is developed and embedded throughout the organization; employees have a common language and are developed to have a common understanding of the business and a quick, effective way to set directions;  communication is transparent; employees learn from and support each other, examining what goes wrong to fix it; and there is a formula for everyone sharing in the company’s success.

Subramaniam, who often eats in the cafeteria sitting with employees to listen to their ideas and comments, thinks of himself as an employee as well as the CEO. He follows, for example, the company policy that executives at a certain level fly business class in flights over two hours, rather than buying a corporate jet - which the board had encouraged him to do. He explained in his interview with Kurtzman: “But I told the board I felt it would send a terrible message throughout the company if we bought a private jet.”

Kurtzman’s book shares many other stories of when companies have created common purpose, healthy and functional organizations, and financial success. Some examples: Pixar, Google, Apple, Wynn Resorts, Continental, IBM, Ritz-Carlton, and Clayton, Dublier & Rice.

However, Kurtzman points out in our discussion that while HP was a common-purpose company under its founders (where people lived the HP way) and Toyota in his experience operated with true common purpose in the 1970s (with a sense of empowerment and respect for the individual) in neither case was it sustained.

He is the first to admit that achieving and maintaining a common-purpose company is hard work. “It is difficult for a company to keep a sense of common purpose for longer than a decade,” says Kurtzman. “It has to be nurtured or it goes away. Things happen. Leaders start losing touch with the organization.”

He estimates that 25 percent of companies have achieved creating a common-purpose organization. In general, he says, those that are likely candidates include: a young company (about 40 – 50 percent of start ups begin as common purpose); a company with a new, energized CEO; or an organization on its way back from losing its balance.

Leaders of conscious capitalism companies and those involved in creating and sustaining common-purpose organizations share a leadership style that involves a sense of “we,” that recognizes and rewards employees beyond money and creates a value proposition throughout the organization that impacts stakeholders.

What will it take for other business leaders - looking at the impact on their organizations of high turnover, poor morale, lost productivity, quality problems, and lost clients - to consider whether building a common-purpose leadership style might be worth the effort?

Gael O’Brien is a Business Ethics Magazine columnist. Gael is a thought leader on building leadership, trust, and reputation and writes The Week in Ethics.

Sustainable Excellence: The Future of Business in a Fast-Changing World

by Aron Cramer and Zachary Karabell

Reviewed by Gael O'Brien

For a long time when the term “sustainability” was mentioned in connection with business, the examples most often cited were Ben & Jerry’s, The Body Shop, Patagonia and Stonyfield Farm. Their founders’ formula combined a successful business strategy with an agenda of doing good in the world.

Gary Hirshberg said recently that he started Stonyfield Farm, the world’s largest organic yogurt producer, nearly 30 years ago with the question “Is it possible to create an enterprise where everybody wins?” His company’s compound annual growth rate of over 24% in the last 18 years and the ongoing achievements in the company’s “healthy food, healthy people, healthy planet” mission suggest he’s on the right track.

Now it is a rare company that doesn’t talk about its commitment to sustainability on its website. Customers and investors want to know what a company stands for.

While it isn’t easy to tell the hype from real impact in companies’ sustainability reports, there are a lot of companies whose commitment to sustainability has been tested and who have integrated or are integrating sustainability into their core business strategy.

“Sustainable excellence” is a term used by Aron Cramer and Zachary Karabell to describe companies that operate profitably, are committed to superior business practices, and “integrate consideration of society and the environment into their DNA.”

Their new book Sustainable Excellence: The Future of Business in a Fast-Changing World draws on Aron’s 15 years with Business for Social Responsibility, the last six as CEO, and Zachary’s experience as an economist and money manager with a focus on sustainability as a driver of profitability.

Sustainable excellence is what the authors believe will drive lasting success and ultimately, redefine what excellence means.

The book is a rich collection of stories about successes and mistakes companies have made in dealing with the impact of their products on the environment and society, in human rights areas, and in relationships with NGOs and others.

The examples affecting Ford, Nike, BP, Levi Strauss, Walmart, General Electric, Nestle, PepsiCo, Coca-Cola, Shell, Starbucks, Google, Clorox and others offer specifics about best practices and ineffective solutions as companies seek to make real their declared commitments to sustainable practices.

Ultimately the book is about leadership. Is the leadership needed to achieve sustainable excellence different from general business leadership?

Cramer and Karabell say yes. More listening is required: listening especially to diverse voices. “By listening to unfamiliar voices, business leaders can see the future first—and steer their companies in the right direction.”

Whether by involving NGOs or others in strategy discussions to understand their concerns and making adjustments, or using outside advisor groups, or creating partnerships to address collaboratively problems, sustainable excellence doesn’t happen in a vacuum.

Cramer and Karabell urge business leaders to consider the following in their business strategy:

• Think big: create business strategies that meet big global challenges
• Use sustainability to drive innovation
• Set the right incentives internally and externally
• Embrace the transparent world – and collaborate
• Make consumers your partners

Whether or not “sustainable excellence” catches on as a term or movement, Cramer and Karabell have raised the bar on what sustainability can mean in companies, and what the aggregate benefit can mean to the world.

Gael O’Brien is a Business Ethics Magazine columnist. Gael is a thought leader on building leadership, trust, and reputation and writes The Week in Ethics, a weekly column where this review was first published.

By Jeffrey Hollender and Bill Breen

Reviewed by Michael Connor

I recall a business meeting years ago with a team from a computer software company.  The company’s CEO handed me a business card with his title: “Keeper of the Magic.”

Not many business executives have the wherewithal or courage to adopt that kind of work identity.  Jeffrey Hollender does.  As co-founder and executive chairman of Seventh Generation, the Vermont-based maker of natural household and personal care products, Hollender has dubbed himself the company’s “chief inspired protagonist.”

In that role, Hollender ranges far and wide developing Seventh Generation’s product, business and brand while also serving as a provocative and entertaining advocate for progressive values in business.  His new book, co-authored with Seventh Generation editorial director Bill Breen, seeks “to show that when companies shift their value proposition from selling desirable products to solving difficult social and environmental problems, whole new opportunities arise.”

The Responsibility Revolution: How the Next Generation of Businesses Will Win profiles some familiar brands generally associated with corporate responsibility and sustainability – Patagonia, Timberland, Organic Valley, Nike and Seventh Generation – and a few larger enterprises – including Novo Nordisk and IBM – to provide lessons in how to do the right thing genuinely and effectively.

It’s no simple task. “At too many companies, do-gooding claims are mere meeting pabulum – a way to burnish the brand, entice consumers, and shake off critics,” write the authors. “Those companies that are genuinely committed to doing good too often isolate their CR (corporate responsibility) departments from their operating units and so prevent them from influencing critical strategic decisions.”

Consumers are driving much of the change.  At Marks & Spencer, one of the U.K.’s leading retailers and a British institution, the head of corporate responsibility initiatives explains that in head-to-head battles with major competitors, “we’re never going to beat them on price.  But if we can drag them on to a battlefield that’s marked out in terms of trust and responsibility, we’ve got a chance of winning.”

As a result, Marks & Spencer managers brainstormed more than two hundred social and environmental issues that confronted the company and eventually narrowed the list to 100 challenges across five categories: climate change, waste, raw materials, fair trade and people.   The company developed what it calls a Plan A (“because there is no Plan B”), committed to fulfilling all 100 challenges by 2012, and placed a Plan A “champion” in each of its 600 stores.

Examples like that prompt Hollender and Breen to conclude that “moving forward, (corporate responsibility) will most likely become a baseline requirement in every company’s license to operate, but nothing more,” though they acknowledge that plenty of hard work needs to be done to accomplish that vision.

Hollender is at his best when evangelizing and encouraging the vision.  He likes to tell the story of how his company came to be called Seventh Generation, quoting from the founding document of the native American Iroquois confederacy: “In our every deliberation, we must consider the impact of our decisions on the next seven generations.”   Thinking like that would truly make for a responsible – and sustainable – business revolution.

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Celebrating Failure: The Power of Taking Risks, Making Mistakes, and Thinking Big By Ralph Heath

Following is an excerpt from Chapter One of the book,  “Starting Fires”:

"Success is not the result of spontaneous combustion. You must start yourself on fire.”
—Fred Shero, National Hockey League coach

It was a cold spring day in 1957, a Saturday as I recall. My best friend, Edgar Hoffman, and I were playing with matches, as young children sometimes do. We were in the basement of a ranch home being constructed in our Milwaukee neighborhood. Because it was a weekend, the work crew was not on the site, leaving Edgar and me free to roam about the new home construction.

Edgar and I had each constructed our own private fort within the partially built structure. Edgar had just committed the corporate sin of exaggerating his résumé by declaring he had a warm fire roaring inside his fort. I took that as a challenge. (I was freezing my butt off, and I was always the competitive one.) So that morning, in the fort, what little testosterone I did have took over, and I set out to build a bigger fire than Edgar’s. Our forts were made of straw so it didn’t take long for me to set off a major house fire.

Fire trucks are terrifying when you’re a little boy—especially if you know you are the criminal responsible for burning down the rough construction around someone’s new home. I can remember being told to go to my room and await my punishment. It was not the time to ask if I could help the firemen put out the fire. And I can remember waiting in my room, certain it would be several years before I would be allowed to see the sun again, or worse, that I would be carted away to juvenile detention.

I never did learn who called the fire department, but I do know it was my dad who called the police after the fire was out. He told them that his son was responsible for starting the fire. He confessed to me, years later, that it was one of the hardest things he ever had to do. I told him that I had always admired him for doing it because it was so honest, and my dad was all about honesty. (Four years later, when Dad took us to an outdoor drive-in movie theater, the ticket-taker asked the ages of everyone in the car. My dad offered up that Edgar had just turned 12 yesterday and was therefore not eligible for free admission. He bought the extra ticket for Edgar. At the time, I cringed thinking what a waste of money it was, but years later I realized that my dad was setting the example of honesty, an example that I have followed, and will follow, the rest of my life.)

I learned multiple extraordinary lessons the day of the fire: When you make a mistake, it is best to simply tell the truth and take your lumps. It wasn’t a malicious fire; I was trying to stay warm and was merely a dumb little kid trying to compete with my best friend (who was two years older and wiser than I was).

After being sent to my room the night of the fire, I did, in fact, see the sun again. My dad knew that I was horrified by what I had done, and he didn’t have to dole out extra punishment. In his wisdom, he played off of my remorse and told me he was disappointed, and knew that I could perform at a higher level the next time.

That is what presidents of companies must do. Your people are most often always trying their best to please you. Sometimes, in our frustration with an employee, we forget that most important dynamic. They already feel horrible when they make a mistake, and, most often, the best thing to do is to encourage them to reach a higher standard the next time they are given an opportunity to perform.

The great thing about making a mistake is that the bar is now moved pretty low, and you get the opportunity to rush in and correct the problem and suggest a positive solution. It is an opportunity to demonstrate that you listen, that you understand what you did wrong, and that you can solve the problem when given a second chance. Plus, everyone enjoys an underdog story of coming up from the depths of mistakes and failures to achieve success.

Ironically, I made the connection years later that starting little fires is what presidents do most often. When I started that fire at six years old, I was merely warming up for my ultimate job as a leader and company president.

A leader’s mission is to look for opportunities to grow the business inside your company and motivate your people in that particular area of expertise to raise the bar to new heights. Even if you’re running a relatively small company, similar to my former advertising agency, you can’t possibly work effectively across seven or more departments to direct operations yourself. You need smart, talented, and highly motivated people who will see the little fire you lit and lead the charge to make changes inside the company to pursue even higher highs. And after you’ve provided the spark, small flame, or flame-throwing mechanism on each issue, you get to move on and light more fires in other departments, and thus spread the gospel of trial by fire and the lessons it teaches all of us.

The fort-building fire story is one of many sparks that led me to write Celebrating Failure. I’m grateful my dad set the right tone in allowing me to recover from my failure.

Starting Fires is excerpted from author, consultant, and keynote speaker Ralph Heath’s new book Celebrating Failure:  The Power of Taking Risks, Making Mistakes and Thinking Big published by Career Press.

This Borrowed Earth: Lessons from the 15 Worst Environmental Disasters around the World

Reviewed by Michael Connor

Naysayers on climate change and global warming have a point: no one can predict with certainty what the future holds.  And so, despite evidence compiled by some of the best scientists on the planet, they weave conspiracy theories and argue for non-action.

The same pattern frequently emerges in discussions about environmental safety, with the naysayers arguing that immediate risks to health are exaggerated while the cost of protecting against unforeseen calamity is usually too great.  Besides, economic development will suffer, they suggest.

But what lessons does history provide?  Massive mercury poisoning in Minamata, Japan in the 1950s.  A dioxin-laced explosion at a chemical plant in Seveso, Italy, in the 1976.  And an explosion at a Union Carbide factory in Bhopal, India, which killed thousands in 1984.

Those are but a few examples – there are more, right up to the present day.  And Robert Emmet Hernan provides a frightening catalog of detail about each of them in his new book, This Borrowed Earth: Lessons from the 15 Worst Environmental Disasters around the World. Hernan’s message is simple:  “If we forget how and why these disasters happened and what horrible consequences emerged from them, we will not avert future disasters.”

This Borrowed Earth will serve as a valuable textbook for a generation of environmentally-conscious young people who were not yet born when Chernobyl and Exxon Valdez dominated headlines.  Unfortunately, they will discover that a disturbing pattern emerges in far too many of these cases: a preference for profit over human safety; a willingness to ignore early warning signs of trouble; lies and cover-up; and, oftentimes, a denial of the suffering caused.

A former environmental attorney for New York State who worked on the infamous Love Canal toxic dump case in Niagara Falls, New York, Hernan concludes that what’s needed to address the issue of global warming is political will. “We need leaders who are capable of imagining the consequences of global climate change, and who can identify those who will suffer in the future,” he writes, “including our children, our grandchildren, and their descendants.”

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BOOKS: Money for Nothing: How the Failure of Corporate Boards Is Ruining American Business and Costing Us Trillions

by John Gillespie and David Zweig

Reviewed by Michael Connor

If you’re one of the many trying to determine where blame might lie for the financial and economic crises of the last two years, John Gillespie and David Zweig would suggest you look in the corporate boardroom. Their new book - Money for Nothing: How the Failure of Corporate Boards Is Ruining American Business and Costing Us Trillions – is rich with unfortunate detail:

• Stanley O’Neal, former CEO and president of Merrill Lynch, was paid $48 million in salary and bonuses in 2006, in large part because of the firm’s apparent success in selling mortgage-backed securities.   When the company’s failures made headlines, O’Neal was allowed by his board to “retire” with an exit package worth $161.5 million.  Within three months, O’Neal was back in a boardroom, “this time as a director of Alcoa, serving on the audit committee and charged with overseeing the aluminum company’s risk management and financial disclosure.”
• Countrywide Financial, a leader in the subprime mortgage market, paid each of its directors from $344,988 to $538,824 in 2006, more than twice the average for the five hundred largest U.S. corporations, while CEO Angelo Mozilo himself made $48 million, not including gains on stock options. In the two years prior to the housing market crash, independent board members cashed out more than $24 million in stock gains.
• The board of Lehman Brothers included “a theatrical producer, the former CEO of a Spanish-language television company, a retired art-auction company executive, a retired CEO of Halliburton, a former rear admiral who has headed the Girl Scouts and served on the board of Weight Watchers International, and until two years before Lehman’s downfall, the 83-year-old actress Dina Merrill.”  In a September 2008 conference call, Lehman CEO Dick Fuld told analysts: “I must say the board’s been wonderfully supportive.”  Four days later Lehman filed for bankruptcy.  Lehman shareholders, represented by the board, lost more than $45 billion.

Unfortunately, in the annals of modern corporate governance, those are not isolated cases.  Gillespie (an investment banker who has worked at Bear Stearns, Lehman Brother and Morgan Stanley) and Zweig (a journalist who has worked at Time Inc. and Dow Jones), put forth an abundance of evidence to support the stereotype of a modern-day corporate director – typically an over-compensated, under-challenged former corporate executive (or former government official) who never argues with management and votes to reward CEOs and senior executives with multi-million dollar salaries and bonuses even as the companies themselves all-too-often spiral into oblivion, damaging the lives of real people, including employees and shareholders.

The subject is truly anger-inducing, and rest assured Money for Nothing will make you angry (or reinforce your existing anger) about the current state of corporate governance.  But if policy-makers and the business community are going to set a corrective course for the 21^st century corporation, it’s critical that we get beyond the anger and begin to pick apart issues while creating new definitions for accountability.  Money for Nothing succeeds at that as well.

(Listen to Money for Nothing co-author John Gillespie on a Business Ethics podcast.  You can download an MP3 audio file of the program here.)

Defining the Job

Corporate directors have existed, and been criticized, for hundreds of years; forty years ago  Harvard Business School professor Myles Mace characterized them as “nothing more or less than ornaments on the corporate Christmas tree.”   More recently – in the wake of scandals at Enron, WorldCom, Tyco and others - the Sarbanes Oxley Act of 2002 introduced a number of reforms aimed at improving the effectiveness of boards for U.S. companies.

In fairness, most large global enterprises consider governance a top priority - IBM and Coca-Cola are among those that come to mind – and work hard to improve the performance of their boards.  And these days, especially with the threat of litigation, directors who take their jobs seriously can sometimes confront a formidable task.  Increasingly, report executive recruiters, the best director candidates don’t want the job.

Perhaps most disconcerting for directors themselves, Gillespie and Zweig suggest, is the intense public debate about the role of corporate governance in the modern-day corporation.  Should directors be encouraging management primarily to increase shareholder value?   If so, how important are near-term profits and short-term stock performance?   What about long-term sustainability of the enterprise? And how does one incorporate the many demands of multiple stakeholder groups, including employees, local communities and a panoply of activist groups dedicated to particular causes?   Juggling those priorities requires directors with a far-sighted mind-set and ethical core that allows for day-to-day constancy and the ability to make difficult decisions amidst extraordinary circumstances.

In Search of Solutions

The authors recommend a number of solutions aimed at changing boardroom culture. The most radical might be the creation of a new class of directors – “public directors” – an idea first proposed in the 1930’s by William O. Douglas, then head of the Securities and Exchange Commission (and later a U.S. Supreme Court Justice) and adopted more recently by some experts in governance.  Public directors would be identified as such by a government entity, independent of the company, and constitute a minority of the board.  To ensure objectivity, the authors suggest, independent directors might even be paid independently, maybe by an assessment on large companies or even publicly.

Other suggestions include creating a director training consortium; insisting on greater diversity of board members; imposing term limits; limiting directors to serving on three or fewer boards; and requiring that directors “put skin in the game.”  This latter recommendation, which has been proposed before (by governance expert Charles Elson and others) would require directors to have a “meaningful percentage” of their net worth invested in companies they serve – maybe to 6 percent, depending on the number of directorships they hold.

Probably the biggest check on board behavior, though, is the power of shareholders.  Among other recommendations, the authors suggest allowing shareholders to call an Extraordinary General Meeting in which a majority of those voting may remove directors.  It’s a practice allowed in the United Kingdom and other countries, but difficult to imagine being implemented in the U.S.

Despite the horror stories they report, in their final analysis Gillespie and Zweig seem reasonably optimistic about the future. “Boards can play the single most effective role in advancing the future opportunities and prosperity of our families, our communities, and our country,” they write. “If we expect and demand more of them, they will rise to that challenge and answer that call.”

Too Big To Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System from Crisis - and Lost

by Andrew Ross-Sorkin

Reviewed by Michael Connor

As the drama unfolds in Too Big to Fail, Andrew Ross Sorkin’s sensational fly-on-the-wall chronology of the 2008 financial crisis, it becomes clear that not all millionaire bankers are alike.  Some are more observant than others.

JP Morgan CEO Jamie Dimon, for example, understood why Treasury Secretary Hank Paulson couldn’t come to the rescue of investment banking giant Lehman Brothers in September 2008.  As he paced the bank’s 49^th floor executive dining room, Dimon explained to his JP Morgan colleagues that the American public would not accept yet another financial bailout, according to Sorkin’s account.

“They want Wall Street to pay,” Dimon said. “They think we’re overpaid assholes.”

Dimon’s off-color but accurate observation is but one example of what makes Too Big to Fail too good to put down. Chock-a-block with color and detail, it follows in the tradition of great business thrillers like Barbarians at the Gate by Bryan Burrough and John Helyar, and James B. Stewart’s Den of Thieves.  Sorkin, a business reporter for the New York Times, doesn’t exert much energy exploring how the global financial system came to the brink of collapse (“If we don’t act boldly, we could be in a depression greater than the Great Depression,” Paulson tells President George Bush); nor does Sorkin provide the intellectual framework for a discussion of concepts such as “moral hazard,” by which the possibility of financial rescue creates incentives for business to pursue irresponsible risk.

But he doesn’t have to; the players tell the story.  Even as Jamie Dimon explained to colleagues why no bailout was in the offing, Sorkin recounts how Lehman CEO Dick Fuld believed until the very end that his firm would be rescued, probably through an investment by a rival bank with the support of the Federal Reserve Bank or the U.S. Treasury.  But he was dreaming, according to Sorkin.  Treasury Secretary Paulson told rival bank executives, assembled at the New York Federal Reserve Bank in downtown Manhattan, why Lehman’s Fuld had not been invited to a critical meeting. “Dick is in no condition to make any decisions,” Paulson announced. “He is in denial.” Paulson called Fuld “distant” and “dysfunctional.”

The irony is that the politically astute Jamie Dimon was ultimately wrong while the dysfunctional Fuld had it sort of right.  The Fed and the U.S. Treasury did provide hundreds of billions in bailouts; Fuld’s problem was that none of it was for Lehman Brothers.  After first brokering a deal for the sale of investment bank Bear Stearns – and then letting Lehman Brothers drift into bankruptcy - the federal government provided massive guarantees and investments for mortgage behemoths Fannie Mae and Freddie Mac, insurance giant AIG and the carmakers GM and Chrysler.  With its Troubled Assets Relief Program (TARP), the federal government became an investor-owner in virtually all the nation’s top banks.

One frightening lesson in Too Big to Fail (and there are several) is that regulators and bankers were making up the rules, and frequently discarding them quickly, as the crisis-of-confidence in the global banking system expanded and deepened. Financiers and government officials alike were ambivalent as to whether banks and investment firms should have been allowed to fail in 2008.  With the federal government allowing Lehman to fail, then abruptly moving to save others, Democratic Rep. Barney Frank jokingly declared that Sept. 15 should be declared “Free Market Day.”  “The national commitment to a free market lasted one day,” he said.  “It was Monday.”

Was the crisis a systemic failure of the financial system, or primarily a panic?   Or perhaps a bit of both?  Lehman’s Fuld blamed short-sellers and financial market speculators.  Most economists now blame a decades-long national credit binge, coupled with lax (or no) regulation, and incentives for business to assume irrational risk.   Fueling all of those, Sorkin suggests, were insanely wild compensation levels for bankers.

An “astounding” $53 billion, for example, was what the financial industry paid its workers in 2007, according to Sorkin.  At Goldman Sachs, the average Goldman employee earned $661,000, with the firm’s CEO, Lloyd Blankfein, pulling in $68 million. While Goldman co-president Jon Winkelreid had paychecks totaling $53.1 million in 2006 and $71.5 million in 2007, he was nonetheless experiencing a “cash flow” crisis in 2008 as the result of spending on a Nantucket waterfront estate and a Colorado ranch, among other luxuries.  But Goldman wasn’t unique; Barclays Capital, CEO Bob Diamond earned $42 million in 2007.

As the financial crisis spread, that perspective was maintained. During one negotiating session, Morgan Stanley banker Wallid Chammah, who owns a Manhattan town house that has its own doorman, served $180-a-bottle Bordeaux to “help settle the mood while keeping things proceeding” in takeover discussions with Lehman.  Even Lehman’s bankruptcy lawyer, Harvey Miller of the Weil, Gotschal & Manges, billed $1,000 an hour for his services.

In addition to an intentionally lax regulatory environment, Sorkin suggests, there was also incompetence.  Taking a body blow to his reputation is Christopher Cox, chairman of the Securities and Exchange Commission during the meltdown.  When it came time for a call from Wall Street’s chief regulator to press Lehman to file for bankruptcy, Sorkin reports, Cox, “for whom Paulson had very little respect to begin with, was proving how over his head he really was.”  According to Sorkin, Paulson told Cox: “You guys are like the gang that can’t shoot straight!  This is your fucking job. You have to make the phone call.”  (Cox’s viewpoint is not reported.)

“They were trying to save themselves from their own worst excesses, and, in the process, save Western capitalism from financial catastrophe,” writes Sorkin.  Corporate and personal reputations and livelihoods were on the line.  Lehman CEO Fuld, a hardened Wall Street fighter, emerges as a sad character.  The tension and physical wear and tear take their toll on Treasury Secretary Paulson, himself a tough former Goldman banker.  On one occasion, Paulson felt light-headed and nauseated: “From outside his office, his staff could hear him vomit.”   On another occasion, Paulson retreated to House Speaker Pelosi’s office: “Hurriedly pulling a trash can before him, he began having the dry heaves.”

In the end, Sorkin provides no prescriptions or remedies.  In fact, he writes, the outlook is gloomy:  “Washington now has a rare opportunity to examine and introduce reforms to the fundamental regulatory structure, but it appears there is a danger that this once-in-a-generation opportunity may be squandered.   Unless those regulations are changed radically – to include such measures as stricter limits on leverage at financial institutions, curbs on pay structures that encourage irresponsible risks, and a crackdown on rumormongerers and the manipulation of stock and derivative markets – there will continue to be firms that are too big to fail. When the next, inevitable bubble bursts, the cycle will only repeat itself.”

The question, of course, is whether the outcome – so painful in 2008 – would be survivable next time around.   Too Big to Fail provides an important warning.