Pinocchio’s Jiminy Cricket Battles Milton Friedman

In Abigail Disney’s TED Talk, she shared the values she observed in her grandfather, Roy Disney, the co-founder of Disney. “He never walked by a piece of garbage, inside Disneyland or anywhere else, where he didn’t bend over to pick it up. He said “no one is too good to pick up a piece of garbage.” Such humbleness coming from a man who co-founded one of the most iconic brands in the world.

Although Disney did not always treat everyone fairly across the company, Abigail believes her grandfather “had a very deep commitment to the idea that he had a moral obligation to every human being that worked for him. That actually wasn’t such an uncommon attitude for CEO of the day.”

So, what happened to Corporate America since the 1970’s?

The Friedman Doctrine was published. In September 1970, economist Milton Friedman published a path breaking essay in the New York Times Magazine about corporate purpose which had influenced a generation of CEOs that “the social responsibility of business is to increase its profits.” The sacred shareholder-primacy has been the modus operandi for corporate America.

On the other side of the Atlantic, the World Economic Forum published its Davos Manifesto in 1973 which states “The purpose of professional management is to serve clients, shareholders, workers, and employees, as well as societies, and to harmonize the different interest of the stakeholders.”

For the past 50 years, more business leaders chose to follow Friedman’s Doctrine. Look at what maximizing shareholder value has brought us? The catastrophic impact of climate change. Healthcare is out of reach for millions of workers in the world’s richest economy. Income, gender & racial inequality. Food insecurity for two billion people while we generate 1.4 billion tons worth $1.2 trillion of food waste annually.

Fortunately, Abigail’s favorite Disney character Jiminy Cricket has been working his magic on at least 181 CEOs who have signed and committed to “Statement of the purpose of a corporation” at the Business Roundtable that outlined a modern standard for corporate responsibility.

The purpose of a corporation is to create long-term value and to serve a more comprehensive group of stakeholders – investors, employees, suppliers, customers, and the community. All stakeholders need to be proud of their work and to have the dignity to be able to put on the table for their families. A business cannot function in a broken society.

Always let your conscience be your guide. As Jiminy Cricket explained to Pinocchio, “Conscience is that still, small voice that people won’t list to. That’s just the trouble of the world today.” How will your organization welcome back Jiminy Cricket?

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Inner Circle Conversations is a by-invitation group discussion on topics curated by Elaine Cheung. The goal is to develop foresight by understanding the impact of accelerated changes around us. If you are interested in joining a future conversation, please subscribe at www.elainejcheung.com