The Business Roundtable’s recent statement about redefining the purpose of a corporation turned out to be too difficult to read in one sitting.
Not that it was too long, at just 300 words or so. It was that boring.
If adopted, it’s not clear what would even change. Today you are not supposed to rip off your customers. You are not supposed to abuse your workers or cheat your vendors. No one should ever leave a big mess in towns where they operate.
Had the roundtable said something about rolling back excessive C-suite pay, well, that would have at least been interesting. And also unthinkable, given that the group is made up of CEOs of some of the nation’s most prestigious companies. If these executives are serious about rethinking purpose, they could do a little research into far more ambitious models, like stepping up to sell a product or service that takes on one of the country’s pressing problems.
Hopefully they would learn that a version of that model once thrived here in Minnesota, created by a guy named Bill Norris. If this is an unfamiliar name, Norris helped get computer maker Control Data Corp. going in the late 1950s and then led it for the next three decades. He seemed to think economist Milton Friedman, who argued in a famous New York Times essay that making money for the corporation’s owners was the sole proper purpose, was simply wrong.
There wasn’t really a choice to make between making money or having a social impact. Why not do both?
The problems he saw and put CDC to work on — huge disparities in economic outcomes, small-business owners struggling on a playing field tilted against them, a vast need for cost-effective education, among them — wouldn’t get solved without the help of business. And they were moneymaking opportunities.
This wasn’t his thinking in the early days of Control Data, long based in Bloomington. CDC was started to build the fastest computers largely by veterans, including Norris, of a groundbreaking supercomputer company in St. Paul called Engineering Research Associates.
Control Data became a big story in Minnesota almost from the beginning. It soon blossomed into one nationally as well.
After CDC sued International Business Machines Corp. in the 1960s over IBM’s improper vaporware sales practices, Norris was on the cover of Businessweek as the only true rival to the then-dominant Big Blue.
The way CDC approached its problem of providing the “peripherals” its customers needed turned out to be an example of Norris’s social-impact thinking. These are products like controllers and computer tape drives, and Norris asked why not put the peripherals plants in places where technology jobs were hard to come by? If the workers needed training, CDC could do that, too.
Small-business owners had a different problem, as Norris realized that without the money for Big Ticket computers they would have no way to get the productivity gains of new technology. His solution was data centers, a service business.
Some of these ideas didn’t always sell that well inside the company. In oral histories of CDC found at the Charles Babbage Institute at the University of Minnesota, you can see that CDC’s service business caused some of the old hands to leave CDC, fearing a lack of focus.
Eventually there were so many CDC initiatives there’s no way to even list them all. Yet maybe nothing got more closely associated with the Norris social agenda than an education system he championed called PLATO.
Education looked to Norris like CDC’s biggest opportunity. Millions of Americans needed cheaper, more readily available and easier ways to learn. And there was no practical way to solve a problem this big without computer technology.
This initiative got going decades before people talked of distance learning or online education. Once refined PLATO had lots of little teaching functions. If a kid on PLATO looked at 3 + 2 = ___ and answered “6,” the machine asked if maybe the student hadn’t mistakenly multiplied.
PLATO was one tool to let kids catch up to their peers in subjects like math. Prison systems also used it to help inmates get a GED — and a better shot at a decent job someday.
As described in an oral history at the Babbage Institute with former CDC manager Molly Lou Reko, Norris didn’t think anybody should be thought of as “learning disabled.” Some people just needed more time to learn than others; with PLATO they got as much as they needed.
PLATO was never the bottomless money pit it eventually became infamous as, as explained by former Control Data CEO Robert Price in interviews with the Babbage Institute’s former director, Thomas Misa.
Norris contributed to his own PR problem, once telling a Wall Street audience about all the investment in this education technology, and Price remembered $200 million. Yet Norris had meant all government and university funding, too.
Norris eventually found out something that could have been anticipated. The same executive could be hailed as a visionary when the stock was appreciating and sales were growing and then mocked as hopelessly misguided when the stock price and sales trends went the other way.
The old CDC barely got out of the 1980s alive, and “even today, it is by no means clear what really went wrong,” Misa wrote in his excellent 2013 history of Minnesota’s computer industry.
In looking back at this period, though, it looks like CDC had too many things going on and some poor execution, too, rather than Norris’s notion of social impact being wrongheaded from the start.
Norris was clearly right, for instance, that a lot of money gets spent on education and that it was going to be a moneymaking opportunity for a long time. Norris’ experience at CDC allowed him to tell a business audience in 1979 that social programs really can deliver good financial results.
As he was winding up his talk, he said he hoped he had made a convincing case for business to go after the biggest problems we have.
“Because there are no other answers,” he continued. “All of the obvious and easy approaches have been tried and found wanting.”