By Roy Snell
My father was a Vice President for Control Data, the undisputed supercomputer king at one point in time. He used to tell stories about Seymour Cray, the greatest supercomputer architect of the period, coming to board meetings in a plaid shirt and a plaid disposition to match. One could argue that these people were at the epicenter of the digital revolution, the invention of the computer. No invention has changed the lives of humans like the computer in my humble opinion.
Control Data was a huge company that failed “too soon.” Some believed Control Data failed because their CEO, Bill Norris, was too focused on corporate social responsibility. It was a volatile time in computing, the industry was exploding and changing rapidly. We will never really be sure if Norris’s strong commitment to corporate responsibility brought Control Data down, but one thing is for sure, Norris was an ESG pioneer. He was doing ESG related activities in the 50’s and 60’s. Unfortunately, ESG programs did not exist at that time because there were no investor stakeholders. On June 16, 2009 the Minnesota Post published an article by Albert Eisele who thought Bill was ahead of his time on corporate social responsibility. The following is from that article.
Norris, who retired as chairman and CEO of Control Data in 1986, and died in 2006 at age 95, was often ridiculed as a misguided visionary who bet his company’s future on ‘foo-foo social projects’. He appeared to be more interested in societal ills than generating profits. Fortune magazine once labeled him “a business genius who unfortunately thinks he’s a social philosopher”, while Inc. magazine called him an “eccentric corporate do-gooder.” One Wall Street analyst called him “the Ralph Nader of the computer industry.”
It would seem to me that these critics would represent your modern-day investor stakeholders.
Foo-foo social projects? Eccentric corporate do-gooder? I guess name calling is the price you pay for being a pioneer. Can you imagine such disdain for a CEO who wants to make the world a better place in 2021? This concern still exists with executives but the ESG problem is now addressable with a materiality assessment and an effective ESG program. My father felt Control Data went too far on social issues and my guess is he would have supported any effort to help manage Bill’s interests in these issues.
Today we are pressured by customers, employees, and investors to adopt their favorite ESG issues but, what if your stakeholder’s list of causes is untenable… It’s a trick question, everyone’s total list of stakeholder’s ESG issues is untenable. Between your investors, employees, customers, and other stakeholders there will be so many ESG issues that they will bankrupt the organization if you take all their ESG issues on at once.
Some leaders are afraid that if they start an ESG program it will run amuck and distract them from their overarching mission and drain them financially. They are wrong. Ironically an effective and materiality focused ESG program is specifically designed to help leaders prevent their organization from taking on too many ESG issues. Leaders should not be nervous about ESG programs, but about implementing an ESG program without an effective materiality process. A materiality process helps you decide which ESG issues are the most relevant to your business and your stakeholders. I would not start an ESG program just to make the world a better place; however, I would start an ESG program to save my company from death by ESG. If Bill Norris had an effective ESG program and an ESG materiality process, it is possible Control Data would still be around today. An effective ESG program can help an organization limit the number of ESG issues to a manageable amount based on materiality. Maybe more importantly, an effective ESG program will also help you explain to customers, employees, investors, and other stakeholders that you are working on issues relevant and material to your business and doing all you can to address environmental, social, and governance issues that you can impact.
I often wish my father was still around to talk about work related stuff, which we used to do on weekly basis. The first question I would ask him today would be… “Do you think an ESG program with an effective materiality process would have prevented Control Data from failing when it did?” I probably would have been lectured about dangers of ESG for about an hour but I think that eventually he would have come around if he studied ESG programs long enough. That is the challenge isn’t it… educating leadership on the elements of an effective ESG program? Whatever you do, do not forget, leadership needs education.