CCBYZ – 7.02 The NAKED Corporation: How the Age of Transparency… Part 2 [Audiobook] (w/commentary)

Welcome back to another episode this is part two part two this is the corporate Cowboys podcast my name is Alex your host right back to business this is season seven episode two and we’re on part two of this book The Naked Corporation how the age of transparency will revolutionize

Business the authors are Don Tapscott and David T Cole this [ __ ] was published 2002 by Free Press and I don’t mean it’s [ __ ] like it’s a [ __ ] book it’s a good book but this [ __ ] right here was published 2002 by Free Press so onward chapter two is titled transparency versus opacity the battle

Oh transparency May in general be a good thing but it’s not always the right thing nor may it always be practical and it has its enemies transparency can be controversial poorly executed or placed at risk all in all while the world is becoming more open there are many obstacles to complete transparency some

Valid and some not subtitle obstacles to transparency and the little mini subtitle limits to knowledge so there’s some obstacles to transparency one of those one of those is is limits limits to knowledge we can only take action on what we know critical information like enron’s role in manipulating the California energy

Markets may not become known in a timely manner information events and complexity tend to increase geometrically Science and Technology have limits indeed the more we know the more we realize what we don’t know as H.L Menken once said penetrating so many secrets we cease to believe in the

Unknowable but there it sits licking its chops yo for those who don’t know who HL making is that [ __ ] had some based takes alright so go go Google him go look him up use whatever search engine you have to look them up he’s got some bass ticks but as with

Every author every commentator every um every Speculator every Observer take their views with the grain of salt even my own all right and if you haven’t noticed yes I’ll be providing commentary every now and then on the views of this book given that it’s more than 20 years old so you know

Just uh just to provide a little reality check on what [ __ ] looks like in 2023 so continuing environmental impacts are often only discovered after they become irreversible a 2002 study by the World Bank the World Resources Institute and the United Nations said that several ecosystems are fraying under the impact

Of human activity and that in the future ecosystems will be less able than in the past to deliver the goods and services on which human life depends the study concludes it’s hard of course to know what will truly what will be truly sustainable it’s hard of course to know

What will be truly sustainable because the quote continues our knowledge of ecosystems has increased dramatically but it simply has not kept pace with our ability to alter them in another study the world economic Forum reached a similar conclusion businessmen always say quote what matters gets measured yet look at

Environmental policy and the data is lousy yeah so not much measurement going on there or not the right kind of measurement going on there because today’s day and age the world economic Forum touts pretty much boasts pretty much um brags that you will own nothing and you will be happy how

Funny is that the good news it says here is that thanks to technology we chip away at the mountain says Daniel Este of Yale University I see a revolution in environmental data collection coming because of computing power satellite mapping remote sensing and other information Technologies one example is the long-running battle between U.S

Midwestern states which are heavy coal users and Northeastern states which suffer from acid rain technology helps prove New York’s claim that its acid rain problem was not just the results of home-grown pollution another subtitle the business value of Secrets much of a company’s information is rightly confidential whether for

Competitive or for privacy reasons Innovations Market entry plans proprietary business methods pending mergers and Acquisitions and a host of other matters must be kept secret for varying periods of time parties to a transaction also benefits from information asymmetries uh asymmetries are not having the same information where one side has more or a

Different quality of information than the other giving them an advantage asem asymmetrical necessarily means uh at not advantaging as advantaging and adverb advantaging one side that’s benefiting one side there you go benefiting one side parties to a transaction also benefits from information asymmetries your car dealer may have more information about

The problems with your car than you do you may know more about your health than your life insurance company parties will attempt to gain advantage through a monopoly over information if they can firms with ethical obligations of confidentiality as well they must protect employee records customer information and the like transparency

Means visibility into the operations of Institutions not the personal information of individuals experience shows that good privacy policies pay off firms sometimes have good business reasons to be opaque and play in The Danger Zone but the danger zone can be risky as the Kellogg’s Corn dog Fiasco

Illustrates for more yeah I mean just a side comment for more information on what the danger zone is that is uh the relative relationship the correlative relationship between a a company’s transparency and the political action that its stakeholders are likely to exercise given that transparency and if you want

To know more about this about the Kellogg’s Corn dog Fiasco go listen to part one part one is Juicy as [ __ ] like a corn dog with all the [ __ ] with all the um condiments there you go firms sometimes have good business reasons to be opaque play in The Danger

Zone by the danger zone can be risky as the Kellogg’s Corn dog Fiasco illustrates these are shifting Sands it says what yesterday was considered proprietary that’s executive compensation for example is today on the public record some firms following strategy Guru Michael Porter’s long proven advice pre-announce plans to outflank the competition While others

Play close to the chest even in areas formally considered competitive and proprietary transparency is changing the rules yeah some [ __ ] somehow why am I cussing some organizations some individuals some persons if you will real natural or legal fictitious some persons will leak information we’ll just straight up

Call it leak right they’ll let certain information leak about potential moves they might make about prospective moves they are making that are in the works in order to gain some kind of Advantage there’s always you know there’s a method to the madness there’s a motive behind everybody’s moves behind everybody’s uh

Plays in the field and uh corporate Wars no different so these are shifting Sands some play close to the chest even in areas formerly considered competitive and proprietary transparency is changing the rules the open source model of fostering Innovation such as with the Linux computer operating system relies on co-creation and aggressive transparency

On matters that some firms still consider proprietary open source has scored major successes Linux for example has migrated from The Fringe to the mainstream yes and this is true a lot of folks a lot of folks use Linux the cost of openness this is the next

Subtitle the next mini title the cost of openness the next subheading subheading active transparency costs money for new organizational functions tracking and Reporting interaction with stakeholders and outside auditing for a small or a low margin business such expenses can be practically a showstopper Borderland software a California company with 300

Million dollars in sales says that the 2002 sarbanes-oxley rules for corporate disclosure result in new bills of three million dollars a year about 10 percent of its earnings this is due to the added costs of accounting scrutiny legal help including two newly hired in-house attorneys dedicated to compliance and

One million dollars in added director and officer Insurance costs companies like BP that’s British Petroleum Ford and Hewlett Packard spend Millions on social responsibility staff annual sustainability reports external verification consultants and the like the business case exists but each company needs to make it when sorry even even when the spirit is

Willing and the money is there few firms have a culture of transparency and most need to invest time and money to build the required processes and infrastructures the next subheading is pseudotransparency and deceit yo yo welcome to [ __ ] corporate eh active transparency strives to be inclusive to address the aspirations and needs of

All stakeholders as it aspires to be trustworthy verif verifiably verifiably material and true and and it aspires I’m sorry I [ __ ] up that sentence and it aspires to be trustworthy verifiably material and true in the past some firms have benefited from opacity opacity opacity and dishonesty today more companies than we

Care to imagine still maintain old practices yeah dog that’s that’s the corporate life corporate corporate world order that’ll never end others understanding the growing demand for Candor present themselves as open though they change little in their values and management style faking it what we call pseudotransparency is likely to result

In information overload confusion bad communication or whitewashing sustainability sustainability a UK firm publishes in partnership with the UN environments program a global survey on the quality of corporate reporting related to financial environmental and social practices in 2002 its report points out that few companies around the world provide this scope of transparency

Reporting and those that do a mere handful and of those that do a mere handful have adopted rigorous reporting methodologies many companies excluded from sustainabilities top 50 engage in what some call grain washing self-promotion in the guise of transparency greenwashing you don’t say sustainability points favorably to the

Invasion of the suits in quotes the invasion of the suits as companies increasingly draw on the services of Blue Chip accounting firms and Consultants to audit and validate not only financial but also environmental and social reports yeah essentially they’re hiring expert Spinners to spin all the reports

All the information they collect so that it appears favorable to them and their stakeholders their shareholders so that they continue to attract investors money more clients that says it continues by the way only five of sustainabilities 50 top rated reporting companies are headquartered in the United States that’s Bristol Meyer

Squibb Baxter International Chiquita Brands International General Motors and Procter and Gamble three Suncor Energy BC Hydro and Alcan are Canadian the next subheading transparency literacy a lack of experience with transparency can lead to missteps on the frontier of openness it will take time for businesses to become literate about

Transparency to understand its Dynamics and boundaries and to develop the competency and skill required to manage in an open economy corporate transparency requires its own form of literacy as the online bests as the online bookselling leader Amazon often sales in uncharted waters in September 1999 the company introduced purchase circles that’s in quotes

Purchased circles which disclosed the book preferences of its corporate customers Amazon revealed that customers from Microsoft were snapping up the Microsoft file the secrets case against book sorry the secret case against Bill Gates so it’s called the mic it’s called the Microsoft file the secrets case against Bill Gates by Wendy Goldman

Wendy Goldman ROM sorry Wendy Goldman rump the Microsoft file the secret case against Bill Gates by Wendy Goldman rum Amazon’s review said the book paints a harsh and unforgiving picture that’s not at all flattering to Gates or the rest of Microsoft’s top brass meanwhile a book on Linux was a

Hot seller at Intel amazon.com spokesman Paul Capelli called purchase circles a discovery tool we know that people don’t make purchases in a vacuum he said you buy things based on what others around you are buying or what they have to say you look to family friends or neighbors what purchase

Circles do is allow insight into groups of people that may have significance for you some customers however thought Amazon’s Innovation was voyeuristic voyeuristic what like it was prying what like it was overstepping some bounds of some kind dog today we have what’s called targeted marketing and when companies when

Organizations collect data on your purchase habits this [ __ ] is viewed as normal but I guess in 2002 it was still the wild west and it was Uncharted Uncharted Territory okay okay dog continuing buyers were uncomfortable with the idea that their book purchases might reflect poorly on their employers

Or betray a corporate agenda and the disclosure made them feel as if someone were looking over their shoulders after asking employees for their reaction to the Amazon program IBM CEO and chairman Louie gerstner received 5 000 email responses within hours more than 90 percent objected to having their

Book buying habits as a group disclosed online after IBM complained Amazon removed its purchase Circle listings gerstner wrote to Amazon CEO Jeff Bezos saying I’m certainly not going to tell you how to run your business but I do urge you to view this as an enormously important issue

Damn look at where we are today in 2023 [ __ ] the the government is buying information private organizations are collecting information to flip and sell to other private organizations and and other private governments yeah notice how I didn’t say public governments private governments the negative reaction forced the company to

Modify the service today customers can ask that their information not be used in generating purchase Circle lists and companies can tell Amazon to de-list them some privacy Advocates insist such policies are still wanting since the burden is on the consumer or company to opt out Amazon says the feature is popular and

Now offers purchase circles based on geography educational institution Industries and government departments this amazing Story shows that businesses must become transparency literate to better understand what transparency means and how to harness its power the next little subheading here structural obstacles while the world becomes more open structural supports for opacity continue

To rise United States litigiousness dissuades companies from revealing more than they need to the main blockers of transparency within firms are often their own lawyers a May 2002 California Supreme Court’s forced a three decision against Nike led many to conclude that social and environmental reporting would become

More risky in the future the courts ruled that when Nike had denied reports that workers were mistreated in the Asian factories that manufactured its shoes the company’s statements constituted quote commercial speech and were therefore not covered by the First Amendment okay yeah for a publicly traded company that’s supposed to be in

The interest of the company of the public I’m sorry at issue were statements that the factory conditions in press releases and correspondence sent out by Nike in 1997 including a letter to the editor that said the sneaker company was doing a good job with overseas labor but could do better

Quote because in the statements at issue here Nike was acting as a commercial speaker because its intended audience was primarily the buyers of its products and because the statements consisted of factual representations about its own business operations we conclude that the statements were commercial speech for purposes of applying state laws designed

To prevent false advertising and other forms of commercial deception wrote to Justice Joyce Kennard for the majority the action had been brought against Nike by environmental activist Mark Caskey Nike appealed to the U.S Supreme Court’s which into in June 2003 sent it back to the state’s courts in

The meantime the effect of the ruling has been that companies could be sued and penalized if their social or environmental reporting broke truth in advertising regulations as a result Nike has said it will not issue such reports until the case is resolved how how [ __ ] how convenient how convenient they can

Just withhold these reportings that and to some extent ought to be mandatory they ought to be they have to be uh mandated transparency for publicly traded companies right they ought to be mandatory and yet they say until this case is resolved we ain’t reporting [ __ ] so they can just do

Whatever they want under the table and until the case was resolved until they get a final decision on the matter until the appeals process is exhausted they don’t have to report [ __ ] to you damn that’s wild transparency that’s the next subheading transparency fatigue and paralysis as the world becomes more open

Information proliferates and individuals face increasing numbers of ever more complex choices possibly to the point of paralysis ignorance may not be Bliss but it’s less work than now that I know the effects of carbon combustion on global warming should I dump my SUV that’s still I still debated in 2002 they’re using

Global warming 2023 they’re using climate change because they recognize whoever they are the international Regulators or the puppeteers above them they recognize that [ __ ] is cyclical and so they can’t propagandize it going one way only [Laughter] so should I accept the job with Exxon despite its environmental policies

Should I leave my broker that has been fined for conflict of interest between research and Investment Banking this is more than information overload it is Choice overload similarly some business executives are showing fatigue from scrutiny perhaps leading to quote transparency paralysis as semi-naked corporate Executives fear making moves that might further expose

Them to controversy exhibit a with the extended catering to the stock market companies are cheap billions of dollars sit in corporate treasuries there are dozens of Overexposed sitting ducks and all sorts of Industries and crises of over capacity Airlines Automotive Financial Services you name it one would expect lots of merger and acquisition

Activity but all there has been is a handful of big deals few are buying these bargains Gordon Nixon CEO of RBC a financial services firm with assets approaching 300 billion dollars says that transparency is causing business Executives to act like politicians and consider how a decision will be perceived rather than its economic

Merits some Executives May Retreat to Fortress thinking others Paralyzed by fear of scrutiny May hesitate to make the Bold moves they need to succeed Hewlett-Packard CEO Carly fiorina showed courage when she led her company to acquire Compaq in May 2002 the evidence so far suggests it was a good

Move but the Flack she received from shareholders and commentators has not gone unnoticed by others maybe for example we’d see more foreign direct investment if companies weren’t worried about the super sensitive politicized business environments that’s funny it writes that super sensitive politicized business environments when nowadays you got huge trillion dollar investment

Firms like Black Rock and other others internationally globally quote unquote globalized globalized firms uh that now invest based on virtue points virtual signal points uh woke scores if you will like if a company is pushing the quote-unquote right kind of agenda then they’re more than likely to uh to

Garner investment dollars from these large firms who who really just seek to globalize everything and centralize everything under their Dominion next subheading the new Power of obfuscation obfuscation is uh sort of concealment a sort of um uh what’s the term called like confusing confusing somebody covering up

Um deploying like a diversion of some of some kind in order to in order to hide away material facts and whatnot the power of obfuscation all right the internet’s transparency is a double-edged sword it is a tool for information access verification and Discovery but it can also be used to

Deceive a 2003 Federal Trade Commission study found that two-thirds of all Spam contains inaccurate information well yeah dog that’s [ __ ] spam just about anyone can put up a website claiming virtually anything parity websites and campaigns illustrate this Duality well those are parodies not spam are they vehicles for transparency

Opacity or both question mark December 3 2002 was the 18th anniversary of the chemical disaster in Bhopal India where an accident in a Union Carbide plant caused poison gas emissions that killed 4 000 residents in their sleep damn this is where an accident in a Union Carbide plant cause poison gas emissions that

Killed 4 000 residents in their sleep and injured several hundred thousand others damn so you’re telling me you killed only four thousand I think those are only four thousand that were recorded because if it hurt if it injured several hundred thousand others I mean you’ve got to question the

Response time especially in a uh in a developing country like that whether 4 000 was really was really the cap on deaths on that day journalists around the world received via email a press release appearing to be from Dow Chemical which inherited the Bhopal issue after it acquired Union Carbide in the press

Release Dao apologized for the death and suffering caused by the industrial accident and explained that its hands were tied on the matter of financial compensation to the victims the company’s first Allegiance it said was to shareholders and the Paramount need to ensure a healthy bottom line

I don’t know fam that doesn’t sound like a parody to me quotes we understand the anger and hurt but Dao does not and cannot acknowledge responsibility if we did not only would we be required to expend many billions of dollars on cleanup and compensation much worse the

Public could then point to Dao as a precedent in other big cases quote they took responsibility why can’t you Amco BP that’s British Petroleum shell and Exxon all have ongoing problems and that would just get much worse we are unable to set this precedence for ourselves and the industry much as we

Would like as much as we would like to see the issue resolved in a Humane and satisfying way for information the release referred the readers to www.dow-chemical.com so apparently it was a parody apparently allegedly a parody the overbearing attitude of the widely circulated press release sparked thousands of complaints but the

Complainers had been duped Dao had no connection to either the press release or the site both were hoaxes the production of the Yes Men a group of Internet activists who had earlier gained notoriety for bogus sites satirizing the World Trade Organization and the general agreement on tariffs and trade

The press release and sites attracted enormous negative publicity for Dao Dao’s lawyers quickly forced the original hoax site to shut down but another spoof site Dow ethics.com picked up its content it offers this tongue-in-cheek corporate boast quote did you know Dao is responsible for the birth of the modern environmental

Movement Rachel Carson’s 1962 book Silent Spring about the effects of a dow product DDT led to a Groundswell of concern and the birth of many of today’s environmental action groups another example of Dao’s commitment to living improved daily end quote the science goes on to parody various PR

Initiatives of the company such as www.bopal.com an authentic thou sponsored sites that presents the company’s position on corporate parody sites are a spin-off of the Boom in political parity sites virtually every politician with a recognizable name has been skewered by mock sites a parody sites so angered George W bush during the presidential

Election campaign that his officials petitioned the FCC to shut it down when told the Constitution’s freedom of speech Provisions protected parody sites Bush uttered his famous remark there ought to be a limit on freedom diem [ __ ] that [ __ ] the bush campaign’s reaction immediately caused the parody

Sites audience to soar in May 1999 the sites received 6 million hits over the candidates official sites what hold on hold on in May 1999 the site received 6 million hits while the candidates official site received thirty thousand imagine that parody sites can’t confuse people as the Dao story illustrates with off-the-shelf

Software and a few spare hours critics can savagely ridicule any company appreciative audiences easily forward the bogus press release or site address to friends around the world the same viral marketing that made Napster an overnight success can now Pummel an unsuspecting company with sarcasm as George W bush discovered to

His Chagrin trying to crush a parody site simply boosts its notoriety and drives up traffic the only real defense is to behave in a manner that doesn’t invite ridicule that’s some funny [ __ ] it’s different from today’s uh 2023 I mean we’re in the era of 2023 the year of our lord it’s

Different from the cancellation mob that um that occurs internationally really from Academia to politics to uh to social issues now now if you say something that’s contrary to the quote-unquote mainstream agenda you could get ridiculed you could get canceled you get shamed for um for not following I don’t know

The mainstream school of thought for not being a uh for not being a pot a bot Towing the line NPC a sheep if you will obviously it differs from place to place geographically regionally the next subheading here is the geopolitical context we have already mentioned companies that aggressively resist being open

Point first point Fidelity and other big mutual funds want to keep the proxy votes Secrets they say it’s because of cost and the need to keep politics out of business decisions many suspect it’s because Fidelity has a conflict of interest as provider of services like the management of employees 401K

Retirement accounts to companies whose shares is whose shares it owns sorry many suspect it’s because Fidelity has a conflict of interest as provider of services to companies whose shares its owns second Point rice Tech soft patents on the name and genetic coding of basmati rice with the goal of privatizing that’s

Rendering opaque the common intellectual property of India’s farmers man if I mean talk about [ __ ] parasites right parasitic parasitic capitalism that exists but at the end of the day that’s not capitalism per se it’s just parasitic corporatism parasitic cronyism pure capitalism wouldn’t do that Kellogg that’s the the third point the

Third Point here Kellogg failed to disclose the genetically modified contents of its corn dog and paid the price when Greenpeace revealed the information but the battles around openness are being fought on a much broader front in 2002 2003 political leadership terrorism war and compliance media combined in the United States to pose

Challenges to disclosure transparency and indeed freedom of expression some have charged that the government is using National Security to strengthen opacity no way you don’t [ __ ] say like the Patriot Act information restrictions are necessary in areas related to National Security but a broader atmosphere of secrecy provides an example that like-minded

Business Leaders can point to Meanwhile the government enacts some measures that protect opaque business practices that arguably threaten security or are irrelevant to it okay the Homeland Security Act of 2002 gives the Department of Homeland Security broad powers to receive information from corporations about weaknesses in the country’s quote critical infrastructure

This information this information becomes automatically exempt from the Freedom of Information Act that’s gay companies also gain immunity from civil liability if the information reveals wrongdoing and Immunity from Anti-Trust suits for sharing the information with the governments and each other damn that’s wild so in the name of

National Security in the best interests of national interests and then even like National they’re not even governmental they’re political that means they’re individual they’re going to people they’re going to individuals at the top in the interests of those interests if somebody were to blow the whistle on something [ __ ] heavy right

That information can be deemed exempt from the Freedom of Information Act so you so the public could arguably never [ __ ] know about it it could literally be swept under the rug and exempt exempt from liability Exempted from liability so nobody could sue anybody for it either [Laughter] talk about

Hegemony talk about hegemony talk about uh oligarchism some [ __ ] like that talk about corruption that’s just [ __ ] pure corruption as much as I like corruption that’s pure corruption that’s not even capitalism at that point it’s just the facade a facade of capitalism uh it’s corruption under the guise of capitalism how about that

United States Senator Patrick Leahy a Vermont Democrats believes these exemptions will be counterproductive no way he said I mean regardless of whether to do is a Democrat or Republican Republican I don’t give a [ __ ] they’re in the same Circle when you’re in the White House you’re shaking hands and rubbing elbows with

Just about everybody and the same they’re working towards the same interests and many a times they are against the better interests of their own constituencies so it’s not uh it’s not impossible to believe that somebody on Capitol Hill has or grows a conscience uh he said he said they would quote

Encourage government complicity with private firms to keep secrets information about critical infrastructure vulnerabilities reduce the incentive to fix the problems and end up hurting rather than helping our national security in the end more secrecy May undermine May sorry in the end more secrecy May undermine rather than Foster security yeah that’s true business

Is war right and so long as you’re doing good business then you’re preventing Bad Business from existing right Bad Business equals bad blood equals blood money that sort of thing right now business obviously always becomes personal and when you’re at the top at the tippy top and you’re pulling the

Strings you are necessarily one of the puppeteers for I don’t know your congressional district or whatever the [ __ ] it’s in your best interest to be transparent but but some folks place their personal interest over the representative interest right they got elected by people to represent those people and yet

A lot of those Folks at the top [ __ ] over their own people their own constituents for whatever benefit for insider trading on this on this information that’s exempt from foia right so they take advantage of of these opportunities maximize their wallets which is which is how you can get you know

Positions in governments like uh let’s let’s say for example speaker of the house right in 20 in in the in the 2020s right in the late in the early 2020s you could have a position like speaker of the house and you only make like a couple hundred grand which is a lot it’s

Still a lot it’s a considerable amount of money you can make a couple hundred grand salary and yet somehow your portfolio your net worth can increase exponentially literally exponentially the end just because of this [ __ ] because of opacity you take advantage of of how opaque actual Communications actual governments to

Private organization Communications are you take advantage of those Communications and you can necessarily trade on Insider information you’re [ __ ] over your own people you’re [ __ ] over the nation for the sake of your own wallet you can walk away from a position like that with hundreds of millions of dollars [Laughter]

Leahy also describes impacts that have no bearing on National Security for example if a company submits information that it’s factory leaches Arsenic and groundwater quotes that information no longer could be used in a civil or criminal proceeding brought by local authorities or by the neighbors who were

Harmed by drinking the water that’s so [ __ ] that means that a company could strategically blow a whistle on itself just pick a Fall Guy give them a little pension at the end of that give them a little goal to parachute if you will make a Fall Guy to report on this

Information and then that information could never be used to actually sue the company that’s that’s devious as [ __ ] meanwhile public support for the underpinnings of transparency has weakened since the 1999 no sorry since 1999 the freedom Forum has surveyed Americans on the following questions the First Amendment became parts of the

U.S Constitution more than 200 years ago this is what it says quote Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof or abridging the freedom of speech or of the press or the rights of the people peaceably to assemble and to petition the government

For a redress of grievances do you agree or disagree with the statement that the First Amendment goes too far in the rights it guarantees man I’m I’m not going to say I’m worried or concerned about what folks’s answers are um I think by 1999 I think around 2002 folks were

Already growing more dependent on the government if you will I mean farming industry largely is out a lot of the food that the U.S consumes is being exported more and more sorry it’s being imported a lot of like the the staple food is being imported more and more so we’re becoming dependent on

Government’s management we’re hoping that the government does a good job of managing our well-being managing our national livelihood so that we don’t go hungry so these folks are going to say yeah yeah we’ll we’ll trade some of these freedoms for uh a [ __ ] uh a sandwich

Share reminds a [ __ ] reminds me of uh of third world corruption really like that that’s third world Antics like you got Mexico Southern America that [ __ ] that [ __ ] is normalized out there and it’s becoming normalized here in 1999 only 28 of respondents replied that the First Amendment goes too far in

2000 this number dropped to 22 but it’s jumped to 39 in 2001. I wonder why was it was it something we will never forget September 11th or some [ __ ] and then to 49 in 2002 damn so they suck in government big furthermore according to the survey the least popular First

Amendment rights is the freedom of the press 42 percent of respondents said the Press has too much freedom to do what it wants 40 percent said that newspapers should not be allowed to freely criticize the military and so on funny enough I think there’s only like three to six companies

That own all of mass communications and media like the newspaper and the news and [ __ ] news channels and [ __ ] like that there’s only three or like three to six companies like major corporations in the entire world like on this planet that own mass communications like that [Laughter]

You don’t like you don’t want them to be as free as possible they’re all really all they gotta do is just start aligning what they release via the press all have to start aligning them together so it appears like there is some form of control and Regulation and like nobody’s

Deviating far out into like left field and right field and it’s still the same one entity one organization that owns it all Just an Illusion yeah all right I said uh they should not criticize the military okay yeah I mean a lot of [ __ ] warhawks out here all

Of a sudden huh they want war and [ __ ] weirdos military industrial complex weirdos dog they could be doing a lot more with psyops for for the benefit of people not for the manipulation of people but for the benefit and they don’t they [ __ ] up the bag every [ __ ] day that I’m alive at

Least they’re [ __ ] it up globalization has Unleashed new often invisible forces that frame the issues differently but the results are similar World economic Forum senior advisor Claude Claude smaja smada smalda Claude smadja comments the decisions that affect my life whether my job will be eliminated will I have a mortgage with higher interest

Rates what returns I will get as an investor are being made by vague institutions and organizations no way vague institutions vague institutions and organizations you mean like the world economic forum the taste of beer I think is decided by European European Union bureaucrats in Brussels the taste of beer I drink is

Decided by European Union bureaucrats in Brussels there is increased opacity opacity am I saying that right opacity opacity opacity in the old world if the corporation did well my job was Secure and I could anticipate a raise now if my Corporation does well my job may be more at risk my

Company can decide to rationalize production and move our plants to a cheaper geography or this guy John Smith shows up here occasionally he’s a consultant of some kind I don’t know who he is but I know he has huge control over my life today a bunch of young fund

Managers in a room in London New York or elsewhere decide that my national currency is a bad risk so interest rates go up and it’s harder for me to pay for my house I don’t know what I’m eating 10 years ago I didn’t need to ask myself if my corn is genetically modified

Well damn Claude sounds like you got sounds like you got a good head on your shoulders but you know that [ __ ] can get knocked off quick such shifts are unfortunate because the costs of opacity are opacity the cost of opacity are immeasurable let’s dig deeper before the next little subheading

Here let me just confirm how to pronounce the next little subheading here continuing the cost of opacity on July 18 1997 the world awoke to an alarming wave of selling that was devastating currencies and stocks in financial markets across Asia Latin America and Europe massive waves of capital fled into safe havens as

Investors lost faith in previously booming developing economics and previously booming developing economies a series of bankruptcies began as the Meltdown continued over the following months Malaysian prime minister Maya mahathir Muhammad mahathir Muhammad charged George Soros and other International investors with sucking the wind out of his country’s economy

This will George Soros gets up huh he’s pretty relevant in in 2023 too um that nigga’s been alive forever the Asian financial crisis lasted three years spilling over to Wall Street and Western economies a similar crisis hit Russia in 1998. similar how similar George Soros these crises brought transparency to the fore

Several factors caused the problems in particular an Asian Financial bubble that pre-saged the internet economy in the late 1990s many claimed that lack of transparency was one of the causes Western politicians economists and media identified emerging Econo economy what emerging economy corruption economy don’t you mean economic corruption emerging economy it says economy

Western politicians economists and media identified emerging economy corruption nepotism and favoritism along with poor corporate governance as drivers of the Meltdown you don’t say lack of Disclosure by companies commercial Banks and even central banks had fanned the crisis no way you don’t say the international monetary fund IMF in particular declared that henceforth

Transparency must be the quote Golden Rule for a globalized economy and that it would take charge of strengthening the supervision of Financial and banking systems in developing countries no way the IMF sticking their finger in everybody’s pot that’s that’s I would have never guessed you [ __ ] Color Me Color Me surprised

Uh if for more information if you want some context on the IMF go read confessions of an economic Hitman by John Perkins under strong pressure many emerging economic leaders opened their economic systems to new levels of international scrutiny in retrospect some analysts notably Joseph stiglitz have argued that

The transparency issue raised by the IMF was itself a smoke screen designed to mask the failures of its own aggressive policies of economic liberalization dude I gotta look up this [ __ ] Joseph stiglitz he’s sticking it to IMF the corruption charges also masked the extent to which Malaysian prime minister

Mahathir Mohammed was right in his claim at the time dismissed as bombast that the crisis resulted more from International speculative speculative money flows than from the fiscal policies of emerging economies countries most Hurts by the crisis like Thailand Russia and Indonesia were those that had most thoroughly bought into the imf’s prescriptions

Prescriptions prescriptions yeah because well I guess a little run down what IMF does is loan money loan money and calculate it to an extent because they’ve got [ __ ] they have a league of economists and accountants right so what they do is they calculate loans out for developing countries and structure

Them in just the way in just the way where it’s going to be impossible to pay and if it looks like you’re gonna be successful paying what do you think they call up they call up I don’t know some some kind of intelligence agency that’s

At the center of it all like I don’t know American or British or if I can Russian even Germany France Israel if they lend themselves to it right they dialed up one of these um intelligence agencies right and they could be recruiting [ __ ] from the school of Americas when it was

Operative if it still is if it still is it’s running under another name but they’re essentially mercenaries for hire and they start [ __ ] they start [ __ ] in your country and I mean the type of [ __ ] that really affects infrastructure really affects Economic Development and then all of a sudden you can’t pay

Back these loans to the IMF and what the IMF then comes in with their economists and their consultants and their accounts and says you know we I mean we could cut you a little Slack but but you’ll have to privatize some of your some of your natural resources

You’ll have to privatize some of your natural resources and the name in the in the name of uh sound Economic Development and Global Prosperity whatever the [ __ ] that means right world peace and uh before you know it they’re restructuring the loan and you still owe out the ass but now you owe

Literally an arm and a leg in the country and uh yeah I mean that the IMF is better off the IMF itself is better off and whoever runs the IMF like who the [ __ ] do you think funds the IMF that the IMF is just running around lending money

All right all right all right follow the money and you’ll you’ll end up somewhere maybe in a grave or don’t follow the money and you’ll still end up in the grave but if you do it the first way you’ll go out in a blaze of glory hopefully not drunk meanwhile equally

Opaque but much more protectionist countries like China and Poland which relied on the state to manage more careful and incremental Market liberalization weathered the storm much better and it makes me think it makes me think does uh does China have a type of agency like that I mean China’s just got more people

Period right China and India these folks so it makes me question whether or not their economies lend themselves to um black budgets and that type and that sort where funds can just be diverted to special projects highly confidential with the latest in technology and the latest in

In arms weapons and whatnot and uh I mean they could insert into a country be in and out um I mean we just saw that with a bunch of who was it a bunch of retired were they like Delta or some [ __ ] I think there were Rangers I think there were Rangers

And seals they got caught up in Cuba I think it was Cuba or Venezuela they’re [ __ ] around because they were disavowed and they weren’t provided the resources and adequate support this is again this is 2020s we’re talking about and if you didn’t hear it it’s because you didn’t [ __ ] want to

Hear it you’re caught up in Instagram and Facebook bullshitting all right I digress I’m ranting the costs were big Millions lost jobs across Asia in many countries interest rates the cost of capital for business expansion and consumer purchases mushroomed to 50 percent and more for over two years share prices collapsed further crippling

The ability of businesses to raise Capital the International Financial Community forked over 110 billion dollars in bailouts to Indonesia South Korea and Thailand alone foreign business investments in Emerging Markets plummeted from 280 billion dollars in 1997 to 150 billion dollars in 1998 then languished around 180 billion dollars for several years

Interest rates that emerging economy governments had to pay on their bonds became and remained much higher [Laughter] did I not tell you those bonds where those bonds coming from those loans they’re they’re necessarily loans but they’re backed by something so dog your word is bond right and if you break that

[ __ ] we break your economy we we break your economy again go read it the book is called confessions of an economic Hitman and [ __ ] will blow your mind and if it and if you’ve already if you already have an idea of what goes on I mean it gives you a recounting on

Another level so another degree of what actually goes on in international economics it’s wild it was such a good book they say the average premium over U.S government bonds shot up from five percent pre-crisis to over 13 then slowly faded to 7.5 percent by mid 2001. today many Asian economies are

Recovering South Korea is a star but investors remain far from selective about putting their money into emerging economies and exact a much higher price when they do this crisis spawned a new Mini industry the transparency industry in 1997 the organization for economic cooperation and developments that’s the oecd past

And anti-bribery Convention no way it took place that happened in 1997 anti-bribery Transparency International TI formed in 1993 became a focal point for exposing and fighting political corruption in emerging economies corruption in the old-fashioned sense of evil of envelopes stuffed in cash is something that happens in secret hence transparency

International’s name and focus yeah so they focus on the money huh what about the violence what about the hit squads what about the wet work the ti Global corruption reports 2001 includes articles and research from over a dozen agencies and organizations including the IMF the United Nations the U.S government academics and consulting

Firms they all sound corrupt to me this sounds like one giant [ __ ] circle jerk while transparency was the catchphrase the focus was corruption particularly government corruption particularly the corruption of the government okay despite politically correct mentions of rich country issues like U.S campaign Finance the targets was government bribery in poor countries corporate

Transparency and governance received short shrift typically Western firms were depicted mainly as victims sometimes as willing accomplices they were forced to cope with or choosing to Panda to shakedowns by sleazy local politicians and officials get the [ __ ] out of here oh my goodness really it’s the politicians shaking down companies okay

Okay dog yeah no let’s just this has become the victim real quick yeah these politicians are shaking me down I’m not bribing politicians the politicians are shaking me down okay sure sure a TI survey reported that 74 of all Publications on corruption between 1990 and 1999 focused on transparency a oops

Focused on I messed that up I misread that my apologies a TI survey reported that 74 of all Publications on corruption between 1990 and 1999 focused on politics and public administration only one percent on business ethics no way transparency a real issue was merchandised as a salutary a salutatory

A salutory matchup between the bad effects of corruption on developing economies and the desires of multinational corporations to reduce transaction costs you know what that means right they’re just they’re pitching money at [ __ ] to quote unquote Grease the wheels it makes transaction costs it reduces transaction costs that means

That they have to go that they have to jump through less regulatory hoops by paying somebody off directly and just making it happen just just pushing them through despite the shaky motives of some of these like the IMF who surfaced the issue the cost of corruption in emerging

Economies were and remain all too real Transparency International and its Partners have shed the lights of transparency on many specific examples of endemic corruption illuminated its costs and convinced growing numbers of leaders to tackle the problem in doing so they built the elements of a cost impact case that now can be applied

To the 2002 rich country corporates governance crisis what the [ __ ] is this rich country rich country about and because there’s when you’re talking about International conglomerates right it’s the conglomerate itself that’s [ __ ] Rich regardless of what country they’re in it could be in in and some who said they could be in like

The poorest country right and it’s the conglomerate itself that’s rich that’s it that’s all you have to really that’s how you have to think and visualize that it’s the like the country could be poor and it’s the conglomerate that’s rich still if you’re in a quote-unquote rich

Country a first world country you think I got that way because the government was strong no the corporations are strong uh the first point first point transparency transparency Internationals 2001 corruption perception index ranked more than 120 countries on the use of Public Power for private benefits on the

Basis of a composite of expert sources the least corrupt top 24 on the list were Rich market economies Finland with a score of 9.9 out of 10 came first the United States ranked 16th scored badly relative to its peers an embarrassing 7.6 it’s ranked below Singapore Canada Australia the United Kingdom and Hong

Kong but above Germany Japan and France second Point TI also surveyed Business Leaders in 14 major emerging market economies such as Brazil India and Russia to learn which countries that invest in emerging economies are least likely to house companies that pay bribes again the United States showed up

In the middle of the pack outdone by Sweden Australia Canada the United Kingdom and others I.E these states were less apt to host bribe payers than the United States the United States rated better than Singapore Japan Italy and China other surveys rated U.S companies among the most likely to have anti-bribery

Codes of conduct but in the absence of transparent and verifiable Reporting and given the perceptions of Emerging Market leaders U.S firms’s virtuous codes of conduct may not predict virtuous Behavior no way you mean to tell me that codes get violated and laws get broken that’s that’s wild point three in another survey

Respondents ranked the U.S government as by far the most likely to engage in questionable practices like diplomatic and political pressure commercial pressure dumping Financial pressure tide Aid official gifts tied defense and arms deals yeah I mean just that point right there is all you need to go read confessions

Of an economic Hitman by John Perkins [ __ ] I might make that a future audiobook if if the references in this book are enough I’m like I’m not gonna do that I might do that for the podcast point four is it point four point four corruption according to TI’s research

The tracks from economic social and environmental performance it diminishes Science and Technology it is often employed by those who cause direct harm to air quality and water quality among other measures in other words corruption corrodes the foundations of sustainable competition yeah that’s beautifully put that last point right there is

Beautifully put and it’s funny because there’s a lot of you know autism is on the rise right so there’s so there’s a lot of smart specialized very Niche very hyper focused individuals who might be uh gung-ho on like one thing really Uber focus on like one thing it could be

Planes Trains automobiles science math English History right one thing right and then they get exploited by [ __ ] and corporate [ __ ] like me right I’ve done it before I know folks who’ve done it before I may not do that as much because I’ve learned I’ve changed my

Ways and it’s not just out for personal interest I don’t have much to show right I’m not doing this podcast sitting on a beach somewhere drinking umbrella drinks sipping pina coladas and and Counting how many Panamanian uh or how many Panamanian accounts I have in some tax Haven no no no no I’ve

Recapacitated and I’ve retooled I’ve retrained my brain to instead of being an economic Hitman I’m a corporate Cowboy that’s the point of this podcast continuing continuing a parallel price Waterhouse Cooper’s PWC study looked at the cost of opacity opacity opacity I keep [ __ ] that up opacity opacity

Quote the lack of clear accurate formal easily discernible and widely accepted practices in the business environment it’s expert survey of 35 mostly emerging economies rated corruption and four other areas of concern the legal and judicial environments including shareholder rights Economic Policy accounting and corporate governance and Regulatory uncertainty slash arbitrariness

Believe It or Not respondents rated Singapore as the least opaque I.E the most transparent on these business criteria its weak record on civil rights was not factored in the United States Chile and the United Kingdom followed closely then PWC Quantified the impact of opacity as if it were a tax on

Foreign investments or an incremental cost of doing business with Singapore as the zero Baseline the United States opacity tax was measured as five percent Hong Kong’s 12 Mexico’s 15 percent Japan’s 25 and China’s 46 percent PWC also assigned an opacity risk premium to each country equivalent to

The amount of Interest above the U.S level that opacity would add to the cost of government bonds Hong Kong’s risk premium came out at 2.3 percent Mexico’s 3.1 percent Japan’s 6.3 percent and China’s 13.2 percent I’m not going to explain those if you are listening to this audiobook and you

Know what the [ __ ] you’re looking for you know what you’re looking at you know what you’re listening to then I’m not going to explain that [ __ ] by early 2001 the international I mean go back rewind it listen to it again if necessary pull context clues from it in order to

Find because they’re analogizing transparency and opacity to attacks attacks on the cost of doing business there I borrowed it down for you I distilled it for you if you’re still confused if you continue to not understand rewind that [ __ ] and re-listen to it by early 2001 the international policy

Community spearheaded by many U.S experts was teaching several lessons from the Asian financial crisis first opacity combined with corruption and self-dealing can cause deep and sustained economic crises no way well [ __ ] I do learn something new for a second second opacity hurts businesses and raises the transaction costs investors lose trust withdraw from

Capital markets and increase the price they exact from companies for loans and Investments sure okay third opacity costs taxpayers businesses and consumers as governments are forced to intervene with bailouts and social safety nets while their cost of borrowing increases due to the opacity risk premium well nobody said you had to bail out

Folks right nobody said you have to bail out these too big to fail [ __ ] anybody can fail anybody could get it everybody is entry level forever that’s pretty much the uh the the Mantra of a corporate Cowboy you are entry level forever you think you make it to the top

You take one moment to settle you settle for just a little bit you get clipped that shit’s easy all the research we’ve cited was pre-enron in the PWC survey U.S respondents were highly optimistic about the quality and impact of accounting standards in their own business environments from the beginnings of the

Asian crisis through early 2001 U.S commentators often supported by leaders of global institutions like IMF and World Bank preached that the U.S system of corporate disclosure was the model for the rest of the world to emulate yeah one I’m not going to comment on that too

Heavily I I want to I want to continue with this book Enron and the shock and Scandals that followed silenced the preachers as they realized that their claimed causes of the Asian financial crisis applied to the U.S the chickens had come home to roost so they say opacity literally means that they made

Their bed and they had now they had to [ __ ] sleep in it now they got a pillow now they got smothered with the [ __ ] pillow in the very bed that they made opacity combined with corruption and self-dealing had led to a deep economic crisis the crisis may not turn out to be

As sustained as it was in Asia because of the fundamental strengths of the U.S economy through current fiscal and disclosure policies hold on so sorry though current fiscal and disclosure policies further undermine the strength but the cost of the 2002 meltdown will remain with us for a long time the

Crisis has hurt many businesses investors withdrew from Capital markets and set higher performance hurdles as a precondition for their return although the cost of borrowing declined rather than increased this was because the Fallout of the transparency crisis all of the costs let me reread that because I had [ __ ] I gotta take a

Drink hold on hello H2O although the cost of borrowing declined rather than increased this was because the Fallout from the transparency crisis combined with a trade deficit industrial over capacity and productivity growth delayed a recovery from recession as a result the Federal Reserve continued to push rates

Down but even though interest rates were low risk money remained hard to get why could it be that there were more Regulators with their fingers on the buttons and their hands on the phones getting Insider connects well let’s continue I don’t [ __ ] know specific costs of the U.S transparency

Crisis were clear and diverse enron’s fraudulent semi-concealed off-balance sheet activities and subsequent bankruptcy destroyed 90 billion dollars of market capitalization 21 000 jobs and a major accounting firm Arthur Anderson R.I.P Rest in Piss and helped Dash the retirement plans of Millions of Americans that sucks and did anybody die from that or did

People just get arrested and go to jail I don’t know questions questions it falsified over seven billion dollars in costs and went into bankruptcy with debts of 41 billion these and other failed companies created billions of dollars in bad debts for banks and other lending institutions the federal governments opened more than 100

Corporate crime investigations and charged over 150 people with fraud the trustworthiness of wall Street’s biggest names Goldman Sachs Citibank Merrill Lynch Morgan Stanley and Credit Suisse first Boston was cast into doubt well I mean half of those [ __ ] laundered for the cartel on the other half were what funding Epstein or some

[ __ ] brokerage firms eventually faced fines of 1.4 billion dollars and laid off laid off thousands of employees as millions of individuals dropped out of the stock market damn but the pla but like the players like these people didn’t drop out weird the damage swelled into a Market’s Panic

Reminiscence of the days of the robber barons reminiscent from my back I’m cracking myself up because like every sentence now I’m just I’m gonna sarcastically commentating on this [ __ ] my bad I’m bad I will tone it down some I will read it through and keep the breaks intermittent okay keep the interjections

Intermittent okay from March 19 2002 to July 19 2002 the peak of the transparency crisis standard and Poor’s 500 Index lost 28 percent of its value dropping from one 1170 to 848. long after the Technology stock bubble had burst in an August 2002 analysis The Brookings Institute estimated that for as long as

The transparency crisis prevents the stock market from recovering to 2000 to March 2002 levels it will cost the U.S economy a significant and ever-growing portion of its gross domestic product due to reduced consumer buying and business spending specifically it forecasted a reduction in gross domestic product between

Two tenths and about half of a percent over a one-year period equivalent to 21 billion to 50 billion compounding to half of a percent to one point one nine percent over three years and 1.05 to 2.5 percent over 10 years The Brookings forecast assumed no corrective action but the cost of the

Crisis was all too obvious to government and Business Leaders steps were taken to improve both the appearance and realities of corporate transparency beginning in early August starting with Congressional hearings starting with Congressional hearings and legislation in hopes that the worst was over by late fall the Markets started to improve a

Springtime rally pushed the s p up in the 1000 range by early July 2003. this was still well below its pre-crisis peak investors remained skittish foreign next little subheading here stakeholder webs countervails to opacity whether it knows it or not every company has a stakeholder web an S web what the

[ __ ] is up with these with these shorts with these uh acronyms not acronyms what are they abbreviations s webs and B webs they’re just Networks but I get it maybe they’re being they’re they’re qualifying and further defining describing what these webs are constituted of right so stakeholder webs okay

Whether it knows it or not every company has a stakeholder web an S web maybe several a stakeholder web is a network of see a network could you say [ __ ] I said Network a stakeholder web is a network of stakeholders that scrutinizes and attempts to influence a corporation’s Behavior recently many

Have studied many have studied recently many have studied these networks and given them different names including transparency networks corporate responsibility clusters Network armies and smart mobs but as business critic Amy Cortese says quote whether you choose to call them whatever you choose to call them these forces are products

Of the internet age United not by geography but by common cause and technology that lets them communicate freely and instantly end quote a key characteristic of many s-webs is self-organization self-organizing systems such as the open source movements that produced Linux are fundamentally different from an often subversive of traditional hierarchical organizations [ __ ] yeah

[ __ ] yeah because uh that that’s pretty much what facilitates you know corporate Cowboys what enables corporate Cowboys to operate inside and outside corporations they display intentional emergence whereby strong patterns emerge from complex initially random systems through the application of a few Simple Rules like being a corporate like everybody’s

Entry level forever that’s what that’s what puts the fear of God into people not God itself you you put the fear in others that everyone is entry level forever and can get knocked off at a moment’s notice if they [ __ ] up the bag if they create bad business they got bad blood

Immediately immediately they just but I mean if that if that were the case since the dawn of time I mean we wouldn’t have poverty we wouldn’t have starvation we wouldn’t have pestilence and War and famine and and all these other social diseases right but um

Yo I mean if God’s real so is the devil so the devil’s here apparently emergence has captured the imaginations of scientists researchers and analysts in many disciplines including biology mathematics and economics unlike most naturally occurring emergent systems humans apply intentionality in many of their emergent systems they make

Deliberate choices on the basis of their ideas goals and desires nonetheless the cumulative effect of self-organized sorry nonetheless the cumulative effect is self-organized rather than orchestrated stakeholder webs actively investigate evaluates and seek to change the behaviors of Institutions such as corporations to achieve better alignment of the values and interests of their participants

Man I don’t know I I find I find myself being more realist more more cynical as uh as time goes on but that’s only because some of the participants have found ways to legislate themselves out of any liability and that goes to show I mean there’s there used to be governments made by

People for the people and um every couple Generations that power gets usurped and gets violated before before [ __ ] start getting clipped and and in Minecraft like like the youngsters say in Minecraft [ __ ] him that’s some corporate Cowboy [ __ ] the next subheading here seven characteristics of stakeholder webs what

The [ __ ] what happened to S webs one the embodiment of transparency transparency is not an amorphous disembodied Force it’s tangible expression the S web there you go realizes the ability of stakeholders to find out information inform others and self-organize S web participants connect via interactive media like the internet

Email the telephone instant messaging facts holy [ __ ] this is from 2002 facts and face-to-face Communications they also use traditional print radio television mass media the new transparency increases the power and influence of s webs s web structures and behaviors made possible by the internet very much resemble it and S web works

Very differently from a typical top-down company or business web it’s modus operandi is pure collaboration peer peer resin your your relative peer as in your colleagues it’s modus operandi is peer collaboration rather than hierarchical control and S um like the internets like the internet’s an S web structure is highly

Distributed an S web a s web is highly adaptive it can spring into action quickly and fade just as fast instead of spending energy trying to tear down obstacles it routes itself around them ironically there is often considerable opacity within an S web as various participants may not be fully

Aware of who the other members are Nestle’s stakeholders figure 2.1 focused initially on the company’s reported efforts to encourage mothers in developing countries to abandon breastfeeding in favor of using its packaged infant formula this is from 2002 yo Nestle be on some [ __ ] more recently the chocolate industry has

Rocked no sorry the chocolate I’m [ __ ] this one up more recently the chocolate industry was rocked by revelations that its supply chain was tainted by child slavery in turn changing the composition and activity within Nestle’s s web the effects rippled from ngos to nearly all the company’s stakeholders some

Customers were turned off by the stigma of eating chocolates made by slaves employees were demoralized by bad press supply chain Partners were forced to raise standards and participate in new monitoring systems and investors worried that the Scandal might affect the firm’s stock price and long-term prospects yeah there’s a whole um

Uh I don’t know if by the time you’re listening to this Reddit is still a thing but there’s a whole last subreddit that I’ve seen that I’ve come across called [ __ ] Nestle r slash [ __ ] Nestle that’s funny uh two one of the characteristic number two of stakeholder webs varying participants motives and roles

As web players can be motivated for a variety of reasons religious groups use moral principles to examine and change corporate Behavior some players such as employees who organize to change a company’s pension policy or shareholders who try to force a company to adopt good governance are motivated by self-interest some have an

Ideological motivation ranging from a desire for better corporate citizenship to a desire to weaken corporations and end corporates power I’m I’m kind of in between corporate Cowboys I think are a little bit in between we’re in between every [ __ ] thing some may turn out to be agents of competitors [ __ ] corporate Cowboys might

Be just that corporate Regulators are mandated to uphold the law corporate Regulators what about corporate Regulators what about corporate Cowboys regulating um just taking a quick look at figure 2.1 they referred to Nestle’s stakeholder web and uh really it’s just Nestle in the middle and a bunch of circles with arrows going every

[ __ ] where for um for their stakeholder web and they’re numbered they’re numbered from 1 to 12. so I’ll read them off here pretty quickly number one is investors and then there’s an arrow there’s I mean the arrows go from every Circle to every other Circle essentially so number one is investors

To a supply chain three is anti-globalization groups funny four is women’s groups funnier five is environmental groups six is labor groups seven is the media eight is government nine is customers 10 is mass action groups 11 is other non-governmental organizations other ngos and twelve is trade organizations which is funny because

There is an anti-globalization group in here and a Trade Organization so yeah I would I would imagine some opacity exists they don’t know or maybe they pretend yeah I’m gonna say they pretend they pretend that the other doesn’t exist or they pretend that they don’t know about

The others motives and interests but I mean if we’re being real here if we’re being real in the name of business whatever Bad Business looks like they’re probably shaking hands on that yeah anti-globalization and World Trade sure foreign participants also play different roles it says some s web participants act as

Leaders coordinating the rules and activities of others the AFL-CIO is Central to the S web that scrutinizes Coca-Cola coordinating investigations exposes and activities aimed at changing labor practices in the company’s modeling plans some play the role of content provider researching and communicating critical information to other members Greenpeace provided intelligence to the rainforest

Action Network about Home Depot’s old growth forest logging some play other rules linking the corporation amplify and relaying Communications to other network participants conducting litigation proposing shareholder resolutions and so on Malcolm Gladwell describes three kinds of people it’s the same model that could be applied to organizations who apply special roles in

Mobilizing human networks connectors mavens and salesmen connectors know lots of other well-connected influential people they also have a special gift for bringing the world together mavens are obsessive experts in a narrow field like the artists I guess the [ __ ] artists they love to share their knowledge and other people trust their advice right

Gladwell suggests that Paul Revere who mobilized a stakeholder web that sparked the American Revolution was both a connector he knew lots of important people and a maven he had the inside scoop on the British Army’s plans and shared it with the importance people who trusted him the third type of mobilizer

Is the salesman a person with an infectious sometimes subliminal ability to persuade given the right situation and an effective mix of such special people and S web becomes an Unstoppable Force so you in your own life listener reader consider which one of the three that you are

What’s your strongest at which you uh could practice in not put your weakest in but what which one you have the most opportunity and go practice that you want to be capable in all three otherwise you’re going to end up being taken advantage of if you think you can specialize in one

Area and not know how to talk to people not know how to interact professionally you’re going to get bent over and [ __ ] the third characteristic changing Dynamics changing Dynamics s webs can be relatively inactive quiet benign reflective small stable and slow moving or they can be intensely active huge

Volatile and Powerful several Dynamics are at work and S web can move from one state to another inactive to active small to large hostile to Cooperative almost instantaneously Network effects come into play a bigger network is exponentially more valuable to participants and impactful on its Target

Uh damn that was so the first point the first point was that s web the first point is an S web can move from one state to another in active to active the second point was Network effects come into play a bigger network is exponentially more valuable uh the third

Point is in s webs transparency Works a bit like osmosis says researcher Anthony Williams in networks like these quote information flows freely from areas of high concentration to areas of low concentration where it disseminates rapidly across space and time point four rumors travel flat rumors travel fast

And they pretty much travel flat too I know I misspoke there but they necessarily travel flat along people along the level of people that you know it’s rare that the person above you learns before the person next to you that’s that’s rare it’s rare unless you know you’re making a move unless you’re

Making a corporate play but uh it’s rare uh rumors travel fast butts validation can be Swift as well sophisticated s webs have good nonsense detectors because misinformation especially when initiated by members can hurt the network 0.5 local networks can become Global fast as digital information does not respect boundaries

0.6 the S web has a marvelous quality persistence based on its ability to Archive information that was placed in its years ago can still be available today ready to use similarly linkages among s web participants May lie dormant for a Time ready to be reactivated when needed the fourth characteristic variable corporate engagement

Firms have various levels of Engagement with their s-webs a company may not even be aware that it is operating under the scrutiny of an S web some s-webs we analyzed had no interaction at all with the target firm other firms systematically engage their s-webs to learn influence them or

Harness their power to help Build a Better Business engagement pays off Hewlett-Packard uses consumer inputs to identify product problems Johnson and Johnson engages employees to ensure that its Credo guides their behavior shell turned parts of a hostile aweb a aweb what the [ __ ] is an aweb hold on hold on

An aweb what the [ __ ] oh it’s a typo okay that’s a typo it’s a [ __ ] typo so uh so there’s still s webs there’s there is no aweb at least not yet there’s a b web that’s the business web or business Network and there’s an S web

Which is a stakeholder web so like a stakeholder Network there is no aweb so shell turned parts of a hostile s web into a network that supports its sustainability agenda when activity in the S web is high while engagement is low companies can be drawn into a trust crisis refer to figure 2.2

And figure 2.2 just real quick I’ll describe it for you is the same graph that we saw in part one chapter one and chapter one essentially where you have in is it similar in the sense that there is two axes the X and A Y axes and then it’s um

Its origin were like the zero zero were like the they meet together in the bottom left then as they expand up and outwards they create quadrants right the y-axis the one that goes up and down is rated from low at the bottom to high at the top and that is named engagement

With the firm right the x-axis starts with low on the left hand side and high at the far right hand side that’s labeled s web activity now the bottom left quadrant is called the danger zone the top left quadrant is called the opportunity Zone the top right quadrant it’s called the sustainability Zone

And the bottom right quadrant is called trust crisis all right we’re continuing so when web so when activity in the S web is high while engagements is low companies can be drawn into a trust crisis figure 2.2 unengaged activity has a centrifugal force where the S web migrates away from

The firm and can become alienated from The Firm its values and its activities conversely lack of Engagement Robs a corporation of the opportunity to evolve and strengthen its values to be consistent with those of its stakeholders for both parties lack of Engagement undermines the Quest for commonly shared values in turn generating mistrust

Characteristic number five big trouble trust crisis gladwell’s concept of the Tipping Point is an apt description of what happens when a small event suddenly turns a stakeholder web with the force of an epidemic from an amorphous collection of stakeholders into an uncontrollable trust crisis new information or events can suddenly

Precipitate a trust crisis when Baxter International became implicated in the deaths of patients of its renal care products for kidney treatments that’s what renal means renal r-e-n-a-l in case you didn’t know renal the company was swept into a trust state where everything became subservient to dealing with the trust crisis

Most big companies have faced at least one trust crisis precipitated by a trust event they modeled Exxon Valdez or managed Johnson and Johnson Tylenol through with varying degrees of damage or new Strength the generalized trust crisis of 2002 there was a generalized trust crisis [ __ ] everybody was mistrusting each

Other and distrusting each other the generalized trust crisis of 2002 was precipitated by several companies that disappeared almost overnight no way trust destroyed Society revoked their license to operate I don’t know about that just their license to operate so again I I I refer back to my question I returned to

My question nobody [ __ ] died from that like no no heads literally rolled that’s weird characteristic six a company’s response to a trust crisis effect on its future and its viability firms have shown two diametrically opposed methods of dealing with a trust crisis one is to use conventional public

Relations tactics to quell it the other is to engage the S web in active discussions and processes to resolve issues the traditional approach uses advertising PR campaigns spin misinformation criticizing the critics spoofing like posing as an S web member and providing phony information pitting one group against the other and other

Dirty tricks such approaches usually have the opposite to the desired effect they tend to inflame activity in the S web and attack is fodder for increased Communications as participants inform others rebut or reply to the attack and reorganize themselves the S web is an organism whose antibodies gain strength

By combating intruders engagement is a far more effective philosophy and approach a corporate Spirit of open Communications listening consideration of participants interests admission of wrongdoing if appropriate consultation commitment to change abiding by commitments accountability and transparency all have the effect of reducing crisis activity and restoring Trust

Nestle is again a case in points in 1999 BBC oh sorry a 1999 BBC documentary revealed that several cocoa plantations in the Ivory Coast Used slave labor to produce the raw materials sold to Chocolate retailers like Nestle Cadbury and Hershey observers were quick to accuse the industry of complicity in slavery the

Chocolate industry vigorously denied responsibility saying that companies bought raw materials on commodity exchanges and had no way of knowing how cocoa was produced a deadlock seemed inevitable and many individuals and organizations called for boycotts but after further dialogue among anti-slavery ngos concerned government agencies in the chocolate industry a

Consensus emerged that slavery had to be eradicated from the supply chain everyone understood that boycotts would cause great harm not just to the reputations and profits of Manufacturers and retailers but also to The Many African farmers who depended on income from cocoa production in a July 2002 agreement the industry

Agreed to fund Research into the extent of the problem and to take steps in cooperation with the government of the Ivory Coast to eliminate slavery that shit’s laughable anyways it’s like a laughable okay yeah so they’re going to spend money on finding ways to to to to

Whether what is it to uh increase the cost of making chocolate sure sure fam sure let’s pretend that happened also an independent board consisting of a broad array of stakeholders was set up to monitor progress a potentially explosive issue was resolved without boycotts or lawsuits relying instead on dialogue and

Cooperation sure not coercion cooperation right right and with ngos and governments as partners the chocolate industry can legitimately claim that its Supply chains are free of slave labor that ladies and gents is called plausible deniability characteristic seven last characteristic of s webs a powerful force for corporate transformation ooh

S webs existed in pre-internets days but their speed of communication and therefore Effectiveness was glacial that means slow moving slow like a glacier like a [ __ ] glacier moving slow really really slow the net supercharges and s-web enabling it to quickly become a powerful often Global Force for change

Because engagement is the only effective way to deal with crisis s webs change the behavior of Corporations The Firm engages information begins to flow back and forth both parties learn and behavior changes engagement creates new feedback loops which constrain or help correct unacceptable behaviors while encouraging new values and

Behaviors that conform to the expectations of the network Anthony Williams says quote when information disclosed to the public reveals inconsistencies between the conduct of Corporations and acceptable standards of Behavior Network participants must put new forms of accountability into motion as we shall see s webs by motivating corporations to be accountable reward

Them for being trustworthy we live in an era in which stakeholder webs supersede government’s ability to influence some behaviors of the private sector and markets ever since the South African boycotts hastened the end of Apartheid activists have been perfecting this new kind of markets campaign now the internet enables stakeholders to

Construct far-flung networks to influence corporate Behavior by attacking corporate Brands and mobilizing public opinion any company with a reputation and brand to protect is vulnerable even firms that are isolated from consumers can be made to acquiesce usually by targeting the firm’s Partners at the retail end of the supply chain

When we explain the notion of s-webs to business Executives some react with concern even fear good [ __ ] you should fear corporate Cowboys what the [ __ ] memo to Business Leaders though s webs are good for you this will help you be trustworthy engage with them engage with us learn and build trust

Trust is the Cinque for viability and performance in the new business environment and S webs are a new Force for corporate success and shareholder value in summary there are real limits to transparency and forces mobilized in favor of opacity the experience of emerging economies and of the United States clearly shows that

Opacity breeds corruption markets failures and poor underlying business conditions stakeholder webs are an Unstoppable Force for a new glass nose in business and capitalist Society the train has left the station nevertheless as we’ve seen battles around openness rage on yeah that’s the [ __ ] that’s the corporate War essentially ladies and

Gentlemen that ends chapter two of the naked Corporation how the age of transparency will revolutionize business authored by Don Tapscott and David ciccol published 2002 by Free Press and read to you by Yours Truly Alex a corporate cowboy I’ll catch on the next one

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