Richard Edelman, a member of the Executive Committee of the Atlantic Council Board of Directors, praises the acceptance speech given by Sam Palmisano in accepting the Distinguished Business Leadership Award.   He argues, however, that Palmisano missed “an opportunity to make a broader statement about the evolving relationship between business and government.”

Here’s what Edelman would have added:

First, business is the most successful change agent in society. Look at the evolution of countries such as Brazil, Mexico, India or Indonesia, where the average person’s income has gone up by 20 times in the past decade. But CEO’s must now recognize the responsibility of business to go beyond that described by Milton Friedman, who said, “So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no they do not”. We’re entering a new era of Mutual Social Responsibility, a virtuous circle in which people consume what they need (not what they want) while companies agree to achieve financial AND societal objectives.

Second, those of us in leadership roles in the business community acknowledge the violation of people’s trust and are committed to fixing the problem. We will be more transparent about our corporate strategy and risks associated with our plans. We realize that pay levels for top executives have escalated while the average wage-earner has had no increase. Bonuses for short term performance have led to unacceptable risk-taking. This system will be changed, to one which embraces shared sacrifice.

Third, there are new voices whose views must be incorporated into a global governance model based on a stakeholder society. Non-governmental organizations, communities as well as employees and consumers are entitled to a hearing. This is an evolution from the shareholder society which concentrates only on investors and is regulated by government. It calls for an outside in, listening approach by business and government because both of these traditional institutions have lost the mandate to lead unilaterally.

This is not a time for business as usual. The collateral damage of the crisis goes beyond those sectors requiring government bail-outs, namely autos and finance. The way forward is Private Sector Diplomacy, in which business shares the stage with government and NGOs to find solutions. Mr. Palmisano went part way along the path, committing to work on a major global issue, the consequences of urbanization. It is important that CEO’s use future public speaking opportunities to move from company stewards to private sector statesmen.

He’s right, of course, about the leading role entrepreneurs and business leaders must take in solving the challenges we now face.  His words echo some recent sage advice Deutsche Bank CEO Dr. Josef Ackermann delivered at the Council.

I’m less certain that all, or even most, of Edelman’s fellow corporate titans agree with him on the direction ahead.  Do most believe they have a significant responsibility to society beyond their own shareholders?  Are they really interested in tying their pay to that of their workers?  Edelman knows them better than I do, of course, but my guess is that many of them are going to need some convincing.

Most would have to agree that it makes sense to incentivize long-term performance rather than the quarterly stock report.  But, alas, they will continue to issue stock reports quarterly and this will lead to pressure for short-term thinking.   How can this dilemma be solved?

Edelman, Ackermann, and Palmisano are pointing to the right questions.  It’s a conversation we need to have.  It must be a continuous dialogue between government, business, and other private stakeholders rather than decided upon in Washington and dictated from on high.

James Joyner is managing editor of the Atlantic Council.

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