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CORPORATE COMMUNITIES
NOVEMBER 1, 1995
TRANSCRIPT | | |
David Gergen, editor-at-large of "U.S. News & World
Report," talks to Rosabeth Moss Kanter, professor at the
Harvard School of Business, and author of World Class: Thriving
Locally in the Global Economy. Kanter discusses her book which
looks at the relationship between large corporations and local
communities in the increasingly global marketplace.
DAVID
GERGEN: Dr. Kanter, it's been clear for a long time that if American corporations
jumped into the game of global competition, they can do extremely well and
corporations like Intel and Motorola and Boeing and Microsoft, they have really
led American business back from the early 1980's. Now, your book comes along
and argues it's not just corporations but communities need to get into the
same game.
ROSABETH MOSS KANTER: Well, yes. I mean, cities can be sources of globally
relevant skills and create jobs for the people in them by being international
centers of trade or of manufacturing or of innovation. They can not only build
more jobs for the future, but they can help the companies, small and mid-size
companies, in those cities tap new markets, export markets. They can create
new kinds of enterprises that bring them into the future, and they can do
something for the quality of life of all the people that live there by starting
to meet world standards, not just regional standards, but be places that are
crossroads of world tourism, world travel, and world trade.
DAVID GERGEN: Now, you've spotlighted three cities that trade--both the
prowess in manufacturing or prowess in innovation or prowess in trade.
ROSABETH
MOSS KANTER: Yes. I chose Boston not necessarily because it was the best but
it was a very good example of a city that's flourishing because of innovation,
like Silicon Valley, San Jose, like Austin, Texas, like Denver, which is growing
jobs, a lot of export-related jobs. Denver is actually benefiting from NAFTA,
because like Boston, like Massachusetts, it has high-tech innovation-packed
products, and a lot of entrepreneurs ready to build those products into, into
businesses that not only meet world standards, but help open up new business
opportunities because they're creating markets. They're defining the category
in software or telecommunications, or biotechnology. So that's one model.
DAVID GERGEN: Another model, Miami?
ROSABETH
MOSS KANTER: Miami was a model of a trade center, an international crossroads
like Singapore, like some parts of San Francisco. Miami is, in essence, the
capital of Latin America. It's a place that is getting back American headquarters
that had once been in the region, are now coming back to Miami, because it's
a better place to do business in Latin America. Disney consumer products moved
its Latin American headquarters from Mexico back into the United States, into
Miami. And it's flourishing because of a bilingual population, a great airport,
trade skills, and that's creating new sources of jobs. By the way, blue-collar
jobs too. An airport has lots and lots of blue-collar jobs.
DAVID GERGEN: Absolutely. If you come through Miami Airport, you see it. And
the third model was Greenville, Spartanburg.
ROSABETH
MOSS KANTER: Exactly. Many people say, "Where?" Greenville and Spartanburg
are the site of the highest per capita diversified foreign investment in the
United States. They are a world class manufacturing center. Starting 30 years
ago with the textile industry, encouraging European machine makers to locate
in that area and using their presence to continually upgrade skills, make
quality a community priority, emphasize technical skills and customize job
training, a program that many South Carolina governors encouraged. Fritz Hollings,
when he was governor of South Carolina, helped start that program. It has
become an international center. Michelin, the French tire maker, is now the
largest manufacturing employer in South Carolina.
DAVID GERGEN: And I remember as a child going to Greenville-Spartanburg, and
it was an area of very blue collar and small town, and it seemed very much
the old traditional South Carolina. Going back there today, it's absolutely
remarkable. What struck me about your book was the degree of local leadership
in the private sector coming say from Roger Millican at--who led the textile
effort, and also the degree of public leadership--not only Fritz Hollings
in the Senate, but strong governors they've had in educational reform. Richard
Riley--he's now the Education Secretary. The country was Democrat. Carroll
Campbell, a Republican, current governor. They've had very strong leadership
there to help make that possible.
ROSABETH
MOSS KANTER: They saw education as one of the keys to being a world class
manufacturing center, and they were also foreign friendly, open to international
investment. And the foreign presence in this part of South Carolina, which
is now, of course, throughout the South, that whole corridor from Atlanta
to Charlotte, I-85, sometimes called the Autobahn, so many German companies
there, well, like Ohio, which has also attracted a lot of new foreign investment,
bringing jobs to American workers, they understood that international companies
could raise the horizons of local people, it could make them think that the
world was open to them. It could add cultural benefits, bring in new technology,
and make sure that local manufacturing met world standards.
DAVID
GERGEN: All right. Well, there is one danger, it strikes me, that perhaps
didn't get enough attention in your book and that is the degree to which companies
begin thinking globally. They sometimes forget their local commitments and
local roots. You did cite, for example, in Dallas, the difficulty now of raising
money for civic projects from corporations, because so often the decisions
about charitable contributions or local investments are made in Tokyo or Hartford
or Kalamazoo, and recently, the "New York Times" had a big piece
about a great angst in the city of Rochester because Kodak under strong leadership
now, strong international, global leadership, is stepping back or is thinking
of stepping back from some of its local commitment. So there is some concern
on the part of these communities.
ROSABETH
MOSS KANTER: Absolutely, because, in fact, one of the findings in my book
is that companies that have their headquarters in a particular city give much
more to that city than companies whose headquarters are elsewhere. It means
that cities also need to change their strategies, because they often have
fewer headquarters. The CEO's, even if they're still living in the city, are
on airplanes, traveling all over the world. Their commitments are weaker.
It's why I argue that small and mid-sized businesses ought to be the focus
for community involvement and of economic development policy. You can't count
on the global giants; they are preoccupied with their affairs elsewhere.
DAVID GERGEN: But you can encourage them. And you pointed out
the city of Cleveland, for example, which has done very well,
the corporate community there, even though it's very global and
is very competitive internationally, has come together and has
brought a real change in Cleveland, a real improvement in the
city life.
ROSABETH
MOSS KANTER: Cleveland, tomorrow, a network coalition of originally about
three dozen CEO's, now it's about five dozen CEO's, has made an enormous difference.
What they managed to do was work on what I call their infrastructure for collaboration,
which is sort of a mouthful. But instead of just the physical infrastructure
of roads and highways and bridges, they also worked on collaboration, a social
infrastructure that could bring the business community together with a shared
agenda. And any city can do that. It has to unite cities in suburbs. We have
to think regionally, because those political boundaries only lead to turf
wars and in-fighting, and that's part of what Cleveland did.
DAVID GERGEN: Let me ask you the question that's on the mind of a great
many Americans tonight, and that is corporations are doing very well in this
new global environment, and people at the top of these corporations, people
not in the white collar jobs, but as you called them, the gold collar jobs,
are doing very well, but for the average American worker, many, many American
workers have not shared in this bounty. Productivity has been increasing three
times as fast in the 90's as has compensation. It was very striking to me,
for example, there was a piece in the "Wall Street Journal" recently
about big corporations now. The Standard & Poor's 500 Corporations, largest
corporations, they have experienced increases in their net income each year
over the last three years of 20 percent plus each year. So their profits are
high. The question in the Journal piece was what are they going to do with
the profits, and their two options that they were considering were either
to invest more in the company, buy down their debt, or invest more overseas,
or to please their stockholders perhaps by buying back stocks. Those are the
two options. Strikingly, there was no third option that was sharing those
gains with the workers.
ROSABETH
MOSS KANTER: Well, I think that's outrageous. And, in fact, I think big business
had better watch what it's doing for its work force if it wants to continue
to have support in the United States. I think we are in danger of a populous
backlash. I think it will be against big institutions of all kind, government
and big business. And there are many people who are not voting right now because
they think big government and big business were all in the same bag, and they're
against the worker. I think it's a tremendous danger. I think companies do
have to think about sharing their gains with the work force. I think they
have to think about creating more economic security for people. Some big companies
are starting to do that by even encouraging networks of, of their suppliers
to help them with job displacement, i.e., if they do have to close a division,
they have a bigger network, and they can help people get another job. But
it's a major problem in America. That's again why small and mid-sized businesses
ought to be the focus of many communities' economic development effort, because
they are creating new jobs.
DAVID
GERGEN: And a CEO will sit down and tell you, Rosabeth, if we're going to
compete internationally, we have to have capital from our stockholders, we
have to make 'em happy, and they're getting used to these big gains they're
seeing in the Dow Jones this year. If we're going to compete internationally,
we have to invest overseas, so, you know, we can't afford to give it to our
workers. How--what would you tell them?
ROSABETH MOSS KANTER: I would tell them that some of the best
and most progressive flourishing American companies are companies
that think about economic security for their work force, like
Hewlett-Packard, which has now risen to the top close to IBM as
one of the world's largest computer companies, and Hewlett-Packard
still offers displaced workers another job in the company, pays
very high wages, and counts on people's skill, not on cheap wages.
That's--cheap labor is not going to be the way we compete in the
United States. It's going to be brain power. And I also tell CEO's
that unless--it's the only Henry Ford strategy--that unless workers
are paid a decent wage, they're not going to be able to afford
the products the company makes.
DAVID GERGEN: Well, perhaps we can do it all. I hope so. But thank
you very much for being here.
