Perspective: On 'creative capitalism,' Gates gets it

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Critics argue that donating funds or freeing up employees to work on charitable projects, even if they one day actually turn a profit, violates corporate charters. Corporations need to maximize shareholder value, which means working on high-margin projects and directing profits to dividends.

The fiduciary duty of corporate officers, however, is quite broad. It does not, and never has, dictated that every spare cent must go toward utilitarian function. (If that were the case, corporate lobbies wouldn't feature artwork and polished reception areas. They'd have orange crates and a bulb hanging from the ceiling.) Free-market absolutists on this point are simply and utterly wrong.

A corporation can give to charity, or free up its employees to work on projects with an altruistic bent, if it helps public relations. Intel gives millions in scholarships. Few of the recipients end up at the company. But by doing so, the chipmaker can foster a tight bond with a major research institution.

Related podcast
'Creative capitalism' showdown

News.com's Michael Kanellos and Declan McCullagh
share their differing views.

Creative capitalism can also boost employee morale and loyalty. One of the biggest problems oil companies have faced in recent years has been recruiting. Simply put, oil companies have bad public images and that turns away top grads.

"We will not be able to recruit and retain people if people do not see us as a high integrity industry," Raul Restucci, executive vice president of exploration and production in the Middle East at Shell, said during a conference panel in 2005.

Building leeway and creativity into a job can have huge indirect benefits. And, to focus on the mercenary again, you can't say that these projects won't ultimately prove profitable. After all, how many people 20 years ago believed that the luxury-goods market would be driven by shoppers in Shanghai and Moscow? Fostering relationships now can only help.

Perhaps the toughest roadblock toward acceptance of this kind of system is envy. Deep down, I think most everyone would probably like to work on a project that could make a difference in the lives of others. That is, until you see your college roommate drive by in a Ferrari.

On the other hand, you'll be able to tell him about constructing a subdivision of mud homes in Mali.

Biography
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas. He has worked as an attorney, travel writer and sidewalk hawker for a time share resort, among other occupations.

More Perspectives

[wildchild_plasma_gyro]

Slight critism here

On this he gets it bit your boasting about how an Engineer distributes a glorified wood burning barbicue to poor people in Latin America.
Oh how the world needs western innovation like it needs a whole in the head.
If you'd said that some engineer had developed cheap technology for breaking down more food sources for poor latin americans to eat or how some engineer had worked out a way to maintain from humid air a cheap and effective space saving meal worm farm now i'd have appaulded and seen your point about the concept being sound but wow there you go mr poor latin american man heres a glorified barbicue.

[wildchild_plasma_gyro]

Umm year

How very creative Capitilism is.
I wonder did this world class engineer come up with the idea before or after he had cooked his 3rd burger.

[Mendz]

Gates Needs Help

Gates has always been a visionary with Microsoft -- where he has the R&D and laboratory resources to back his "vision" even years ahead before his own company delivers the same.

Outside Microsoft, however, he has no such R&D. He has visions. He has plans. And he needs help. This is his way of asking for help. I believe that the stir he's made with the idea of doing "creative capitalism" is a successful start. Reading between the lines... Gates is calling for as many people as possible to be and to get involved.

You see, that's the point: the mission needs help.

[davemesaaz]

I don't see this as an either or you can Profits and eliminate Poverty.

I don't see What Gates is doing as an either or statement. Either you help the poor or you make money.
The great industrialists such as Ford Carnegie Sam Walton have succeed by not just catering to those who could afford their products. But the made billions by making their products cheaper for the poor and middle classes.

When Henry Ford started producing cars they were more expensive then homes and were an item only available to the rich. Ford found a way to make cheap cars for the poor and middle classes and made billions by doing so.

Right now corporations make products for the 2 billion of the worlds rich. But there is a "Fortune at the Bottom of the Pyramid" and the individual that solves that problem will reap billions.

[Tui Pohutukawa]

Ivory tower BS

Gates: "Sometimes market forces fail to make an impact in
developing countries not because there's no demand, or even
because money is lacking, but because we don't spend enough
time studying the needs and requirements of that market."

What a load of nonsense. I have travelled developing countries.
Many people there haven't got enough money to buy something
to eat, never mind afford permanent housing. Gates should
leave the air-conditioned conference halls for a while, get on a
bus in India, for example, and take a look around. Millions of
people own next to nothing. Armies of unemployed and
homeless. Thousands who literally live off the refuse that gets
imported from the west.

Gates et al: Stop the whining and the posing. Learn to share.
Use your billions, don't lock them away in foundations that only
feed your ego.

[Dachi]

What?

"I have travelled developing countries. Many people there haven't got enough money to buy something to eat, never mind afford permanent housing."

This is not everybody. Also, do you propose that instead of trying to help them prop up a self sustaining economy, that we simply build huge homeless shelters that hold millions and millions of people and feed them all with our endless wealth?

Shipping in food is a /very/ short term solution.

Welfare creates welfare dependency. Instead of teaching them to farm, trade, build, and invent, we are teaching them how to stand in line waiting for handouts.

>"Use your billions, don't lock them away in foundations that only feed your ego."

Many many billions of dollars worth of consumables and foreign aid has already been shipped into some of the poorest regions of the world. The end result is that they are now highly dependent on this aid.

(ie, farming is difficult enough in these regions, try competing against free foreign aid)

Also, instead of developing cheap generic medications, foreign aid has made doing this difficult by granting billion dollar contracts for treatment to some of the biggest medical companies in the world. Companies who's patents, trade secrets, and litigation seek to make it /more/ difficult to have inexpensive readily available generic drugs.

I could tell you how to solve many of the poverty problems in these nations and I am sure many others could as well.

It would not be that hard to have them compete in the global economy, but it would cost American, European, and Asian jobs/wages.

Since people don't want them competing for their own jobs, they would rather hand them crippling foreign aid. If you want to do this fine, just don't walk around looking down your nose at the rest of us.

PS. Throwing free/cheap copies of Windows at these regions is also a convenient way to fight Linux. Again leaving them dependent on another billion dollar US based company.

[sgurivir]

What about responsibility?

The responsibility of CEO is to make profits for their
shareholders.The philanthroiphic or the resulting PR efforts
should lead to benefits for the company. Unless Shareholders
approve the board/CEO to allocate finances for philanthrophc
efforts, it's cheating on part of the CEO. He's doing it for his
own altruisitc/ personal reasons.

The corporations should concentrate on paying dividends for
shareholders. If a company really wants to tie itself to
altruistic efforts, it should form a seperate sister organization
with it's own account and let interested shareholders invest in
it.

[sgurivir]

What about responsibility?

The responsibility of CEO is to make profits for their
shareholders.The philanthroiphic or the resulting PR efforts
should lead to benefits for the company. Unless Shareholders
approve the board/CEO to allocate finances for philanthrophc
efforts, it's cheating on part of the CEO. He's doing it for his
own altruisitc/ personal reasons.

The corporations should concentrate on paying dividends for
shareholders. If a company really wants to tie itself to
altruistic efforts, it should form a seperate sister organization
with it's own account and let interested shareholders invest in
it.

- Sridhar Gurivireddy

[sgurivir]

What about responsibility?

The responsibility of CEO is to make profits for their
shareholders.The philanthroiphic or the resulting PR efforts
should lead to benefits for the company. Unless Shareholders
approve the board/CEO to allocate finances for philanthrophc
efforts, it's cheating on part of the CEO. He's doing it for his
own altruisitc/ personal reasons.

The corporations should concentrate on paying dividends for
shareholders. If a company really wants to tie itself to
altruistic efforts, it should form a seperate sister organization
with it's own account and let interested shareholders invest in
it.