The late author Sir Terry Pratchett once famously said: “If you do not know where you come from, then you don’t know where you are, and if you don’t know you are, then you don’t know where you’re going.” This is certainly true of the changing dynamic between corporations and their increasingly demanding stakeholders.  Disruptive technologies, the disintermediation of media and the dislocations in our society and economy that became inextricably woven into our post-9/11 world has blurred the lines between the private and the public in a way never contemplated before.

We have entered the world of the “citizen corporation”— the concept that everything a corporation does is fair game for criticism and amplification in the marketplace for goods, services, equity capital and ideas. The “citizenization” of the post-9/11 corporate world means that senior communications professionals must be not just be able to build a narrative, but they must be equal parts sociologist, digital prognosticator, researcher and cultural anthropologist.

To paraphrase Sir Terry, how we got here from where we came from is instructive, as corporate history is in a real sense an analog for how political, social and economic trends have shaped our civic dialogue. The history of Corporate America’s relationship with its public and private stakeholders since the 1960s can be divided roughly into four distinct phases, each of which has brought its own challenges and opportunities for communicators. 

“The Private Corporation” - (Up to mid-80s) 

Traditionally, publicly-held corporations operated on the proposition that a corporation’s primary responsibility is to maximize returns for its shareholders. Its best known and celebrated exponent is the late University of Chicago Economist Milton Friedman, who claimed that the social purpose of a private enterprise is to make money, with it being up to the individual “owner” to decide what to do with his holdings. So, activities around social purpose would reside with the individual shareholder rather than the corporation.  

This era was typified by companies that were organized as conglomerates or holding companies whose corporate names that only resonated with the financial community. And, given that corporate executives jealously guarded their option of maintaining arm’s length between the corporate name and product brands under it, that was fine with them. 

“The Branded Corporation” (Mid-80s to early 1990s)

With the 1980s came the break-up of conglomerates as a primary business strategy and the rise of “pure play” companies whose corporate name was often synonymous with their principal product brands. Wall Street began discounting conglomerates and awarding higher multiples to companies with business models more understandable to financial analysts. 

Using a corporate brand as an “endorser” of product brands also had a risk mitigation component, as research found in general that consumers wanted to know the corporate name behind the brands, and vice versa, and corporate favorability could be enhanced by more effectively linking the two.  In this phase, there was also considerable movement to migrate corporations into becoming “master brands” - with the brand name becoming synonymous with a company’s principal product brands.  

For the first time on a broad basis, companies looked to develop multi-stakeholder communications campaigns that took corporate leaders out of their investor relations comfort zone and had them more visible in front of larger, more broad-based stakeholder venues. 

“The Stakeholder Corporation” (Mid-1990s to 2010)  

By the mid-1990s, the concept of the corporation had morphed from the shareholder focus of Milton Friedman to the stakeholder focus perhaps most forcefully articulated by Howard Schultz, CEO of Starbuck’s, who emphatically drew a direct line between social responsibility and shareholder value.   The premise of this phase was that a corporation was responsible to multiple stakeholders, and that corporate leaders should engage constructively with social, economic and environmental issues.  

During this phase, corporate social responsibility (CSR) became a strategy that underpinned corporations’ efforts to ensure their “permission to compete” locally, regionally and globally, while underscoring their investment appeal, manifested in the growth of socially responsible investment (SRI) funds. It also saw CSR elevated to a board-level concern.

“The Citizen Corporation” (2010 to today)

The Supreme Court decision in the matter of Citizens United versus the Federal Election Commission made lawful the exercise of “political” speech by corporations. One of the by-products of this decision is that today, there is an expectation that corporations engage in political speech, taking positions on many issues that have become lightning rods for our political dialogue.  

The implication for corporations is two-fold — first, that what was once private is now public, and in fact the line between public and private affairs has been blurred to the point where there is very little distinction between the two. And, second, companies will often be construed as acting politically, even when they’re acting to stay clear of politics, making the potential for alienating large swaths of the public even more acute.  

More than ever before, companies look for guidance on how to navigate a “third way” course that mitigates their political and social risk, helps them forecast trends that could draw the attention, and potential fire, of the public, and determine which issues can be leveraged to proactively build reputation. If the past is prologue, the chapters being written now about corporations’ dynamic relationships with its stakeholders are bound to be the ones fraught with the highest risk, and potentially highest return.

Harlan Teller
Harlan Teller

Harlan Teller is an executive director in APCO Worldwide’s corporate communications practice, with more than 45 years of industry experience. Read More