IF AMERICA’S CEOs have learned one lesson over the last half decade, it’s this: Avoid politics. It is the right lesson – as usual, Milton Friedman was correct, the primary purpose of a business should be to increase its profits – but the rapidly changing nature of the economy calls for an update: Avoid politics whenever possible, but never when necessary.
The recent history of corporate activism is instructive. Just before the pandemic, the chief executives of 181 of the largest US corporations signed a pledge to “lead their companies for the benefit of all stakeholders”, not just shareholders.
They essentially promised to pursue a better world beyond profits. It did not go well. After several prominent instances of companies or executives getting burned for taking political stances – just ask Budweiser or Elon Musk – most companies now just stick to business or at least stay silent.
But as data and data analysis become more valuable commodities, neutrality and apoliticism will become harder to maintain. Perhaps Friedman’s shareholder capitalism no longer makes sense in the modern economy – especially if your business is working with data. And especially if your software aids the military or helps governments monitor their citizens.
Two recent books illustrate how there is no such thing as neutral values when it comes to data. One is critical of Meta, alleging it used its data to assist the Chinese government in monitoring and censoring its users. That decision surely increased profits – China is a huge market – but was it ethical? It is one thing to sell sneakers in China, quite another to sell data. Either you assist the Chinese government in its efforts, or you don’t.
Another book, by Palantir co-founder and CEO Alex Karp and corporate affairs chief Nicholas Zamiska, argues that more companies need to be explicit about how their values should guide their work. Palantir, a data analytics company that is known (some might say notorious) for its contracts with the Pentagon and ICE, was co-founded by tech entrepreneur and libertarian donor Peter Thiel. Karp, meanwhile, has said that he agrees with progressives on most issues.
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Politics aside, on its website Palantir says it was “founded to help Western democracies and open societies harness data to protect citizens without compromising civil liberties”.
It would be naive to take that statement at face value. Yet, even expressing these principles carries risks. Google also grew up as a values-driven company, with its (since discarded) slogan of “Don’t Be Evil”. Its employees took that to heart when they refused to work on a contract with the Department of Defence in 2018. The US$229 million contract went to Palantir instead, four years later. Was that a case of values paying off, or values aligning with profits?
Google’s old mission statement has become a bit of a punchline, and it’s worth asking why. For one, it was never clear what “evil” meant. Is it evil to help US special forces wage war, or is it evil to stay neutral in a fight against the Taliban? Again, regardless of what you think of Palantir’s values, they are clear – so unlike Google, Palantir tends to attract employees who agree with its values.
Another requirement for corporate mission statements is that they be related to the corporation’s product. There’s no need for a beermaker, for example, to take a political stance. One of the more grating aspects of Silicon Valley culture in recent years is how sanctimonious every tech startup became about its work, even if it is just another version of Groupon.
There are other risks to a value-driven strategy. Karp argues that founder-led companies do better. Google is no longer run by its founders. Perhaps if it were, “evil” would have been better defined.
Palantir may one day face the same issue. It may be clear to Karp and his advisory board what Palantir should do when there is a conflict between morals and profits. But he won’t be the CEO forever. How do values change under his successor, and the one after that?
All of which raises the larger question: If the most valuable commodity in the world is the ability to analyse and interpret data, is shareholder capitalism now out of date?
It isn’t – but the Friedman doctrine is in need of an update. The goal should be to have a clear corporate mission that is consistent with what it does and can transcend successive generations of CEOs. The mission may be as simple as, “We sell beer and hope to make money”; there is no reason to say, “We make beer and try to save the world”.
If a company is involved in data or weapons, it may require delving into some geopolitics, because there is no such thing as neutrality in that line of work. That’s why Palantir makes a point of saying it stands for Western values, but you won’t find anything on its website about its view of transgender athletes in women’s sports.
As the world economy enters the artificial intelligence era, and as more defence technology is developed in the private sector, companies like Palantir and Facebook will become more important, and ones like Budweiser and Nike less. That means some big companies will find it harder to avoid politics completely – and will have to consider their positions carefully. BLOOMBERG
