ON CORPORATE POWER AND GREED

Corporate power and greed has been one of the salient topics in the political discourse surrounding the current presidential election. It may have featured more prominently on one side of the political aisle during the primary season, but its appeal crosses party lines.

This should not be surprising to anyone who has paid attention to the largely negative depiction of businesses in popular U.S. culture – there have been numerous articles that document this aspect. This may be surprising to find in a country which prides itself on its free enterprise ethos, which nourishes the entrepreneurial impulse like few others, which turns out more business school graduates on a per capita basis than most others, and which often measures professional accomplishment primarily in financial terms.

My purpose in this post is not to offer an analysis of this phenomenon but to provide a historical reference, from which the reader can draw some encouragement.

If you are not into the history of British colonialism, chances are you have not heard of The East India Company (EIC). If you were asked to identify an exemplar of corporate power and greed, you could not go wrong by mentioning this company. Author William Dalrymple has provided a fascinating and relatively succinct history of the EIC in a March 2015 edition of The Guardian newspaper.

The EIC came into existence under a Royal Charter granted in 1600. Its initial focus was on trade between England and the East Indies. The company experienced great success, and with success came aspiration for power and monopoly. It used its wealth to buy political influence in Parliament, and used the sheath of political influence and protection to take it into realms where no modern corporation would dare venture.

At its zenith, in the late 1700s, The East India Company had more power and ran a much larger and more complex enterprise than the largest corporate behemoths of today. The following interesting highlights emerge from Dalrymple’s pieces and other articles in the Economist and BBC online:

·        At the height of its power it had about 35 permanent staff in its home office.

·        It had a standing army of 260,000 men and a large fleet of ships.

·        It ruled over a country that in that period accounted for 25% of global GDP (in contrast to England which accounted for 2%).

·        Its power and influence ranged from the Cape of Good Horn all the way to Singapore

·        It set up a governing infrastructure and a tax collecting apparatus that regulated the lives of close to 100 million people covering the entire Indian subcontinent.

·        What it transferred in treasures from India (still on display or storage in British museums) is mind-boggling.

·        It was one of the first companies to offer limited liability to its shareholders.

·        It was the first state backed company in human history. Today, state backed companies account for 19 of the 100 biggest multinational companies (mostly in China, Russia and Brazil).

·        Like today’s corporations, the EIC had a powerful East India lobby in the British Parliament

·        It was an innovator in the art of governance. Their system of management has been described by Tom Peters as “tight-loose” management (not unlike the model that many successful franchises used today).

·        It allowed its employees to profit from personal trading while at the same time putting in place a very rigorous list of rules and regulations for conducting company business

·        Landing a job at the EIC was seen as the ultimate prize.

Its information systems were so impressive that Peter Drucker highlighted it in one of his many articles. They used a nationwide system of runners (literally). By the way, the tea made famous during the Boston Tea Party came from the East India Company.

But like others. before and since, the EIC succumbed to what Schumpeter has called the “gale of creative destruction.” Events in India created financial problems for the EIC forcing it to seek government intervention and relief. Its political patrons in London turned on it, as criticism of its excesses began to spread in England and there was a demand for action by the government. By 1834 it was all over for the East India Company.

Corporate power and greed may make for a good topic to whip up political excitement and social unrest in modern times. But if you look through the long lens of history at the sustainability of the power of any particular corporate entity you realize that a lot of it is transitory. Just try recalling the prominent retail store chains that have disappeared in your life-time. For all of the glory that tech giants are basking in today, they are all just a few disruptions away from fading into a list of has-beens.

As a long time management consultant and former academic, I am always interested in taking the long and sometimes contrarian view on issues. As a consultant my prime focus is on discovering the frequently untapped pools of intelligence, insights, and talent that exist in surprising places within client organizations, and unleashing it to help the organization achieve its objectives. It is the discovery and empowerment process that I find rewarding. Contact me - [email protected]