Pioneering Corporate Responsibility

Marilyn Carlson Nelson
COO and Vice Chair of Carlson Companies

Good afternoon. Thank you ladies and gentlemen – and, I must thank my father and mother for leading us – my sister and myself – to this day. They have, for many years, modeled for our family the true joy of giving, and the joy of family. Glen and I, Barby and Skip, and our children, say thank you.

Just the other day I received a heart-warming tribute from my father. It was on my birthday, and he gave me what I thought was a wonderful card. On the cover it said, "You’re the answer to my prayers." Then I opened it and saw the rest. It said, "You’re the answer to my prayers… but you’re not what I prayed for!" But I thank you anyway, Curt.

And I thank the Greater Minneapolis Chamber of Commerce for honoring us with this award. I want to say a profound thank you from all of the people at Carlson Companies here in Minnesota and, of course, our family. To be recognized for one’s corporate contribution in this state – which is renowned for contributions – is profoundly humbling.

Bridging The Generations

Metaphorically speaking, we are here today to talk about the transfer from one generation to another of a precious heirloom. A precious heirloom handed down to us by those who went before – our community.

It is so appropriate that the movement and the award we honor today are called the "Minnesota Keystone Program" and the "Keystone Honored Company Award." A keystone is what holds an arch together – without it, the arch falls. We have built an arch in the Twin Cities. An arch that lifts us over and above, to new heights. The keystone of that arch is the support of our corporate community - which is, in fact, many of you here in this room.

The quality of life here in the Twin Cities and in Minnesota is the differentiator for us. It is what attracts the "best and brightest" and keeps them here – even in the month of February! In this environment we have all needed to create an "extra edge" for ourselves and our community. Keystone was … and is … that edge!

When I look at the history of the program I see great vision. But think back to a time before the Keystone Club. For many younger people in the room, this will have to be a history lesson. In the post-Kennedy era, there was a different attitude in the country - a feeling that government could and should do many, many things for citizens. The federal government gave huge block grants to the states. The states gave grants to the communities in the belief that community leaders could and should know how to spend tax dollars to build their own cities. So the money became available, and we put that money to work.

Our forefathers and mothers believed that our community should have not just a GOOD quality of life, but the BEST quality of life. There was a prevailing belief that our harsh climate could be overcome in recruiting businesses to headquarters here and in recruiting executives to lead those businesses. And there was a strong belief that investment in quality education was imperative to develop the overall quality of the work force. This was not just philanthropy – this was enlightened self interest!

Seeds of the Keystone Program

In those days, tax laws permitting corporations to deduct charitable contributions up to two percent of pre-tax income, and later up to five percent, meant a corporation was incented to invest in the public and nonprofit sectors of the community. Minnesota corporations took advantage of this opportunity.

Despite generous sources of government funds, our businesses opted not to retreat and let the federal, state or municipal governments handle the load. Neither did they elect to simply pass responsibility totally back to individuals. Many of our corporations stunned the nation by actually contributing five percent of pre-tax income!

Remember, at that time, the national average for corporate contributions was less than one percent. This community consciousness energized everyone.

Was it successful? Absolutely. Look at where we are today.

• Today, 32 of the Fortune 1000 companies are headquartered here.

• In fact, we rank 7^th in the number of Fortune 500 companies based in our community.

• We have not one, but three Malcolm Baldridge Award-winning companies with operations here, IBM, Zytec, and Custom Research (the first service company to ever receive the award, by the way).

• Dun & Bradstreet calls us, quote, "one of the strongest economic areas in the U.S." - a fact recently reinforced by our state’s upgrading to AAA bond status. No other state has been upgraded to this level in 22 years!

• Our business failure rate has been half the national average and second best in the nation.

• And, in the past five-year period the 2% of the U.S. population that lives in our state has created more than its share of the new jobs in our country – 3.3% to be exact and growing at a 65% faster rate than the rest of the country.

Clearly, philanthropy is not hazardous to corporate health!

While we succeeded in building a strong economy, we succeeded also in creating a strong educational environment. In fact, education may well have been the cause of our economic successes.

• In education, our per capita spending is 17% above the national norm.

• Our high school graduation rate hovers around 90% - above the U.S. average of about 70%.

• We have a staggering number of post-secondary opportunities: 8 state university campuses, 51 community and technical colleges, and 22 private 4-year colleges.

• And, to put it in truly human terms, four Minnesota teachers have been named National Teacher of the Year – a number equaled only by the mini-nation of California!

A strong business climate and a vibrant educational culture have done something else – created a quality of life few other regions can match. Look at the unbelievable array of choices a typical weekend in the Twin Cities offers:

• 29 plays – in fact, more live theatre than anywhere but New York and Washington, D.C.,

• 6 dance programs,

• 3 major art exhibits,

• 24 gallery shows,

• 5 comedy acts,

• our nation’s only live radio comedy show,

• musical performances by the Minnesota Orchestra, Plymouth Music Series, and other internationally renowned groups,

• 1,000 parks in our community alone, many of them more than 10 acres in size, and

• Mega-Mall shopping and sports: the Vikings, the Timberwolves and the Twins (we hope)!

Consider that we now live in a community that is ranked by the respected "Kids Count" database as one of the top two "child-friendly" communities in the United States. This is due in no small part, I’m certain, to the "Success by Six" program originated here by the United Way and the many other programs supported by all of the contributors in the Keystone Program. This child-friendly reputation was corroborated by SAVVY Magazine, which called us, quote, "the best place for raising children in the country."

Challenges to Our Future

Yes, we have made fantastic strides in building a community that is the envy of all. Why then - when it is so tempting to do so - is it so important that we do not stop where we rest? The answer is – if I can quote my father with him sitting right here - "They who rest on their laurels soon have their laurels handed to them by someone else!"

Serious trends, which certainly must be acknowledged, threaten our cities. For example:

First – Whatever your political con-victions, it cannot be discounted that the federal, state and local governments cannot afford to take on all that they did before.

Second – There are trends in business that are undermining our sense of place, and threaten to undo the good so many have done.

Impact of Globalization on the Community

Globalization has many significant and provocative implications. We hear about global competition putting pressure on margins. Narrowing margins focus management’s attention on non-community issues such as expense management disciplines, business process re-design, and productivity. These pressures conspire to reduce both the dollars and the hours that corporations feel they can make available to community.

Globalization means thinking global. While this trend has positive implications for international relations and even prospects for peace, it also means identifying with multiple communities in multiple nations. For corporations who find that 40-50-60% of their income comes from outside the U.S., it is harder and harder to focus the majority of their giving in any one community. With all the electronic networking taking place today, a virtual organization of the future could be stateless, and nationless. Witness ABB, which advertises that it is a global company without a headquarters!

Shareholder Sovereignty

Another business issue: I find the focus on "absolute shareholder sovereignty" – the idea that only the shareholder matters – very concerning. Why? Because there are those shareholders who have become so driven by market multiples that they reward corporations who drop every penny to the bottom line for short-term gain.

We are operating in an environment with a voracious – no, I should say cannibalistic hunger for growth to please the public markets. The pressure is extraordinary. Indeed, a healthy 20% growth in income before tax can actually disappoint the market! This trend resulted in at least one company in our own market disbanding its charitable foundation and only making contributions which can be proven to show immediate business payback and, therefore, can be expensed.

These are real trends – and they are real threats to the world as we know it. But, ever the optimist, I offer my own list of counter claims.

Reasons for Hope

First – I do not believe the shareholder value at the expense of the other stakeholders is a viable model for the long run. It is an ideology that comes out of the eighties when we had gone so far the other way – with entitlements for our employees completely unbundled from and unrelated to shareholders returns. A "correction" was needed. We had to swing the pendulum to re-focus on returns on capital, shareholder investment, and value added.

That being said, at Carlson Companies, we have always believed that our future depends on an even-handed approach to shareholders, customers, employees, suppliers, and the community.

Clearly, with the economy at near full employment, employees will have a bolder and louder voice in how we manage the quality of life within the company and in how we approach our sense of citizenship within not only our local community but the global community as well. Employees are, in many instances, becoming owners – financially and emotionally. This, too, will change the paradigm.

Enlightened shareholder value, I believe, – like enlightened self interest – will move corporations back to a more responsible, responsive role in the lives of our people and our communities.

Globalization does demand more of our executives - more travel, more 24-hour engagements dealing with Europe on one end of the day and Asia on the other. So, giving financial resources is an important way of being more than one place at a time. Globalization is also requiring a better educated, better trained, stable work force and healthy communities.

Our need for employees to fuel our growth, plus the pressure that comes from low unemployment requires strong social service organizations to train and integrate those previously considered unemployable. That also requires corporate organizations which provide training, stabilization, motivation, involvement, engagement and a safety net.

Healthy communities allow teachers to teach and students to focus on learning. Healthy communities produce healthy competent workers who help to produce economic value for the corporations who hire them.

The market place may be global, but people will live and love and work and play in localities. And, we must never rationalize that our responsibilities to so many allow us not to serve any. The homeless are victimized by change – they have no roots – less resilience. Our corporations, however global, must not be stateless – homeless. If that happens, our corporate cultures will be soulless and we will fail.

Perception Matters

So what does this mean for Minneapolis and St. Paul? With all the vibrant, positive facts I offered earlier, I believe we are still at risk - if not factually, perhaps emotionally. Think of the negative impact of the title of "Murderapolis" which we received from the New York Times last year, when our murder rate topped the nation.

Or, just last month when again, the same publication called into question our community’s attitude towards welcoming immigrants and new families to our area. The headline read: "Ethnic Change Tests Mettle of Minneapolis Liberalism." I quote from that article: "the rapid influx of desperately poor people, most of them members of racial minorities, is testing the social fabric here as street gangs from Chicago and Detroit have staked Minnesota turf."

And this quote: "Many whites, as well as middle-class blacks, have been leaving Minneapolis for years, saying they want better schools for their children, but also spreading concerns about the changes in the city." That is powerful – and distressing – stuff.

Now, some would argue that it is the messenger – in this case the New York Times – that is the problem and not the message. But, to use another phrase, "where there is smoke there is fire." And this fire, as much as some in our community would like, does not come from a bonfire made with copies of the New York Times! These are truly troubling signs that the public perception of our community and state is changing, and if the perception changes, so can the reality.

Addressing the Issues

We cannot continue to be a national leader in problem resolution, in creative thinking, in product development, if we do not keep an eye on our quality of life. If we do not protect it with everything we have.

We face one of those choices this week with the vote on the new baseball stadium.

We have been given a tremendous opportunity – the largest gift in the history of the state, from an involved Minnesota family. It is a creative solution to a tough problem. And yet, there continues to be division not discussion - anger, not a search for answers.

Our community deserves better. It always has. If we don’t think with vision, if we don’t look forward rather than down at the ground, we will lose much. If we lose the ability to attract and retain talent, we will lose our competitive edge as a "brain state." We will fail to attract the best to our schools. Our corporations will suffer, and those headquarters I mentioned earlier will move. All of this, on the threshold of the knowledge age - an age that should be ours!

This must not happen. No, this will not happen - because we won’t allow it to happen. We will do as our forefathers did. We will renew, re-energize, re-commit. We will convince our colleagues and our stakeholders that we have responsibilities that are, indeed, longer term.

We stand today in a vibrant, healthy community and reap the benefits I’ve just named. But we stand here with humility because my generation and those who follow have "drunk from wells we did not dig." Now, it is up to us to come together not just to celebrate those who have gone before us, but also to reaffirm the desperate need to build for the future.

All of us can proselytize for the Keystone Program and the commitment it represents by suggesting – no, by calling out – that everyone should recruit one more member to this worthy cause.

We must find and train the stone cutters of the next generation. With them, we will and can cut the Keystones that allow more arch-building - the creation of more towering community values - the building of a community that lifts our collective hearts and minds to new heights in the 21^st Century.

To my father Curt and to all of you who have gone before, I say thank you and bless you for your vision. To those to whom the responsibility now falls, I say join us in the wonderful crusade. May we never lose the enthusiasm to put our hands on the wheelbarrows – wheelbarrows filled with carefully crafted stones. And when asked why we are moving those stones, may we never lose the vision that spurs us to reply, "We are building a cathedral … our community." Thank you.

Marilyn Carlson Nelson is COO and Vice Chair of Carlson Companies, Inc. This speech was presented November 12, 1997 at the Greater Minneapolis Chamber of Commerce "Minnesota Keystone Program." This speech has been edited for publication.

1997 marks the 21^st anniversary of the Minnesota Keystone Program. Carlson Companies is the first recipient of the Keystone Honored Company Award. The award was accepted by Curt Carlson, founder, Chairman and CEO of Carlson Companies and by Marilyn Carlson Nelson.

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