Focus on the Long-Term and Resist Short-Termism Afflicting Corporate Behavior

Photo of Larry Fink: BlackRock

Laurence (Larry) Fink, Chairman and Chief Executive Officer of BlackRock, a New York, N.Y.-based investment firm, sent his annual Corporate Governance Letter to chief executives at S&P 500 companies and large European corporations. Mr. Fink's letter encourages corporate leaders to focus on creating long-term strategies and resist "the powerful forces of short-termism afflicting corporate behavior." While you can read the letter in its entirety, there are a few points worth discussing in this post.

The lack of transparency and openness on Wall Street has long been a concern of mine during my professional career. I am pleased to read Mr. Fink's message "that companies have an obligation to be open and transparent about their growth plans so that shareholders can evaluate them and companies' progress in executing on those plans." Mr. Fink continues to say: "We are asking that every CEO lay out for shareholders each year a strategic framework for long-term value creation. Additionally, because boards have a critical role to play in strategic planning, we believe CEOs should explicitly affirm that their boards have reviewed those plans."

I spend a significant amount of my time reading reports issued by publicly-traded companies as required by the U.S. Securities and Exchange Commission and I am routinely disappointed these companies do not address management's vision and future plans. Therefore, I find encouragement in Mr. Fink's words:

Annual shareholder letters and other communications to shareholders are too often backwards-looking and don’t do enough to articulate management’s vision and plans for the future. This perspective on the future, however, is what investors and all stakeholders truly need, including, for example, how the company is navigating the competitive landscape, how it is innovating, how it is adapting to technological disruption or geopolitical events, where it is investing and how it is developing its talent. As part of this effort, companies should work to develop financial metrics, suitable for each company and industry, that support a framework for long-term growth. Components of long-term compensation should be linked to these metrics. 

Mr. Fink also addresses how environmental and social factors are impacting corporate long-term plans:

These issues offer both risks and opportunities, but for too long, companies have not considered them core to their business – even when the world’s political leaders are increasingly focused on them, as demonstrated by the Paris Climate Accord. Over the long-term, environmental, social and governance (ESG) issues – ranging from climate change to diversity to board effectiveness – have real and quantifiable financial impacts.

"At companies where ESG issues are handled well, they are often a signal of operational excellence."

It is too easy to blame companies for being too focused on the short-term; "investors, the media, and public officials have a role to play," according to Mr. Fink. "In Washington (and other capitals), long-term is often defined as simply the next election cycle, an attitude that is eroding the economic foundations of our country" and "public officials must adopt policies that will support long-term value creation."

Lastly, "Companies, for their part, must recognize that while advocating for more infrastructure or comprehensive tax reform may not bear fruit in the next quarter or two, the absence of effective long-term policies in these areas undermines the economic ecosystem in which companies function – and with it, their chances for long-term growth."

What are your thoughts about Mr. Fink's letter?

Aaron Rose serves as President and CEO of ROI3, Inc., a Seattle, Wash.-based company that empowers people in emerging economies through innovative, technology-based solutions. He is also the editor of Solutions for a Sustainable World.

iGorilla: A Mobile App to Help Save African Gorillas

What if there was a way to help save the African gorillas with your mobile phone? iGorilla, available for the iPhone and iPad, allow users to follow the lives of gorilla families in Virunga National Park’s remote forests. Through the Apple App Store, iGorilla costs $4.00, with $2.80 going toward supporting the efforts of preserving the natural habitat of the park, which is located in the Democratic Republic of Congo and declared a UNESCO World Heritage Site in 1979. Upon downloading the app, users are able to choose a gorilla family, learn more about individual members and follow their lives through reports, photographs and videos. (Photo: gorillacd.org)

AppleiPhoneReview.com provides a thorough review of the iGorilla app. The review notes that a mobile device app is a great way for nonprofits to engage with their donors who are on the go. “Although not the first charity-based iPhone app, iGorilla is a good model for savvy organizations that see the increasing relevance of the mobile web.” In addition to engaging with donors, mobile apps provide an opportunity for nonprofits to tell their story and promote operational transparency and financial accountability.

The review also notes a few shortcomings of iGorilla. “What is sorely missing from this app is social media integration. The Gorilla.cd website gives visitors the opportunity to share blog posts, videos and pictures on Facebook and via email, but the iPhone app lacks this social sharing capability. It would also be great to see the park add features to give users more opportunities/reminders to donate. What if I was able to get a pop-up notification each time a post relating to my gorilla family was added? What if blog posts outlined the problem and exactly what materials are needed to fix it, then offered a chance to donate funds for these specific items. This would contribute to the transparency that the park has already cultivated on its website, where people can pitch in to specifically purchase petrol, sacks, and support for gorilla orphans as well as park rangers.” (Photo: Juan Pablo Moreiras/UNESCO)

I invite readers of this blog to share their ideas on how can a nonprofit organization broaden its footprint through mobile apps. What are some of the other organizations using mobile apps?

Iraqi Government Creates YouTube Channel to Increase Engagement to a Larger Audience

In order to promote its message and engage with Iraqis at home and abroad, the Iraqi government launched a dedicated channel on YouTube. In a video message, Iraq's Prime Minister Nuri al-Maliki explains, "The Iraqi government is committed to using this technology to connect to various international communities and to those who follow the issues of Iraq." Mr. Maliki continued, "Iraq today is experiencing great developments, and we have great ambitions to achieve in regard to communicating with people around the world." Mr. Maliki's message about the Iraqi government's latest initiative may be viewed below:

I hope other developing governments follow Iraq’s lead in using the Internet to connect with international investors, nongovernmental organizations, and most importantly, citizens living in-country or abroad. As Hunter Walk, Google's Director of Product Management, wrote on The Official Google Blog regarding Iraq's initiative, "We hope that by launching on YouTube, the Iraqi Government and their citizens will also find it easy to use YouTube to engage in such conversations, and bring their proceedings, policies and ideas to a larger audience around the world." One criticism I have regarding the Iraqigov Channel is the inability to post comments by YouTube viewers. Here is a video message from Eric Schmidt, Google's Chief Executive Officer and Chairman, about Iraq's YouTube initiative:

There is another initiative that is worth discussing regarding Google and Iraq. According to a Embassy of the United States in Iraq press release, "The CEO and Chairman of Google Inc., Eric Schmidt, and members of the Iraq Technology Task Force announced...in Baghdad a project to create a virtual tour of the Iraq National Museum using state of the art Google technology. The project, the first of its kind at any museum, will digitize and electronically catalogue artifacts at the Iraq National Museum, allowing global access to the collection. It is part of an ongoing commitment by U.S. institutions to partner with Iraqis under the Strategic Framework Agreement to help support and showcase Iraq's rich cultural heritage and history."

The press release further says Mr. Schmidt "is the first CEO of one of the world's leading technology companies to visit Iraq; the trip marks Google’s third visit to Iraq to collaborate on U.S. Government-led technology initiatives. This public-private partnership fosters U.S.-Iraq cultural diplomacy and exemplifies twenty-first century statecraft—the U.S. government serving as a convener, and facilitator of initiatives and programs that are driven by the Iraqi people in partnership with private companies. This is the first private-sector delegation to meet with the recently established Iraq Technology Task Force (ITTF), which is a multi-stakeholder body created by Iraqis to build the country’s IT capacity. The delegation's visit demonstrates how public private partnerships are about more than contributing traditional resources, they are also about leveraging expertise itself."

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Palau's President Creates Blog to Promote Transparency

In this blog, I often discuss the need for governments, at all levels, to operate more transparently when it comes to formulating public policy or implementing public projects. I am happy to learn that Johnson Toribiong, President of the Pacific island nation of Palau, launched a blog to promote government transparency. Bernadette Carreon wrote an article for the Marianas Variety, a newspaper based in the Commonwealth of the Northern Mariana Islands, saying "the Belau Blog was established to promote direct access to government information and address misinformation." (Photo of President Toribiong courtesy of the ROP)

In an interview given by President Toribiong, according to Ms. Carreon's article, "the blog contains information regarding the executive branch including laws that needed to [be] explained." The Belau Blog will allow Palauans living outside their native country "to access information about the executive branch" and will offer all readers the opportunity to comment on President Toribiong's activities. Posted on July 29, 2009, President Toribiong's first entry said, "Welcome to the Official Blog of the Republic of Palau. As much as we can, we will publish as much news, executive, orders and such on this Blog. Please feel free to comment on this blog but please keep it polite. Thank you very much and hope you visit the blog often."

I commend President Toribiong's efforts in using technology to promote transparency and, I hope, government accountability. I recommend all nation leaders to follow the President of Palau's lead in using the Internet to engage citizens at home and residing abroad. Using blogs and social media services will allow citizens to become better informed on various issues and engage constituents to help formulate solutions to their nation's most pressing problems.

New Investment Monitoring Platform to Assist Investors in Africa

One of my key frustrations in launching new business ventures in Africa or helping African nations develop foreign direct investment initiatives is having insufficient or inaccurate information when making key business decisions. One of the benefits of the Internet is having easy access to essential information that facilitates the ability to conduct business effectively and transparently. On July 9, 2009, the United Nations Industrial Development Organization (UNIDO) and the African Union Commission announced the launching of a new tool, the Investment Monitoring Platform, designed in partnership with the Microsoft Corporation, that will map investment flows in Africa and offer investors more information for analysis and decision making.

According to UNIDO's press release, "The new Investment Monitoring Platform will provide data and information on the characteristics of foreign and domestic investors, as well as their motivations, actions, perceptions, intentions, and impact." UNIDO further explains, "The data on the platform will be supplied through bi-annual surveys of both foreign and domestic investors conducted in more than 20 African countries by UNIDO." With the goal of covering 22 countries by the end of October, the first surveys will commence on July 23, 2009 in Kenya and Senegal.

In addition to being supported by the African Union Commission, says UNIDO, the Investment Monitoring Platform is "financed by the European Union Commission, the Governments of Austria, Italy, Turkey and South Africa. It is the result of the collaboration between UNIDO and the Investment Promotion Agencies Network (AfrIPANet), established in 2001 and currently comprising more than 40 members throughout Africa. One of its objective is to promote partnerships among investment promotion and industrial development stakeholders at the national and regional levels."

In expressing his support for this innovative initiative, UNIDO Director-General, Kandeh K. Yumkella said, "The information gathered will also allow for a better understanding of the impact of the global financial crisis on investment flows in Africa. It will help Government and national agencies design more effective investment and business policies, promotion strategies and services that respond to investor needs, and formulate viable industrialization strategies for the continent."

There are great investment opportunities throughout Africa, but corruption and the lack of transactional transparency are key barriers that force investors to look at other markets. I hope the Investment Monitoring Platform will deliver the results intended to assist investors in making sound business decisions.

Obama: A Tech President?

Almost a week has passed since Senator Barack Obama was elected as the 44th president of the United States of America. As Mr. Obama begins his transition from senator to president, Americans, and all the world, will be watching closely how he will implement all his changes. One thing is for certain, the president-elect will use technology unlike any preceding president and he is expected to be the first US Tech President ("Obama expected to be first US 'tech President'").

Mr. Obama used non-traditional methods such as the Internet and text messaging to fundraise and organize volunteers, although there are differing opinions as to its effectiveness. Senator John McCain had a well-designed website, but he used more traditional methods of communications ("Tech Weekly: How technology helped win it for Obama"). To many Americans, Mr. Obama appeared more "in touch" with the future and the ability to lead the United States through several difficult issues.

One of the many criticisms of George W. Bush's administration is the lack of transparency in its operations including methods of executive management and process of policy formation. An advantage of technology is the ability to decimate information to a large audience and engage their participation. As we witnessed during eight years of President Bush's tenure, however, technology can be used to restrict accessibility to information. I hope that an Obama White House will use current and yet to be developed technology to engage the populous. Voting is one way for citizen participation in American democracy, but elected leaders need to improve upon engaging their constituents in being a part of the solution to various issues. Technology will help facilitate this engagement and the recent launch of change.gov sponsored by the Obama-Biden Transition Project is a good start.

Similar to using technology to help resolve some of the world's most difficult socioeconomic issues in developing markets, countries like the United States must use technology innovation to help resolve the current economic crisis and improve education for the next generation. Mr. Obama has a monumental task and I wish him the best of luck. However, the president-elect and his incoming administration cannot do it alone and I encourage the White House to use the latest technology to tap into the innovative knowledge Americans possess. Doing so will be a true testament to citizen engagement, which is something that people desire and has never been available until now.