Part One of Two
The TakeAway: Advocates for corporate responsibility need to address the wider context of global politics and power, particularly within conflict zones where human rights abuses are most pronounced.
So we got Osama bin Laden. Now what?
This question, raised by pundits and policy makers, generally relates to using military power to protect and advance American interests. Overall, many reactions to bin Laden’s death – and our involvement with NATO forces protecting Libyans from Col. Muammar el-Qaddafi’s deadly wrath, not to mention continued unrest in Egypt, Syria, and other parts of the Middle East – stem from a misunderstanding of the context of power in the 21st century, and the fact that American influence on foreign policy no longer is restricted to the use of military force, or “hard” power.
Advancing democracy, human rights, and civil society involves the use of “contextual intelligence” in applying what Joseph S. Nye, Jr., a renowned scholar of politics and international relations, calls “smart power”: that is, combining hard (e.g., coercive military or economic force) and soft (e.g., persuasion and attraction) power into effective strategies in varying contexts.
This has huge implications for business and human rights—which are about to be elevated with next month’s expected U.N. ratification of the Guiding Principles for Business and Human Rights, issued in March. The Guiding Principles cap a six-year process undertaken at the request of the U.N. Secretary-General Kofi Annan in 2005. They’re based on the “Protect, Respect and Remedy” policy framework proposed by the Secretary-General’s Special Representative John Ruggie to the Human Rights Council, which endorsed it in 2008. The Policy Framework consists of three pillars:
- the state’s duty to Protect against human rights abuses by third parties, including business;
- the corporate responsibility to Respect human rights, which involves a process of due diligence to assure that they do not interfere or infringe upon the rights of others; and
- access to both judicial and non-judicial Remedy, which includes not just the courts but grievance mechanisms at the local level.
The Guiding Principles emphasize “human rights due diligence”, particularly in zones of conflict—those places where the “worst of the worst corporate related human rights abuses take place,” Ruggie says, where there’s fighting over territory, or over the government itself. “This is the type of context that attracts illicit enterprises, who treat them as lawless zones. But even well-recognized firms can get drawn into involvement in human rights abuses, including complicity in forced labor and genocide.” In a recent Harvard Kennedy School video, Ruggie explains the costs of conflict and “stakeholder related risk” to companies, which, in the extractive industries, can run into billions of dollars. Part Two of this two-part Post will delve into the specifics of the Guiding Principles and what lies ahead after their ratification.
But first, let’s place this shift in thinking about corporations and human rights – and its expression by other nonstate actors (such as institutional investors, advocacy groups, financial analysts, law firms, the media, and so on) – within the larger context of world politics and the global economy, which have undergone great change over the past few months, as we have seen.
Changing Power Frameworks and Organizational Requirements
Today, power in the world is distributed in a form resembling a complex, three-dimensional chess game, says Nye, a former Assistant Defense Secretary for International Security Affairs and Harvard Kennedy School dean emeritus. The top chess board represents military power and is largely unipolar, with the US dominating. The middle chess board represents economic power and is largely multipolar, with the US, Europe, Japan, and China as major players, but others (Brazil, India, Russia) gaining in importance. The bottom chessboard consists of transnational relations that cross borders outside of government control, and includes nonstate actors “as diverse as bankers electronically transferring sums larger than most national budgets at one extreme, and terrorists transferring weapons or hackers threatening cybersecurity at the other,” Nye writes in his new book, The Future of Power.
Companies occupy this bottom chessboard of nonstate actors, their efforts now turbocharged by technology and the advent of social media. “The barriers to entry into world politics have been lowered,” Nye says, “and nonstate actors crowd the stage….This is a new world politics for which we have less experience.”
That’s why it’s important to exercise what he calls “smart power”—which fits the corporate responsibility agenda of environmental, social, and governance concerns. “Smart power is the combination of the hard power of coercion and payment with the soft power of persuasion and attractions,” he says. Smart power involves networks and connectedness, which generate “power to accomplish goals that involves power with others.”
Smart power also involves contextual intelligence, which is “the ability to understand an evolving environment and capitalize on trends.” Nye first used the term “contextual intelligence” in his 2008 book, The Powers to Lead. Contextual intelligence, he wrote then, is “an intuitive diagnostic skill that helps a leader align tactics with objectives to create smart strategies in various situations. Others have called it judgment or wisdom.”
The trick is converting these power resources into strategies for desired outcomes.
If you put together smart power and contextual intelligence, you get what Nye’s Kennedy School colleague Ronald Heifetz calls the practice of “adaptive leadership”, another hallmark of progressive corporate responsibility development—and competitive success. Adaptive leadership anchors the various dimensions of power and strategies to a coherent set of core values, recognizing what’s worth keeping and what’s worth changing. Like smart power and contextual intelligence, adaptive leadership is a way of thinking rather than a process, and relies on continued curiosity and intelligence about the changing environment. It also relies on innovation and improvisation, with pervasive experimentation—including a willingness to fail and accept losses. When harnessed to organizational learning and change, the practice of adaptive leadership – like the practice of smart power – helps foster sustainable prosperity, for companies and stakeholders alike.
Something to keep in mind when viewing images from the Middle East of their power struggles, and people’s desire for freedom and a decent life.