TIME Innovation

Five Best Ideas of the Day: August 29

1. We must confront the vast gulf between white and black America if we want to secure racial justice after Ferguson.

By the Editors of the Nation

2. As ISIS recruits more western acolytes, it’s clear military might alone can’t defeat it. We must overcome radical Islam on the battleground of ideas.

By Maajid Nawaz in the Catholic Herald

3. Kids spend hours playing the game Minecraft. Now they can learn to code while doing it.

By Klint Finley in Wired

4. One powerful way to raise the quality of America’s workforce: Make community colleges free.

By the Editors of Scientific American

5. Restrictions on where sex offenders can live after prison is pure politics. They do nothing to prevent future offenses.

By Jesse Singal in New York Magazine’s Science of Us

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Internet

The Internet As a Human Right

An audacious idea whose time has come

Kosta Grammatis likes to think big.

In 2011, around the time of the Arab Spring, Grammatis grew frustrated at the ways governments can pull the plug on people’s Internet access as a form of social and political control. He wanted to figure out how to circumvent political and physical obstacles and bring digital media to anywhere it was otherwise unavailable. He and some colleagues set out to buy a satellite from a bankrupt company and use it to beam connectivity to places like Tunisia. That plan turned out to be harder to realize than to it was to imagine.

But Grammatis, a web evangelist, is a true believer in the good things that can happen in a more interconnected world. He recalibrated his thinking to rely less on expensive orbital technology and more on working with established communications and financial institutions.

But the idea remains big. His new startup, Oluvus — i.e., “all of us” — remains focused on wiring the entire planet and bringing free Internet to the five billion people who do not have access.

In the video above, Grammatis tells the story of how he got where he is now and why this time, the odds of success look good.

 

TIME The Drucker Difference

Getting Past the Great Ideological Divide in Business Today

In 1946, as unionized workers in America’s steel mills, coalfields, rail yards, auto plants and electrical equipment factories crippled the economy by launching a wave of strikes, Peter Drucker urged the two sides in the great struggle to find some way to get past their deep differences.

“What we need is not an ideology,” he wrote, “but a science—a new science of industrial peace.”

The same might well be said of the defining divide in today’s business world: those who hold that “maximizing shareholder value” is a corporation’s primary mission versus those who believe that companies have an obligation to provide benefit to a multitude of stakeholders.

That this is a clash being waged by individuals who cling to their own dogma and tend to talk right past one another is underscored by a study being released today from the Aspen Institute’s Business and Society Program.

“Often,” says Miguel Padró, an Aspen program manager, “there’s more ideology than pure logic at play here.”

To better understand this dynamic—as well as its myriad nuances, which suggest where common ground may lie—Aspen commissioned the Keller Fay Group, a marketing research firm, to conduct 28 one-hour interviews with corporate executives, investors and scholars about the purpose of the corporation. The study doesn’t identify who said what, but it does list the participants, which included folks from PepsiCo, Kroger, Eli Lilly, the Ontario Teachers’ Pension Plan, BlackRock, Generation Investment Management, Northwestern University, MIT and Harvard.

Many of the views expressed were stark. “Societies that don’t have shareholder value as a goal never succeed,” said one of the interviewees, who added that “the old Soviet Union . . . was the ultimate stakeholder society.” From the other end of the spectrum came this: “Corporations serve society rather than the other way around. . . . To the extent there’s a single mission, it would be a social one. But really, when you unpack that a little bit, you’re talking about a lot of different missions that affect the wellbeing of a range of stakeholders.”

Interestingly, Drucker had problems with each of these positions, at least in their most extreme forms. It was in the 1950s, he noted, that General Electric CEO Ralph Cordiner and some of his peers began to preach “that senior executives were responsible for managing the enterprise ‘in the best-balanced interest of shareholders, customers, employees, suppliers, and plant community cities.’ That is, what we now call stakeholders.”

The trouble was that “Cordiner’s generation and its executive successors did not define what performance and results produce the best balance, nor did they develop any kind of accountability,” Drucker explained. At the same time, he wrote, “boards of directors . . . became increasingly impotent and increasingly rubber stamps for a company’s top management.” And any organization is bound to deteriorate “into mediocrity and malperformance if it is not clearly accountable for results and not clearly accountable to someone.”

By the mid-1970s, this failure had spurred the rise of a new philosophy: putting shareholders first. “It sounds much less noble than Cordiner’s assertion of the ‘best-balanced interest,’ but it also sounds much more realistic,” Drucker observed in a 1991 essay for Harvard Business Review. Yet this, too, had a fatal flaw: “For most people,” Drucker pointed out, “‘maximizing shareholder value’ means a higher share price within six months or a year—certainly not much longer.”

As I’ve written, this has led to all kinds of misguided corporate decisions that, while enabling executive pay to bloat, have done serious damage to both company and society in the long run.

Which brings us to where we are today: one camp pushing a model that didn’t work terribly well decades ago, and the other pushing a model that has degenerated into what McKinsey & Co.’s Dominic Barton disdainfully describes as “quarterly capitalism.”

This would be utterly depressing, except that the Aspen study also contains some glimmers of promise. Notably, more than half of the respondents either strongly or somewhat strongly agreed that the primary purpose of the corporation is to serve customers’ interests—an idea that has been advanced by the University of Toronto’s Roger Martin as ultimately the best means to please shareholders themselves.

“To create shareholder value,” Martin has written, “you should instead aim to maximize customer satisfaction. In other words—and nobody should be surprised by this—Peter Drucker had it right when he said that the primary purpose of a business is to acquire and keep customers.”

Beyond that, according to Aspen, greater accountability for corporate management was “a central concern” among those interviewed, while “long-term value creation appears to be a unifying goal.” Indeed, as Keller Fay put it, “this may be the most surprising—and gratifying—outcome of the study: Some of the most vehement criticisms of short-term decision making emanated from the enthusiastic shareholder-value advocates.”

Can we really shift to a customer-oriented, long-term-focused business culture undergirded by adequate accountability? Not easily. But launching an in-depth dialogue on the topic, as Aspen has done, is an important step toward the way that Drucker wanted companies to behave: “Unlike Cordiner, they do not ‘balance’ anything,” he wrote. “They maximize.” But they do not attempt to maximize shareholder value. Instead, “they maximize the wealth-producing capacity of the enterprise.”

“It is this objective,” Drucker concluded, “that integrates short-term and long-term results and that ties the operational dimensions of business performance—market standing, innovation, productivity and people and their development—with financial needs and financial results.”

All of which seems a lot more like science than ideology to me.

****
A final word: “Everything human beings do,” Drucker wrote, “obsoletes sooner or later.” It is with this in mind, and with bittersweet feelings, that this marks my last “Drucker Difference” column. After more than six and a half years of tying Peter Drucker’s timeless insights to current events—first at BusinessWeek, then at Forbes and now at Time—the moment has come to turn my attention to other priorities and other writing. But don’t be fooled: This shouldn’t be read as a sign that Drucker’s wisdom is no longer relevant. Quite the contrary. So, please, take part in the continuing conversation @DruckerInst. I look forward to seeing you there.

TIME social good

Watch: How Haute Couture Can Use the Marketplace for Social Good

Combining a social agenda with good business produces beautiful results

What happens when a social activist and a fashion-industry executive put their heads together in order to create social good? Maiyet, a New York-based luxury fashion brand working with local artisans in the developing world, aims to find out.

Co-founder Paul van Zyl, who came of age during the fight against apartheid in South Africa, believes the firm’s mission is to make sure that “people at the bottom of the pyramid can lead dignified lives.”

His business partner, Kristy Caylor, a career fashion executive, is troubled by the fact that consumers can buy a “one dollar t-shirt that was made half way across the globe and assume that people’s human rights have been respected and that people are being paid properly.”

Rather than rail against injustice, however, the pair set out to change the conversation among the people at the top of the industry by finding people with world-class skills in local markets without access to design direction or infrastructure and work with them to build a brand that give expression to their “raw talent” while at the same time succeeds commercially.

Judging from the response they got at Paris Fashion Week last month, they are off to a good start.

TIME

Watch: How Scientists Plan To Bring Extinct Species Back To Life

Resurrecting long-dead species of animals, or 'de-extinction', will not be a fantasy for much longer. But how is it possible?

Conservationists and scientists have a saying, “extinction is forever.” But soon biologists will be able to clone long-gone animals, in the hopes of redefining that axiom to “DE-extinction is forever.”

TIME talked with Stewart Brand, president of Revive & Restore, about the technology that may soon allow scientists to bring back extinct species using the DNA found in museum fossils.

In the video above, researchers discuss the process of bringing extinct species like the passenger pigeons back to life.

Your browser, Internet Explorer 8 or below, is out of date. It has known security flaws and may not display all features of this and other websites.

Learn how to update your browser