A Liturgy of Loss and Hope

I was supposed to travel to Lake Superior at the end of this month. I’d hoped to visit some of the spots R. B. Roosevelt mentions in Superior Fishing, talk to some people along the way, and see for myself the Eagle Mine, the Humboldt Mill and the haul route from mine to mill.

Then I found out that today the Concerned Clergy of Marquette would be offering a community benediction — “a liturgy of loss and hope,” as they describe it, to “mourn” the changes the new mining has already brought to the area, and to invite people to “recommit to preserving what remains of our beloved land and her people.” (You can find out more about today’s two-part event here.) liturgy

The “quiet reverent time” promised by the benediction superseded what plans I had. I changed my ticket and flew to Marquette yesterday.

On the way here I reflected a little on the idea that rituals of mourning (like funerals) are for the living, not the dead. Mourning, which nowadays we so often do in private, can be a powerful social act. Funerals have stirred rebellions; mourning rites can also give communities a chance to heal and atone.

Today’s liturgy on the Yellow Dog Plains was a quiet reckoning, but a reckoning all the same. People spoke from the heart. There were prayers, poems and songs. A fire burned at the center of the circle. Snow graced the ceremony’s end.

To the Edge of the Gap with Satya Nadella

It’s hard to believe that the people around Microsoft CEO Satya Nadella did not prepare him for a question about the pay gap at the Grace Hopper Celebration of Women in Computing conference, and even harder to believe that they would advise him to tell women to stop asking for a raise and place their “faith,” instead, in “karma.” Nadella must have gone off script, or lost his talking points on the way to Phoenix. He tried to backpedal on Twitter later in the day, but by then the damage was done.

There is a transcript of the mess here. Nadella starts by talking about the inefficiencies of “HR systems” and ends up endorsing a corporate caste system, in which karma determines station. He advises talented women that the arc of Microsoft universe is long, but bends toward justice: they should keep the faith, keep working and just keep quiet about the whole equal pay thing.

Today, he’s repented, in an email to Microsoft employees: “if you think you deserve a raise, just ask for it.” He’s also committed, he says, to closing the pay gap at Microsoft. The trouble is, telling women they should “just ask” for raises may indicate that the CEO has found a formula that will allow him to remove his foot from his mouth, but it isn’t going to solve the problem.

In fact, research by the organization Catalyst — which I’ve written about in another post — shows that while the system may reward men in roughly the way Nadella describes, giving them “the right raises as [they] go along,” it does not so reward women; and when women ask for raises, their requests go unmet. It’s hard to have faith in a system like that.

The whole incident brings me back, of course, to my ongoing interest in the power of asking, which is the power in question here.

“Just ask” sounds like permission; but permission does not necessarily entail power. What’s fascinating about the Catalyst research on what happens when women ask for raises is that it clearly shows that the power of asking is a power we have to confer on others: it’s the power we give the other to make claims (or demands) on us.

We confer that power when we recognize the other’s status as a second person, or — to put it another way — when we recognize in them an authority equal to our own.

Respect that authority, and we are mutually accountable to each other. Disrespect or disregard it, and we deny others the status of persons, make them instruments of our will or means to our ends. We dehumanize them, or fail to acknowledge them as fully human.

Of course, respect of this fundamental order is not something Nadella can institute at Microsoft by tweeting about “bias,” emailing his apologies or by executive fiat. But a good place to start the broader conversation about closing the pay gap (at Microsoft, in the tech industry or throughout the business world) might be to see it, and approach it and address it as a basic power gap that only true respect for persons can bridge.

A Postscript on Weird Timing and Pending Collapse

Since I wrote my last post on Eagle Mine, I’ve been thinking about the thing I most wanted to say and never managed to say. I’d hoped in that post to call attention to the weird timing of Conibear’s announcement, but I couldn’t quite figure out how to do that. The company announced the start of mining operations in the Yellow Dog Plains right in the wake of the People’s Climate March, and during a week when world leaders were gathered at the UN to discuss the global climate crisis and acknowledge the fragile condition of the biosphere.

The Eagle announcement never takes any of that into account. It makes some predictable noises about environmental responsibility. You don’t have to listen very hard to hear the dissonance.

Hands up during the 12:58 moment of silence at the People's Climate March. Just before this, a group led a chant that went something like: "Keep the tar sands in the ground / Close the mines and shut them down." Other than that I didn't hear too much talk about mining at the march.

Hands up during the 12:58 moment of silence at the People’s Climate March. Just before this, a group led a chant that went something like: “Keep the tar sands in the ground / Close the mines and shut them down.” Other than that I didn’t hear too much talk about mining at the march.

That this mining operation poses an immediate threat to the Yellow Dog watershed hardly needs saying. As I mentioned in my last post, Lundin Mining cannot point to a nickel and copper mining operation in the U.S. or Canada that has not polluted groundwater or surrounding waters, and there is no reason to believe that Eagle will be the magical exception — despite the company’s claims that the water they are discharging is drinkable. No one who makes that statement should be taken seriously, let alone believed, unless he follows it with a nice big glass of minewater, and fetches one for the kids while he’s at it.

Eagle is just the start. The bigger mining, leasing and exploration boom all around Lake Superior only magnifies the threat. One of the busiest mining operations in the world is about to be staged around one of the largest freshwater lakes in the world. The timing couldn’t be worse. Freshwater ecosystems are under greater pressure than ever before. Just this week, the Living Planet Index reported a 76 percent decline in freshwater species since 1970. That alarming statistic is one very clear indication of pending environmental collapse, and reason enough to protect Lake Superior from any further encroachments by risky mining operations.

It’s disconcerting, too, that the new mining around Lake Superior was spurred, in no small part, by Chinese growth and urbanization, which put a new premium on copper and nickel; and of course urbanization in China — which starts with pouring cement and raising stainless steel — will only aggravate emissions, further compromise China’s freshwater resources, and hasten environmental collapse. It is hard to see how this can end well, and it’s difficult for me to understand why anyone would pretend it is sustainable.

The weirdest twist in all this may be that this new mining operation goes into production just as China appears to be slowing down, after two decades of heady growth. As a result, “money managers are bearish on copper,” reports Bloomberg’s Luzi Ann Javier in a review of commodity ETFs; and “global inventories of nickel tracked by the London Metal Exchange are at an all-time high.” There is a glut. The warehouses are full. Right now, at least, it looks as if the rush is over.

Does Eagle Mine Have Social License to Operate?

Lundin Mining CEO Paul Conibear hit all the right notes when he announced last week that Eagle Mine is now in production. Completed ahead of schedule and on budget, the new nickel and copper mine on Michigan’s Upper Peninsula marks “a tremendous achievement”:

The Eagle Mine is a significant new, high-quality, low-cost mine, that has been constructed to the highest of safety, environmental and social responsibility standards.

Our team has done an exemplary job in bringing the mine into production, and we look forward to the operation becoming a significant cash flow generator for the Company and a significant contributor to the local and regional economy. We would like to thank all employees and contractors for their dedication and excellent work in addition to all local stakeholders for their ongoing support.

Analysts and investors seemed pleased as well, and happy to take Conibear at his word. The company’s share price, which had been trending downward, ticked up the day after the announcement. Lundin Mining is “hitting the ground running,” declared one enthusiast, who goes by the pseudonym The Investment Doctor and published his report right on the heels of the company’s press release; “and it’s rare to see a large scale project being completed ahead of schedule. The production is starting just in time to benefit from a strong nickel price.”

Those inclined to follow the Doctor’s advice may wish to consider that his analysis focuses solely on nickel production, and makes no mention of what’s happened to copper prices lately: they’ve plummeted (though, to be fair, they now seem to be rebounding slightly).

In any case, the whole picture may be a little more complicated than the mining company and its boosters would have us believe. Eagle will count as “a significant contributor to the local and regional economy” only if you overlook the effect the mining operation is bound to have on tourism (which currently makes up around 20 percent of the Marquette area’s economy) and the many other detrimental and distorting effects mining will have on the economic life of the Upper Peninsula. Economist Thomas M. Power has run these down. For one thing, he observes, mining operations can hinder entrepreneurship and innovation, and drive away creative professionals and knowledge workers. They prefer not to live around a mine, or on the haul route from mine to mill; nowadays even the miners would rather commute. It remains unclear, too, how the region will benefit in the long term, after the accessible ore runs out and Eagle shuts down.

So one has the feeling that the tepid term “contributor” in Conibear’s statement about the broad economic benefits of the new mining operation was chosen with care: it positions the mining company as a social benefactor, but it reserves any talk of wealth generation for the “flow” of cash into the company coffers. Some will trickle down: the contribution Eagle makes to the economy will be “significant”; but even saying that leaves wiggle room to back away from stronger and more specific language about job creation that was used to promote the project in the first place. The main object here is to reassure Lundin’s creditors.

To bring the bigger picture into focus, we also have to take into account the social costs and environmental risks associated with this new mining operation. When Conibear says that Eagle Mine was built to “the highest of…standards,” I guess he’s talking about mining industry standards. At least some environmental and community groups have different and even higher standards, and they are not satisfied with DEQ enforcement to date or with the Community Environmental Monitoring Program established by Rio Tinto and the non-profit Superior Watershed Partnership (for which Lundin Mining will pay $300,000 annually). For local stakeholders like the Keweenaw Bay Indian Community, who opted out of the Superior Watershed Partnership deal, the new mine falls short on many important counts. Together with the National Wildlife Federation, the Huron Mountain Club and the Yellow Dog Watershed Preserve, the KBIC sued, only to lose in the Michigan Court of Appeals in August of this year; but that loss hardly means the concerns that motivated the twelve-year legal challenge to the mine were without merit.

The stark fact remains that like Rio Tinto before them, Lundin Mining cannot point to a single example of copper and nickel mining in the United States or Canada that did not pollute surrounding waters or groundwater. Questions raised by Jack Parker about the geological stress field of the Yellow Dog Plains — and the risk of “sudden collapse” he alleges was covered up by regulatory collusion — continue to be “studiously ignored.” Haul road construction has been mired in controversy: it took corporate wrangling of the County Road Commission and exercise of eminent domain to push through the the current route; and that road work has already violated the Natural Resources and Environmental Protection Act.

The point is not to multiply examples or revisit all the controversies that still surround Eagle Mine. Now that the mine is in operation, some of these issues may even be “moot,” as a writer in Crains suggested after the decision by the Court of Appeals in August. But taken together, they raise the question whether Lundin Mining has done enough (since purchasing the Eagle operation from from Rio Tinto) to earn the trust, let alone gain the support, of local stakeholders who were not already in the mining camp or the mining company’s pocket. So far, Lundin has demonstrated that it can bulldoze ahead and get stuff done. Its claim to social license remains unsettled.

A Fifth Note on the First CEO: The Postwar Fad

We don’t usually think of corporate boardrooms as places where fads start or take hold. But that’s probably the the best way to account for the adoption of the CEO title by American corporations in the postwar period. Or at least that’s the view urged in this 1999 paper by Allison and Potts, which a reader shared in a comment on my post about the postwar provenance of the term CEO: from the mid 1950s to the mid 1970s, the adoption of the Chief Executive Officer title spread, primarily through “board interlocks” — or through individuals serving on multiple corporate boards.

Allison and Potts present the title’s diffusion through corporate networks as a “no brainer,” “an innovation largely without consequence to adopters.” It was a case, they say, of “contact-only diffusion” or “diffusion with contagion,” in which no serious choices or business decisions had to be made; the title may have helped clarify the difference between President and Chairman, but for the companies Allison and Potts study there was no “non-trivial economic benefit or cost” involved. Companies adopted the title Chief Executive Officer largely because they were emulating other companies: “diffusion of the CEO title was strictly mimetic, a true fad.”

cumulativeCEO
Everybody was doing it. Container Corporation of America started the trend in the late 1940s: why, Allison and Potts don’t explain, but I hope to make some sense of that at some point in the future; it’s intriguing, to say the least, that the company led by Walter Paepcke — Aspen booster, patron of the arts, and promoter of big ideas — led the way. In 1955, CCA was the only one of the largest 200 industrial companies in the United States that had a Chief Executive Officer. By 1975, all but one of the bunch had adopted the title.

CEO Titles

The fad takes hold in four stages: an early period, from 1955-1961;1962-1965, when adoption rates climb dramatically; a late middle period, from 66-71; and a final period where we see adoption rates drop off, mainly due to the remaining number of small adopters.

Though Allison and Potts don’t distinguish the adoption of the Chief Executive Officer title from the use of the acronym CEO, it’s in that late middle period, which they call the “inflection point” of the fad, where we start to see the first traces of the acronym “CEO” in the Harvard Business Review and other business publications. Shareholder value theory makes its debut in 1970. By the time the fad has run its course, in 1976, Jensen and Meckling have published their theory of the firm: the CEO has been identified as the primary “agent” of the firm’s success. He has also begun to enjoy unprecedented political influence, social prestige and cultural celebrity. What began as a boardroom fad has produced a new icon of American power.

Mine? What Mine?

Haul road construction for Eagle Mine has already polluted the Salmon Trout River, but unless you’ve been following the Eagle Mine story closely you wouldn’t know that after reading in the local paper about this minor disaster: a road crew’s accidental “exposure” — or rupture — of a perched groundwater seep. “Dirty Roadside Runoff,” by John Pepin, a Marquette Mining Journal staff writer, never once mentions Eagle Mine or Eagle’s parent company, Lundin Mining. Pepin is scrupulous at least in this regard: he keeps the mining company clean.

(The Mining Journal is available online to subscribers only, but you can read it on a phone or tablet if you download the paper’s free app).

The front page item sidesteps any mention of Eagle, laying the “unlawful discharge of sediment and turbid water to a wetland ravine” — which violates the Natural Resources and Environmental Protection Act — at the feet of the Marquette County Road Commission. The Michigan DEQ sent a violation notice directly to the Road Commission on August 4th; to date, so far as I can tell, Lundin Mining and Eagle Mine were not put on notice either by the DEQ or the EPA. Nor, it seems, will the local press hold the mining company accountable. Instead, the Journal seems to have taken pains to keep the company’s name out of the dirt, and keep the reading public in denial. (Those looking for a more honest and more informative account will find it here, on the Yellow Dog Watershed Preserve’s site).

Yellow Dog Watershed Preserve's site features this photo -- data August 6th -- and other photos of the perched seep's destruction.

Yellow Dog Watershed Preserve’s site features this photo — dated August 6th — and other photos of the perched seep’s destruction.

Let’s be clear. The Road Commission has undertaken this “upgrade” of County Road AAA for the mining company; there is no other reason for the work, and no other reason to advertise the work as an upgrade except to pretend that the Eagle Mine haul route will benefit the public in some way. The truth could have been stated in a single sentence: Lundin will be the primary if not the sole beneficiary of the road work on the AAA.

Pepin’s article never comes close to stating that one simple fact, and never even hints at the controversy over the haul route that led to this disaster. But this is about more than shoddy journalism or what might even be a case of corporate capture at the editorial offices of the Mining Journal.

As Lundin prepares to bring Eagle online, and as the mining boom proceeds all around Lake Superior, clear lines of accountability are critical — and need to be carefully drawn. Big miners continue to “de-diversify” and juniors are trying to scale up: in the turmoil, we’ve seen mine properties around Lake Superior flipped (e.g., Copperwood, or Eagle itself); others, like Twin Metals, thrown into limbo; and who can tell what effects Lundin’s big South American acquisition of Freeport’s Candelaria (in partnership with Franco-Nevada) will have in this northern district?

In a situation like this, where ownership stakes are changing hands and companies are exerting undue influence over public officials, accountability can get blurry and responsibilities neglected. The last thing we need — when the future of Lake Superior itself is at stake — is a compliant and servile press adding to the confusion.

Love and Plastic

loveorplastic

Someone tossed, or the wind blew, a plastic shopping bag into Grand Army Plaza, and the bag came to rest at the feet of this sandwich board. Since then, the wind has probably carried the bag elsewhere, to other streets or into the trees, where lots of bags like this one get stuck.

Wherever it may have gone, this bag will outlast by far whatever gathering of love and soul the sign in Grand Army Plaza advertised.

Paul reassures us in 1 Corinthians that love will endure — that it will bear the weight of the world and outlast all things, πάντα ὑπομένει; but plastic is perdurable, and takes an awfully long time to disappear. Long after those who may have gathered here are gone, this bag will remain.

A Fourth Note on the First CEO: The Postwar Provenance

A reader of my posts about the acronym CEO suggests I have a look at the organizational chart for the Manhattan Project to gain a better appreciation for the “American and military” provenance of the term. “I believe during a period of intense collaboration between the military and private sector after WWII,” he writes, “it somehow permeated to corporate use.”

I have wondered about that “somehow,” and wondered, too, if I could be a little more specific about the course this permeation took. Is the acronym CEO — and the idea of the CEO — an outgrowth of the military industrial complex? Does the rise of the CEO to a position of cultural celebrity in the 1970s and 1980s tell us something (we don’t already know) about how the postwar environment shaped American ideas of command, power and leadership, in the private sector and in the public sector?

These are questions worth asking, I think, though I’m not sure the organizational chart for the Manhattan Project is the best place to start. Or at least that chart doesn’t include the term “CEO.” There is an “OCE” — an Office of the Chief of Engineers; the role of “Executive Officer” was assigned to J.B. Lampert. That title was also used in the appointment of Leslie R. Groves (of Now It Can Be Told fame), who in the org chart has the title of Commanding General.

The larger point here still merits consideration: just follow the careers of the engineers and military commanders identified in the Manhattan Project org chart, consider the military industrial development of the 1950s and the American business environment in which COs and XOs and members of the OCE worked closely with the private sector, and in many cases left the military to join the private sector: it’s easy to see how a new vocabulary of command might have emerged during that period, and eventually found its way into ordinary usage.

Still, I want specifics and cases I can point to. To that end, I’ve written to the company historian at General Electric, to ask whether the term CEO was in general use before the era of Jack Welch (who for a variety of reasons — not least for his cultural celebrity — probably deserves the title “The First CEO”). I’m looking for some examples of usage from the days of Ralph J. Cordiner (Chief Executive Officer from 1950-1963), Fred J. Borch (Chief Executive Officer 1963-1972) or Reginald H. Jones, who served from 1972-1981.

ReaganProgressGE seems like an obvious place to start looking. The company that brought us both Jack Welch and Ronald Reagan was, during the war and then in the postwar period, at the very center of military-industrial development; and big American companies like General Electric were never just manufacturing products — or even “progress,” which Reagan used to tout on TV as GE’s “most important product.” They were also designing models of power that persist to this day.

The Breach at Mount Polley Represents a Failure of Governance

The Imperial Metals Corporation’s Board of Directors claims “ultimate responsibility” for the company and its business operations, but we have yet to learn exactly how the Board will exercise responsibility after the Mount Polley disaster. It’s not even clear the Board is capable of responding to the spill with anything but the public displays of emotion and concern we’ve already seen, weak assurances that the disaster has been “stabilized” and vague promises to do better next time. None of that amounts to taking responsibility.

Deregulation, lax regulation and staffing cutbacks on the government side are being blamed for the breach of the tailings pond. There are charges of collusion: “The government isn’t inspecting the mines, and the mining companies know it,” says consultant and advocate Glenda Ferris. But the breach at Mount Polley also represents a failure of internal or corporate governance at Imperial Metals: the board does not appear qualified to deal with the risks the mining company’s operations actually entail.

The Mount Polley breach has shown just how big those risks are, and how extensive are the responsibilities they carry. Imperial’s operations have created an environmental catastrophe (in the words of Phil Owens, Professor at University of Northern British Columbia). The last assessment I saw reported that Imperial Metals has released over 10 million cubic meters of water and 4.5 million cubic meters of toxic waste into surrounding rivers and waterways. The sudden rush of toxic waters was so powerful it took down trees in its wake.

There are important human rights considerations here as well, now that Imperial has compromised access to clean water throughout the region for who knows how long. Reassurances from Imperial Metals president Brian Kynoch that the water “in our tailings” is “very close to drinking water quality” are an insult to the intelligence, and make a mockery of serious human rights claims.

It’s not a question whether the mining company is a “bad actor,” or whether it’s “unfair” to portray them that way, as British Columbia energy minister Bill Bennett complained earlier today. It‘s a question of competence: who’s seated at the boardroom table before anything like this happens, and whether they are able to meet the serious responsibilities that go along with running a mining operation.

No one on the Imperials Metal board has environmental or human rights credentials. The company’s sulfide mining operations — and those of any mining company — require people with both. They should have a boardroom seat as well as a real say in how business gets done and how to mitigate mining’s risks. Until then, talking about “ultimate responsibility” is just guff.

 

Has Management Become Significantly More Incompetent?

I don’t really have a dog in the Lepore-Christensen fight. Lepore’s strongest point, that Christensen’s theory of “disruption” is both a flawed theory of history and itself an artifact of history, seems to have gotten lost in the fray. Lepore overreached in her New Yorker piece, and now Christensen’s adherents and acolytes have come out in full force. There hasn’t been much room for careful discussion of Christensen’s theory as a discourse or artifact of post-industrial social collapse — which is, I suppose, what interests me most about it.

Still, I’m following the controversy, and yesterday, John Hagel offered a welcome, level-headed contribution to the discussion. Here, I simply want to paraphrase the comment I left on his post, because it touches on some themes I’ve written about in connection with the rise of the CEO (notably here, here and here.)

Hagel wants to move the discussion of Lepore-Christensen away from intramural antagonism and the clash of personalities and disciplines to look at “fundamental and systemic trends.” Clearly, he says, “something very profound is happening — and it’s largely escaped notice.” One measure of this bigger shift: “the topple rate at which US public companies in the top quartile of return on assets performance fall out of… leadership position.” That rate, he notes, increased 40 percent between 1965 and 2012.

There are lots of possible explanations for that wild increase. It seems safe to say there must be some great historical forces at work. Otherwise, Hagel writes, “one would have to believe that management is becoming significantly more incompetent over time”; and I guess nobody would seriously believe that. Here, at least, we’re meant to pass over the thought with a knowing smile: of course management has not become significantly more incompetent over time. Right?

I didn’t seriously entertain the thought of growing managerial incompetence again until I arrived at Hagel’s concluding paragraph. There, he offers a few suggestions on how incumbent players might “more effectively respond to these disruptive approaches (short of resorting to regulation and other public policy measures).” One suggestion is that management find ways to take the long view: incumbent players need “to find ways to expand the horizons of their leadership team beyond the next quarter or next year.” Myopia is always dangerous, and more dangerous now than ever before.

At the same time, short-sighted management has a history, and as I’ve suggested in my posts on the rise of the CEO, the most interesting chapter of that history starts right around the time the topple rate increases, in the 60s and 70s.

Around 1965, as profit rates in manufacturing fall and as the postwar boom yields to post-industrial reality, new ideas of management take hold. One of them is what Jack Welch once called “the dumbest idea in the world”: the doctrine of shareholder value. As this doctrine becomes boardroom religion, we see the rise of the “CEO” as corporate savior (in Rakesh Khurana’s phrase) and cultural celebrity.

Short-termism and, in some cases, risky financial manipulation become the name of the game. Compensation packages reinforce bad habits. Strategists and management consultants take their cues from the C-Suite, and tailor their offerings accordingly.

I’m not saying the rise of the CEO, the doctrine of shareholder value, or the promise of sustainable competitive advantage in the 70s and 80s explain the increase in the topple rate, but clearly they should be taken into account here; and we should give growing managerial incompetence its due. Bad ideas about what counts as business success — and misguided actions by business (and political) leaders — certainly make businesses more vulnerable to the kind of disruption that interests Hagel: the loss of leadership position.

Big scary historical forces may be overtaking us, but if competence in the face of those forces is what we’re after, then failed ideas of corporate purpose and failed models of corporate leadership ought to be called out, questioned, and radically altered or just dropped.