Ralph Nader says these CEOs got it right — ethically
Ralph Nader says these CEOs got it right — ethically
For more than half a century, Ralph Nader could be considered America’s consumer advocate in chief. He was an instrumental force behind the first set of safety standards for motor vehicles, the Clean Water Act, the Whistleblower Protection Act and much more.
A presidential candidate more than once, he’s spent his career challenging the abuse of corporate power. So his new book comes as something of a surprise. In “The Rebellious CEO: 12 Leaders Who Did It Right,” Nader tells the stories of chief executive officers who have been forces for good.
Nader discussed the contributions of these business leaders with “Marketplace Morning Report” host David Brancaccio. The following is an edited transcript of their conversation.
David Brancaccio: What’s gotten into you, sir? Being nice to CEOs — are you mellowing?
Ralph Nader: Well, after a lot of years going after the big CEOs for bad behavior, I thought we needed some comparative yardsticks. Because if we don’t have comparisons and contrasts by CEOs who got it right, it’s hard to evaluate the CEOs who are not getting it right. Because they always justify everything they’re doing by saying, “We’re just responding to market demand.” Over the years, I’ve got to know and learn about 12 CEOs, in a whole variety of businesses, who did it right.
Brancaccio: You have some very big, top-of-mind names among your list of 12: Yvon Chouinard, the Patagonia guy. But among the 12 you feature are some, I would say, non-household names: Jeno Paulucci, from Minnesota. This guy founded 70 companies: Chun King Foods, some will remember. Jeno’s Pizza Rolls, many will remember. What should the world learn from Mr. Paulucci’s example?
Nader: Well, he grew up real poor in the Iron Range of Minnesota. And he described conditions for the miners beyond belief, and he never forgot where he came from. So, as he became more and more successful — he started out as a peddler. In fact, he said almost all of us are peddlers, are trying to sell something. And that was the title of his autobiography. And he was extremely successful as a salesman. And then he said, “Well, I’m gonna go out on my own.” And he started one company after another. But he was tremendously outspoken. He wouldn’t tolerate suppliers of packaging, for example, that messed up. He’d go right to the CEO to get the materials shaped up. He insisted on labor unions in his company, and he championed the cause of labor because, again, he never forgot where he came from and how horrible the conditions were in the workplace for his family.
Brancaccio: It’s an interesting approach, right? Because the CEO would have power to provide the benefits and compensation that might make a union unnecessary. Yet he still thought the structure of unions was important for his employees.
Nader: He had a sense of, “Well, I’m the CEO, and I come from a poor family, and I’m gonna respect my workers.” But he also knew that that made the workers too dependent on him and whoever was in the executive suite in his company. He wanted the workers to be assertive, which was something he did in company after company after company. Never had a strike — he was very proud of that.
Brancaccio: Lots of interesting people on the list here in the book: Anita Roddick from the Body Shop. We interviewed her over the years. Herb Kelleher, that character, founder of Southwest Airlines. I mean, he was a character, right?
Nader: He was a lawyer, and he looked at the airline industry as being very stodgy. So he said, “Hey, I’m going to start the airline. I don’t know a thing about airlines, but I know how to hire people who do.” And he insisted on reversing the business model. So when Southwest was successful, he was the lowest-paid executive among all the big airlines — United Airlines, Delta. And he was paid about $750,000 a year, and he was making more money than any of them for the company, more profit than any of them.
And when I asked him why, he said, “Because I started with my people” — he would never say “associates” or “employees.” “If you treat our people well, on the airlines and at the counter, they will treat the customers well. And the customers will fly on Southwest Airlines more. And that will make the shareholders happy.” So that’s what I mean by reversing the business model.
Brancaccio: Now, we’re speaking at a time that inflation is coming off its highs, but so many U.S. households are living paycheck to paycheck — 58%, using the last count I saw. Now, you feature some CEOs in the book — thinking of John Bogle of Vanguard [Group] and the Price Club boss, his name is Sol Price, actual name. These are people who worked to keep prices down for customers, but possibly that meant they left profits on the table. In other words, they could have made more profit, but that’s not how they saw their mission.
Nader: Well, when it comes to John Bogle, who’s really a great man in the history of corporations in our country, he broke the model of the hierarchical, stock-held mutual funds like Fidelity and others. He started Vanguard, which now has $7.5 trillion in assets, the second-biggest after BlackRock. He made it into a mutual company. So, technically, if you invest your money in Vanguard funds or index funds, you’re a part-owner owner of the company. That way, he didn’t have to get these calls from Wall Street analysts, and he was free to criticize his own industry and show them how they’re gouging with their fee structure.
All these CEOs, David, had similar characters, although they had widely different personalities. But they had certain consistencies, and one was they had a vision for what the companies they’re gonna run was supposed to be for the society, for the economy. But they also paid a lot of attention and detail to profit, as Anita Roddick did with her many shops, as she called it. They also publicly admitted mistakes. Jeno Paulucci would immediately admit the mistakes why, say, his restaurants failed, or why a product failed, in public, as a way to motivate him to do better the next time. And second, they weren’t secretive. Sol Price would give all his ideas about how to expand big-box stores to his competitors. They weren’t interested in building conglomerates. Kelleher was once [asked], “You know, you got a big airline. Why don’t you buy a hotel chain?” He said, “What do I know about a hotel chain? Why should I diffuse my attention?”
And they also criticized their own industry. John Bogle did, of course. Yvon Chouinard of Patagonia did. The great Ray Anderson of the Interface corporation of Atlanta — that’s the biggest carpet tile manufacturer in the world — he decided early in the 21st century, he was going to turn this company around and become carbon-neutral.
Brancaccio: A couple years ago, that influential club of CEOs, the Business Roundtable, had their big meeting of the year. And at that meeting, they agreed to work toward a kind of capitalism that would consider the costs and benefits to many different stakeholders. Yes, shareholders, of course — but also employees, the community, the Earth. And some headlines followed that, and some pledges. But I think many would say that Roundtable’s initiative seems to have lost energy. Old habits die hard.
Nader: Yeah, that’s right. They made some very nice statements about having their stakeholders include not just their workers and shareholders, but their consumers and the environment. But they just left all these nice statements on the table, as they went back to building their bottom line with the old-fashioned “Well, we’re just giving the market what it’s demanding.” And that’s the only verdict that really counts.
I do have one CEO who has five restaurants in Washington, D.C., Andy Shallal, an immigrant from Iraq at a very young age. And he really broke the model of traditional restaurants. You go into his restaurants now, and first you see a bookstore, and then the dining area with art on the walls. And then there’s a room with dining tables for civic activities. He would have poetry readings, politicians would come and speak, citizen groups would come, there would be debates while people were dining. And that three-part model has enriched the community of Washington, D.C.
Brancaccio: Among your hopes here for this book is that maybe it would be added to, I don’t know, business school curricula?
Nader: Yeah, there are just millions of students that are business majors in undergraduate courses, and, of course, business schools. And they need a book like this as part of their curriculum to elevate their expectations of the role of business in our country and alert them to what they may be required to compromise in terms of their own principles, and keep their conscience at home, by bad business practices. And that’s what this book, hopefully, will help turn around.
Brancaccio: Let me ask you something about you. Mr. Nader, you’re still at it here. I think you have a big birthday coming this winter. [He’ll turn 90.] Some of your critics probably wish you had retired 50 years ago or something. But here you are with this new project, this new book. Doesn’t seem like you’re going into retirement mode, huh?
Nader: No, not at all. A long time ago, when I was at Princeton, the world was not doing well. There was a threat of nuclear war with the Soviet Union. There was a lot of discouragement on campuses, a lot of fatalism. It was a time when they would tell elementary school students to get under the desk for air raid tests. So I went to the library and I studied the philosophers of pessimism, like Schopenhauer, sort of as a justification for being resigned to the world as it is. And I wasn’t impressed. And I realized that pessimism has no function and you have to be continually optimistic and that the only real aging is the erosion of one’s ideals.
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