This is the first in a series of articles analysing corporate personhood and the standards to which we hold corporations. Since Dartmouth v. Woodward in 1819, private corporations have been viewed as having many of the same rights as you or I, prompting one to look at the state of business around them and ask simply, what kind of person are you?
Before we even embark on this journey, I want to make one thing abundantly clear. Let’s dispel any concerns that this article is going to be nothing more than a rant against western capitalism – I’m far too invested in the system to call for something that brash. I’m an MBA and a management consultant, so at this point, one can assume that my education and current business practices have sufficiently brainwashed me. However, my mind as of late has been having a lot of fun playing around with this metaphor and, hopefully like you, I’m curious to see where some of these questions will lead as we hold businesses up to the same scrutiny and judgement that we do normal people.
What Kind of Person Are you?
Like a ray of sunlight breaking through the clouds after a long storm, a child is born. However, this child is unlike those that immediately come to mind. 10 fingers and 10 toes are no longer our top concern. Instead, we investigate the management team, revenue forecasts, go-to-market strategy and operating policies. This child is a corporation, and while they may not be flesh and blood, in many ways, the moment that a business is registered and on the books, they already have more rights than any normal new-born.
Just as thousands of babies are born each day, so too are thousands of start-up businesses. Some are brought into the world in rather deplorable conditions – garages, basements, and pubs – but nearly all with a common goal: to grow and thrive. In many ways, early start-up businesses are a lot like infants; they’re a little awkward and clumsy, don’t fully understand the world around them, tend to be a serious liability for their parents and initially, don’t do much other than whine and crap themselves. However, when we play around with the corporate person metaphor, some stark differences arise between the early days of a business and the early days of a child. Some of these differences are laughable and clever, but others are downright concerning.
If corporations are persons, then we should be alarmed by the infant mortality rate (IMR).
Pending on which statistic you choose to pull from your ass, startup failure rates are quoted as anywhere from 25% in the first year, to around 50% within 5 years, or even up to 90% in the case of tech companies (hang your heads in shame, you deplorable nerds). The exact number doesn’t matter, but what does is the fact that even the countries with the highest IMRs in the world (Afghanistan: 12.2%, Mali: 10.9%, Somalia: 10.4%) still come nowhere near the morbidity rates of our little corporate people.
Looking to literature on IMR, we see a number of consistent issues involving endogenous factors (mainly biological in nature, affecting the foetus), however, also a number of exogenous considerations (the surrounding environment). Crowding & congestion correlates with a higher IMR do to the lowered sanitary conditions and higher competition for basic resources. Nutrition is important, both in quantity of nourishment and in the quality that the child receives. Access to basic medicines can be crucial in times when an infant falls ill and requires life-saving technology. Lastly, illegitimacy of birth can cause social burdens on the mother and community, leading to neglect and poor health.
Again, if we take the corporate metaphor to the extreme, we can assume the following conclusions:
· The small business space is more congested than the highest density cities of India
· We are funding our start-ups with the equivalent nourishment of a minimal amount of the worst infant formula money can buy, mixed with tainted pond water
· Our professional aides, start-up guides and business-helping technologies are on par with medical advances from the Victorian era
· Entrepreneurs are fickle, deadbeat moms and dads that are nearly always starting new ventures in the equivalent of broken homes
Should we be holding our entrepreneurs to higher standards when it comes to the management and development of small businesses? Alternatively (or additionally), should our governments be working to improve the surrounding environment for start-ups by providing greater access to funding, support and guidance then is currently available? If corporations are persons, then we’re neglecting our youth.
If corporations are persons, then why do we trust infants with such large responsibility?
Let’s assume for a moment that your small business does not become a statistic. You survive the cull and manage to grow your infant into a baby. How many babies do you know that own land? When was the last time you saw a three year old sue one of its colleagues?
At the core of these questions lies a harsh reality: we give young corporations far too much power with far too little oversight. Once a business flourishes and grows into an adult behemoth, we can trust them to understand and play by the rules (… right?), however, in early days, why would we expect a young organization to know everything about law, management or accounting? Many of these businesses are still in developmental stages.
Therefore, much like we pamper, train and restrain our young, why not put corporate persons through the same rigorous education and slowly growing responsibility regime? While I’ve typically been one who’s all for learning how to swim in the deep end, looking back to our first question regarding how frequently start-ups fail, there might be something to the concept of forced entrepreneurial education and limited power in early business phases.
Why are parents held accountable for the actions of their biological children, but not their corporate children?
Call me crazy but the concept of limited liability seems completely bonkers. I know that this entire series of articles is about how corporations are persons, however, these organizations don’t actually have sentience themselves. Therefore, when someone screws up, we can’t just blame the company; odds are there was some significant human decision making involved that deserves a good finger pointing or two.
If a young child were to pick up a weapon and injure another person, we wound find the parents guilty of negligence and improper oversight. So why is it that when corporations pillage their way through society, we don’t point the finger at their parents? Of course, in cases of extreme corporate malfeasance, we have seen a number of white-collar criminals be brought down. However, in the absence of massive personal wrong doing or illegal behaviour, we still have to ask who takes the fall when a corporation screws up. Somebody designed that part, somebody signed that contract, somebody authorized that product launch and somebody screwed up.
At bare minimum, if we’re not going to blame the parents, can we at least do a better job of punishing the child? Where is our equivalent of corporate juvenile detention and what would it look like to lock up a company for a few years?
If you want your customers to start respecting you like a person, then start acting like one.