Different (board) rules for different times? Reg Jones would be horrified by some of today's antidemocratic and anti-corporate governance impulses.

• Author: Hindery, Leo, Jr.
• Position: IT STILL TAKES A CEO

ON EPTEMBER 13, 1970, just as I was starting my second year of business school at Stanford, Milton Friedman authored a seminal opinion piece in the New York Times Sunday Magazine entitled "The Social Responsibility of Business Is to Increase Its Profits." 'Seminal' for Dr. Friedman, for sure. But for those of us with a much broader sense of corporate responsibility, no less so--especially if Friedman's limited, some would say selfish, perspective was about to gain widespread traction.

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Eleven years later, in 1981, largely at the urging of Reginald (Reg) Jones, lack Welch's just-as-esteemed predecessor at General Electric, the Business Roundtable officially endorsed a policy which said that shareholder returns needed to be balanced against "other" considerations, of which they specifically included employees and customers.

Jones repeatedly put forward his belief that his obligation as CEO was to preserve a responsible GE into the long term, and he and many other significant CEOs began to advance the view, in writings and speeches, that a vibrant middle class, growing from the bottom up, was the very best thing for their companies, the rest of corporate, America, and the nation.

This expansive sense of responsibility--soon covering at once and equally shareholders, employees, customers, communities, and the nation--became the foundation for fully a quarter century of generally honorable for-profit board conduct.

It's important to note that Freid-man's very narrow sense of corporate responsibility struggled to find traction outside of the United States. As recently as 2007, Wendelin Wiedeking, the CEO of Porsche, said: "We should not always look at getting the maximum return. Shareholders give their money just once, whereas the employees work every day. And our business model is only financed by customers--when the customer is happy, then the worker is happy too and so are the suppliers. Then there should be enough money left for the shareholder. But that is the order of importance."

What Reg Jones was positing--I know, because I was around when he said it--and what Wiedeking was later affirming is that by being responsible to multiple constituencies, the corporation is in fact more likely to be viable into the long term, with greater profitability and thus greater wealth creation for shareholders. And of course it's infinitely more ethical to boot.

Yet 23 years after Friedman's pronouncement--even after the very public...