A durable climate.

• Author: Rosenberg, Hilary
• Position: Profile on Robert A.G. Monks

Robert A.G. Monks considers his activism agenda for the future.

The next frontier for the team of Robert Monks and Nell Minow is addressing the conflict of interest that keeps major financial institutions, including corporate pension funds, from being involved owners of companies for fear they will lose business.

"We will not have a really durable activist investor climate until the mainstream firms are fully and competitively involved," he says. "Even the best people running conventional institutions do not dare associate themselves with activism for fear of customer backlash." Monks had hoped to take this issue on as a U.S. senator - hold hearings, write legislation. This was not going to be.

Monks' ultimate solution for the conflict of interest problem is the establishment of special purpose companies devoted to voting. This is the conclusion he reaches in his fourth, and first sole-authored, book, The Emperor's Nightingale, published in 1998. The book describes Monks' vision of shareholder activism as the best reconciler of a corporation's two contrasting qualities: the mechanistic and the human. This time, Monks take a new approach to the whole subject of corporate governance.

In 1996, his friend Dean LeBaron took him to the Santa Fe Institute, a think tank in the emerging field of complexity. In essence, complexity is the notion that you cannot take things apart to study them; you have to study them as a whole. Monks took to it at once, for to him complexity seemed to be a wonderfully fresh way of looking at the modern corporation.

"I've spent so much time trying to understand corporations, from a lawyer's point of view, a manager's point of view, an economist's point of view, an ethics point of view, and none of these languages work," Monks says. "What you need is a dynamic language. A corporation is a dynamic thing. This is a way I can tell the story that is more accessible."

As a literary analogy for his message, Monks uses the myth of the Emperor's Nightingale, in which a mechanical bird's song cannot replace that of the live bird, but both are shown to have their place. He goes on to explain the mechanistic and "living" qualities of the corporation: although it is...