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5. Interviewer: You were co-chair of the team that put together the Authentic Enterprise. Could you talk a bit about it and the kind of impact it’s having?

Iwata: OK, so more than two years ago Roger Bolton was president of the Page Society and one of the primary missions of the Page Society is to advance the policy role of the Chief Communications Officer (CCO). So Roger said, well, if that’s the case, then what is the future of the Chief Communications Officer? We should have a team go off and try to answer that question. Valerie Di Maria, who was at Motorola at the time as CCO, and I co-chaired that with nineteen team members. CCO is an agency people; great team, and we sort of dove into this question. Well, one of the things we quickly found out was in order to answer the question “what is the future of the CCO?”, we had to answer, “what is the future of the CEO?” So we had a firm go off and interview and it turned out a little over thirty CEOs, and before they could answer the question about the future of the CCO they wanted to talk of the future of business, what was on their minds?

This is now about 2 ½ - 3 years ago. They listed several forces of change that are pretty obvious today. One is the digital network revolution. From a CEOs standpoint they said it used to be just the press, either playing offense, like let’s get our word out, but then also defense. We just used to have to worry about the press, but now somebody over here we’ve never heard of has this powerful megaphone called the Internet; they’re on it for like nothing and people are actually paying attention to them. How are we going to respond to this new world? So the diffusion of media, mostly because digital commons emerging was one, and second was the expectation that corporations were changing. Perhaps there was a day when a corporation was expected to produce good product, make money, and not break the law. But now, the CEO is saying, I’ve got to worry about the environment; I’ve got to worry about my supply chain; I’ve got to worry about how I treat my people; I’ve got to worry about all of these things. That coupled with the prior concerns, the CEO is saying all of these stakeholders are exerting influence on us, but by the way, maybe we should take advantage of that, but I don’t know how to do that. The third was globalization. About the same time we were doing this work Tom Friedman’s book The World is Flat came out. Rather than being a screed about jobs moving to India, it changed the dialogue, at least in the United States, that globalization is going to have profound implications, good and bad, and we’d better figure this one out. So the CEOs were citing those three drivers of change.

We then asked the CEOs, and then we subsequently did a lot of thinking about this. So what are the implications of all of this to the CCO, who reports to you? And the CEOs by in large said (1) we need somebody to figure out how to have relationships across multiple stakeholders. Today we manage the government here, the press over here, universities there, employees over here, customers differently, but they’re all talking to each other now on the [Inter]net. They all have the same knowledge, so we can’t segment them and segment messages. They all know the same thing. How do we get hold of this thing and use it to our advantage? CCOs could help. Secondly they said, “help us figure out this new world of digital, gain mastery of it.” Someone is going to; the CCO could take a stab at it. Third—and this was wonderful to hear—values will be very, very important again. I need help to define values or reaffirm them and then get everyone to live them. Why? Because of this incredibly transparent world that we’re in. The only way that we can be sure that whatever the world sees, mostly through our people, they’re going to like what they see. I can’t do that unless everybody actually is living the values that we espouse. In some cases we need help even defining them.

Well we wrote all that up in the paper and published it. We called it the Authentic Enterprise deliberately, and I just gave a little talk across the street here [at the Page Society Conference]. I talked about authenticity because I think it has been misunderstood, you ask what has been the reaction? I think there’s been a very good reaction. There is some recommendation that the paper is somewhat controversial, which is good. But one thing that I’ve observed is that people have equated authenticity with ethics. I said to them yesterday in this little talk, we could have written a paper called The Ethical Enterprise, The Socially Responsible Enterprise, The Virtuous Enterprise, The Good Enterprise, The Uninvited Enterprise, but we didn’t. We called it the Authentic Enterprise; why? Because every company should be ethical; every company should not break the law; every company should do the right thing. But great companies not only do all of those, which I believe are table stakes, but great companies are also unique in some way.

Another way of saying it, is not every company values the same thing; so like what? Well, we value innovation; at least we say we do. Then an insurance company or a bank might say we don’t value innovation because we value risk mitigation. Another company might say we value team play in our culture. Other companies might say we value individual achievement. Those are perfectly good differences, but they also make for unique companies. So authenticity isn’t about doing good things. It’s about being clear about what you want to be distinctly in the world and then actually translating those words into action in the behavior of the company. So I think that the Authentic Enterprise gets talked up a lot if it does because it’s touched a nerve about lack of trust in corporations, which is very much true given what we’ve been through in the past ten years here. It also speaks to the change that’s required for us to navigate and capitalize on the new digital commons, which is very controversial. In some ways it means loss of control. When you think about it, we write the speeches; we write the talking points; we monitor interviews; we talk to reporters. No one else is authorized to talk to the press. The authorized spokesperson used to mean something. Well, the declining circulation of newspapers and the declining effect of prime-time television, we go with it. If people are [not] reading just Business Week, Forbes, Fortune, New York Times and so forth, and they’re getting more information and influence from other places we better map ourselves to that too. But it also means that we can’t control what a blogger writes or thinks and we one day will not be able to control, in our case four hundred thousand employees all expressing their point of view to the world. That gets back to values.

So a lot of work comes back to what do we value in our case at IBM and then what are the programs and operations that we have to put in place to ensure that employees are supported as we live what we espouse—what we aspire to be. I do think that this represents an expansion of the CCOs role and an expansion of public relations, but we do have to adopt and adapt new ways of doing things. I think that a lot of companies are well on their way to doing that.