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October 1993

State Roundups
Minnesota

The Minnesota Principles go global

A business ethics code launched in Minnesota is fast becoming a model for global standards of business behavior.

Developed last year by members of the Minnesota Center for Corporate Responsibility, an affiliate of the University of St. Thomas, the Minnesota Principles are aimed at business owners and investors, suppliers, employees, customers, competitors and the communities in which companies do business. For example, one principle encourages businesses to collaborate with less-advantaged countries in raising their standards of health, education and workplace safety; another asks businesses to respect the integrity of the cultures of its customers.

The principles were formulated by 17 corporate and university members of the center to help businesses understand how to operate in different cultures worldwide.

First presented in 1992 to the Caux Roundtable, a group of international business leaders who meet each year in Switzerland, the principles were enthusiastically received. And as a result of the Caux presentation, the Minnesota group made a publicly televised presentation in Japan. "They now know more about the Minnesota Principles in Japan than they do here," says Robert MacGregor, president of the Center for Corporate Responsibility and a primary spokesperson on behalf of the principles.

The Minnesota Principles have another Japanese connection by virtue of their kinship with the Kyosei Principles. Roughly translated, "Kyosei" means working together for the common good in harmony with fair competition.

Ryuzaburo Kaku, chairman of Japan's Canon Corp. and an avid proponent of Kyosei, has led his company to outperform most competitors during his 22 years as chairman. Charles Denny, chairman of ADC Telecommunications, Minneapolis, and one of the Principles' authors says Canon's success is proof that "you don't have to run a company into the ground to be fair and principled."

Over the past year, the Minnesota Principles have been printed in Japanese, Spanish and German and distributed worldwide. In addition, the principles have caught the attention of some people at the United Nations, and plans for a conference in Russia are under way.

The popularity of guidelines like the principles and Kyosei is growing "because the world has shrunk and issues are interconnected," MacGregor says. "So many companies are global in nature and compete against each other that the time is right to establish a level playing field of behavior," MacGregor says. Denny adds, "There's a reluctance to invest in environments where the rules of the game are unknown or ever-shifting."

Denny says also says because of sophisticated global communications, "The corporate sin committed yesterday in Zaire is up on the front page of The Wall Street Journal today."

To be truly effective, the principles need to be accepted worldwide, Denny says. But he doesn't expect that to happen any time soon. Denny says the reaction he received from the leader of an undeveloped nation to adopting the principles was probably typical: "As soon as we're as wealthy as you, we will adopt these principles."

Small windmill manufacturer shines in world market

World Power Technologies is proof that company size has little to do with success in foreign markets.

The six-person Duluth-based company will export 70 percent of the more than 200 small wind-powered electric generators it manufactures in 1993.

World Power Technologies' windmills are designed largely for homeowners and farmers in remote locations. Since starting operations in 1989, the company has shipped to such far-off nations as South Africa, New Zealand, Australia and Japan.

Company president Elliott Bayly relies on marketing largely through dealers because "it's impossible for our size company to reach the end users." While customers often learn of the company by word-of-mouth, World Technologies advertises in several US environmentally conscious publications. And if he can exhibit at a trade show for a reasonable fee, Bayly says, he'll participate in that.

Although he has "flirted with doing business in Russia and other Eastern European countries," Bayly's focus is on expanding business in Mexico and South America. To reach those potential customers, World Power publishes a sales brochure in Spanish. Although the company has sold some windmills in Argentina, business in Latin America has been somewhat disappointing to Bayly.

Mexico especially is an untapped market, Bayly says, describing one potential customer: a small, rural village without electricity. "For $2,000 they can have electricity, and that's far cheaper than extending main power lines," he adds. "Even if each home could have one light, it would be an improvement. Their kids could read at night."

Bayly expects the North American Free Trade Agreement (NAFTA) to have a positive impact on his business. "If NAFTA can just make the flow of parts to and from customers easier, it would certainly lighten our load," he says.

Regardless of the outcome of NAFTA, Wind Power contends with burdening paperwork and shipping logistic nightmares, amounting to what Bayly calls "the hassle cost." For example, to send 100 service bulletins with a small replacement part through the US Postal Service to dealers abroad, a customs form is needed for each package. Shipping costs are high and customers often incur extra costs to retrieve packages, not to mention customs bottlenecks.

But despite the additional difficulties and costs in exporting, Bayly imagines a bright future in an almost unlimited market: "There are 6 billion people in the world and over one-half don't have electricity."

—Kathy Cobb