The collapse of trust in the private sector combined with the rise of consumers as content creators has put an end to the traditional “license to operate” business model, according to Edelman CEO Richard Edelman, who believes successful companies need to adopt a “license to lead” approach.

Richard Edelman
Edelman Photo: Christian Whitman
“Business must gain the informed consent of constituents, provide value beyond its traditional performance objectives and be held accountable through a new level of transparency,” he said today at Marquette University’s first corporate communications summit.

The CEO of the top independent firm said business should substitute principles-based leadership for rules-based leadership.

“Rather than driving the car next to the guard rail, business needs to operate in the center of the lane-to tune out the high-priced lawyers or brilliant financiers who advise hugging the guard rail to make a bit more money," said Edelman. "There’s more to gain from a motivated workforce and confident customer base that far outweighs any benefit derived from operating at the edge.”

Edelman urged business to take the lead on issues that are central to their operation and stakeholders.

He gave the firestorm surrounding fracking as an example where energy companies failed to lead, resulting in dozens of stories about pollution of water supplies and laws banning that technique to extract natural gas.

The Edelman CEO sees the need for companies to embrace “radical transparency” and let the voices of “regular people” be heard.

“Employees in mid- to lower levels of the organization are more credible than the chief executive—and they are out there communicating already," he said. "Progressive corporations can serve their own best interests by supporting the process, encouraging informed engagement with Twitter or Facebook because that’s where discussions are taking place.”

The corporate communications officer, to Edelman, is the right person to drive the license to lead model. “Gone are the days when senior communications executives could lean toward their CEOs and whisper advice in their ears, then step aside, assured they’d done their job. The CCO must partner now with CEO on both strategy and execution. It needs to be the closest relationship in the corporation.”

Edelman’s dream is that the best students will forgo the temptations of Wall Street, consulting and tech start-ups for a career in communications.

He said: “CCOs are the future of organizational transformation. We’re the next-generation power brokers.”