The CEO's New Agenda. (Interview).(corporate leadership urged to consider social, economic and environmental issues)

For the past two decades, business leaders have focused exclusively on shareholder value. In a time of terrorism and corporate scandal, a much broader vision is imperative, as Yale School of Management Dean Jeffrey E. Garten explains.

In the past year or so, business leaders have learned about a phenomenon usually reserved for athletes: that it is possible, in an astonishingly short period of time, to change from hero to goat -- the one who gets blamed, rightly or wrongly for the whole team's failure. The image of the CEO as Alexander the Great has faded; comparisons today are more likely to be made with Charles Ponzi.

When applied indiscriminately to all CEOs, the goat label is no doubt as unfair as the hero worship was unjustified. But even if corporate crimes are a matter of a few bad apples rather than a blighted orchard, the reality is that the public is outraged and the politicians smell blood.

It may seem like odd timing, then, for an important thinker on corporate leadership and public policy to be issuing a call for CEOs to undertake a serious, committed engagement with a whole range of social, economic and environmental issues -- topics that for years have been at the bottom of most top-executive agendas. But that is precisely what Jeffrey Garten envisions in "The Politics of Fortune: A New Agenda for Business Leaders," published by Harvard Business School Press. Garlen -- dean of the Yale School of Management, former undersecretary of commerce in the Clinton administration, a veteran of Wall Street in the 1980s and author of "The Mind of the CEO" -- seeks a new kind of leadership from chief executives, yet one that hearkens back to a period in our history that also required people from all walks of life to come together in the pursuit of common goals.

In an interview with SMR senior editor David A. Light, Garten spoke of the need to balance regulation and free markets, the historical precedents for business leadership on public-policy questions, and the urgent need for institutions that can manage the progress of globalization. He also discussed the important first step that CEOs must take before they can exert leadership on a bigger stage: restoring their reputations.

SMR: You talk about how CEOs need to actively repair their reputations, but wouldn't it be more prudent for them just to lie low for a year or so and let the storm blow over?

Jeffrey E. Garten: As a strategy for dealing with our current crises, that won't work. The issues aren't going to blow over, and people aren't going to forget. I've been part of many discussions in places like barbershops and diners, and almost no one is giving the corporate sector the benefit of the doubt. There's a pervasive sense that the whole sector is somehow corrupt. And the problem is getting worse with every fresh scandal and with every bad …