Provocation - The Difficulties in Doing the Right Thing
"Expectations of business leaders have changed dramatically. When I was a young executive, the chief executive was expected to deliver increased profits, happy shareholders and more jobs. Today, staff and customers believe you should embody the company’s values and speak out on big, touchstone issues, from race to fake news and climate change."
- Paul Polman , Ex-CEo Unilever (Financial Times, January 2022)
After the Great Crash in 2008 there was a boom in interest in business ethics. Fired by an amalgam of suppositions including: a) all bankers are evil b) late stage capitalism has finally - and predictably - eaten itself and c) the MBA is responsible for all moral turpitude at the top….off went the corporate world on a path of soul searching and trying to understand how to do the right thing.
But along with this wave of interest came a curious irony: the more entrenched the discipline became in business schools, the more it was discussed on the management pages of the HBR, the WSJ and the FT the more bewildering— and even off-putting — it appears to actual managers. Those on the coal face running real businesses often react with a mix of bemusement and irritation when told they need to be taught how to be "good" at work.
Over 500 business-ethics courses are currently taught on American university campuses. Fully 90% of the nation’s business schools now provide some kind of training in the area. There are more than 25 textbooks in the field and 3 academic journals dedicated to the topic. At least 16 business-ethics research centers are now in operation, and endowed chairs in business ethics have been established at Georgetown, Virginia, Minnesota, and a number of other prominent business schools.
But why is the field of business ethics largely irrelevant for most managers and leaders? Or did they never really have difficulty telling the difference between right and wrong beforehand anyway? It’s not that they are hostile to the idea of business ethics. The idea is fine, even laudable.
Managers would welcome concrete assistance with primarily two kinds of ethical challenges: first, identifying ethical courses of action in difficult grey-area situations: “not issues of right versus wrong,” but “conflicts of right versus right”; and, second, navigating those situations where the right course is clear, but real-world competitive and institutional pressures lead even well-intentioned managers astray.
The problem is that the discipline of business ethics has yet to provide much concrete help to managers in either of these areas, and even business ethicists sense it. One can’t help but notice how often articles in the field lament a lack of direction or poor fit with the real ethical problems of real managers. “Business Ethics: Where Are We Going?” asks one title. “Is There No Such Thing as Business Ethics?” wonders another.
It’s about Doing The Right Thing. But doing the right thing by whom? The array of any business’s stakeholders has become bewildering. Indeed, the latest stakeholder to be added to the lengthy list is Mother Earth herself. If we succeed in seeing off Climate Change and achieving anything like Net-Zero it will be the innovative energy of private enterprise that achieves it. (Certainly in the UK currently you could argue there is not only an ethics but also a competence and trust deficit in government). ESG is a case in point.
ESG may help the bottom line – as many of its proponents insist – but it’s intensely time and brain power consuming. It’s an immature world where sound, solid data to reflect true performance is hard to come by amid a tsunami of marketing greenwash. It would be hard to argue that across the full panoply of environmental, societal and governance there is a clearly definable path for each and every business enterprise. ESG is not like the Ten Commandments. There are far too many "what ifs” and “what abouts” in the real world.
Thirty years ago Milton Friedman, doyen of market economics, summed up this view by arguing that “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.” This is what Terry Smith is getting at in his recent attacks on corporate virtue poster child, Unilever. His strong implication is they should spend a little less time palm oil tree hugging and more squeezing a bit more margin in their negotiations with supermarkets.
Are we asking too much of business leaders to somehow fill a void of moral authority in society? If you ask them and get an honest reply most business leaders will say their decisions are a trade off between not perfect and worse.
No universal set of ethical principles exists; most are too woolly to be helpful; and the decisions that companies face every day rarely present themselves as ethics versus economics in any case. He says that companies should aim instead for “responsible shareholder-value optimisation”: their first priority should be shareholders' long-term interests, but, within that constraint, they should seek to meet whatever social or environmental goals the public expects of them.
To improve leaders:
don't boost their confidence, but competence
don't boost their self-belief, but self-awareness, including awareness of their flaws, which you should stop calling "opportunities"
don't ask them to be themselves; teach them to go against their nature
