With Enron still in recent collective memory, business has not fully recovered its morality and ethics standing. And the 2008 financial crisis didn’t help, in fact lowering trust in the world’s business establishment. So the question of whether morality and profitability in business can be symbiotic is fair. I had not really formed an opinion on this issue until the very recent past, when several incidents in my professional life gave me no choice but to do so.
And so, having pondered the issue, I believe there is an answer that constructively transcends the growing divide between the pro-profit and anti-corporate, anti-globalization groups. In short, business success doesn’t have to be synonymous with immorality. The key to achieving a symbiosis between profitability and morality is in my opinion a combination of strategy and invention.
In short, strategy implies deliberate choice, and choices bring with them value judgement. Choices aren’t of course perfect but at least they provide the basis for constructive argument around values, which eventually converge to the most basic notions of right or wrong. In this sense, profitability is the mechanism through which the market validates the right choices and penalizes the wrong ones. But the market is not itself the best barometer for morality. It could validate products that are produced unethically and so forth.
The second element of my proposed equation, invention, helps here. Using human creativity, invention frees us from zero sum games in the organizations that provide our livelihood. Companies that invent are places that provide plenty of opportunity for growth without the need for the employees to bump into each other’s comfort zones. Because any limited but highly desirable internal resource (i.e. management positions) is continually replenished with a fresh supply, there is no opportunity for staleness that would provide the Petri dish for Machiavellian organizational germination to take place. These places are also likely to be the ones where attitudes of concern towards other human beings are the norm, which subsequently extends to the products and services which these companies develop, market and sell. By being embedded in innovative products and services, morality and ethics propagate seamlessly throughout the society at large. And of course, inventive companies are likely the most profitable type of enterprises.
In my personal experience politics of the type that undermine ethics and morality prevail in companies lacking clear strategies and a mandate for invention. It’s as if without deliberate choice the mechanisms to reinforce talent and penalize undesirable behaviors cannot be instantiated, leading to perverted organizational cultures. Also, without an explicit encouragement of inventive creativity employees are caught in a zero sum game, applying their creativity to misguided uses. This type of corporate environment leads to speculative behavior otherwise known as office politics. In these type of enterprises one does not get ahead through competence, but rather through an unethical cocktail of Machiavellian heuristics: games, alliances, manipulation, misinformation, information hoarding, etc.
This type of insight can easily be expanded to the entire capitalistic construct. If we divide business models archetypes in inventive, facilitative and speculative, we can say that what keeps capitalism going is inventive archetypes of the likes of Apple. In this hypothetical economic paradigm, facilitative businesses are for example the many sales establishments say for example insurance companies: they facilitate access to a product or service. Finally, the speculative business archetype is mostly future-facing and coalesced in the financial and investment sectors – Enron is the prime example. The only businesses that bring new value into the world and prevent capitalism from becoming a zero sum game are the ones in the inventive archetypes. Left only to the other two archetypes, capitalism would quickly become catch-22 game, and morality and ethics would take a serious hit – just take a look at former and current communist regimes.
And so, it seems to me that strategy and invention, proxies for choice and creativity, are essential for morality and ethics, just as they are essential to profitability.
Even though this may sound surprising to those convinced of capitalism’s imperfect nature, it still has a moral ascendant over alternative economic models that have been tried.
Now as a word of final caution, neither strategy nor innovation is a guarantee for morality and ethics; after all Enron was both strategic and inventive in a misguided sense. Rather, I believe that solid strategy and encouragement of invention increase the likelihood of morality and ethics. And so, I would suggest when choosing our leaders, from those in the Oval Office to those in the corner office, we also consider their inclination and appreciation for strategy and invention; it is likely they will also be moral and ethical if they are strategically and inventively inclined. Courage, a key ingredient of leadership, is required for both morality and taking the risks that invention requires.
Photo source accessible here.