Mark Pastin

As part of a long-term research project, I have identified five competitive strategies common to organizations that are successful and ethical on a sustained basis. None of these strategies considered alone guarantees ethical success. I will be sharing these strategies through a series of posts. Here is the third strategy.

Manage the moments of truth.

Jan Carlzon, former CEO of SAS airlines, used the phrase “moments of truth” to describe those times when the employees of a company have direct contact with its customers. Carlzon’s point was that if you treat customers fairly in each moment of truth, you will win the battle for customer loyalty. And you will only win these moments of truth if each and every employee knows how you expect them to handle such moments. The same can be said for ethics. If everyone in your company treats the company’s constituents ethically each time an employee has direct contact with them, the company will earn a lasting reputation for ethics. And this will only happen if each and every employee knows your ethical expectations for them.

As part of a long-term research project, I have identified five competitive strategies common to organizations that are successful and ethical on a sustained basis. None of these strategies considered alone guarantees ethical success. Here is the first strategy.

1. Provide a sound product or service.

While this seems obvious, the customer is often the forgotten player when it comes to ethics. Talking about customers seems dull compared to talking about global warming or genetically designed food. However, unless you provide good value to your customers, ethics is not part of your strategy. You may have a great environmental record, but if you stay in business by ripping off your customers, you are not doing business ethically. GM may be an otherwise ethical company, but when it sells cars with a known a safety problem, its ethics has spoken. In ethics, it all starts with a good value proposition for customers.

Being ethical does not guarantee business success. In 35 years as an ethics consultant, I have certainly seen companies disadvantaged by less ethical competitors. But I have also seen ethical companies succeed. Some succeed through sheer luck. But most succeed because they pursue a conscious strategy that incorporates their ethics. They make ethics part of the competitive advantage that enables them to succeed.

When I talk about pursuing a conscious strategy, I am not thinking of a formal strategic plan. I see few such plans in my consulting work and, when I do see one, it is not necessarily called upon when important decisions are made. But whether or not there is a formal plan, successful companies employ certain strategies to compete effectively. It is at the level of these competitive strategies that ethics can find a home.

I have identified five strategies common to companies that are successful and ethical on a sustained basis. None of these strategies considered in itself will guarantee ethical success. However, each of these strategies increases your chances of combined ethical and market success. I will be sharing these strategies in a series of posts over the next several weeks.