The Ethics Strategy #3

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.

The Ethics Strategy #2

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 at markpastin.com and through a series of posts. Here is the second strategy.

Choose business partners carefully.

A wise adage says, “Lie down with dogs, wake up with fleas.” If you want to do business ethically, choose business partners that do business ethically. Even though your business partners are independent businesses, you assume responsibility for their actions when you choose to work with them. It did BP no good to point out that the accident that led to Gulf oil spill was due to a contractor; you cannot outsource responsibility. It is widely recognized that managing relationships with business partners is a key to competitive success today. An ethics strategy and a good business strategy converge with both requiring a careful look at business partners, although through somewhat different lenses.

The Ethics Strategy #1

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.

The Ethics Strategy

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.

Avoid Fatal Ethics Mistakes #5

This is last post in the Avoid Fatal Ethics Mistakes series. I appreciate all of the positive comments especially on Linked In. Always feel free to comment here as well.

If you are not sure of an action, try explaining it to someone whose judgment you trust. This is not because you will benefit from what the other person has to say – although you probably will. But you will benefit primarily from your own attempt to explain the action. When you can not give an explanation you consider plausible, you are risking a fatal ethics mistake.

Ethical Mistakes and Your Career

You may enjoy a piece that appeared in the Globe and Mail on how ethical mistakes may impact your career. Read it at http://www.theglobeandmail.com/report-on-business/careers/leadership-lab/be-careful-an-ethical-mistake-can-be-fatal-to-your-career/article22067000/

Avoid Fatal Ethics Mistakes #4

Another tip on avoiding fatal ethics mistakes:

Don’t use pressure to justify an unethical action. Many fatal ethics mistakes are made under pressure to just make some decision, any decision. Rather than think things through, you take the path closest at hand even if it is ethically questionable. The rationalization is that anyone under the same pressure might make the same choice. Be on guard when you feel pressure to just make a decision. Hindsight will judge the action without considering the pressure.

Avoid Fatal Ethics Mistakes #3

Another tip on avoiding fatal ethics mistakes:

Respect your innate sense of right and wrong. When we do something wrong, we often ignore an uneasiness about the action that we may not be able to explain. In a world of ethical relativism, it is unfashionable to claim to have an inner sense of right and wrong. And yet we do. In almost every fatal ethics mistake I have observed, the individual making the mistake sensed that the action was wrong beforehand.

In my book Make an Ethical Difference I explain what this innate sense of right and wrong is and when it should be trusted.

Avoid Fatal Ethics Mistakes #2

Another tip on avoiding fatal ethics mistakes:

Act on the principle that nothing you do is private. Most people who make fatal ethics mistakes gamble that their action will never be discovered. They are trying to fly under the radar. But we live in a world in which everything we do is tracked, recorded and potentially accessible. Even if it was once reasonable to assume you might fly under the radar, there is no space under the radar today.

Fatal Ethics Mistakes

It is often far harder to recover from an ethics mistake than an ordinary mistake. While an ordinary mistake may reveal a lack of knowledge or attention, an ethical mistake colors perception of everything a person does. When caught in an ethical mistake, admitting to it often does not settle the matter. Doubt remains about the character of the person who made the mistake.

Suppose you steal a sales lead from a co-worker by intercepting a phone call from a customer that was intended for the co-worker – “She’s not available but, no worries, I can help you with that…. ” You take over the call, steal the customer and get paid incentive for doing so. And then you are caught. Not only will your co-worker never trust you again; she will put out the word that you prey on your colleagues. You made a fatal ethics mistake.

Or suppose you are working on a new drug being tested in clinical trials. The company is gambling a lot on this drug and you are proud of your role in its development. After the closing date for all trials to be reported, a late report arrives indicating problems with the drug. It is the only negative report and you are entitled to ignore it because it is late. You bury the late study. But when the drug is released, there are serious side effects just as predicted by the late study. You made a fatal ethics mistake.

Hindsight is 20/20 and you may conclude that you would never make these mistakes. And yet in my daily work as a consultant, I see many fatal ethics mistakes made by ordinary people. While they almost always regret these mistakes, they have often injured their careers irreparably. In ethics, it is often one strike and you are out.

Fatal ethics mistakes are almost entirely avoidable if you take certain precautions when facing difficult decisions. In a series of posts, I will provide tips on avoiding ethical mistakes based on my experience as an ethics consultant.