Beyond Ethics: The For-Profit Moral Community

Most people agree that companies should not act immorally. Running amok intentionally hurting people and the planet with regard for nothing but the bottom line is behavior only the most caricatured capitalist would defend. But most individuals are equally reluctant to call for-profit business to a moral purpose. Isn’t business’ job after all to earn a profit, to maximize shareholder wealth? Don’t moral missions need to take a backseat to those “business” objectives?

In line with that business first mentality, for-profit companies are considered amoral, not actually incapable of doing right or wrong but without a compelling moral component driving them to do good. Their moral dimension is relegated to obeying laws and observing some sort of business ethic that constrains the unfettered pursuit of profit.

Beyond that constraint, discussions of business ethics weigh the business profit motive against ‘social responsibility,’ ‘corporate citizenship,’ and various other buzzwords that sound very little like moral issues. The discussion of business ethics is not whether (much less how) a business should do good. The focus of business ethics is to determine the minimum ethic beyond bare law keeping a for-profit company must observe (or pretend to observe). Its objective is defining the minimum ethical standard that constrains the profit motive.

Provided that minimum ethical standard is met, companies are not expected to adhere to morals, much less to be driven by a moral purpose. Moral purposes are left to the “non profit” sector, which comprises the “moral people,” those without regard for profit and a noble purpose instead.

But that’s a misnomer.

Profit and Purpose Are Not Mutually Exclusive

First, it is a social myth and educational ignorance that leads people to believe non-profits are not allowed to generate huge revenues and massive profit. Many non-profits, like trade unions, hospitals, and the NFL, generate enormous amounts of money and those leading them make obscene salaries. They are simply not allowed to retain profits or to distribute them as dividends.

In the case of pure charities, consider how much impact, compared to for-profit companies and the high profit “not for profits,” they really affect on society? To wit: Where would the most noble cancer research foundation be without the wealthy non-profit hospitals and universities that conduct the research?

Of course all of that gives rise to the issues of “cause marketing” and other practices that are the collusion between profit and wealthy not-for-profits that, predictably, raise some pretty sketchy ethical issues. (Those issues are beyond the scope of this article, but if you’re interested, you can begin by Googling the Pink Campaign to learn where all of the money raised for breast cancer each October actually goes— and doesn’t go.)

It brings us squarely back to business ethics, but this time with a sharper point: How may businesses use moral causes to drive revenue and generate profit without being considered immoral?

That’s to what business ethics ultimately reduces: PR issues that govern how a company must conduct itself in the pursuit of maximizing profit to avoid stigma without actually wavering from its bottom line mentality. It is a system that breeds corruption, scandal, and cynicism.

So I want to frame a different discussion with you: What if a for-profit business, rather than being restrained from immoral behavior by laws and constrained in maximizing profit only by “ethics,” was driven by relationships, purpose, and values?

What if the for-profit business was a moral community? I know a majority will poo poo that idea which is good. The majority is rarely ever correct; it is only a larger gathering of sheep than the second most popular opinion, but I invite you to think about it with me: Is a business properly understood as amoral— with its first obligation to profit constrained only by laws and business ethics? Or is it moral enterprise defined by obligations to its relationships, values, and non-financial purposes?

Is For-Profit Business Really Amoral?

What are the issues framing the primary debates around business today? Aren’t they issues like minimum wage, wage gaps, gender equality, health care, birth control, and the right to discriminate? What are those if not moral issues? Is it fair to say the organizations making the decisions about those issues that affect employees, customers, vendors, partners, and suppliers are amoral, freed from stating a moral position on the matters and constrained only be law obeying and business ethics?

Does that even make sense?

In fact, we see (ironically) many businesses abandoning their amoral grounding to embrace and espouse very moral positions on these issues.

Every company that decries a minimum wage increase is taking a very pointed moral position: Profit over people. The problem is that these moral assertions are cloaked as business objectives: Paying a penny more than the legal minimum affects the bottom line by a penny.

It is entirely “ethical” as the MBA professors would describe it for a business to lobby against laws that would reduce its profit, but it’s ipso facto immoral to regard individuals as worth only the legal minimum one is required to pay them. This is a moral argument. Moreover, not all of the arguments are so easily cloaked.

Hobby Lobby took a strong moral position on birth control as part of health insurance. Chick Fil-A has a strong pointed moral position against gay individuals. Although each retreated to to “business issues,” ethics, and profit, those are clear moral positions: Hobby Lobby did not balk at the insurance due to an adverse effect on profit, but because it had moral qualms about “spending profit” on the birth control itself. Chick Filet ultimately ceased funding radical anti-gay religious groups and exited participation in the moral debate.

But what does that say about the relationship between these companies and their “stakeholders,” including employees, customers, vendors, suppliers, reps, and others necessary to conducting business?

Your Stakeholders As Moral Partners

There is not the slightest whiff of Chick Fil-A ever acting unethically toward its gay customers or employees. And leaving aside ethical questions around the the birth control issue itself, there is no evidence that Hobby Lobby has ever been an unethical company. Both treat their stakeholders as equal and valid economic agents. But is that enough? It begs the question I’m trying to raise with you: Should a business understand its stakeholders as simple economic actors or as moral partners with a stake beyond the company’s bottom line?

I am going to contend that it’s the latter. A market defined exclusively by sheer economic forces, competition, and price signals might be efficient but it cannot be moral and an amoral market cannot preserve the individual’s dignity or encourage their personhood. To view stakeholders as only economic actors is to reduce them to something less than human.

A market must be more. It’s broader character has to do with society, mores, identity, values, and thought. True competition embraces the moral dimensions of choice and in the emerging economy, businesses must embrace that competition. It does that by relying on clearly articulated values revolving around a non-financial purpose.

The vision statement for a moral community becomes an explanation of how it will (and how it will not) pursue profit within those objectives.

These explanations must become the promises upon which inter-dependent, mutually profitable relationships of value and exchange with the companies, its customers, and its partners — up-, down-, and cross-stream of its own economic activities are built. And these relationships must be entered and built for reasons other than lowest price.

In essence, for-profit businesses must learn to think of themselves first as social actors obligated to social objectives. We must learn to think as a “not for profit” might. Before we ask, how will we profit? We must answer, what is our purpose?

But that raises another question: Can a business organizing itself as a moral community achieve economic success?

But What About Profit?

An articulated “non-profit” purpose does not preclude creating profit. As the not-for-profits we mentioned above demonstrate, that purpose can be the root of profit. The moral community is not without a profit motive; in fact, the moral community may be unabashedly for-profit, but it is not profit for its own pursuit.

In the moral community, profit is profit derived from— and invested in— a stated moral purpose. And as that purpose becomes an invitation to individuals to join the moral community, that company becomes the leader of the moral community it has created. In turn, that moral community becomes the market that the business serves.

The company profits within its own market as it would any other, by creating value through its products and services. But because the market is built on more than economic factors, employees and customers are part of the same moral community. That experience of shared moral values becomes the moral community’s brand, defining the experience of being a customer as identical to that of being a member of the moral community.

Because it is not a market built on competition and price signals, it is one free of price competition and in many ways inoculated from competitors. Much added value is built directly into market transactions to the exclusion of competitors.

But what about those competitors?

How Do We Understand Competition?

As the business organizing itself as a moral community does not understand profit and markets by outdated business models, it does not understand competition in antiquated ways either: Competition is very real but it is not a zero-sum game nor does it demand the utter destruction of our competitors.

Competition in the moral community is not based on nefarious tactics, sabotage, or slander. In fact, the moral community does not identify its competitors as businesses with similar products but as everything a customer could choose to spend money on instead of its own products and services. It’s aim is not to destroy or damage the competition but to earn customers by creating more value. The moral community must be so focused on that objective that it simply has neither time nor interest to worry about other companies, much less try to beat them.

Moreover, our competitors’ customers and employees, in time could become our customers and employees. They cannot join a moral community that excluded them priorly. The appeal of being included in the moral community is, itself a competitive advantage in competing for customers and talent.

It is always better to have friends than enemies and competition does not demand the latter.

Participating in the Moral Community

The moral community does all traditional tasks differently than traditional amoral businesses do.

1. Moral communities build vision differently. In the moral community, visions are not top down wordsmithing statements that speak to market share and shareholder value. They are genuine values and objectives shared by all members of the community. A propensity and preference for taking action based on those values becomes the default position for all of the community’s members.
2. Moral communities manage differently. Those values become obligations that drive the organization, not as concerns for profit and quarterly returns drive the amoral company but as genuine moral concerns that drive decision making. Within that framework, the moral community trusts all of its members as peers and equals, intelligent and capable of creating value, impact, and profit. All of its members are Silos are demolished, hierarchy is razed, and fiefdoms are abolished.
3. Moral communities market differently. The moral community is not focused on price competition but upon value creation as defined by the individuals involved in a transaction, not by the organization’s hierarchy. Marketing communication focuses on quantifiable propositions of how that value will be created, rather than platitudes and the marketing department ceases to exist, as everything the organization does is aimed at creating value, not selling products. “Marketing”is merely the moral conduit between employees and external members of the community.

The For-Profit moral community cannot be created by incremental change rooted in old school ideas. In fact, I suspect it’s impossible for existing companies to embrace being a moral community and that it is the domain of radical entrepreneurship and the next new generation of leaders.

GTIdeology Happy Hour Chat

We discussed these concepts in The Skolny Organization’s GTIdeology Happy Hour Twitter Chat on November 6. You are invited to join us every Thursday at 4:00 PT | 7:00 ET to discuss various aspects of our GTIdeology— the ideology of Greatness Through the Individual for business.

About Vince Skolny

Vince Skolny is Founding Chair of The Skolny Organization, an unabashedly for-profit venture marketing organization that exists to impact the world by creating and encouraging greatness through the individual.Vince is a fierce advocate for the individual and intends it to lead an entire social revolution, reorienting society around individual persons, point blank equality, and genuine egalitarian opportunity.

He speaks to groups, conducts workshops, and facilitates discussions on the ideology of Greatness Through the Individual as the foundation for business. Follow him on Twitter or Like him on Facebook.