The Frontier of Business Growth and Security is Ethics — Part I: Why

Social media and other digital disruptions have changed the world forever. Now, like it or not, transparency is king. One outcome of this massive shift is that ethics are no longer a nice to have; rather they are something for every board and leader to grapple with. But more than that, ethics now can be harnessed as a strategic asset to both grow and protect business. Far from being an oxymoron in the old joke, “business ethics” has become a business necessity and, if done right, a business asset.

Business Starts and Ends with Relationships

After thinking about it for longer than I care to admit, it’s clear that the primary and essential thing every business does, just to be in business and stay in business, is to create and maintain relationships. I don’t mean simply the squishy feel-good kind, but rather the critical, long-lasting, resilient, transactional, affective, and especially profitable relationships that form the backbone of any enterprise. I’m talking about relationships with customers, followed closely by people and suppliers. It starts and ends there — no relationships, no business. Everything else is detail.

It seems obvious. But what this means in practice has changed dramatically and permanently. It requires adding ethics as a formal part of an expanded relationship equation. Now ethics are right at the cutting edge of business.

I’ll explain. And in Part II I’ll show how to do it, and how not to do it.

Before Ethics

Way back in the twentieth century, business relationships were driven by mostly rational considerations like delivering relative performance and price, and ethics were limited to things like product honesty and value. This rational approach was emphasized during the mid-century by companies like P&G. But over time, many products and services reached “parity,” becoming effectively pretty much the same or easy to copy. Moreover, consumers were expected to think a lot about low interest purchases (like say, toothpaste), but they don’t. Eventually, businesses learned that most decisions are nowhere near 100% rational.

So right at the end, in the ’80s and ’90s, the smart money moved to relationships that emphasized emotion. Think Nike, Apple and a host of others. A little bit of cultural consideration crept in too, as we all recognized that people make purchase decisions based on considerations like “this product or company is for people like me” or “this suits me well.” And for little while, there it stayed. Until a new millennium arrived, almost 20 years ago.

Ethics are the One Constant

Now in the twenty-first century the way we build and maintain crucial business relationships is dramatically altered, and there is no going back. Reason, emotion and especially culture still matter, but now the permanent digital shift has changed the world to include social and ethical factors like never before. Businesses can no longer survive as invisible or opaque entities hidden behind carefully constructed brand images, crafted content, and curated communities, with an occasional dose of crisis management. Now social media, clickbait headlines, the outrage cycle, Twitter mobs, generational shift, and both external and internal activists demand alignment with their passionately held ethical expectations. Taken together they create an environment that can either help grow or threaten and even kill a business in record time. And in each of these social conversations (or storms), the one constant is ethics.

Ethics Are Everywhere and Necessary

These endless and often heated considerations of right and wrong, good and evil, and benefit and harm were always built into novels, songs, plays, and even soap operas, not to mention advice columns, gossip columns, coffee catchups and hallway conversations. Then late in the last century we saw ethics emerge in the form of outrage or conundrums behind much of the content of reality shows and “screaming head” commentary and infotainment. But now it’s gone social and digital, 24/7 and global, where everyone everywhere is a potential influencer with a platform that can grow with the power of a hashtag and a headline.

It’s exciting, it’s threatening, and it’s an unruly mess. The page has turned, the train has left the station, and the horses are out of the barn. And as a result ethics are no longer nice to have, they are necessary.

Trouble’s Brewing

For examples of what happens when companies are inattentive, blindsided or have made serious if sometimes unintended missteps, look no further than Facebook, Google, Uber, Wells Fargo, Theranos, Sequoia Capital, Tesla Volkswagon, Monsanto, Fox, or the Weinstein Company. All these companies and many many more have become flash points around ethical confusion and even outrage which can halt momentum and create large costs in either stock price/market cap, new investment, goodwill, regulatory pressure, loss of key people, enormous distraction, litigation, embarrassment, misalignment, employee activism, many unexpected hours and, in extreme cases, possibly even their existence.

That’s real money. And it could have been used instead to grow the business or feed the bottom line. It’s pretty obvious that any company that has customers, employees and observers who have access to media are similarly vulnerable, sailing often in the unknown, and potentially just a post, tweet, click or send away from similar troubles.

Ethics are a Moving Target

One thing’s for sure — ethics are very hard to navigate, and will stay that way. In a diverse global society, ethics are a moving target, shifting with cultures and sub-cultures, in fluid conversations, driven by changing awareness and experience. In fact, we could argue that the vast majority of ethics are socially constructed (which is a fancy way for saying they are a matter of agreed opinion in groups), so they vary in time and place in a way that is as varied as all humanity. They’re morphing and evolving as you read this.

But how can we know what’s right? Moreover, what happens when time accelerates and places converge, as has happened and will continue to happen? Then the potential for disagreement, confusion, conflict and unanticipated change goes up enormously, in large part driven by social media.

And other questions arise. Who gets to decide what is ethical? Which ethics are most important and most relevant? And how do we stay ahead of the curve so we’re not reacting to bad surprises, but instead riding a wave of ethically-informed relationships that enhance the business? Wouldn’t that be the goal — to grow, align and protect the business in accordance with the most current, powerful and salient perceptions and expectations of the business’ own customers, employees and suppliers? Can ethics leverage that to become a driver of business, as well as a protector? As such, can it be a strategic asset?

The Mandate

Let’s end with Google’s motto, “Don’t be evil.” It’s now clear that not only is it meaninglessly vague, it doesn’t serve the business in any significant way. Ethics must be specific, insight-driven, strategic, embedded, differentiating, business building, and protective.

And done right, ethics can even be fun and exciting. In part two, I’ll share how it’s done.