Corporate Ethics Transformation––Part III: The ETS “How” Roadmap
5-Steps + Models of the Ethics Transformation System (ETS)
Part II — The Better Way Forward is a game-changer. Purpose is fast-becoming a new breed of “why” behind the “why we exist” statement.
Paradigm shifts in business don’t come easy. Establishing a Purpose everyone agrees with is difficult. Much harder, however, is re-aligning the organization to achieve it.
In most cases, structural change is a top-down endeavor. Purpose-driven leaders differ from past generations because they listen to customers AND employees and stakeholders; these leaders are outside-in thinkers (vs. brand-first). Customer and employee needs come first; servicing those needs is then how they architect the business:
Marc Benioff is a prime example; his proactive, activist stance is being followed by many other CEOs. At the recent Fortune CEO Initiative, other leaders publicly expressed their own personal stance on social, cultural, and environmental issues in part because of demands from their employees. During one breakout session, more than half the CEOs present said the job of “Chief Reputation Officer”––defined as articulating and defending the values of the firm–takes up more than half their work hours. That’s certainly a change from decades past.
The same goes with Ethics. It’s one thing to say you want your organization to behave better, that you want to become a better corporate citizen, that you believe you can do good while doing well. It’s quite another to do it. Becoming a better corporate citizen is a rigorous journey requiring a re-think and re-design of every aspect of the business, including every stakeholder across the business ecosystem. It requires constant attention and consistent measurement, analysis, and optimization. It’s really hard.
Pre-work
Smart organizations start with the fundamentals. Mission, Vision, Values, the building-blocks of corporate strategy.
Few are unfamiliar with what these terms mean but many, however, confuse and misuse them. All too often we see Mission statements posterized on HQ walls and as Values statements laminated wallet cards––and that’s it, neither of these fundamental building blocks of corporate strategy or culture are turned into living, breathing drivers of day-to-day operations. What’s more important, memorizing the Mission Statement or signing the deal before the end of the quarter? Ah, I thought you’d say that.
Putting that fun discussion aside, getting to Purpose starts here:
Mission
What you do each day to climb the mountain (what the company does).
Vision
Where the company is going; the next big mountain to summit (where the company wants to be)
Values
Describe and define the desired company culture; the core attributes of the brand’s DNA (who you are; your identity)
Now comes Purpose
The organization’s North-Star — the “why” behind the company’s very existence, a focal point in time and space that motivates every employee and stakeholder to commit to doing good while doing well.
The final piece is typically left out of the boardroom plan or VC pitch deck. Values alone are not enough to drive the organization to Purpose in the new business environment, where how the organization does what it does is just as important as what it does.
Ethics is the missing building block. Ethics are the essential cornerstone for defining how everyone behaves. The Ethical compass, or roadmap for “how” the organization lives its Values every moment of every day in every activity, links Values to Purpose. It’s not possible to achieve Purpose without creating a standard of ethical behavior, a “behavioral heartbeat”.
Bad behavior sinks more companies than poorly thought-out Strategies or a short-sighted Vision. So if Purpose is the North-Star for the organization, the best it can be for everyone, how does it get there without an Ethical compass? It can’t. Hence, why business — capitalism itself — needs an Ethics transformation.
Transforming the organization into an Ethics-and-Purpose-driven company requires more than just another power-point with Values bulleted on slide 2 or another 5-year planning spreadsheet. It requires a framework that charts a path forward in a systemic way. You need a living, breathing roadmap.
The Ethics Transformation System (ETS)
Transformation. One of the most overused words in business. Yet we all kind of know what it means — a new state, or “way”, of being, doing, or seeing, that is wholly different from what was. The new state is familiar yet, at the same time, unrecognizable. The degree of new-ness is what determines the difference between change and transformation — change happens when you lose 50lbs. Transformation is losing 50lbs and becoming a triathlete. Same person, different person.
In its simplest form, an Ethics Transformation means that the organization’s Code of Ethics becomes aligned with and integrated into its Mission, Vision, Values, and Purpose — so much so that that a new “way” of doing business emerges. Transformation to the new way crystallizes the how’s and why’s driving key initiatives:
— vetting new candidates
— creating differentiated and meaningful customer experiences
— selling products and services
— sourcing raw materials
— coding algorithms
— disposing waste
— building a diverse workforce
— fostering a balanced culture
— training beyond compliance and governance
— designing accountability into management
…the list goes on.
What follows in this post is a brief introduction to the Ethics Transformation System (ETS), an essential, must-do part of the journey to becoming a Purpose-driven organization.
The artifacts in the System have been adapted from the Digital Customer-First Transformation System my good friend and former partner Tom Butta, Sprinklr’s CEO Ragy Thomas, and I developed and implemented across the organization — readers should know that Tom, now CMO at SignalFx, created original version of some of these models years before our time at Sprinklr. Collectively, we knew most brands were struggling to “capture and create value” from social engagement; the DCFTS enabled dozens of clients to leverage social (and many other digital technologies and techniques) to transform the experiences they create for customers.
New posts will follow that detail the 5 artifacts that comprise the System and how to create them, deep-dives that explain how each model works and how function as steps in the journey to Ethical Transformation and becoming Purpose-driven. Each deep-dive will also include examples of how companies are starting or already on their transformation journey, as well as snippets from interviews with business executives already invested in transforming ethically as a critical step along the way to becoming a Purpose-driven organization.
[One more thing before starting. It is not my intention, nor would it be smart…or even ethical for me to propose how anyone should behave. I’m not in the ethics business, and it is not my place to propose that anyone or any company is beholden to any particular set of behavioral guidelines or moral code. The ETS (e.g., the artifacts, associated content, and processes) is a framework designed for YOU; it is a tool figure out how YOU can help YOUR COMPANY do better, however YOU and YOUR ORGANIZATION must define what that looks like; that is not my purpose or role. You’ll find placeholder content where it makes sense; the ETS’s highest-and-best-use is for YOU to create YOUR OWN UNIQUE and better way. Your way, not my way.]
The 5-Steps + Models
The journey to Purpose is impossible without an Ethics Transformation. The 5-Steps + Models introduced in this visual and outlined below are designed to work together, as a system, to guide an organization to better behavior, the key element of achieving Purpose. Here’s the basic visualization (subsequent posts will provide detailed visuals and deep-dives into each Model):
Step 1: Create a Purpose-based Code of Ethics
A code of ethics is a guide of principles designed to help professionals conduct business honestly and with integrity. A code of ethics document may outline the mission and values of the business or organization, how professionals are supposed to approach problems, the ethical principles based on the organization’s core values, and the standards to which the professional is held. This is your journey’s starting point.
The objective of this critical first step is to create a new Code of Ethics, one that is more aligned with and integrated into the organization’s Mission, Vision, Values, and Purpose building blocks. Most organizations have a Code of Ethics, likely written long ago, under the purview of the HR team. Take the binder off the shelf and dust it off; find the file in your old Dropbox folder. If you don’t have a Values statement or list, you’ll need to create one. Same with Purpose. The key activity here is to create a Purpose-based Code of Ethics that can stand alone (to be used, for example, to define compliance and regulatory behaviors) AND be easily recognizable by all stakeholders as aligned directly to why the organization exists.
Step 2: Maturity Roadmap
How ethical is your company today? How would you even measure a meaningful degree of ethical behavior? How ethical do you want to be in a year, or two, or three…or five? You can’t get where you want to go if you don’t know where you are today and what’s required to move forward. A Maturity Roadmap starts with an ideation process, thinking through these big questions. It results in a picture of the ideal future state of behaving ethically in order to achieve the company’s stated Purpose. Once you have the future state mapped, then you have to assess and evaluate where you are today — typically, the criteria for evaluation analyzes People, Processes, Culture, and Technology. The gap between the assessment of today versus the ideal state becomes the framework for the work that needs to be done. Hence, why we call this the Maturity Roadmap — I’ve created a simple, three-stage path to ideal future state maturity. Part of the deep-dive into the Maturity Roadmap includes a deconstruction of the most critical part — Crossing the Chasm — the place most organizations get stuck, the blockage that keeps them from achieving a truly cohesive, constant, and comprehensive Ethical business.
Step 3: Value Model
Moving from profit to Purpose terrifies many CEOs and senior executives. Is there business value too behaving more ethically? Yes. Creating a Value Model illustrates exactly how. This model shows how every day-to-day activity is aligned to the three most important business drivers the business has — making money, reducing costs, and reducing risk. In this case, where the organization is seeking to become a better corporate citizen, the Value Model prioritizes reducing risk as the most important business outcome by placing it higher in ranking vis a vis making money or reducing cost.
Step 4: Capabilities Model
The Maturity Roadmap illustrated the gaps between where the organization is today as an ethical actor versus where it wants to be. The Capabilities Model illustrates the specific things the organization needs to have and be able to do to move to the next stage of maturity. Broken out into People, Processes, Culture, and Technology, this model identifies areas where the organization needs make deeper or broader investments. Now that you know what capabilities you need more of, you can start the work required (outlined in Maturity Roadmap) to move forward.
Step 5: ROI Model
Like any other initiative, better behavior is measurable. It is therefore possible to attach an ROI to it. Which is essential to the calculus of doing good while doing well. Analyzing potential returns derived from better behavior is how we know whether the organization is behaving better. This model defines which which activities are worthy of tracking, which ethics initiatives (i.e., People, Processes, Culture, Technology) are making a difference, and in the process, leverages algorithms to create reasonable, concrete measures of benefits (e.g., risks reduced, costs saved, revenue generated).
