The question of ethics in business has never been more prevalent, in so many diverse circles, in the past as it is today. Our post-financial collapse society (where millennials are still feeling the painful affects of the shockingly unethical behavior of many Wall Street institutions that led to a world-wide meltdown) is quite comfortable with asking uncomfortable questions of not only mega-corporations, but of fledging startups ripe with innovation, heavy funding and aggressive goals to change the world.
That’s a good thing. Startup founders, especially, should continuously question how their business models, marketing campaigns, company culture and goals will affect the lives of individuals and a society as a whole.
Producer Daniel C. Giacopelli (@danielgiaco) of Monocle 24: The Entrepreneurs (a weekly podcast featuring news and thought-provoking interviews on the best in global business), recently interviewed Susan Liautaud (Founder and Director of Susan Liautaud & Associates Limited, a UK-based advisory firm on ethics matters internationally, @susanliataud) on the ethics of business-not-as-usual. Below, Liautaud and Giacopelli give us cause for pause and food for thought — especially with regards to ethics in startups. Among other pearls of wisdom from the interview, we learn how startups should intigrate ethics into their business model from day one and that it should be done above and beyond strategy and in real-time. Using Uber as an example (among others), Liautaud presents a compelling case for redefining how we approach ethics in corporate and startup ecosystems.
“Regardless of your view on the future of society and business, but let’s be honest, it’s somewhere between darkly pessimistic to cautiously optimistic, well, one thing is certain. It will be a complex, messy, Wild West sort of place. We might not have flying cars, but we’ll certainly have driver-less ones. They’re already here, of course, and on the web front. Our diminishing privacy seems to be a given. So this all leaves us with a fundamental question, how can businesses, from big corporations to small start-ups, address and wrangle with the plethora of ethics dilemmas, which will surely come to the forefront of decision-making? Is it the founder’s role to be the ethicist in chief? ” — Daniel C. Giacopelli
Daniel: My guest is Susan Liautaud, lecturer in public policy at Stanford and founder of the course Ethics on the Edge. She popped by Majority House to give me a tutorial.
Susan: What I’m trying to teach in this Ethics on the Edge course (which is a great privilege to teach) is basically how do we make ethical decisions? How do we run businesses? How do we run non-profit organizations? How do we run government ethically and effectively in a world in which our understanding of our reality lags far behind the reality? So by way of a couple of examples, we really don’t know what it’s like to go to Mars. We really don’t know everything we need to know about e-cigarettes in terms of the science. We really don’t know what’s going to happen with some of the testing on Ebola vaccinations or prevention efforts. So the question is how do we continue to progress, to let companies grow, to enhance research, but at the same time make good decisions, make ethical decisions when we are in this world of uncertainty?
And I should say, also, that the course addresses the fact that today’s world is particularly uncertain because of accelerating technology. So things are changing faster than ever before, and also because of the complexity of global risks. We’re dealing with everything from cyber-terrorism to financial system meltdown, water shortage — I mean the list is almost endless, and so that whole constellation of challenges is the space in which we work in that class.
Daniel: And what I find interesting is also, you know, in the UK, we have the FCA, in the US we have the FCC for regulatory and financial things, but is there anything like that for ethics? Is there a global body that’s keeping an eye on how we behave corporate-wise?
Susan: Well, not really. And actually, you raise a very interesting point because there is a limit, and in my view, should be a limit, to regulation. Regulation can only go so far, and particularly in the world that I describe, of virgin galactic and drones, regulation lags very far behind reality, and that’s normal because it takes time to, again, understand the science, develop policy, regulation, etc. So no matter what, regulation is always going to lag behind. And the ethics part of it is really, what do we need to do above and beyond regulation? And another place we’ve seen this question that you raised is in the — so you talked about financial services sector. What we’ve seen over and over again is after an ethics crisis, the headlines read, you know, reinforced compliance efforts. But in fact, compliance is just the law and in my view the law is the lowest common denominator, not highest standards of ethical behavior, and importantly here, not high standards of business efficacy. There’s a lot to be gained by looking at behavior above and beyond the law.
Daniel: Do you find a lot of entrepreneurs or corporate executives want to be ethical, or do you think they find it a nuisance? It takes effort and it could also lose you money trying to be ethical.
Susan: Well, it’s a great question, and in particular with respect to entrepreneurs. So, in listening to the wide variety of entrepreneurs on your show, I can safely say that there isn’t one who wouldn’t benefit from thinking about ethics from the start. It really pays off in the long run, and it’s true that with entrepreneurs, very often, I get we’re too busy, we have other priorities, we’re trying to raise funds, we’re trying to grow, etc. Larger companies now are under more external pressure and it’s true that sometimes people think it’s more of a nuisance than anything else, but the ones who do it well, and there are companies who I would say integrate ethics into their business model — it’s just a part of who they are and how they do business — they really see the benefits and they wouldn’t turn back. I would like to see [ethics] be more integrated and real-time and, as I say to a lot of my clients, very well integrated into strategy. So we’re not quite there yet because we tend to have strategy first and look at the ethics later.
Daniel: Okay. Let’s look at a few case studies. One we were chatting about a bit earlier (before the interview) was Uber. Of course, they run into a few problems with drivers attacking the passengers (among other problems). How do you feel they could respond to that ethically?
Susan: Okay. So Uber is a really interesting example. Exciting company, great company, and a service that is really, really important around the world. They are also very well-resourced, so if anybody’s in a good position to integrate ethics into their thinking, Uber is. I think the reaction from the company, for example, on the rape case in India or on some other safety issues that have happened in other places like in San Francisco, has been, first of all, to try to fend off regulation and, second of all, to say, “We don’t have time for this. Growth is our priority and more intensive driver safety processes will slow us down.” They do say that they have very rigorous procedures. If you look at their website, they detail them. But at the end of the day, the reality is . . . the message from the company was ‘we prioritize growth’. Whereas, I think a much more effective message, both ethically and commercially, would be, “Of course, we run on ethical principles. Our top principle, our most important principle, is safety of our passengers, whether it’s against some form of aggression or whether it’s against some form of driver safety problem, and that’s our priority, above and beyond growth, and we will always keep that front and center, and we would be very happy to work with regulators around the world to see what the right balance is between the efforts that we can be making as a company and where regulation benefits everybody, but again, most importantly, passenger safety.”
Daniel: And is that ethics for ethics’ sake, or is it ethics because you think there’ll be a profit motive in the end where they’ll make more money because they’re being ethical? Or do you think it’s just a good thing to be ethical?
Susan: Well, I think it’s both. I think that it’s very hard to feel that you have a great company if there’s always this sense that passengers are not as well-protected as they could be. Anytime human safety is in jeopardy, it’s very hard to really believe in your business, in my view. But the other thing is that now they no longer operate in Delhi. So I think, ultimately, even if now they’re very well-resourced and they’re growing wildfire, ultimately, there will be commercial implications. And I know people are saying, “You know, do I really want my 17-year-old daughter taking Uber?”
Daniel: And initially, they said they actually weren’t going to pull out of Delhi, even though they were mandated to do so. Eventually, they complied and said “Okay, well, we will.” But here are all these other cab companies that aren’t supposed to be running and they’re still running, and now they’re being investigated. But, eventually, they obeyed the law.
Susan: Right, and that’s an interesting point for two reasons. One is I don’t think what anybody else does is justification for unethically running a business, and the other thing is that you mentioned the law again. So I said earlier that the law is lowest common denominator, but we all need to be making decisions and running our organizations in accordance with higher standards of ethical decision-making. But nonetheless, the law is important and I don’t know of very many cases, I could count them probably on one finger, where violating the law is the ethical solution.
Monocle: I was actually going to ask you is there ever a case when doing the right thing is against the laws of the country in which you’re operating?
Susan: There might be cases, again, where human life is at stake, and I would phrase it that way. We get cases, for example, in the NGO world where they’re extremely difficult because you have a human life at stake on both sides of the decision and it’s tricky. I mean, and sometimes you have human life and some other law that isn’t human life-related. For example, bribery. So is it okay to pay some bribes to the port authority to get badly needed medicines into a country to save some children’s lives? Then the issue there, though, is what are the consequences over time? If you’re looking at that as one decision, it’s very different from looking at it as well, this will have a lot of consequences. Maybe next time the rate of bribery is going to go so high that the NGO can’t afford it. Maybe, you know, the NGO will be arrested in another country, UK Bribery Act or something. So these things are never that simple, but there are rare cases, and I would say, there would always be a case where human life is at stake.
Daniel: And finally, what ethical lesson do you think all companies should follow, regardless of geography or industry? Is there one thing that you think, bare minimum, companies can do to be just a bit more ethical?
Susan: There’s one overall approach to any kind of a decision anyone in the company would make at any level, and that is to make sure that every time a decision is made, ethics is part of that thinking in real-time. I can’t emphasize strongly enough that when we create strategy or when we decide to accept or not accept a customer or put a product on the market, the time to think about the ethics is at the same time you’re thinking about the commercial and the economic and the practical aspects of the decision, not afterwards when the toy has harmed a child or when something else has gone wrong. It’s really that real-time thinking.
Check out the full interview below and download the entire episode (#172) and subscribe to the podcast HERE.