Jim: When you get down to it, a “hard-headed” businessperson can’t be sentimental. There has to be a bottom-line reason for doing anything and everything related to the business. That is at least the image that many people, even many business people, have of the “successful” businessperson. Hiring, firing, advertising, charity, purchasing, selling, product or service selection, personnel decisions are all grist for the mill. They think that morality and ethics need not enter into the decision process. That really is not the case. But sentimentality is a luxury.
Paul: Jim, before tackling that head-on, let’s figuratively “take a walk down Business Street.” The first thing we notice is that the buildings are not like the song of a half-century ago “all made of ticky-tacky” and they do not all “look just the same.” There are incredible arrays of styles and materials, sizes and colors. The people coming in and out of those buildings are just as varied.
Look at this impressive building. It has a sign identifying it as the Business Hall of Fame. Once inside we find a pantheon of business leaders. Some of them had business dealings that were questionable. Some of them such as Andrew Carnegie apparently tried to assuage guilty moral sensitivities by incredible philanthropic contributions and endowments. Others, like James Cash Penney don’t carry that kind of baggage. Here was a man who was legendary in his frugality. One story is about him stopping to instruct a clerk in exactly how to wrap a package to not waste a centimeter of wrapping. He had an eye on the bottom line and the bottom line was for him the Golden Rule.
Here is a picture that is unusual because the subject is still alive. It is Aaron Feuerstein, CEO of Malden Mills. When New England mill owners were heading out of town faster than yuppies on Labor Day weekend, Malden Mills said we’re staying put and made its Polartec fabric ever more profitable even with higher production costs. Then disaster struck in December 1995 when a fire destroyed the mill. Feuerstein didn’t hesitate. At great personal sacrifice and because he had deep spiritual resources for his ethics he kept his employees on the payroll and set about rebuilding.
In late November 2001 Malden Mills filed for bankruptcy. When I get to this point in my classroom some of the more outspoken students agree with what you stated at the beginning; “See you can’t be sentimental and successful at the same time. It’s people or profits: you can’t have both.”
That’s wrong for a number of reasons. Those students especially don’t have the foggiest notion of business strategy.
Bankruptcy, at least corporate bankruptcy, is not necessarily an indication of fiscal, managerial, or moral failure. In many cases it is a deliberately calculated approach to reposition the firm more advantageously and allow it to pursue its mission. Whether that mission reflects noble ethical values or not is not built into it. It is interesting to me that the major creditors for Malden Mill are also, for the most part, the same corporations who are lending the venture capital to help this phoenix rise from the ashes. Today they are back in business and on the road to success.
Now let’s cross the street and take a quick look at the “Business Hall of Shame.”
We only have time to ponder one portrait. It’s “Chainsaw” Al Dunlap, the man Business Week in 1996 called “A Corporate Tough Guy.” Boy, there was a guy no one would accuse of being sentimental. I have to admit he was successful — ruthlessly so, but successful. That was the story of his life. Then the Board of Sunbeam said in effect, “that’s enough.” Either we lose you or we lose our integrity, which is another way of saying we lose our corporate soul,” and they said “Sayonara” to Al.
Jim: To restate the question, “do business and ethics go together?” I can see that is going to be a recurring theme. Hopefully, in the meantime, we got rid of a stereotype or two. It is clear from your examples that ethical conduct or lack thereof in the market place is not a sure indicator of success or failure. What I hope to demonstrate in our future conversations is that, while the evidence is not yet all in, there is enough to suggest that an ethically guided company has a much better chance of success than one that is not, all else being equal. |
