Wednesday, October 15, 2003

Oct 15 2003

Corporate Ethics

This term seems like an oxymoron, especially these days. Enron, WorldCom, and the rest have simply shown us something we’ve really known for a long time: the corporate world suffers from a lack of ethics.

Some believe that corporations don’t need ethics. Business is impersonal, as it should be. Businesses are all about work, which produces a product or a service, and why do we need to shoe-horn ethics into that?

Because products are bought by customers, and services are used by people. All businesses are fundamentally about people. Robots don’t buy laundry detergent; people do. Software applications don’t get tax advice; people do. Corporations are responsible to their customers, their lifeblood.

What about shareholders? They’re secondary. It’s great to impress Wall Street, but they’re not the ones generating the revenue that the company uses to pay its rent and its employees. At least, not established companies; startups don’t have any or many customers, so aren’t subject to the exact same forces.

But ultimately, all companies have to be about revenue, because all the positive valuations in the world won’t bring in revenue — unless you begin to borrow based on those positive valuations, in which case you’re setting yourself up for failure (how will you pay off those debts if you have nothing but more debt with which to pay them?).

So. Companies deal with people. That means that companies are in a relationship with their customers. People expect certain things from relationships.

People expect honesty to the point of transparency. Honesty is a no-brainer, but people expect more than simply being as truthful as you can be given all your pressures. When people are in a good relationship, they expect the other person to be forthright about everything, to the point of volunteering information that might damage our reputations. If a friend screws up, you expect him to be upfront about it, not hide behind “market forces.”

People expect straightforwardness. That’s an awkward word, but I can’t think of anything better. It ties into the above point, too; when you’re honest, you don’t hide behind knots of formality and complexity. More than that, you look for ways to cut those knots. Who wants a friend who guards every word? People want the straight dope, as simply as possible.

People expct realistic results. You can’t hide behind words forever; what are you actually accomplishing? What impresses you more: Amazon.com’s latest acquisition, or the fact that it’s moved almost a million and a half copies of Harry Potter and the Order of the Phoenix alone? People get fed up with that college roommate who always talked big but never did anything, and they get just as fed up with a company that plasters “Company Focused” on its website but takes six days to answer a simple e-mail.

And, as those wonderful IBM commercials point out, there is no magic genie that will make this easy. It’s tough. It’s complicated. It requires a lot of thought.

But it’s important.

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