10 April 2009

Dulling the Virtuous Edge

(19-May-2008) The 20th Century was extremely productive. On the heels of the Industrial Revolution, it was a time period defined by new ideas, inventions, scientific discoveries, technological innovations, and in the United States, economic prowess. Business became the most powerful institution in the world, and at the turn of the glorious century, powerfully bad.

What happened? America, its people happily living a values-based and comfortable lifestyle—what I perceive to have been a “black and white” world—suddenly turned gray. With the introduction of computing resources and commercial transportation, opportunities widened and the world got a whole lot smaller. Altogether, these seemed to be very positive steps for our developing nation, and adopters were many.

However, fast times call for fast measures, and in the past decade handfuls of corporate scandals have surfaced because of it. So much scandal in such a relatively brief length of time has been the collateral result of globalization. Enabling resources and technologies have allowed businesses to expand across regions and the globe, and the everyday tempo of industry has necessarily been altered. Expanding businesses means expanding markets. To expand, like business models and firms tended to merge, in effect lessening competition and dulling the virtuous edge. As the gap between global mergers and small businesses broadened, so did the exercised form of professional ethics.

Profit blindness and the residual quest for a quick competitive edge resulted in poor behavior and choices, as observed in many case studies of corporate bad boys and their scandals. The rub of the thing is that when making the decisions leading to downfall, these players overwhelming claimed that they didn’t feel—at the time—as though they were doing anything wrong. And that’s the key.

The existing moral standards pre-globalization had become irrelevant at an unknown place and time, and what replaced them was widely shaped by “what made business sense” as well as tom peeping of what others were doing. To avoid scandals, future CEO’s need to redefine the bottom-line, and revert to real, established operating standards consistent with a global economy.

A guiding light then, is Corporate Social Responsibility, or CSR. CSR is heavily invested in the idea of business sustainability, sustainability being the ability to fulfill one’s needs without compromising the ability of future generations to fulfill their needs. CSR spawns forward-looking programs, in which hindsight shouldn’t be needed to see scandalous behavior twenty-twenty. CSR considers the global society, and how impacts of business decisions affect various stakeholders. A CSR-oriented vision, intermixed with profit-based corporate goals, gives business the opportunity to be both good and productive.

Why should CEO’s care about being socially responsible? How is it in the interest of the business to do so? These are two separate questions that have everything to do with each other.

The first step is to acknowledge that we have a problem. A global economy equates to global concern, and we are not globally healthy. There are people in the world, humans just like anyone else, who die everyday simply because they do not have enough food to eat or clean water to drink. Before we had awareness for these types of people, and before we had a relationship with our global brethren, we had an alibi for being ignorant. This is no longer acceptable.

Sustainability for the life of people, as with the sustainability for the life of business, is inherently tied to its methods. It just so happens that in business, the path to responsibility can be extremely lucrative—financially, intrinsically, and philosophically. With a profit-interest in financial performance, though, attention can again be directed to those human beings who lack food, clothing, shelter, medical care, and jobs. What an incredible market to tap! And the good news, according to The Fortune at the Bottom of the Pyramid by business scholar C.K. Prahalad, is that “creative businesses are finding ways to develop markets among the world’s poorest people.”

The new Industrial Age that a CSR-enhanced business can be a part of presents massive entrepreneurial potential, and the transition to a service-economy may do wonders for customer retention. Rational choice and a loving nature for the global community will be the new competitive edge for a business, and a sustainable one at that. Leading a good business, like leading a good life, can only be achieved through logic and conscious restraint.

Democracy works when there is restraint—the restraint of virtue. Former Labor Secretary Robert Reich once claimed that the “gap between rich and poor should tend to narrow with development, not widen.” Business leaders need to develop a common thread of sustainable activity and adherence to ethical principles in order to close this gap. As a last thought, consider the implications for the world if our real centers of population—those in Asia—begin to consume resources like Americans do today. Is the world this would create a place where future generations can survive? Will that be our woeful legacy?


Gil Burgess said...

If this was your homework assignment, it made staying up late worthwhile!

Seth C. Burgess said...

I actually wrote the above as my Business Ethics final essay on 19 May 2008.

Normally such final writings seem to vanish into the abyss of some professor's student records, however in this case Dr. Barbato actually allowed us to type our in-class essay on a laptop if we so desired and then submit to him via email.

The format was appealing to me as I am used to being able to compose electronically and make edits as desired. It was appealing to the instructor so that he wouldn't have to suffer through illegible handwriting! And the bonus is that I was able to maintain a copy of the writing.

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