Thursday, April 21, 2011

Practical business ethics

rightwayI’ve found little overlap between the case studies that we use in business school and the real-world scenarios that I’ve encountered in starting a new business.  This is especially true with regard to business ethics.

Class scenarios always involve managers asking for money to be shifted, supervisors asking for lab results to be withheld, engineers asking for test results to be falsified.  Simple, obvious, NO.

My real-world scenarios are more like

1) can an employee deposits a third-party check, payable to him, into the business bank account, then withdraw funds to get immediate access to the money (no: money-laundering), or

2) can an employee buy himself a pizza using the company credit card without planning to pay it back (no: embezzlement).  Grey, but still distinguishable.

My real world is full of hard cases.

In a year of pitching, I’ve met investors who want to believe, and investors who are looking for a reason to doubt.  There is every reason to tell them that the sun is rising now and every day will be summer.  “How good is your evidence?”  “How relevant are the bench results to animal testing?”  “When will you hit the next milestone?”  There is a relentless temptation to tell the good story; there is a relentless requirement to tell the truth.  We’ve lost a couple of investors that we might otherwise have had, but I can look the rest in the eye and tell them our situation, good or bad, without backtracking.  I was proud when one of them shook my hand and said that we had an ‘honest business’ going. 

My real world also abounds in ethical shortcuts that can mess things up in the long run.

We’ve wrestled with a signature that we needed on a key document: the other party didn’t want to sign and the business was blocked without the signature.  “What do we do if he doesn’t?” was on everyone’s mind.  One answer is that we tell him anything, then vote him out of the way once we have a path forward. Effective but wrong.  There was the nuclear option of invoking a questionable clause in his contract to nullify our agreement.  Devastating, but wrong.  I made multiple trips to meet with him and negotiated it out, listening, accommodating, sometimes negotiating.  And I got the signature, kept within my boundary for dealing straight with people.


There will be times when I need to be firm and may be circumstances when I need to go nuclear.  I’ve gotten more cynical about human motives and means through all of this.  But I do feel like I’ve stayed on the right side of the lines, even when it’s really been the harder thing to do.

Business ethics?  I abide by an uncomplicated ‘4-question’ test that someone suggested to me years ago:

  1. Does it feel right?
  2. Is it legal?
  3. If a reporter were sitting outside with a few questions, would you talk with him?
  4. (the acid test) What would your mother say?


Jules: said...

About #4: May not necessarily be the right question if your parents are as far-out as mine :-)

Dave Hampton said...

Touche - 'made me laugh. I'm in the middle of reading Shteyngart's "Super Sad True Love Story" and it's filled with characters trying to make sense of their parent's advice.

Hope you're having a great weekend out in the sunshine!