New Ethics in Business

The paradigm of business as a ruthless, cruel world, where competition means cutthroat and egos rule, still seems to prevail in reality television shows like The Apprentice and The Dragon’s Den. It’s an image I’d like to see change.

Not long ago, Enthum had the task of facilitating a workshop for a major company reviewing cost saving options — a necessary response to the economic downturn. Among the ideas accepted was to delay payments to creditors from 30 to 120 days. Heralded as a good way to improve working capital, there was little mention of the negative impact this would have on the company’s suppliers. Since then, we’ve heard of another large company squeezing their suppliers so hard, they contributed to two of them going out of business. Now that big fish is without the materials it needs to build its products.

We know the reality of being in business is tough, particularly when there’s a headwind in the economy. We need to be smart, to think creatively, and to make difficult decisions. But we cannot exist in isolation. Its time to realise how we are all connected, that our problems — be they economic or environmental — need solutions that don’t disadvantage others.

I recently came across this interesting research on leadership; Managers were surveyed about the specific qualities they look for in a leader. It wasn’t intelligence, experience or confidence that topped the list, but moral integrity that was considered the most important attribute —and by a big margin*.

And yet generally business gets bad press when it comes to moral integrity. But the view that capitalism is incompatible with social responsibility or environmental sustainability is being challenged by an approach called Natural Capitalism**.

Natural Capitalism suggests there are new opportunities for businesses; not only to better satisfy their customers’ needs and increase their profits, but also to help solve environmental problems, by fundamentally shifting from an economy reliant on purchasing goods, to one based on providing services.

There are some good examples of businesses reinventing themselves, like the US carpet company, Interface. Traditionally dependent on selling and fitting a lot of carpet, they now operate a floor covering service. For a monthly fee, they take responsibility for cleaning and maintaining their client’s carpets, replacing worn bits as required (now manufacturing squares, not rolls). They company owns the carpet, so it’s in their interest to use less of it, since they derive income from providing a service, not selling the stuff. Now waste is reduced, and for the customers, costs and disruption minimised. Everyone is better off, and so is the environment.

This new industrial revolution, like the one before, calls for new approaches to business. Lets think creatively about how we can sustain and grow our businesses without having an adverse effect on others, or better still, how our success also provide benefits beyond ourselves.

* Lennard McCourt Associates research. Emler, Tarry & Soat,1998; Emler and Stewart 2009 forthcoming

**Natural Capitalism: Creating the Next Industrial Revolution, by Paul Hawken, Amory Lovins, and L. Hunter Lovins.

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