I\u2019ll never forget that\u00a0lecture in my early days of business school in New York, in which the professor proudly explained to the packed auditorium how his family managed to avoid paying taxes over the year through savvy management of the household finances. The idea of being smart about your taxes seemed harmless and sensible, but encouraging young and impressionable soon-to-be businesspeople at an Ivy League institution to avoid paying taxes altogether? I must admit I briefly questioned my choice of education at that moment.<\/p>\n
Since then I spent the years helping companies articulate and strengthen their identity \/ brand \/ image \/ reputation (pick your favorite term). Throughout these years, words like \u201cintegrity\u201d and \u201cethics\u201d came up again and again as part of companies\u2019 definition of their core identities, values or what they aspire to stand for. But what I also witnessed were more and more examples of companies talking about integrity while\u00a0demonstrating the opposite \u2013 from the Enron accounting fraud<\/a> (a company that actually had the word \u201cintegrity\u201d as one of its four core values) to the much talked-about Dieselgate<\/a>. I started wondering if \u201cbusiness\u201d and \u201cintegrity\u201d were in fact mutually exclusive terms.<\/p>\n \u201cThe world runs on individuals\u00a0pursuing their self interests\u201d You may say that some of the greatest thinkers in economics would agree with this conclusion: from the days of Adam Smith, many economists have been arguing for centuries that the purpose of business is to maximize profit. According to this view, ambition, self-interest and even greed are the forces that power capitalism \u2013 and thankfully so. Milton Friedman, a clear advocate of the Profit Motive<\/a> theory, which later evolved into what we know today as the Shareholder Value<\/a> model, went as far as saying that \u201cThe Social Responsibility of Business is to Increase its Profits\u201d. And I won\u2019t even talk about\u00a0Ayn Rand and her thoughts about the virtue of greed. If the sole purpose of a business is to make money for its shareholders, does it not suggest that integrity should take a back seat?<\/p>\n While the notion of maximizing shareholder value (also known as Anglo-Saxon capitalism) came to dominate the world of business as we know it today, it came underrenewed criticism<\/a> in the early 2000\u2019s\u00a0following the gradual collapse of public trust towards corporations in light of the circumstances surrounding the disappearance of once great hallmarks of capitalism such as Enron, WorldCom and Lehman Brothers. The concept of Shared Value<\/a>\u00a0rather than Shareholder Value started to take hold, and some even referred to the idea of shareholder value maximization as \u201cthe world\u2019s dumbest idea\u201d<\/a>. Business Schools, belatedly, are coming to realize<\/a> that part of their role and responsibility in educating future business executives\u00a0is to also instill a strong ethical code among students \u2013and they\u2019re adapting their curricula accordingly.<\/p>\n But in my mind, the question of integrity in business is not connected to whether the conservatives or progressives ultimately win the argument about the purpose of business. Whether it\u2019s to make money for shareholder, as the former argue, or to address wider social needs as the latter argue \u2013 personal integrity can and should serve as a core tenet in the behavior of all companies and company executives. So far so good \u2013 no economist or management theorist would object to that. Why then is it so that scandal after scandal seem to suggest that companies talk the\u00a0talk when it comes to integrity, but find it hard to walk the walk and practice what they preach?<\/p>\n If you ask me the issue is not whether CEOs define \u201cintegrity\u201d as a part of their company\u2019s core values or even its core purpose \u2013 it\u2019s what they do to engender a culture of integrity throughout the organization, and how they lead by example. In his book Conscious Capitalism<\/a>,\u00a0John Mackey, co-Founder of Whole Foods Market, says that business is “fundamentally good and ethical\u201d. I fundamentally agree. But I also think, as he does, that good intentions are not enough \u2013 authentic business integrity requires work on several fronts:<\/p>\n The first 4 of these are referred to as the four principles of conscious capitalism by Mackey. The 5th one is my addition, following my own experience in embedding core values across organizations over the years.<\/p>\n So no, I don\u2019t believe the term business integrity is an oxymoron. And I don\u2019t feel that my choice of education was wrong (though I sometimes like to joke that all\u00a0we learn in Business Schools is\u00a03 C\u2019s, 4 P\u2019s and 5 Forces). But I do believe companies \u2013 large and small \u2013 need to work harder to demonstrate business integrity, and by doing so\u00a0regain trust and live up to the real potential of business.<\/p>\n","protected":false},"excerpt":{"rendered":" I\u2019ll never forget that\u00a0lecture in my early days of business school in New York, in which the professor proudly explained to the packed auditorium how his family managed to avoid paying taxes over the year through savvy management of the household finances. The idea of being smart about your taxes seemed harmless and sensible, but […]<\/p>\n","protected":false},"author":3,"featured_media":7513,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"industry":[],"class_list":["post-7312","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-knowledge"],"_links":{"self":[{"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/posts\/7312","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/comments?post=7312"}],"version-history":[{"count":2,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/posts\/7312\/revisions"}],"predecessor-version":[{"id":7514,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/posts\/7312\/revisions\/7514"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/media\/7513"}],"wp:attachment":[{"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/media?parent=7312"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/categories?post=7312"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/tags?post=7312"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/groupcaliber.banyodev.dk\/index.php\/wp-json\/wp\/v2\/industry?post=7312"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n– Milton Friedman<\/p><\/blockquote>\n\n