Ethics

What’s your bottom line?

Two weeks ago, something quite interesting happened in corporate America.

B Corp, a group of around 30 CEOs from leading US and international corporations (including Ben & Jerry’s, Danone and Patagonia) took out a full page ad in the New York Times, urging their peers to commit to a more ethical way of doing business.

The ad was in the form of an open letter from the group to members of the influential Business Round Table, which is made up of 181 of the most prominent CEOs in America, including Amazon’s Jeff Bezos and Apple’s Tim Cook.

B Corp describes itself as ‘a fair trade label for companies – a global movement of people using business as a force for good’.

Their underlying idea is to shift from a culture that prioritises shareholder profits above everything else, to one where employees and the environment get equal billing: a ‘triple bottom line’.

B Corp argues that this encourages longer term thinking. Which, as well as making for fairer and more socially-useful businesses, ultimately delivers more sustainable long-term value to shareholders.

It’s hardly a new idea. In fact, just a week earlier, the Round Table had issued its own statement, re-defining the ‘purpose of a corporation’ to give equal weight to social and environmental interests. In other words, the same triple bottom line.

Jamie Dimon, the CEO of JP Morgan and the Round Table’s Chairman, said he hoped the statement would ‘help to set a new standard for corporate leadership.’

So why did B Corp feel the need to press for a firmer commitment?

Perhaps because the Round Table hasn’t always been consistent in its thinking.

Through the 1980s and early 1990s, when the US economy was booming, they promoted a similarly inclusive definition of a corporation’s purpose.

But, in 1997, when the global economy started to look a little more challenging, they rowed back on this progressive thinking and defined corporate purpose in much narrower, shareholder-first terms – and that’s where they’ve stayed ever since, until last month’s statement.

Which is why the B Corp open letter is so interesting.

They’re essentially challenging America’s biggest businesses to put their money where their mouth is.

Don’t just talk about a better model of business, they’re saying.

Commit to it.

Become a B Corp member.

It’s an interesting challenge because, if you do sign up, you’re changing the way decisions are made in your business.

For instance, using tricky loopholes to get round inconvenient tax rules (good for shareholder returns) would no longer be something you could justify (bad for the wider community).

And what happens when the global economy goes through another downturn – as economic indicators seem to suggest may happen soon?

Will your shareholders accept lower profits and smaller dividends, while you reinvest to protect your workforce and make your business more sustainable in the long term?

Or will they fire you?

As Bill Bernbach used to say, a principle isn’t a principle until it costs you money.

Let’s see if the Business Round Table are really willing to live up to the bold words in their statement.

Matt is the author of tribe: 66 ideas for building a winning culture, which explores the characteristics that contribute to a winning workplace culture. He’s also written inside: the 10 communication secrets that will transform your business.

If you’d like a free copy of either book, pop in to The Forge (we might even make you a coffee…)

The right stuff

If you visit The Smithsonian Institution in Washington, one of the exhibits you’ll find in the space exploration section is a stopwatch.

At first glance, it seems fairly unremarkable.

Until you discover it’s the watch used by NASA flight technician Bob Carlton, to keep track of how much time was left before the fuel on the Apollo 11 moon landing craft would run out.

The clock is stopped with 18 seconds remaining.

In other words, after over two hours spent trying to find a safe place to set the landing craft down, Neil Armstrong and Buzz Aldrin had just 18 seconds left before they would have to abort the mission and return to earth.

Man might never have set foot on the moon. The world we grew up in might have felt a very different place.

So those 18 seconds are incredibly significant.

The position of the hands on the stopwatch is a permanent reminder of the moment when mankind became a species that could define its future in terms of more than one planet.

And, recognising the significance of the moment, Bob Carlton was determined to preserve it.

He put the watch in a box, took it home and locked it in his desk drawer.

A week later, he took it out and was perplexed to see that the hands were stopped at 22 seconds. Had he called the wrong time – made a mistake under pressure? Alarmed, he put the watch back and resolved not to mention it to anyone.

The following week, he looked again. This time, the hands were on 31 seconds. What was going on? Was the mechanism faulty? Had there been a risk to the mission? Did he need to report it?

The real explanation was more prosaic. Carlton’s teenage daughter was a drum majorette – she had found the watch in her dad’s desk and, not realising its significance, had used it to time her baton-twirling routines.

So the hands on the stopwatch you see in the Smithsonian are not stuck in the precise position they were in at the historic moment of touchdown.

They’re in the closest approximation Bob Carlton could get them into, before handing the watch over to the Museum 50 years ago.

Does that matter? Does knowing it reduce the significance of the watch – or its authenticity as a historical record?

Not really.

The point is not the watch. The point is the story – and what it tells us about the guts, determination and ingenuity of people who were prepared to fly hundreds of thousands of miles in a metal can to set foot on a totally alien environment.

You could melt the watch down and replace it with a fake one made out of cheese and it wouldn’t make any difference.

Because it’s not the symbol that matters. It’s the story behind it.

That’s something worth keeping in mind next time your business sets out on a mission to ‘rebrand’ itself.

People will agonise for weeks (or sometimes years) about the best colour ways, the ‘right’ font, the optimum balance between the logotype and the end-line.

And none of those things will make the slightest difference, if the business doesn’t also stand for something meaningful to the people who work there and the customers it serves.

Real brand is never about ‘branding’. It’s about having the right stuff.

Photo – The Smithsonian Institution – Museum of Space and Aeronautics

How to sabotage your own reputation

When you buy a ticket for an airline flight, what do you think you’re buying?

The ability to travel from A to B at the date and time on your ticket?

Not according to British Airways.

(Regular readers of this blog may sigh to hear me bring up that name again – but bear with me. I promise there’s a point…)

When I complained to BA recently about bumping me off a flight back from Texas, they handled it every bit as badly as the original incident (which is to say, they ignored it completely, until I sent a second stroppy letter to their CEO – at which point, they offered a grudging apology and a few quid off another flight).

The most interesting part was that they denied liability for any losses caused by the delay, because they said they weren’t contractually obliged to carry me on the flight they’d sold me the ticket for.

This didn’t seem to make sense, so I checked twice, to make sure I hadn’t misunderstood. I hadn’t. They said: ‘BA reserves the right not to let you on the flight if we’ve oversold it.’

In other words, when you buy a ticket from BA, what you’re actually buying is the ability to travel from A to B at a time that suits the airline, even if it totally disrupts your own plans.

Or, to put it another way, if you’re counting on BA to get you to a meeting, or a concert, or a family wedding on time, you’d better hope you’re one of the lucky ones that doesn’t get bumped off when they sell more tickets than they have seats on the plane.

You might think this is a rather odd policy for an airline that claims to pride itself on customer experience.

Until you remember it’s the same airline that, this week, got hit with a £183m fine for letting hackers access its customers’ confidential data.

‘This fine isn’t fair’, whined BA’s management. ‘We’re all about customers – we’ve just spent loads on some new bag drops at Heathrow. How can we be the bad guys here?’

And that’s the point. BA just don’t get it.

You can have the best bag-drops in the world. The fanciest menus. The softest cushions.

And none of that matters if you can’t get the basic elements of customer experience right. Such as taking people where they want to go when you said you would. And not exposing their personal and financial data to criminals.

If your customers can’t trust you, nothing else matters – and, if BA really cared about their customers’ experience, they’d know that.

But they don’t. And that’s why they’re now £183m worse off.

Nice guys finish first

A positive culture leads to business success. Not the other way around.

This is confusing for some people, who remember a time when it didn’t matter how you won, as long as you won.

When it used to be cool to have signs above your desk saying things like ‘nice guys finish last’ and ‘lunch is for wimps’.

That kind of gung-ho machismo doesn’t work anymore, because the world we live in has become much more transparent.

If you’re only in it for the money, if you cut corners, if you try to con people, they’ll find out sooner or later – and they’ll let the world know.

The only way to be sure of winning is to create an environment where the people who work for you feel happy enough to want to make your customers happy, too.

The future belongs to businesses that behave like humans.

Nice guys finish first now.

This blog is an excerpt from Matt’s new book; tribe: 66 ideas for building a winning culture. The book explores the characteristics that contribute to a winning workplace culture. If you fancy some bedtime reading, you can buy a copy here. Or pop into The Forge and pick one up for free (we might even make you a coffee…)

Do no evil (no, really)

The week’s big news – how Cambridge Analytica allegedly bought profile data from Facebook and used it to influence the outcome of the US election – has offered a fascinating (if terrifying) glimpse into the world of online data analysis.

Among the many jaw-dropping revelations and tone-deaf Twitter responses, the standout moment was the interview with Alexander Nix, Cambridge Analytica’s (now suspended) CEO.

When it was put to Nix that he had been caught on camera boasting about how his business had used data to influence the election outcome, his dismissive explanation was that he had been pitching for new business, so was obviously saying whatever the client wanted to hear.

What I found interesting was that he clearly imagined this made it okay. Which got me wondering: how messed up must your organisation’s moral compass be if ‘We routinely lie to prospective clients in order to get their money’ feels like a brand positioning you’re happy with?

Perhaps I’m naïve. Nix certainly seemed to feel he was being unfairly singled out for a practice that was routine in his industry. The board of Cambridge Analytica disagreed and threw him under the bus.

No doubt, this will shortly be followed by the disappearance of what has now become a toxic brand – and the business will quietly re-emerge with a new name, a new set of corporate values and (for at least a little while) a loud determination to act in a purely ethical manner.

Will this fix the problem? Or will it just be a temporary diversion, until the new leaders realise they’re losing market share to competitors who are still being less scrupulous about the way they manage data?

That’s the problem with ethics. As soon as you start finding ‘grey areas’, where you can make compromises that boost your profits without actually breaking the law, it’s tempting for under-pressure leaders to embrace them.

Which is exactly where ‘good’ businesses go bad. If your engineers get rewarded for finding ways to mysteriously improve your emissions test performance, that’s bad (Volkswagen). If your sales people get a bonus for selling people financial insurance they don’t need, that’s bad (any bank that mis-sold PPI).

But is either of those ethically worse than avoiding tax? Or deliberately paying your suppliers 60 days later than your commercial terms said you would? (Almost every large business I’ve ever dealt with).

Very few companies are actually ‘bad’. But don’t kid yourself that having a page of values that say things like ‘integrity’ and ‘transparency’ and ‘fairness’ is going to save you from public scrutiny when you’re caught crossing an ethical line.

Culture is about every single thing you do as a business. As soon as you start turning a blind eye to (or worse, rewarding) bad behaviour, you’re in the same boat as Alexander Nix.

If you’d like a free copy of either book, pop in to The Forge (we might even make you a coffee…)