Today, I was reading one of the many RSS feeds to which I subscribe. I was particularly interested in an article that was giving an off-handed compliment to a large cable provider. In this article, the writer was congratulating the cable provider for proactively managing security on behalf of their customers. Apparently, there was a user ID/password file that was circulating in one of the darker sides of the Internet. Most likely, a torrent. (To de-tech this, just imagine going to a bad neighborhood in a big city, and observing money changing hands, and then an item of unknown origins also changing hands.)

Though I was amused that congratulations were given for doing what every company should do as a part of their business (protecting their customers), it brought me to a different line of thinking. The mere fact that some companies warrant kudos for doing the right thing is troubling. And, when looking at the bigger picture behind this, it is even more troubling. It’s not limited to a few companies.

What are you saying?

First a bit of background. I worked for an ethics company for several years. (Yes, they exist. And, yes, they have a good business.) It was, in fact, the longest time I’d been with any employer. There were many things that kept me there, and one can probably list the usual reasons: people, challenging work, and a belief in the business model practiced. To be sure, the company was not an easy place to work. It was a founder-run company, and he had very specific ideas of how the company should operate. And, if one didn’t agree with him, he was open to feedback–provided that the feedback didn’t cross a few, well defined, boundaries. Usually.

But I’d like to focus on the latter of my reasons: a belief in the business model. The company’s philosophy was pretty straightforward, but ultimately very complex. At a very high level, it was the belief that making principled decisions would ultimately bring a more sustainable business. As simple as this may sound, it is much more difficult in practice. I’ll cover that in a moment.

The belief itself is rooted in the view that people inherently want to do good things. People who do not want to do good things are among a very, very tiny minority of the population. So, if people want to do good things, and that desire is a core foundation of their principles, then the concept of making principled decisions will result in good things. The logic is pretty clear, and the concept is one with which most people can probably agree.

The article I mentioned pointed out that the company’s history was one that usually didn’t warrant any level of congratulations. Sometimes, that’s to be expected. There are times where a business’s interests seem counter to what the general public sees as positive. Think of the IRS, for example. Many of us lament paying taxes. Sure, we get that the taxes fund very important things that are things we need. But, we still have a disdain for taxes. In my own case, for example, I lament that each dollar paid is not used as efficiently as it could be.

The company in the article I mention, however, has a history that has helped it gain a very poor reputation.

About that company that was a tough place to work…

Ah, yes. The ethics company. To best explain why the company was a tough place to work, it is a necessary to give further insight. The tenets of the company had a number of attributes that defined leadership. As such, there were a list of attributes that were provided as examples to illustrate a lack of leadership. Think back to the “T” accounts in accounting. On one side you had a credit, and on the other you had a debit. With respect to these attributes, “principled” decision making was considered to be an attribute of a leader. Pragmatic decision making was considered to be an attribute to those who were not leaders. Both sides of the “T” were filled in with attributes.

This wasn’t to say that pragmatic decisions were bad, per se. Rather, it was to say that given a choice between the two, principled decisions were always the better choice. (They weren’t always contrary to each other.) So, if one were trying to decide whether or not to “go with the flow” of an action, a principled decision would certainly be the best (only, actually) choice.

I’ll try to describe this a bit more tangibly. Let’s suppose that a group of automotive engineers are trying to meet a corporate mandate to reduce CO2 emissions. In their quest to do this, they live with the reality that their livelihood likely depends on them being successful with their work. Consequently, they come up with a “shortcut” that will meet the goal of demonstrating reduced CO2 emissions. The shortcut, in this case, is actually a modification that cheats the system measuring the output of CO2. Nonetheless, they know that they will meet the mandated goal–or at least, trick the system to think they are meeting the goal.

Now, let’s suppose that a new engineer joins the team. He reviews the methods of achieving this goal. He quickly realizes that the method used to achieve the CO2 goal is nothing more than a method to cheat the system. Pragmatically, he knows that going along with the status quo is likely going to be better for his career, with a very small risk involved. At a principled level, he doesn’t like participating in what is nothing short of fraud. But, he realizes that not participating at this point is certain to bring him more trouble than saying nothing. Even if he finds a way to extricate himself from the team doing this “wrong,” he still has the knowledge.

Pragmatic decision: Go with the flow. Live with the small risk of discovery.

Principled decision: Go against the flow. Report the fraud. Live with some repercussions that are certain.

For those of us reading this, we can probably say that we would most certainly make the principled decision. But, alas, armchair quarterbacks enjoy the freedom of making decisions that don’t affect them directly. So, picturing oneself in this situation, and tying that back to the reality of having a family to feed, a mortgage to pay, and a retirement to plan, it is much more difficult a decision to make.

This is the concept of principled decisions. This example is actually one of the easier examples. There are many that are far less black and white. As I have adopted principled decision making 100%, I have found myself with some very, very tough decisions. Example? Shipping a product to meet a committed delivery date–with significant financial implications, or accepting a delivery that doesn’t meet the quality/functionality desired by the customers.

I can think of at least one occasion where the CEO at the ethics company walked away from a large sales potential because he didn’t believe the company had any intention of actually trying to change. A principled decision.

Getting back to the article, and the referenced company…

As I read the article, I couldn’t help but mumble to myself, What is wrong with people? (Companies are people, after all.) “Is it really so hard to do the right thing?!” Yes, sometimes it is. And I know this based on my own struggles in taking a principled approach, when taking a pragmatic approach would have been infinitely easier.

I could rattle off a list of companies that are in questionable businesses, from my perspective. What they do is legal, and the service they are supposed to provide is necessary. But, they build their business around a set of pragmatic ideals that ultimately develop a culture that clings to those ideals. And, those pragmatic ideals are sometimes counter to what many people would see as being ethical. Consequently, they earn bad reputations. Their underlying business models are built on concepts that reward decisions that are not first weighed against what is right. The decisions might be based on placating shareholders, as an example. (I fundamentally support capitalism, by the way. I just believe that capitalism and doing the right thing are not mutually exclusive.) So, there might be a decision to take a “shortcut” to reach a CO2 emission goal, as it will likely result in more sales (and/or reduced expenses), and that will make stockholders happy. Short term, a win. Long term? Potentially a big disaster.

And it is here where the loss of principled decision making rears its ugly head. Somebody, somewhere, decided that cheating on the CO2 solution was a better way. I imagine that they ran the numbers, looked at the probability of getting caught, and may have even created a financial model that projected a worst-case financial impact if they were eventually caught. They concluded that cheating was the best option. And so it went.

I use this example because it is relevant to the time this post was published. History is full of examples that are relevant.

The company that was “rewarded” with the compliment above? Three articles earlier I found an article ridiculing the company because it had given a directive to its customer services teams that, essentially, sugar coated a customer unfriendly position it had adopted. It had told them to change the wording of what it was doing so that it appeared in a far more favorable light. Marketing. But, any way one scented this one, it still left a bad odor.

Okay. So, what then?

Business is tough. Really tough. There are times that business have to make decisions that are gut wrenching decisions. In most cases, there is a level of supporting “evidence” to help smooth the decision making process. Sometimes, not. In my own career, I sometimes found myself in a very uncomfortable place. I was forced to make decisions that impacted people in ways that I wish I could have avoided. For example, there were times that people were in the wrong role. It was my responsibility to ensure that everyone on the team was performing at a level needed to help make the company successful. When I had someone in a role in which s/he couldn’t be successful, something had to give. Of course, I’d do whatever I needed to do to help them be successful. But, sometimes the mismatch was so great, nothing short of heroics could help. And, in those cases, I was the one who had to deliver the bad news. This was one of the many areas where pragmatism and principles were aligned: Pragmatically, keeping someone in a role in which s/he couldn’t be successful wasn’t the right thing for that individual or the company. On a principled level, it wasn’t fair to those who depended on that individual’s performance for their own success.

Acknowledging that business is tough, I also lean on a side that businesses sometimes don’t look at the bigger picture. And it is where I believe progress can be made. Is it right to give stockholders everything they want in the short term, only to impact them adversely in the long term. Some investors would say, “Absolutely!” They are in the business of getting the most that they can over a short period of time. That’s the reality of investing these days. And I fear that this mentality has helped create a divide between consumers and companies, as well as employees and their employers.

Consumers don’t inherently trust that many companies will do the right thing, given a choice (Banks, insurance companies, utilities, to name a few. [Based on data I’ve reviewed, not my personal bias.]). There are government agencies that were created specifically because that was true. Employees have, over the years, become much less trusting of their employers. As I’ve mentioned in another post here, many companies have moved away from seeing employees as valuable to their business; they see employees as expenses that should be pared when possible. I see both sides, and acknowledge that it is complex.

But, there is some basic blocking and tackling that can be done by companies. And, in many cases, they’ve made a conscious decision to ignore that blocking and tackling. Let’s start with honesty. If you’re leading a company that is implementing a practice that you know is going to alienate some customers, isn’t it best to be upfront about the decision? At a principled level, if a decision has been made knowing that it will not be popular, isn’t it right to call it what it is? To me, that is basic blocking and tackling. (It also demonstrates that principled decisions are often hard.)

Some companies, however, choose to make misleading statements in order to put themselves in a better light. (Curiously, they ignore that the majority of their customers see right through the statements.) That price increase that was just implemented? It’s not because there is a desire to increase profits. It was implemented to ensure that the best service in the industry can continue. Luggage fees? Those were implemented because it was found that some passengers were using more than their fair share of space when compared with other passengers; the fees help ensure parity among all passengers. The billions of dollars in added revenue had nothing to do with the decision, of course.

Admittedly, I’m being a bit cynical. But I do think that the lack of transparency (another attribute that was a part of the culture at the ethics company at which I worked) has help create the divide I mentioned above. Think about it. Are you going to trust a company that is always honest and transparent more than a company that obfuscates facts in such a way that it always is in a positive light? You might not like the decisions that the honest and transparent company makes, but I’m guessing they’ll be seen as more trustworthy. The other company? Well, I think of a bell curve. People will believe what it says for a period of time, it will peak, and then decline. (I have no data to support this, by the way. It’s just a gut feeling.)

Wow! What a pain!

I wonder if it must be. I’ll tie the loose ends together here. As I said before, I believe that most people want to do the right thing. I’ve also expressed that companies are people. But, there are companies where there is a disconnect between people having a desire to do the right thing, and the company executing in such a way that the right thing is done. And I believe (through my own experience, and through the observation at a professional level) that this is because a culture has been created that rewards decisions that diverge from people’s own principles. Either because of fear, apathy, or a desire to be seen as “all in,” the culture feeds off itself.

What it needs is someone to say, “Wait a minute, this isn’t right. Let’s fix this so we can feel good about what we do!” After I worked for the ethics company, I moved on to other companies. I found that I was often the one in the room saying, “This isn’t right. There must be a better way.” It was hard. Sometimes, really hard. And, sometimes, I wasn’t a popular guy. But, ultimately–little by little, things changed. And, I could look at myself in the mirror and feel good about who I saw.

Isn’t it a better path to do what’s right, versus doing what we think others want us to do? Pragmatically, maybe not. But from a principled perspective, absolutely!