I’m responsible for the global financial meltdown of 2001.

Phew. Feels good to finally get that off my chest.

In all seriousness though, I did have a very tiny ringside seat into that debacle in 2000. While working at Ogilvy&Mather I was sent to the New York office to run the Enron account. A few months later I was back in Toronto. Here’s a reminder, if you really need one, of that story

The Enron legacy was gallons of journalist ink on corporate malfeasance, a brief rise in post-graduate courses in ethics and the signing of everyone’s favourite piece of business legislation Sarbannes-Oxley.

Problem solved right?

Sadly it would appear not.

GM-BOARD-BUILDINGWhile a lot has changed in the thirteen years since Enron and WorldCom, the debate about business ethics appears to be back on center stage with some interesting debates happening in the United States.

On the east coast, automotive giant General Motors faces a very damning court case over criminal negligence that lead to the deaths of 13 people. There is increasing evidence that GM knew they had a defective part which could cause fatal accidents but they, fearing a massive recall and huge legal fees, chose to deliberately conceal that knowledge from outsiders. In a story more reminiscent of John Grisham, US courts are attempting to unravel who knew what and when did they know it, who deliberately conspired to hide this information and what course of action can be taken to give justice to the bereaved families.

In almost the polar opposite scenario, an intriguing situation is raging around Silicon Valley darling Mozilla and the resignation of their CEO Brendan Eich. Eich was ousted for a personal contribution he made to California’s contentious Proposition 8, a bill which attempted to define marriage status as something between a man and a woman only. Many in the civil and gay rights movements saw Proposition 8 as reprehensible and demeaning and that made Eich’s personal support of it questionable. An intense and quite public debate ensued amongst Mozilla staff questioning Eich’s moral judgement. Following that “debate” he chose to resign. Many saw this as a victory for business ethics and congratulated Mozilla’s employees on their fortitude.

Two very different cases with business ethics at their core.

Two very interesting debates about how ethical businesses should run and should act.

So what is today’s ethical framework?

In my strategy work I come across a vast number of company’s that hold up “Doing The Right Thing” as their ethical filter. That’s a noble filter.

And, in truth, there’s nothing inherently wrong with that sentiment – and the company’s and clients that I work with are all very well intentioned – but the struggle is defining right by whom.

Your customers?

Your partners and vendors?

Your stakeholders?

Society in general?

YOUR corner of society in particular?

It’s complicated, right??

Several months ago I wrote a blog post about the tragic garment factory fire in Bangladesh and the difficulty of determining the appropriate corporate response. Reparations to the affected families in the short-term was obvious. But what about the long-term strategy?

Is the ethical decision to leave the country, set up your supply chain in a better-regulated country where your operational costs are likely going to increase – and those costs are either going to be absorbed (“Hell no” being the chorus from your shareholders) or passed on to your customers (“Are you frigging kidding me” being their likely response). What about the lost income and livelihood of all those, mostly female, workers? What’s your ethical responsibility to them, their families or their efforts to earn more gender equality in their country?

For others there is no ethical ambiguity.

For all the vilification WalMart elicits in certain places, there is little doubt about who they’ve determined as the group they’re most concerned by. The group that they’ll do “right by” All their efforts are intended to drive the lowest possible cost for their customers. If that means incredibly tough negotiations with their suppliers and partners, so be it. If it means breaking the backs of their labour groups and creating unlivable wages, then they’re going to do it. If it means foregoing opening stores in certain geographies, then they’ll do it.

How do you determine what’s right?

We all know there is no “right” in the decision made by GM.swearing-on-bible-jpg

In a legal sense I’m sure we’ll see countless lawyers argue the finer points of phrases like “criminal”, “negligent”, “willful” and “culpable”…but that wont change a thing. There is no ethical dilemma about what to do about a faulty product that has already killed people.

So how do others handle it?

These three Canadian examples might help.

McDonalds Canada chose transparency as their ethical route. Faced with consumer backlash, an internet filled with half-truths, myths and lies, McD’s chose to confront the problem head-on. By actively soliciting consumer questions – no matter how blunt and direct – and filming responses to those questions, they were able to highlight their commitment to openness and transparency.

BCHydro chooses education as their ethical yardstick. Their Power Smart initiative is based entirely on getting consumers to actively use less of their product and think long-term about conservation. Let me reiterate – they have an educational program teaching folks to use their product less. Its almost counter-intuitive in a province where hydro-electric power is plentiful and operating costs are relatively low. Its also a far-cry from the organization’s past where they – like so many companys today – were encouraging consumers to spend, spend, spend. Its quite a remarkable example.

Property developers Minto Group uses corporate heritage as their yardstick for making principled decisions. Long before sustainability, green and eco-friendly became watch-words in the development community, Minto had established a robust and dedicated department focused entirely on sustainability initiatives. The impressive part of this commitment is that it started before consumers were actually willing to pay for energy-efficient homes. Minto could’ve chosen to build less-efficient homes that consumers were willing to pay for, but they chose not to. Instead they forged ahead and built some of the highest-rated sustainability properties possible.

It’s all about your brand purpose

Yes Regular Reader, you knew my opinion would come back to this.

Your brand purpose is the strictest filter of any behavior within your organization. As your brand’s true North, there should be no dilemma that can’t be resolved by looking at your brand purpose for guidance.

And while you may still find issue with Mozilla for trampling on the personal opinions of Brendan Eich, there’s no denying the organization – and Eich himself – was acting in a way entirely consistent with their brand purpose. As an organization famous for collaboration, openness and universal access, calling out their CEO was entirely brand consistent. This internal blog post from Mozilla actually reinforces how the company’s brand purpose became the final arbiter for Eich’s decision to resign.

467400-bangladesh-building-collapseBuckle up, its only gonna get bumpier

As consumers become more connected, better informed and more aware of their rights, I fully expect that these ethical dramas will only increase in frequency – and in volume of customer outrage.

Company’s unable to act ethically will find themselves tried in the court of public opinion. And it will be those ethical trials that confirm whether a brand has purpose, and if that purpose has genuine customer appeal.

Sigh, if only Sarbannes-Oxley could make this all go away.

Still believe marketers aren’t the ethical voice of an organization? Still believe that your brand purpose shouldn’t act as your ethical filter?

As always when I write a post on a subject I have little formal background on – in this case ethics – I’m always appreciative of feedback and comments from my readers. What say you on this subject? I’m fascinated to hear your perspective.

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