What are ethics and why do we need them?

According to 17th century philosopher Thomas Hobbes, there are limited resources available and an unlimited desire to possess those resources. Putting people in a situation without strict rules and guidelines will cause them to revert to a ‘state of nature’, where they’ll fight each other without reservation.

To counteract this, we make a contract – a moral agreement – renouncing certain liberties in exchange for safety and security. All governments exist upon this principle. In the context of our globalised community, organisations function upon a similar principle.

Corporate governance models such as King III and Sarbanes-Oxley also provide strict frameworks for ethical conduct in business with the aim of upholding high moral standards and ensuring a stable, fertile environment for conducting business.

In tech, Apple’s ecosystem provides a good example – it’s not as open and interoperable as Android, which generally has no problems interacting with other devices such as PCs using standard operating system functionality. Instead, you need to use specific file formats, transfer such files using very specific Apple-owned software, and generally abide by certain rules that Apple themselves enforce. In exchange for this tight control users get one of the most consistently excellent experiences on the market.

The dark side to that is the ‘state of nature’ that Hobbes mentions. Unfettered capitalism is one example of that – think Enron and how it held California’s entire economy hostage through its electricity cut-offs and creative accounting techniques that ultimately led to the demise of Arthur Andersen, one of the world’s most respected auditing firms. Or look at former Tyco CEO Dennis Kozlowski (who looted the company to the tune of $600 million) and the $2 million birthday party for his wife’s 40th birthday that included an ice sculpture of Michelangelo’s David urinating Stolichnaya vodka, to the apparent delight of his equally depraved guests.

Watching “The Smartest Guys in the Room” or reading “The Wizard of Lies” will give you better insight into the mindset of those operating within a state of nature.


Making sense of it all

It is attractive to think of ethics as a choice between black and white, but nearly every ethical decision takes place in a grey zone. It’s a matter not of keeping your hands clean, but deciding how much dirt you are comfortable with.

Frank Buytendijk of Gartner highlighted how current IT procedures and disciplines fit into classic ethical philosophy. In his model, John Stuart Mill’s utilitarianism (“doing the greatest amount of good for the greatest number of people”) is the guiding principle of email infrastructure and global ERP, while John Locke’s liberalism gives context to BYOD and enterprise app stores.

According to Professors Guido Palazzo and Ulrich Hoffrage of the University of Lausanne, Western organisations base their ethical decision making on two major philosophies:
The first is duty ethics, which follows the categorical imperative as put forward by Emmanuel Kant. In this, decisions are based on whether they can apply at all times, to all people, regardless of the consequences. It is fundamentally black-and-white.

The second is utilitarian ethics which measures whether a decision is right or wrong according to whether it benefits the greatest number of people possible.

Both approaches have their limitations – the categorical imperative does not allow for much humanity (an employee’s sick child necessitating additional leave to what is provisioned by the organisation, for example, will not be accommodated under this principle) while a utilitarian approach often leaves the minority in the lurch, regardless of whether their opinion or stance is actually the correct one. Majority rules does not work in mental asylums, as the old saying goes.

The thing to keep in mind is that you can’t make a decision that is entirely and fundamentally good – you’ll always break one rule in order to adhere to another. But that doesn’t mean you should simply abandon all hope of ethical conduct. Ethics are becoming important to companies in the same way as governance became important in the 20th century. And it’s about more than meeting legislative requirements – as Edward Snowden recently said, “what is right is not always the same as what is legal”.


Ethics and technology

On a practical front, B2B tech companies need to start developing ethical policies that determine how their customers’ data is handled and what the parameters and qualifications of suppliers should be.

If you are a service provider in ERP, do you have a policy about how you use customer data? If you’re a cloud hosting company, do you have a policy for protecting user data from the NSA, for example? If not, your customers may very well take their business to the company that is open and transparent about how their data is secured, and who has access to it.

On a more personal level, are the components for your device sourced ethically from conflict-free zones, and assembled in factories with a good human rights record? Are you choosing the quick, cheap option because it allows for greater profits? You are limited in your vision – customers will soon abandon you in favour of companies that put the welfare and well-being of people above profits.

It may seem counter intuitive, but focusing on profits exclusively is not the best way of securing your organisation’s financial future. The reputational damage following a scandal of ethical failure can sink even the most stable, profitable company.

The real question you need to answer is: What kind of company do you want to be? Depending on the answer, it might be time to get the smartest guys into a room to debate precisely what your company stands for, and what ethical parameters you strive to uphold.

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