From Obligation to Opportunity

This post is an excerpt from my book “Thinking Aloud.” The theme continues to present itself in my conversations with leaders: how to share complex information and challenging perspectives candidly and constructively. I hope you enjoy the essay – and perhaps introduce the questions below as a way to start conversations with your teammates. – CAW

See a list of other posts in this series at Blog Post Series

From Obligation to Opportunity

As a business ethicist, I grew up repeatedly confronted by Milton Friedman’s quote from a New York Times Magazine article: “there is one and only one social responsibility of business —

to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game…”. The article was published on September 16, 1970, and almost continuously since then, writers in business ethics have used that single article as an argument from which to diverge. I’m so tired of it that I could barf. I hereby apologize for every time I have cited the article, including right now.

Almost 40 years ago, Friedman was responding to advocates for a broadly expanded view of managers’ moral duties and obligations. By so doing, he made it all too easy for four decades’ worth of lazy writers (including me) to jump into our own arguments for what managers ought to do, in contrast to Friedman’s assertion that they simply ought to make money for shareholders.

What probably angered Milton Friedman in 1970, and continues to offend many managers today, was not so much the content of the message of social responsibility, but the tone of that message – too often couched in shrill, moralistic, finger-pointing invective. Nobody likes to be called scuzzy, and nobody likes to be told what to do. Almost everybody, by contrast, likes to be recognized as a leader and to be rewarded for wise investments. So why not think about social responsibility in more positive terms?

Managers do have a fiduciary responsibility to shareholders. They also have fundamental ethical responsibilities to the people who are touched by their businesses. Rather than argue solely about the nature of these duties – about the obligations that stakeholders impose on managers – we would do better, and go farther, by focusing instead on stakeholder relationships as strategic investment opportunities. By investing wisely in these relationships, managers can act in socially responsible ways while fulfilling their duty to shareholders. Their businesses will prosper by their wise investments.

By moving beyond the ethics of obligation to the ethics of opportunity, we open up a new realm for discussion among business leaders who are already inclined to do the right thing, just as they are motivated and driven by a desire to prosper. We still need to think about compliance with relevant laws, regulations and ethical norms. We ought not limit our thinking to those obligations, but continue thinking creatively about ways to win by going beyond them.
Aligning commercial success and social responsibility is an essentially creative undertaking. By looking at our businesses through this lens, we might create competitive advantage in the supply chain, by transforming transactional vendor agreements into shared destiny and mutually beneficial partnerships. We can create organizations that attract the best employees, and environments in which those people get even better over time. We connect with customers based on a commitment to truly serve them and an awareness of the benefits that excellence can confer on our own firms.

None of these benefits can accrue merely by following the rules. Compliance with ethical norms is a minimum – and failure to comply can undo much of the good we are seeking through our positive actions – but ethics is about more than compliance. Ethics is about living well and doing good. As one friend observed, “complying with ethical norms is like building a home in accordance with the building codes – that’s just the minimum. Saying a house is built to code doesn’t prove that it’s a great house, just a minimally acceptable house.” The real opportunities happen when we look for ways to build great things that others value.

As people concerned with ethical leadership, we need to minimize finger-wagging and moralizing, and maximize creative thinking and, for that matter, inspirational storytelling. By so doing, we help create more great stories to tell.

Conversation Starters:
We ought to do more than avoid wrongdoing, and rejecting our worst possible actions. We will do better, in all respects, by considering our best options and acting in ways that are not just acceptable, but honorable.
• What stories can you tell about business or organizational leaders who go the extra mile to honor relationships?
• Do you look for these positive stories and share them?
• What examples from your own experience illustrate the ethics of opportunity?

At Ethical Leaders in Action we believe that most, if not all people, can develop themselves to play leadership roles in many different spheres both large and small. The foundation of this development process is a short but powerful list of virtues which can be developed and improved through conscious effort. For more information feel free to take the Virtues of Ethical Leadership Self Inventory (VELSI) which breaks these virtues down into features that can be individually developed. The results of the VELSI come with a quick reference guide to help you understand how the virtues and their individual features fit together. https://ethinact.com/velsi/

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