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 / Fourth Quarter 2001 / Issue 25(originally published by Booz & Company)


The Bottom Line on Ethics

For executives who want to do good and do well, some long-awaited guidebooks.

Fast Food Nation: The Dark Side of the All-American Meal (Houghton Mifflin Co., 2001) is one of this year’s best-selling books. In a winking, post-modernish style, the book brings to light a range of labor, animal, health, and environmental abuses in the supply and production chains of McDonald’s, Taco Bell, Pizza Hut, and other large restaurant chains. Author Eric Schlosser backed up his work with so much research that any meat eater or seller should have cause for concern. Indeed, the book’s popularity should have represented a wake-up call to the industry.

But it didn’t.

There was hardly a murmur from any fast-food executives and little sign that anyone in the industry had taken the book seriously. After all, McDonald’s had already tried to serve a healthy hamburger. But consumers had rejected the McLean Deluxe. And most of the other abuses articulated by Mr. Schlosser — the contamination of meatpacking plants, for instance — are so ingrained and habitual that no company could undo them unilaterally. For his part, Mr. Schlosser washed his hands of any possibility that this business could learn to reform itself. And his book offered nothing to help any manager who might try to change the system from within. Only government regulators, he argued, could stop the abuses described in Fast Food Nation. Given the American propensity for political gridlock, that would probably require a salmonella or E. coli epidemic.

To writers like Mr. Schlosser, the root of the problem is the profit motive. Businesspeople can’t help but fall into exploitative patterns when they are driven by the need to raise surplus cash. But this perspective represents a limited understanding of the role of profit. In reality, when people in business take the need for social reform seriously, the first thing they need is profit — money to fund the extra investment it takes to replace old approaches with new and better ones. Any change in, say, the way meat is slaughtered represents just as much of an investment in innovation as the introduction of a new product line, and this cannot be sustained without some assurance of cash flow and profitability.

On the other hand, managers these days cannot whitewash or ignore the ethical abuses of their own industries. Those who do run the risk of finding themselves on the wrong side of an accusation, a protest, a lawsuit, or a moral battle with their teenage children.

More seriously, the more comfortable managers grow with the ingrained abuses of their businesses, the harder it is to make any changes, and the more vulnerable their companies become to uncertainties around the corner.

Dos and Don’ts
Imagine you are a McDonald’s executive committed to reforming the industry from inside. Given the fierce competition for every nickel, you already know that reform will not be easy. Where will you turn for help? There is a literature of business-ethics guidance that argues unconvincingly that “doing good” means “doing well,” and thus will benefit the bottom line. That argument may be true, but no one has ever systematically proven it. Unfortunately, in the absence of proof, these books tend to celebrate the imperfect efforts of a few visible proactive standard-bearers (such as Patagonia Inc. and The Body Shop International PLC) or a few individual ethical innovators within large corporate systems. By drawing up indiscriminate lists of examples to benchmark, and ethical “dos” and “don’ts” based on these cases, the business-ethics movement has made itself preachy, superficial, and hard to take seriously.

In the end, ethical perspective, like all forms of strategic awareness, can’t be learned through prescription. Business draws its vitality from the fact that the rules are always changing. (A powerful recent example is the battle over universal broadband service, in which the high road shifts, moment by moment.) If there were rules for high-mindedness in the fast-food industry, they would soon be broken — as soon as some new restaurant-chain entrepreneur realized there was a market to be won by breaking free of the truces and balances that all the other companies had agreed to follow.

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