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(originally published by Booz & Company)


Making It Easy to Do the Right Thing

Finally, you could seek more substantial proof. And it could take a generation to find out, through epidemiological surveys, whether your product really is addictive and carcinogenic. Even then, it may be almost impossible to separate cigarettes from all other potential causal factors. As with lead in the Roman Empire (or with cell phone radiation, painted toys, and other potential health risks today), only hindsight will reveal the extent of the problem. You don’t yet have the requisite information to make an appropriate decision.

Three Traits That Foster Ethical Behavior
Unfortunately, most organizations are not set up to help managers overcome this pressure. But some companies have a better track record than others, and their ability to support ethical behavior seems to depend on three characteristics that many organizations lack. Arguably, without these three qualities, companies of all stripes will continue to execute immoral actions that in many cases endanger society around them. And yet, in themselves, these qualities don’t have much to do with ethics per se. They are simply hallmarks of good business practice.

Consciousness. This is also known as ingrained awareness of the ramifications of collective action. The Toyota Motor Corporation offers one of the great corporate examples of consciousness. Early in its existence, the company had a chief engineer, Taichi Ohno, who famously drew a chalk circle on the floor and asked newly hired engineers to stand within it for hours, watching the assembly line at work. Then Ohno would return and ask, “What do you see?” It was a first lesson in becoming continually alert to what was going on around them. Similarly, the well-known andon cord — the cord that any employee can pull to stop the assembly line if there’s a problem — is testament to the amount of consciousness people are expected to bring to work. Each individual is continually looking at the vehicles going by, judging whether they are flawed or whether they fit the customer’s mandate.

Some companies respond to ethical risk by instilling corporate responsibility. But without deliberately expanding people’s consciousness of their day-to-day work, these efforts tend to falter. People may go through the motions, but they don’t really see how their own actions further the lofty ideals of the initiative. Conversely, when individuals are conscious of how their own actions affect the company’s overall performance, ethical behavior is more likely to be the outcome, even if it isn’t articulated that way.

Discipline. Neuroscience research over the last decade has demonstrated that continual, intensive focus changes the pattern of neurons within the human brain. If you want to alter an organization, the way to do it is not to lecture people about the “burning platform” — the organizational problems that must be addressed immediately — but to set up practices and processes that literally force people to do things in a different way day after day after day. Gradually, employees’ neurons change, so that eventually making more thoughtful, long-range-oriented decisions becomes second nature.

One organization that relies on discipline is SRC Holdings, a group of employee-owned remanufacturing companies in Springfield, Mo. Once a week, most of the SRC businesses shut down operations during lunch, and everyone, from the CEO to the maintenance worker, goes over the financial numbers: What are the costs and revenues this week, in what direction are profit margins going, how is the cash flow, and what can be done better right now? Everyone is expected to participate in the discussion. Over the years, SRC has spun out more than 30 long-lived businesses, nearly all instigated by its employees, precisely because the organization’s discipline fosters a combined business and ethical acumen.

Empathy. When a company is truly empathetic, the recognition of the value of employees is just a starting point. A more critical factor is the continued high level of engagement with them, so that everyone in the organization is joined together, feeling a common imperative to do the right thing and make the right decisions. Cultivation of better relationships among different parts of the company (and with outsiders) becomes a paramount value.

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  1. Art Kleiner, “Jack Stack’s Story Is an Open Book,” s+b, Third Quarter 2001: A small Ozarks manufacturer uses disciplined openness to increase productivity and release entrepreneurial spirit.
  2. Art Kleiner, Who Really Matters: The Core Group Theory of Power, Privilege, and Success (Currency/Doubleday, 2003): Includes a chapter that explores the timing of feedback and the dilemma of the cigarette industries.
  3. A.G. Lafley, with an introduction by Ram Charan, “P&G’s Innovation Culture,” s+b, Autumn 2008: Creating a world-class growth organization by investing in people.
  4. A.G. Lafley and Ram Charan, The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation (Crown Business, 2008):A series of stories about leading companies that have redefined leadership and improved management.
  5. Matthew E. May, The Elegant Solution: Toyota’s Formula for Mastering Innovation (Free Press, 2006): An examination of Toyota’s philosophy of team-based innovation.
  6. Jeffrey Rothfeder, “Jeffrey Liker: The Thought Leader Interview,” s+b, Summer 2008: The lean process expert describes why emulating Toyota is so difficult.
  7. Steven Wheeler, Walt McFarland, and Art Kleiner, “A Blueprint for Strategic Leadership,” s+b, Winter 2007: How to achieve the leadership required to instill ethical behavior.
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