Business Ethics: An Oxymoron?

My friend, Rich Marin, has invited me to teach at one of his graduate business school classes in San Diego, on the subject of Evaluating and Using Business Ethics. While looking forward to this, it’s forced me to take several actions.  The first was to find a company around which to build an appropriate case study, one which could become a lens for evaluating the points I hope to make.  After some reflection, I chose the story of Theranos.  The jury had just found its CEO guilty of fraud charges this month (January 2022). The saga of this company’s trip from a $9B valuation to zero is compelling and provides an opportunity to discuss the ethical issues I plan to cover.

Next, I reviewed ethical issues I faced in my business career, as real-world questions faced by the presenter are sometimes the most memorable.  Then I dusted off and reviewed sources and inspiration for my ideas on right and wrong and tools I evolved for making decisions consistent with my values and beliefs. Finally, I found several books written by thinkers on ethics and read or re-read them, including one Rich assigned his students.  I’ll list these, as well as some videos at the bottom of this newsletter, with some links. This newsletter is as much to help me crystalize my thinking as it is to convey some thoughts to readers on why I believe this is such an important topic.

I believe ethics is not a theoretical abstract idea to be relegated to the classroom or pulpit. Ethics is practical and pragmatic, a tool for making the best decisions, in business and life.  It helps ensure our choices are consistent with our values, principles, beliefs, and norms.  The more difficult and ambiguous the decision, the more ethical considerations play an important, even crucial role.   Complicating things is the fact that right and wrong are often moving targets. While one may be tempted to believe the proper decision is only a matter of viewing alternatives against a backdrop of carved-in-stone rules or codified laws, it often is far more complex.

Next, I contend business ethics is not an oxymoron. While fraud at Enron, cheating clients at Goldman Sachs, illegal foreclosures at Countrywide Financial, and a Ponzi scheme by Bernie Madoff may seem like a trend, they’re all anomalies.  Most businesses struggle to operate within the law and some even adhere to strict ethical standards.  It is rare to join a decent-sized company today and not be given an employee manual containing a section on ethical considerations.  Some larger companies even have chief ethics and compliance officers, responsible for training, monitoring, and auditing compliance with laws and the company’s expressed values. Ethical failures, businesses have found, can lead to embarrassing messes that require massive effort and expense to clean up. Better to do it right the first time.

Is Business Ethics an oxymoron in “Fake It ‘till You Make It” culture?

Although I’d read some about Theranos and its charismatic CEO, Elizabeth Holmes, I was unaware of the whole story.   While my timeline in Silicon Valley overlapped somewhat with hers, she and her company were not on my radar. By the time they left their “quiet period,” I was long gone and so have no firsthand knowledge.  During a deep dive into the company, I was again impressed with how incredible the Internet is at chronicling and preserving nearly everything.  Besides books and movies, I was able to easily find some of the first news stories on the company.  I watched an early TED talk where Holmes outlined her dreams for the company and even found a clip of her on the stage with Bill Clinton.  I found the first of what would become many cover stories on Holmes which would pack newsstands, including Roger Parloff’s cover profile of her in Fortune Magazine in June of 2014 with the headline, This CEO is out for Blood as well as Ken Auletta’s in-depth article in The New Yorker in December of 2014.

Within a few days, I’d created a PowerPoint presentation with most of the key elements for a solid case study – a timeline of Theranos, information on the key players, and finally, the protagonist who made the decisions that we could scrutinize and discuss.

Since then I’ve engaged several good friends and former business colleagues in discussions on ethical questions.  Ethical questions impact a large number of contemporary issues and discussing them with so many intelligent people has been a world of fun – although I’m not sure it’s been as much fun for them as it has for me.

Ethical dilemmas are everywhere:

  • Early in the Covid crisis, nurses faced inadequate supplies of protective equipment and limited testing. They could go to work, putting themselves, their patients, and their families at risk. Alternatively, they could stay at home, knowing severely ill patients need nurses to be on duty. What to do?
  • As it relates to charges of voter fraud in the 2020 presidential election, some attorneys who represented those bringing lawsuits claiming fraud may be facing ethical issues with their state bars. On the one hand, every client deserves representation, even those with claims you may not agree with or might be unpopular.  On the other hand, it is something else to file baseless or false claims.  Every state bar has some version of a rule known as “the rule of candor.” It requires that lawyers shall not knowingly file false statements of fact or knowingly present false evidence to a court. The argument goes: by making allegations of voting improprieties without data to substantiate those claims, these lawyers might be violating the rule of candor. They could be disbarred. Which is the ethical choice: to give legal representation or obey the rule of candor?
  • And on voting itself: Should voters vote solely for their interest, or should they vote for the common good, whatever that is?
  • The U.S. Congress where elected officials vote not for the good of the whole (state or country) but for the segment that might re-elect them?

I will no doubt have more to say about all of this after the class, so stay tuned.  In the meantime, below is a list of the most compelling books, movies, and YouTube videos I’ve found on this topic:

Books

Right/Wrong – How Technology Transforms Our Ethics, by Juan Enriqez. A fun, entertaining, and thought-provoking look on how common wisdom and technology enable ethical behaviors.
Bad Blood: Secrets and Lies in a Silicon Valley Startup, by John Carreyrou.  A deeply well researched and compelling history of Theranos by the Wall Street Journal reporter who broke the story about the company’s misdeeds in 2015.
Justice: What’s The Right Thing to Do?  By Michael J. Sandel.I’m reading it a second time.  It is an easy read. Sandel weaves in the biggest ethical questions man has struggled with through the ages using contemporary situations and issues.  Highly recommended.
Something for Nothing: Arbitrage and Ethics on Wall Street, by Maureen O’Hara.  This book attempts to tease apart “legal” and “ethical” in a practical and educational way.  Rich recommends it for his class. Not being a finance person, I found it slow going.

Movies

The Inventor: Out for Blood in Silicon Valley – 2019  (Documentary – HBO) Well done, unbiased and thoughtful history of Theranos and what occurred. Many good interviews with key people and relevant historical footage.

The Real Adam Smith: Ideas That Changed the World – 2017  (Documentary in 2 parts – Curiosity Stream and YouTube). Adam Smith’s observations, chronicled in two books written in the 18th Century, on free trade, the nature of wealth, and moral behavior, remain valid in the 20th Century.  This show explores how his thinking changed the world in the decades after his death and how his principles are still part of modern thought. A highly compelling story.

YouTube Videos

Elizabeth Holmes, Theranos CEO at TEDMED 2014

The Significance of Ethics and Ethics Education in Daily Life | Michael D. Burroughs | TEDxPSU

Science can answer moral questions | Sam Harris

Spilling the Blood of a Silicon Valley Unicorn

Creating ethical cultures in business: Brooke Deterline at TEDxPresidio

In His Own Words: The Theranos Whistleblower  (Filmed at the Markkula Center for Applied Ethics)

Ex-Theranos CEO Elizabeth Holmes says ‘I don’t know’ 600+ times in depo tapes: Nightline Part 2/2

How Elizabeth Holmes sold the idea of Theranos to employees, investors: Nightline Part 1/2  (In two parts)

Theranos CEO Elizabeth Holmes: Firing Back At Doubters | Mad Money | CNBC

2015 Clinton Health Matters Initiatve: Disruptors in Healthcare

Theranos: How Did a $9 Billion Health Tech Startup End Up DOA?  (Berkeley Hass School of Business)

Building business on character ethic – Kevin Byrne at TEDxNoviSad

Ethical dilemma: The burger murders – George Siedel and Christine Ladwig

Justice: What’s The Right Thing To Do? Episode 01 “THE MORAL SIDE OF MURDER”  (Class at Harvard University)

Ethics in the age of technology | Juan Enriquez | TEDxBerlin

Confessions of a Republican Political Operative

In Dubai last month I met the principals of an exciting Tempe, AZ start-up company, ZEV. The CEO, Carolyn Maury, and her co-founders were all at GITEX Global. ZEV converts fleets of gas-powered vans into electric vehicles quickly and at a low cost.  What they’re doing is brilliant.  As they have grown, they have sought and found political guidance and lobbying help from Barry Goldwater, Jr., son of the late Arizona senator who is now an energetic 83-year-old, who regularly visits Washington D.C. and provides politicians with his ideas.  When talking with Carolyn in Dubai, she showed me a photo of herself with the Jr. Barry Goldwater. He’s a spitting image of his father and it reminded me of my time as a Barry Goldwater (sr.), political operative.  I meant to tell Carolyn the story, but never found the time, so now I will tell you.

In 1964, my early teen years,  I found myself on the slippery slope where righteous intent slides into political chicanery.  My father, always a staunch Democrat in a family of Democrats, had sided with the republicans when J. F. Kennedy gained the party’s nomination in 1960. The church we attended believed if a Catholic were ever elected to the presidency, it would mean the Pope would be in charge of the USA. While my uncles stuck with the democrats, my dad—horribly distressed by Kennedy’s election—chose to side with the republicans into the 1964 election when Nelson Rockefeller and Barry Goldwater struggled for the nomination.  Rockefeller had divorced his wife and remarried. This was another major black mark on him from our church’s standpoint. Barry Goldwater was our man.  Goldwater expected to run against Kennedy, but when JFK was shot in 1963, his opponent became Lyndon Johnson.

During the final days before the election, my father brought my brother Leif (11) and me, (13), to a late-stage Barry Goldwater get-out-the-vote organizing event and rally at Lincoln Grade School about a mile from our home in Fairmont, Minnesota.  We quickly tired of the “what do we do next” discussions and found ourselves in a cloakroom in the back.  It was full of campaign literature, political tchotchkes, and bumper stickers — boxes of them – lots and lots of boxes of stickers. Staring longingly at the boxes, we asked one of the party faithful if we might help ourselves to a few bumper stickers.  “Of course, of course,” he said, “… take as many as you want.  We’ll never be able to use them all.”  We grabbed a box, not realizing it contained about 10,000 stickers, and headed out into the early November night.

Our first stop was the school parking lot, where every car got at least two new “GOLDWATER 64” bumper stickers.  Heading around George Lake towards home, every parked car we passed got Goldwater stickers, whether it was on the street or in a driveway.   About a third of the way home, we realized that unless we prodigiously upped our rate of sticker application, we would arrive home with a mostly full box. Although only junior operatives, we knew stickers in boxes could not help the cause, and we got to work.  Stop signs soon had 4 or 5 Goldwater Stickers.  The sign to the boat landing was covered with them.  A homebuilder’s billboard advertising lakeside lots for sale was soon coated with at least a hundred stickers or more.  We crawled up street signs at every crossing and placed stickers over street names.  A block or two from home, it occurred to us that mailboxes should also get stickers, and from that point on, both sides of every mailbox on all sides of the street were adorned with Goldwater 64 stickers.  But even with all that hard work and creativity, we arrived home with nearly half a box of stickers left.

When my father got home he acted less than pleased. The stickers, which shined in the dark, had reflected in his headlights, illuminating his drive all the way home.  He explained we shouldn’t have put stickers on public property and as to people’s cars and mailboxes, we should have asked first.  He acted mad, but I suspect there was some internally smirking – as no one would know who’d done it.  He made us give him the remaining stickers and he locked them in his car trunk.  He told us the next day we needed to go out and remove the ones we’d put up.  Good idea, but the glue used back in those days was meant to last, and remnants of those stickers remained well into the following summer, long after the election was over.  I don’t recall voting for many republican candidates, but I had one exhilarating hour as a volunteer operative!

TV Top Pick #6: The Newsroom

profile, sitting at a desk

Let me be clear up front, I am not recommending you go back and watch this Aaron Sorkin created TV drama from 2012-2014.  However, there is one scene I’d like you to check out.  The scene features Jeff Daniels in his role of news anchor Will McAvoy, being interviewed with two politicians at a local college.  The part I’d like you to pay attention to comes 2 minutes and 10 seconds into this 5 minute clip, if you want to skip ahead. The current political divisions in the country inspired this idea.  Hear me out.

What bothers me is why acknowledging the lack of US supremacy on even the smallest item somehow is translated into “you hate our country.”  Coaches on a sports team look carefully at other teams to see where they’re deficient; always trying to find areas to improve so they can become the best.  That doesn’t blemish their team loyalty, does it? During my years building high-tech companies, we used radar charts to aid competitive analysis.  These charts highlighted our assets and liabilities, forcing us to focus on shoring up weaknesses while capitalizing and leveraging our strengths.  Acknowledging someone else performing better in a particular area was an opportunity to examine what they were doing and figure out how we, using our creativity and innovation, could get better at it than them.  As it says in this clip, it starts by understanding the problem.

What if we, as US citizens, came up with a scorecard to honestly rank ourselves against other countries?  A list might include some of the things below.  Then, every four years, before an election, we ask the administration who’s asking for another four years, how they did on the scorecard?  Of course we’d want to stick to metrics easily measured and difficult to fudge. A host of domestic and international agencies are well-equipped to make calls like this.  If a concern arose that scores may be less than honest and precise, do what they do at the Olympics: hire a dozen firms, six chosen from each political party and when the ratings come in, throw out the highest and lowest rankings and average the rest. Easy!

Here are some ideas on measurable things that could be on the scorecard:

  • Biggest economy, largest GDP. Rate of Growth.
  • Average household income.
  • Maturity and quality of infrastructure: roads, bridges, electrical and Internet coverage (measured by internet/electrical penetration), etc.
  • Safety of citizens. (Murder, violent crimes, property crimes per 100,000 residents).
  • Access to clean air and water.
  • Health care quality, perhaps measured by average life span of citizens, infant mortality rates, wait times for elective procedures, responsiveness if/when emergencies occur.
  • Amount of freedom citizens have. (Would be interesting to see how the measurements would be developed for this one, but it’s important to nearly all Americans, so needs to be included).
  • Incarcerated citizens per capita. Rates of recidivism. (We want to measure all things that matter, not only the things we know where we’ll do well.)
  • Literacy ranking. Percentage of population graduating high school, college, post college and advanced degree percentages. (While some may or may not think this important, investing in citizen’s education is a metric worth keeping track of.  Are there ways to determine where we stand internationally in math, science, languages, art, music, sports, etc.)
  • Amount of national debt. Owed to US Citizens vs. owed to other countries.

This is just a quick start to provide some ideas.  You might have some as well.  Maybe it eventually leads to the Top 50 (or Top 100) attributes making up a great country.

At the end of their four years in office the President and his administration, would be forced to stand up and say, well, in the area of X we moved from #16 in the world to #9, and in area Y we moved from #4 to #1.  Now, we ran into a problem on item M where we went from #17 in the world to #22, but let me explain what happened and why.

I’ve no idea if New Zealand has any sort of formal scorecard, but I found this video of New Zealand’s Prime Minister summarizing her accomplishments and making the case for another term rather interesting.  If I were a citizen of New Zealand, I think it would make it clear to me if I would want her in office for another two years.  Some will find this compelling and others, repugnant, I suspect. What did you think about her focus? On the right things? Unlike the above clip from a television series, this one is actually the real deal, no high-paid writers, no Aaron Sorkin, just reality.

My hope if this idea got legs and were to come to pass, we would see politicians start to work on the things that help our country with citizens holding them accountable for moving forward and getting things done.  It might very well cause a shift in focus to the things that really matter in government and less on the things that don’t. My two cents and deepest apologies if this is too political.

Epilogue: Everything that happened during Jacinda Ardern’s first two years in office, occurred during her pregnancy and delivery of her first child.

New Zealand Prime Minister Jacinda Ardern

What we fear, and why?

On a Sunday earlier this spring, before the whole Coronavirus issue, Maggie and I were hiking in the valleys surrounding nearby North Mountain, in Phoenix, AZ. As we walked a couple engaged in a vigorous discussion passed us, going in the opposite direction. They were speaking Russian, a language I’ve learned to recognize. They spoke freely, with no shyness or hesitation. As we walked I was struck by what my brother, Leif, had told me about riding the Russian subways when he and his family lived in St. Petersburg.

Leif and his wife would not speak out loud on the subways. Communicating meant pressing their lips carefully against each other’s ears or those of their children and whispering quietly. He had a genuine fear for their safety if other riders had been able to discern they were foreigners. The children, however, were fine. Growing up in Russia, they had no discernible accent and could speak freely. This experience made me think about how fortunate we are to live where we do. It is unlikely anyone in the USA fears for their safety when speaking a foreign language or having an accent.

At the most local level, where we live, Americans rarely feel fear of “the other.” The Greek family that runs the bakery upsets no one. The Mexican family living down the block with the mother and father who aren’t so good at English, heading to work every morning, and often getting back late, leaving the kids to fend for themselves are completely fine. The neighbors all keep an eye out for them with a willingness to step in if anything looks amiss. Even the elderly Sikh man who’s never seen without his turban has been accepted, with some neighbors figuring out that not cutting his hair is part of his religious observance and they’re okay with that.

Given this is true, then why are we so easily manipulated to fear “the other,” by politicians and others wishing to use that emotion for their own ends? How sad when “the other” even becomes our own neighbors, friends and even family, when they have political positions different from our own. Unfortunately, it’s not hard to understand although difficult to do anything about, other than being aware and vigilant of what is going on.

Our attitudes of fear and even hate of “the other” is a primal survival mechanism. It is part of our instinct to avoid danger, to fear anything appearing to be different. It is what kept us alive in ancient times. As the writer Bill Bryson so eloquently states in his book A Short History of Nearly Everything:

“Not one of your pertinent ancestors was squashed, devoured, drowned, starved, stranded, stuck fast, untimely wounded, or otherwise deflected from its life’s quest of delivering a tiny charge of genetic material to the right partner at the right moment in order to perpetuate the only possible sequence of hereditary combinations that could result — eventually, astoundingly, and all too briefly — in you.”

But like many remnants of our reptilian brain, some of what goes on in that part of the brain has very little usefulness in modern society. When one race or group of people consciously or unconsciously fears for their safety, if their importance or control is threatened, they’ll develop defenses. This can quickly lead to exaggerated and negative beliefs about the other race or group to justify their actions to secure their own safety and survival.

We’ve outlived most of the need for this deep-seated instinct, but it still exists and is often manipulated by unscrupulous individuals and advocators. It is easy to cause us to fear a horde of “XYZ militant terrorists,” or whatever “the other” group is that is being exploited, or “this party or people” who want to destroy our country.  It holds barely a thread of something that sounds like fact, and any actual risk of such an event or attack occurring is often so remote to be downright silly. Yet newscasts are frequently monopolized with these unlikely and remote eventualities having little chance of ever impacting a particular listener.

For instance, around Halloween, many people fear their children are at risk of being given poisoned candy by strangers while trick or treating, even though there has never, ever been a documented case of this happening. Ever. Yet “urban legends” are regularly brought up and repeated, often as fact and often on the news.

I get angry when the media blatantly exploits these deep instincts. My brother and his wife’s fears on the Russian subway were probably justified. It made sense to trust their experience and reports from American friends advising caution. But it does not make sense to trust politicians or media talking heads who exaggerate or make up facts to make us fear other people when that fear, in context, is not justified. Or, at the very least, they should be required to put the fear they’re pointing at in the context of other real risks the population actually faces. But that’s another whole set of examples and considerations.