From Obligations to Opportunities
How many times are we going to see 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. 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 ever 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 (like 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 horked off 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 skuzzy, and nobody likes to be told what to do. Almost everybody, by contrast, likes to be recognized as a leader and 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 commercially. 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, 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 of the Hill Center, Rich Iverson of the Principal Financial Group, recently 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.
That’s my story, and I’m stickin’ to it.
Compare to the prevalent, powerful and (in my experience) effective employment of values-led organizations and old-fashioned principles. Those words frame the broader-minded approach you describe. Granted, I may be living in the usual Madison, Wisconsin disconnected-from-reality reality, but in my health care organization, when we say "patient-centered care," we are talking about applying ethical standards that challenge the individual to put traditional ethical values before more narrowly-focused ones. I have the pleasure of being a Rotarian with a bunch of professionals who seem to genuinely apply themselves to the "Four Way Test." [Google it].
These are the positive, "opportunity"-driven approaches you describe.
"Ethics" and "socially responsible" strike me as having some of the same issues that our friend the word "liberal" was once famous for.
If you want results -- or to move beyond the paradigm framed by MF -- repackage.
I'm with you. In fact, the Center's focus on Ethical Leadership - the noun being "leadership" - is having just some of that desired repackaging effect, though I hadn't thought of it in those terms. Thanks. I'm also very interested in learning how the notion of an "ethics of opportunity" is received. I think it has "tag line" written all over it. My current, informal tag line is "Helping the good guys win," which is also consistent with this view.
I love the Rotary's 4-way test, except that it has the potential, with its simplicity and effectiveness, of putting professional ethicists out of work. Can't have that.
Chad