Let me start here. As I mentioned, It’s election season. The politicians are waxing eloquent on all the things that ail us and that they will absolutely, unequivocally and efficiently fix for us. Right. I have no intention of dipping my oar in those political waters in this post. I do, however have some thoughts on what might be something to consider for those of us in the business world, and they have to do with some recent personal experiences. Some businesses seem intent on inviting more government intervention.

First, I want you to know that I love my bank. I’ve been with them 20 years. I have two personal and two business checking accounts and one business savings account with this bank. They have always been professional and, believe it or not, in my opinion, generous. They have earned my trust by showing me that they have my best interest at heart, not just their own. Recently though, they shot themselves in the foot, at least with me.

I do not understand why anyone with reasonable credit would ever entertain having a debit card. I can understand that if someone has not established credit or has fallen on hard times and their credit is “destroyed,” then they may have no choice but to use a debit card if they must have a card at all. So why do I say that? Simple, by issuing debit cards, the bank shifts all the risk of identity theft or lost cards to the card holder. Additionally, it is my understanding that these relatively new instruments are not yet under as much regulation as, say, credit cards are with respect to fees and usury issues. If you lose a debit card and/or someone manages to get the number and use the card, the money comes directly out of your account. I don’t know about you, but I don’t keep a lot of money in my checking account, so if cash is unexpectedly taken out of my account, I would likely bounce checks all over the place and incur the fees associated with such a situation. Of course, not so with credit cards; I’m playing with the bank’s money with them. If something is wrong, I am liable for no more than $50 dollars until it’s proven that the charges showing up are legitimate. Banks don’t like that and they write off lots of money each year due to stolen or compromised cards. It’s good for the bank to have you use a debit card because they can shift the risk to you, raise the fees more easily (which recently they have tried to do only to get really bad press) and are not required to “make good” on your losses in a timely fashion. They of course have policies in place that are meant to make us feel better, but the bottom line is the same – debit cards are, for the most part, good for the bank and bad for you.

I went to my trusted banking partner and made some changes in my accounts, opened a couple of new accounts and made it clear to the very attentive and helpful “personal banker” that under no circumstances did I want a debit card issued on the new account. He made notes to that effect and I went away once again as a quite happy customer. Until about 5 days later. Between the 5 days it takes snail mail and about 10 days after leaving the bank, I received not one, but six debit cards in the mail; one for each of the accounts and two extras in my wife’s name for good measure. It took me an extra two hours and two trips to the bank to get them canceled and to make sure that they issued an ATM only card for the new account. I then had to have them put a “General Alert” on my account and password protect it so that no clerk or automatic system would make changes or issue cards without my express permission. What apparently occurred was that a different branch, one I have never used, saw changes to the accounts, noted that there were no debit cards, disregarded any note buried in the system and automatically, without my permission, sent these high risk cards through the mail, followed later by pin numbers to the same mailing address. Why? It certainly isn’t in my best interest. It is only in their interest that they forced this risk and subsequent inconvenience on me. And so they mailed me those six unsolicited debit cards, each with a $5,000 POS daily limit; thus they pushed the risk of $30,000 onto me. Thanks. Message to my bank; Remember, it only takes one “Aw S _  _ t” to wipe out twenty three “That-a-boys.” I admit that one of the first thoughts that popped into my head was, “Damn it. There ought to be a law against . . .” And thus the cycle of regulation, hunt for more profits, anger more customers, more regulation etc. begins.

Then there’s Google. I want to trust them, at least a little. I’m becoming more and more “Google centric” as I move to cloud computing and Android phones (they just work, it’s phenomenal.)  But just as I’m building confidence that I’m doing the right thing by moving to the cloud and all things Google, they start ignoring my “do not track” request in my browser. Oh, and gathering electronic data while ostensibly taking photos for street view. What else are they circumventing? Do they really want the government into their privacy nickers?

I could go into more, the news is full of the failings and the begging for forgiveness of companies serving the public. But I won’t because (a) you already know how bad things have been for business and (b) these things are in the past and I’m anxious to think more about the future – and avoiding the “probably certain future” we face if we can’t police ourselves as businesses. So as usual, I have questions. What are you doing to be sure that your company is keeping the best interest of the customer at heart? How are you making sure that the culture of your company is consistent with the standards you want? It would be hard even for our politicians to argue that they need to regulate business if business didn’t make it obvious that they need regulation. I have met the enemy . . . .

The short answer is yes CSR matters and no it isn’t enought to just employ people and earn a profit; and it never really has been otherwise. The truth is that now there is more transparency (like it or not) around what companies and business owners are doing. And there is obviously much discontent over the widening gap between the “haves” and the “have nots” or, if you will, between the 1% and the 99% to use the now quite ubiquitous rallying cry of the Occupy Wall Street Crowd.

I’ve noticed an increase in the number of business speakers who are “pitching” employee engagement as a critical discipline for the coming year. Why? Well, for one thing, as the economy improves, we will need to do more to keep our key employees. If you’ve had to cut back on wages, bonuses and benefits, you may want to do whatever you can to restore those wages, bonuses and benefits. If we are not able to do that for profitability and cash flow reasons, then we will need to find other ways to encourage employee involvement in our enterprise. Green Research found that 80% of major corporations are planning to invest significantly in employee engagement in 2012. According to Gallup, 86% of engaged employees say they feel happy at work compared to only 11% of those employees who feel disengaged. So what does this all mean to the company? Companies with high levels of employee engagement saw increases in their bottom line. Towers Watson calculated improvements on average of 19.2% for engaged organizations and a decline in bottom line results of almost 33% for those companies scoring in the lower levels of employee engagement.

One of the ways employees feel engaged is if they are allowed to volunteer their time for causes they support. Many companies are finding ways to support their employees by giving them time, or allowing them to “earn” time that they can volunteer for an appropriate charity organization. Some companies are even exploring the idea of partnering with a not for profit organization and giving their employees an opportunity to volunteer, raise funds, etc. The Social Enterprise movement is pairing for profit businesses with not for profit businesses so that there is a cross-learning opportunity. The not for profit organization may have some great ideas for employee engagement since they spend much of their time getting volunteers energized around a mission. The for profit company can share best practices for containing costs, continuous improvement of processes and managing the paid staff properly. It is a win-win situation in most cases.

As social media continues to grow (businesses are finding the new Google+ to be a great platform) and mature, businesses are finding that they have no choice but to be catering to their customers who often use these platforms almost exclusively. These tools are also used by the consumer to determine the quality of the vendor they are considering. They look for referrals and/or ranking by their friends. They do not believe paid advertisements. Companies have to be involved with the social media sites if for no other reason than to know what is being said about their brands and to know what is going on in their community. The social responsibility part of all this is to make sure that the company is engaged in the community.

The National Association of Corporate Directors sent out a Public Company Governance Survey and found that the highest priority at 72% of the respondents was strategic planning and oversight while only 2% put CSR at the top of their priorities. This suggests that many boards will be working to catch up to their more nimble and media savvy competitors. If the trends in transparency, CSR and employee engagement continues, then we will soon find that “good business” is not only the norm, but a requirement to compete.

Maybe, but I think  not; and I suspect Buffett would agree. The controversy seems to be over whether Buffett has done a sufficiently transparent job of communicating that this kind of behavior will not be tolerated at Berkshire Hathaway. It seems to me that Buffett could compose a message that would not “play the blame game” with Sokol but at the same time re-enforce the fact that any perception (real or not) of  insider advantage, or self-serving deals is simply not going to be tolerated at Berkshire Hathaway. Even if the terms of the “resignation” were that Sokol would not be “fired” for internal ethics violations, there has to be a way to make it clear that what happened with Lubrizol, Sokol and Berkshire Hathaway is not “business as usual.” There is trust, a brand and corporate culture at stake.

The consensus seems to be that neither Sokol or Berkshire Hathaway broke any laws. Technically, everything is legal. Still, Buffett has developed a culture of doing more than just simply what is legal. He’s been fairly quick to lecture others on the need for “high ethical standards” in business and seemed to be the gold-standard by which all others were measured. So now he is and should be expected to take the high road on all of this or the Berkshire Hathaway brand will be tarnished. There’s nothing worse than finding out that your “golden god” has clay feet.

The needed communications are clear to me. Buffett must make a public statement saying that what happened in this case involving Lubrizol is not the way business was expected to be conducted at Berkshire Hathaway and that systems are now in place to be sure that this kind of action will not go undetected in the future. To do less is to condone a lower standard than was communicated to the public.

Your list will be different than mine or your neighbors. What outrages you may be different than what outrages me or your neighbor. The point is that we need to be more than a nation of laws. The disaster in Japan is what started me thinking about all this. Despite the earthquake and tsunami, there were no troops called in to stop the citizens from looting or taking advantage of the situation. Some will argue that Japan has paid a price for this “compliance” or utilitarian society. That isn’t clear to me. They were, until recently the second largest economy in the world. Their products are sought after. Even the latest “scandal” with unintended acceleration of Toyota cars has proven to be not a defect in quality but rather a user error.

So do we “do well by doing good”? I find it interesting that it appears that many companies do – over the long haul. It is easy to make a short term gain by being less than honest or to focus solely on the bottom line. It seems, however, to build a sustainable, profitable business, one must be fanatical about providing high quality products and to be authentically concerned about doing what is right for the customer/client.

From WME 2011

According to the folks over at Ethisphere, it pays to build a culture of ethics in our companies. The graph that they provided seems telling and the list of “World’s Most Ethical Companies” comprises familiar companies. Investing in ethics is beneficial for any company, even in a recession. The graph compares the “WME Index,” or all publicly traded 2011 World’s Most Ethical Company honorees, against the S&P 500 since the initial World’s Most Ethical Companies recognition from 2007.

Here is a bit of the methodology: “Ethisphere conducted data analysis on hundreds of companies based on their responses to the survey, as well as documents and information researched and requested by Ethisphere to confirm survey responses. Every company was then given an EQ score based on the results of the survey and measured against seven distinct categories. These categories were Corporate Citizenship and Responsibility; Corporate Governance; Innovation that Contributes to the Public Well Being; Industry leadership; Executive Leadership and Tone from the Top; Legal, Regulatory and Reputation Track Record; and Internal Systems and Ethics/Compliance Program.”

Winning at any cost is not going to build a long term and sustainable business. Perhaps we need to re-think some of the heroes our children see and who we reward in business. So what is the culture at your company? Are you making a stand for ethical business or are you pushing caveat emptor?

Bruce Nussbaum at HBR discussed the concept that “What’s good for business is good for America.” My sense is we have outgrown that rule of thumb. Nussbaum points out why America’s Corporate Elite is increasingly seen as betraying the American Dream, not building it. You can read the full list of reasons on his post. It is an excellent post, and what caught my eye was his comment on corruption:

“America may well be the most corrupt country in the world. We just legalize it and call it ‘lobbying.’ Everyone in politics participates, especially the unions, but the past decade has seen most regulation and much law writing simply given over to company lobbyists in Washington. The most egregious, perhaps, is the successful lobbying by hedge fund managers to tax their management income as capital gains by wrapping it in a ‘we make jobs’ flag. Intense lobbying killed Glass-Steagal, the regulation of most derivatives trading, the expansion of bank rules governing leverage, and the simple failure to oversee and stop corruption in the mortgage business. All if this was legal. None of it was transparent.”

You don’t have to agree that Nussbaum is “right” on this. You can suggest that this is way too simplified and the “truth” is more nuanced. You only have to get that Nussbaum is stating what that many Americans believes is reality to understand the present “voter rage,” and anti-business, anti-incumbent attitude. Regardless whether we believe the indictment has merit or not, it is the reality for many people and so it is the reality of the business (and political) environment with which we have to deal.

I have been mulling this over for some time (go to categories on the right hand side of this blog page and click on “Ethical Corporation” to see the various posts). The reason I’ve spent time thinking about this is to try and divine what we, as business leaders, will have to do to prepare our companies for this environment. On top of all the tactical things to address (credit, reduced revenue, increasing costs, increasing taxes, more regulation, etc.) we have to factor into our strategy the poor ratings consumers give business. The larger the business, the more difficult the environment. At least for now, the public has faith and respect for the “small business owner.” There’s no reason to believe that can’t change – especially as people realize that many small business owners get many breaks most others cannot get.

There is very little data about the distribution of wealth in America. There is one source, the Survey of Consumer Finances, sponsored by the Federal Reserve Board, that does provide data from 1983. These data suggest that wealth is concentrated in the hands of a small number of families. The wealthiest 1 percent of families owns roughly 34.3% of the nation’s net worth, the top 10% of families owns over 71%, and the bottom 40% of the population owns way less than 1%.

Here’s another way to look at it:

In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one’s home), the top 1% of households had an even greater share: 42.7%. Table 1 and Figure 1 present further details drawn from the careful work of economist Edward N. Wolff at New York University (2010). [University of California, Santa Cruz]

How long do we think our end customers (the mighty American consumer) will give those at the top a break just because they hope that they will some day be at the top themselves? We are blessed (cursed?) to live in very interesting times. I wonder what you are doing to prepare your company for this “anti-business, anti-government, anti-incumbent” environment. Can you turn this into an advantage?

It goes without saying that politicians are “way down there.” But still, our larger business institutions seem to have lost their way or at least they have all been painted with a very large “no confidence” brush. There has been so much bad news, so many bad decisions and such a lack of transparency with some concerns that the whole “big business group” is now held in low esteem.

There are exceptions of course. There are some large companies that for now, the public trusts; they are willing to speak well of them. All of this reminds me of the recent Jim Collins book How the Mighty Fall in which Mr. Collins points out that the very first stage of impending doom is hubris. Along with that ill founded belief that “we can do no wrong,” comes the inevitable culture of it’s all about us. Personally, I don’t think that the size of the company is what we need condemn, it’s the lack of holding everyone accountable to provide the best quality of product and/or service.

So what can we take from all this? Maybe we need to continue to believe in the original “noble purpose or goal” of the company when it was founded. I’m sure it wasn’t just about money. Perhaps we need to keep everyone on target for delivering on the original promise of our company and not let the finances become the reason for existence. I remember hearing someone, it escapes me who at the moment, state that “You can have a great CFO and a phenomenal Corporate Attorney and you will never run out of cash and you will never get sued. But you will go out of business.” While business is a risk and you do have to stretch, you don’t have to bend, break, go around or short cut on ethics, common sense and sticking to your original noble goal.

Even the Supreme Court, conservative by a 5 to 4 margin, knew that they could only “tinker with” Sarbanes-Oxley. They unanimously agreed that the law is constitutional and in a 5 to 4 decision only tweaked the way the Public Accounting Oversight Board is appointed. The message is clear, left to their own devices the large companies will tend to go astray. My opinion is that is because they pay more attention to the stock price than they do to sticking to building a business. They worry about the Wall Street bankers and exchanges instead of the real stakeholders in the company – customers, employees, suppliers and other creditors. When you cater to Wall Street, you are not running your business.

For the small business folks I deal with, the pain caused by all of this is felt mostly in their ability to predict the future and go about their business. Since the consumer and big businesses aren’t spending and the banks aren’t lending, the private companies trying to hold on during this economic reset are challenged at best. Still, they are better off being private and not having to deal with Wall Street. So if only the bankers would get the ship righted and on an even keel, we could begin to hire in the small business sector like we have before.

The rules of the game have changed forever. There are no business folks, large or small, that I have not heard say that their business model is either significantly or completely changed. That’s the good news. We now have plenty of opportunity to get back on track paying attention to our businesses and getting back to the fundamentals of providing outstanding products and services. Collins has pointed out in How the Mighty Fall that we do not need to worry ourselves too much about those companies who have gotten big and arrogant. History shows they will fall. We only have to make sure we don’t let them fall “on us.”

So, as usual, the questions! What are you doing to take advantage of this economic reset to rebuild your business culture to be one inspired by your original “noble purpose?” Are you training, building staff, creating teamwork and generally improving your processes? Are you finding new ways to market? Are you making sure that even as you are successful you maintain a healthy paranoia?

So here’s my premise. It is a leader’s responsibility to provide a compelling vision of the real reason for the existence of the organization (whether for-profit, not-for-profit, private or public). S/he must make sure that the organization never substitutes the measurements for the reasons for existence. Here is where I suspect we will find that BP went wrong. I’m confident that we will find that BP leadership has been focused on minimizing cost, increasing efficiency and improving productivity. Employees are not stupid; they watch where management spends time and money and who gets rewarded. They don’t listen to the words spoken uncritically. They match the words to the actions and the actions win every time.

We need to do the debrief and find the causes of this failure at the BP Oil well (we all know there will be more than one). The details will be important. I know, even without those details, that the root cause will be that leadership failed – not the people doing the work. I know that because by definition, leadership has to take responsibility for the results. Providing for proper training, procedures, controls and an environment where the company and employees can flourish are all the responsibility of the organization’s leadership team.

Government likewise is responsible for providing for proper training, procedures, controls and an environment where the services provided match the public’s expectation. One has to wonder what transpired when it came to actually regulating this and other industries. It appears that a major loop-hole in the regulatory requirements for environmental impact studies in the Gulf Oil drilling operation. The last, most stringent impact study was waived not only for BP but for others drilling in the gulf as well. And not only by this administration, but by administrations going back to the first Bush presidency. The public has a false sense of security when they think about industry regulation. They expect that industries are actually being regulated when, arguably, they are not or at least not fully according to the expectations.

So the balance between the right amount of “fat” and a lean, high performing organization is always in tension. If we look at government as being part of the “staff” in our businesses, then continuing the analogy, we need to have some body fat to survive and thrive, but it’s healthiest to have as little as possible. The public has reason to be highly suspicious of a company’s intentions with respect to good corporate citizenship. There are few companies who are genuinely concerned about their impact on the neighborhood, city, state, country or globe. Therefore, the public has supported, perhaps even demanded regulation of most industries rather than a completely free capitalistic system.

What if business organizations were to consider minimizing regulation intervention in their operations by behaving well, making ethical decisions, authentically caring about their impact on the environment and developing a culture that included all stakeholders in the strategy and vision of the business. Sounds like hard work. Sounds like it could take “forever” and be very frustrating. Sounds like it might make life easier in the end. Instead, business leaders tend to think of government regulation as the enemy. I think it was Lincoln who responded to a woman who criticized him for inviting the leaders of the South to dinner at the Whitehouse. She allowed that they were his enemies and he should destroy them, not invite them to dinner. To which he replied by asking, “But Madame, do I not destroy the enemy when I make him my friend?” I’m not sure we will ever see the business and government agencies become friends, and we likely don’t want that since much that has happened is due to an overly close relationship between regulators and regulated. Still, I don’t see how viewing each other as the enemy helps either.

One big lesson from the sad experience of the Gulf Oil Disaster for business leaders is that if we do not do the right thing we will be caught eventually and the results will be more regulation, more red-tape and more Public Relation fall out. BP may well not survive this disaster, and it’s one of their own making. Accidents happen. Yet it is not likely that the public will accept this particular incident as an accident, but rather they see it as negligence. To make matters worse, it appears that BP was less than forthcoming with information because they are looking out for themselves and taking a defensive posture toward future litigation. It won’t work. All that will happen is their reputation, which was not sterling before the accident, will certainly be further damaged by their actions or lack thereof.

For government, the fall out is not going to be any better. The people are not fooled by the self-righteous finger pointing by the members of the House and Senate who are whipping Industry leaders in public and accepting obscene amounts of money behind the public’s back. The trouble is, there are precious few secrets anymore. It will be very interesting to see how the public responds to the BP incident, the financial disaster that continues to plague the economy and the sickening sight of elected officials trying to redirect scrutiny of their actions or lack thereof by demonizing others.That won’t work either. Alas, I doubt that the government officials will learn the leadership lessons that the business leaders will, hopefully, learn.

Some of the responses to this post I found to be lacking in real thought or insight. Not unusual, really, because we all work on auto pilot from time-to-time. The “quick” answers came from those who work based on firm ideologies. From it’s all Obama’s fault because he’s a “marxist from a dysfunctional family background with zero executive experience” and “I think government is just adding fuel to the fire!” to “BP shouldn’t have caused this mess by pressuring managers to rush the work.” I happen to fall more in the camp of wanting to not place blame right now. I’d rather focus on solving the problem and then think about the specific failures – so we can avoid them in the future. Meanwhile, it’s instructive to view the action with an eye to how leadership is being executed and our responses as leaders in our own right.

Transparency:

Companies and Governments have yet to recognize that their actions, policies and decisions will be transparent whether or not they want them to be. We all need to assume that we will be subject to disclosure and perhaps Monday morning quarterbacks. Are any of us really ready for this? Insightful leaders will change the culture of their companies so that they are as transparent as they can safely be – with stakeholders at all levels. You can assume that everything you do and say will be posted on the web for everyone to see. And some things that aren’t accurate or taken out of context will also be published. Have you built trust with your customers, employees, suppliers and owners? Who will they tend to believe? You or the “whistle-blower?” It’s too late to build trust once the fecal matter has come in contact with the rotating blade.

Ethics:

Ethics is a business process. As leaders we all need to make sure that the culture we build is not one of focus solely on the measurements (that is financial results), but rather focused on the value for STAKEHOLDERS, not just stockholders or owner’s equity for private firms. What are we really here to do? What is our reason for existing? I’m sure it’s not just for profits. Are we brave enough to tell Wall Street that we have no intention of giving them financial forecasts and that we are focused on providing valuable products and/or services? That we’re in this for the long haul and quarterly results are not really significant? To me, that would be real leadership.

Accountability:

I see positive lessons here. BP’s CEO, Anthony Hayward has stepped up and taken responsibility. To be sure when it comes to PR, he’s a loose cannon on the deck. Those of us focused on corporate governance would say Hayward’s taking responsibility now is too little too late. None-the-less, Hayward and the COB Carl Svanberg have said that they and BP accept responsibility and accountability for this disaster. They will lose their jobs when this stabilizes, and they know that is coming – the “ultimate” accountability.

I see the President also accepting that he is accountable for making sure every thing that can be done to mitigate this disaster is in fact done. Yet there is little that he can do about what is happening one mile below the surface of the Gulf ocean. What he can do (and perhaps is not doing well) is make sure we clean things up before the oil hits the shores. As a potential Monday morning quarterback, I’m wondering why we don’t have “tons of people” out there cleaning up the oil as best we can before it comes ashore in wetlands. I get that hitting a beach may be acceptable since it’s easier to clean. But come on now, when it gets into “the weeds,” it’s a real problem. And how about the wildlife? Shouldn’t we focus on getting this up sooner rather than later for all lives concerned?

Where I see a big lack of responsibility and accountability is with us, the consumer. We demand inexpensive gas and refuse to alter our lifestyle so that we minimize our dependence on oil. So we have to come to the realization that we are creating this market, the response to the market is to increase supply and the pressure is then put on our elected officials to allow expedited drilling. We cannot blame others for this dynamic, we must accept accountability too.

Making better decisions:

I am not one of those calling for the President to be more passionate – we have enough of that in business and in government. Instead, I appreciate the calm thoughtful approach that seems to be this particular President’s usual method of operating. Turning to academia as well as the leaders of industry to determine what the best possible approach might be seems to be very logical. That takes time and the average citizen is not patient; they are used to solutions being found in less than an hour with time out for commercials.

One of the respondents to the original question stated that “there are at least 20 people in my own company who could do a better job than Obama . . .” His premise is they could do so because they “actually have experience supervising and running something.” Really? I do not know this gentleman and do not know how large his corporation is. I do know that running the U.S. Government simply cannot be compared to running a for profit company – of any size. I cannot imagine having to deal with all the various factions, bureaucracy, constituents and special interests. How do you really inspire, lead and manage an organization comprising 3.7 million square miles, 312 million individuals and 50 states all with their own view on how things should be done? Here’s what I know: If you’re used to running a business, being able to make the decision on how things will be and then DIRECTING people to “get it done,” you will very likely fail at public service no matter how smart you are – UNLESS, you learn to compromise and accept that you do not have the only right answer, you simply have one right answer and others possess a right answer as well. Every business person I know when challenged on his/her statement that it takes a business person to run the government misses that what s/he would wind up doing is turning our democracy into a dictatorship. Perhaps benevolent from his/her point of view, but a dictatorship none-the-less. No thank you, as bad and deplorable as our system is, it’s proven to be the best so far.

I doubt that anyone who has pat and simplistic answers to this challenge have a clue as to how complex and difficult this disaster really is. I’m quite skeptical that anyone who truly believes that any number of people who have run a business or department of a large business can step in and run the United States Government from the Oval Office has a clue how our government actually works (or doesn’t work). This Gulf Oil Spill is an unprecedented challenge. We are learning as we go. There is a plethora of leadership lessons here – both positive and negative examples to be sure.

To me, the fundamental leadership lesson to be learned here is that we cannot wait to make sure our organizations are not only doing the right things, but making sure we are doing them right. We have to inculcate an organizational culture of accountability and responsibility to deliver value in a sustainable business model that does not focus on profits or growth alone. What is the real purpose for your organization to exist? I’ll give you a hint. It’s not profits. Profits are necessary but not sufficient to build a great and enduring organization.

BP Ad on Google

We live in the Internet age. What would you expect BP to do? The media is “all over them,” and painting them as a villain. BP is being portrayed as a company who purposely caused this accident, and perhaps we will find that some of the decisions they made have lead to the disaster. It makes no sense to believe they wanted this to happen. No matter what you think about that, BP is still critical in shutting down this well. It makes no sense to be treating them like criminals at this point. We all, including BP, need to figure out what happened to cause this accident. Right now, it appears to be a series of multiple failures.

Meanwhile, BP is not the only culprit here. My colleagues over at 2130 Partners have, as always, hit the nail on the head. With respect to this disaster, they ask “What can you own?” They ask us to accept our part in creating this reality. Admittedly, most of us are only indirectly responsible for the situation, however, we do all own some of this reality.

We’re all saying harsh things about BP. Can we consider that perhaps the leaders have recognized their failure and want to do the best they can? Can we consider that the BP organization cannot change on a dime and while there may still be a tendency toward secrecy and defensive attitude, they might actually be trying to be better? Can we consider giving them space to do well while at the same time holding them accountable? Can we give ourselves the space to realize our demand for energy drives this and many other processes?

As I write this post, the latest ideas are that with the “funnel” over the cleaned up riser pipe, much of the oil will be able to be collected. Then, as I understand it, the relief well will be drilled to intercept the present well below the failed blowout valve. Then they will attempt to effect a “bottom kill,” that is plug the well from the bottom instead of from the top as tried last week. All of this being done at a mile below the surface.

I don’t know if BP’s purchase of Ad Words is going to help them out or not. I’m sure it won’t help close the well down. Speaking for myself, I can say that I almost never pay attention to, let alone click on, paid Ad Words. I generally don’t trust Advertisements or Advertisers; they have an ax to grind, they have their own best interest at heart, not mine. So BP’s money is not well spent as far as I’m concerned. And don’t get me wrong on this, I do not think I’m going to end up thinking BP is a model corporation. No, instead, I’m pretty sure when all this is over we will be looking at a very large failure in Corporate Ethics. It’s just that I don’t think now is the time to focus on blame.

For the business owners and business leaders reading this blog, the question is how well are you and your organization doing to plan ahead for such a disaster? How will you manage in this internet age? You know your “sins” will not be hidden, right? You will be transparent, like it or not.

I’m not one of those who believes that the customer is “ALWAYS RIGHT,” meaning that the customer knows what’s best for YOUR business. I do believe that the customer is always right when it comes to what they want and you had better be listening. You also need to know what’s going on with how they perceive you as a vendor. A valuable vendor communicates with the customer, provides information about innovative solutions to challenges, stands behind their products and services, does what they can to help conserve their customer’s cash and isn’t always looking to make the maximum profit at the expense of the customer.

Before you get the impression that this post is going to be a “business bashing” tirade, I hasten to add that I feel the same way about employees and especially labor unions. Look at the recent discussion created by states cutting back on education expenses and using tenure or FIFO to layoff teachers. Parents and Administrators are now raising significant objections to losing promising young teachers simply because they were last into the workforce. We all know the concern about how to measure effectiveness of our educators, they are tired arguments and I believe them to be mostly discredited. Get over it. There is no compelling reason to keep a person in a particular paid position just because they’ve been there a long time (nor should they be let go because of that reason either). Labor unions would do well to listen to the paying public and figure out how to help the excellent teachers thrive, regardless of age or longevity in the workplace. That would make unions worthwhile.

For the individual employee, learn to find out how you are doing and be ruthless about it. Embrace 360 reviews and if you’re company isn’t doing them, find another way to determine how you’re viewed by supervisors, colleagues, subordinates and customers. Don’t kid yourself on this. Your career depends on it. Are you flexible in assignments (not your values and ethics, but simply learning new things and taking on new assignments)?

The same is true, perhaps even more important, for those of us who are consultants, mentors and/or self-employed service providers. We had better genuinely have our client’s best interest at heart and demonstrate that so there is no doubt. Find a way to help your customer reach their goals, and one will undoubtedly be saving cash (and it always has been a goal, just exaggerated in this economy). I recently heard on a WSJ podcast that one enterprising HR consultant is teaching her clients how to do what she does so that they can carry the ball in the future. She said, “Why fight the market? The market is to help my clients save money. So I help them learn how to do these things for themselves in the future.” Ecology of information – the hallmark of a good consultant.

The way I see it, we are all in this together. Whether we are small business owners, leaders in large organizations, individual contributors, government employees, union members, in transition, or service providers we had better stop focusing on ourselves and start looking to add value. That isn’t to say we should not be willing to consider our own interests, it just that our interests can’t come first or be foremost.

If the folks at Enron, WorldCom, AIG, Citi Group and all the other dysfunctional organizations had paid attention to their reputation and had goals other than their own enrichment in mind, they would not have become dysfunctional. If we as investors insisted on long term value instead of quarterly stock gains, we would not have pushed the companies into being so short sighted. If the folks in Congress really had the best interests of their constituents at heart instead of their own selfish gains and focus on keeping their jobs, then perhaps their ratings and esteem with the public wouldn’t be lower than whale dung on the ocean floor.

I know, and “if a frog had wings, he wouldn’t keep bumping his butt on the ground.” It seems as though this is all unachievable. Yet, I don’t know of any other way to fix the mess we’re in. I’m convinced that even though it’s a big simplification, “taking care of number 1,” and “wining at all costs” is what got us into this mess. Collectively changing that focus would seem the only way to get out of it. It starts with “the man in the mirror.” Are you willing to change your focus? What is your company doing to “get back to basics” and focus on the customer? Are you looking for ways to change your business model, like the HR Consultant mentioned above?