Potter Stewart

Leadership and Potter Stewart

Dave Kinnear1-On Leadership

Many colleagues and authors are writing about the global Leadership crisis. Some of that feeling — that we have a lack of leadership — comes from highly visible lapses in ethical conduct.

“Ethics is knowing the difference between what you have the right to do and what is the right thing to do.” Potter Stewart, Associate Chief Justice U. S. Supreme Court.

Ethics is, of course, a subjective thing. What is ethical in my country may be totally unacceptable and unethical conduct in your country. Some people suggest that “If it is legal, then it is ethical.” I do not agree. In many ways, relying on the law to define what we can or should do is a huge problem. And our corporate charters (Articles of Incorporation), with the focus on returning growth in equity to the shareholders do not help matters. Strange things happen when a lot of money/wealth is involved. Normally dependable people do uncharacteristic things when there are large gains to be made. Friends become enemies.

As a leader, one must know “the difference between what you have the right to do and what is the right thing to do.” There must be a sense of balance between the fanatical pursuit of profit and doing what’s right for the sustainability of the organizations we lead. Our system must change to allow for doing the right thing. Grantland Price said it very well back in 1914:

For when the One Great Scorer comes
To mark against your name,
He writes—not that you won or lost—
But HOW you played the Game.

You can decide for yourself what Price meant by the phrase “One Great Scorer.” For me, keeping it secular, I’m content to say the market place is the One Great Scorer for our businesses. We can play full out. We can certainly join the great game of business to win. But win at “all costs” will cause us to lose in the long run. How we play is important.

Along those lines, I am heartened by the move to establish benefit corporations or “B Corporations.” At the time of this writing, 19 states have adopted B-Corps”: Arizona, Arkansas, California, Colorado, Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Nevada, New Jersey, New York, Oregon, Pennsylvania, South Carolina, Vermont, Virginia, Washington DC, and most recently Delaware. I hope this trend continues and accelerates. Perhaps this will take some of the pressure off of focusing solely on financial results.

A move to “B-Corps” will not eliminate unethical behavior. We will continue to have new laws, regulations and audits in order to discover and discourage those who insist on taking moral and ethical short-cuts. Small business will continue to be burdened (some say punished) for the misdeeds of “big business.” The only way I know to change the trajectory of ethical misconduct is to build organizations where people are allowed to think, encouraged to lead and are not punished for questioning what is going on.

The leaders of the small businesses with whom I deal have very high ethical standards — for themselves as well as their organizations. The challenge is, how do those standards, those values, get passed along to additional decision makers as the company grows? In order to scale the business to larger activity levels, a business owner has no choice but to allow others to make decisions. Those decisions have to be based on clear values and a vision of the reason for existence of the organization. In other words, the culture of the organization must demand that we live up to the values we set.

All of this requires clarity of vision, mission and values. There must be consequences for breaches in adherence to the culture. If we do not pay attention to the details of “how things get done” in our organizations, then we may well be on the front page of the Wall Street Journal in a less than flattering article.

So as leaders, how do we make sure we stay on track and grow at the same time?

  • Get serious about clearly stating the vision, mission and values of the organization
  • Make sure leaders live the vision, mission and values — actions speak louder than words
  • Hold yourself, leaders and all employees accountable for their actions
  • Create a safe environment for discussion of failures, successes and ideas for improvement

It’s pretty easy to put this list together. You may have other items you want to add. What is difficult is to actually achieve and live out these ideas. I believe each organization will go through a unique experience as they build a purposeful culture of ethical practices.