Marc Le Menestrel

Three Inconvenient Truths about Corruption

Marc Le Menestrel — 2019-01-29T02:53:00Z

Having honest, adult conversations about corruption requires accepting that none of us is ethically pure.

These days, I sometimes begin my classes on corruption with an unusual admission. I announce to my students – who may be judges, police officers, military investigators, bureaucrats or any other variety of public official – that corruption is not a problem removed from me. I am corrupted too.

This is only partly a gesture of humility. It is also my attempt to initiate a dialogue on business ethics that is honest, for a change. The common thing to do when the subject of ethics comes up is to grandstand and make sweeping moral declarations, as though combating corruption were simply a matter of finding the “bad”people in an organisation, agency, justice system, etc.

But corruption has always existed and goes on everywhere. It is indeed very likely that it will always exist. Why not also in myself? Of course, I can avoid thinking about it. Even more convenient, I can choose or invent a definition of corruption that does not include my actions. In doing so, however, I am indulging a self-protective fantasy in which corruption has lost some of its most valuable meaning.

Most of us are very uncomfortable when confronted with the truth of our unethical behaviours. Since we tend to think in exclusive categories, we fear being bad because we think it implies we are not good. However, the truth is that ethics is a grey zone. Each one of us is both good and bad. We are not saints.

In my experience, the more I know the extent to which I am corrupted, the better I am at navigating the grey zone of my own ethics. Finding moral orientation in the grey zone sometimes entails resisting my own imperfections and striving for something higher. At other times, it is a matter of accepting some of my own “badness” so that I can keep my attention focused on the real world, on things as they actually are.

It can be difficult to determine what to resist and what to accept. Here are three ideas that I have found useful in my moral and ethical decision making.

A zero-tolerance stance towards corruption is neither necessarily honest nor desirable

When I invite business executives and civil servants to consider “accepting” their own corruption, it is not an invitation to moral nihilism. Instead, it is a reminder that none of us is perfect. We all have flaws and blind spots that we must be willing to face head-on if we are to learn and improve. If we adopt an unrealistic standard for ourselves (and others), we will be incapable of choosing our moral battles wisely.

For my part, I am trying to embrace the fact that, as a Western male individual, my thinking is biased by an education, a culture, social norms and habits that constitute my identity. This has both good and bad ramifications. Teaching all over the world, I have come to realise that some of my attitudes could be perceived as discriminatory, even racist sometimes.

When a student points out some hidden negative bias in my teaching, I strive to show interest and curiosity. Then I can learn, instead of pushing away any information that contradicts the temptation towards self-conferred sainthood.

So overall, I have very good reasons to have some tolerance about my ethical vulnerabilities. As I am intolerant of the aspects of myself that I really want to fight, I can be tolerant of the aspects that I accept as part of my fallible humanity. I can bring those aspects to a clearer and more peaceful conscience.

Abandon the business case in order to re-invent it

Being clear-headed and emotionally mature – i.e. adult – about corruption means confronting the tensions that can arise between moral and profit-making imperatives or, if you like, between business value and stakeholder value. These are both moving targets, and it is a rare moment indeed when the two are aligned such that they can be pierced with a single arrow.

Yet executives persist in the belief that they can popularise anti-corruption by stressing the “business case” for doing the right thing.

I believe that an insistence on the business case contains fatal contradictions. The search for profits – i.e. the core cause of corruption – cannot also be the core of anti-corruption. Treating anti-corruption like a strategy that must yield financial returns is like treating a disease with its very cause. It almost ensures that we will miss the most meaningful opportunities for positive change. Yet this is the situation we face today, in which anti-corruption itself risks becoming corrupted. If, however, we submit our way of thinking to principled self-scrutiny, positive change can be the catalyst for improving all stakeholder relationships and, ultimately, achieving sustainable and meaningful business success.

As corruption begins with temptation, it is important to promote anti-corruption for moral reasons, not just self-serving ones. It is only to the devil that ethics can be sold.

In my own teaching, I have had to abandon the business case. I needed to be prepared to teach outside my students' comfort zone instead of always telling them what they preferred to hear.

With time and hard work, I built sustained and profitable client relationships. Still, I continue to navigate the grey zone between my intellectual honesty and my own success. It is only because I am not confined to the business case that I can incrementally invent mine.

Altruism is not always ethically superior

Ethics and altruism are often wrongly conflated. Especially when it comes to corruption, doing what is best for others does not equate to acting ethically. In my experience, it seems that my students are spending a great deal of their time and effort pursuing goals – or working around constraints – other than their own. In many cases, their unethical behaviour serves the interests of their company. It may also stem from deference to authority, blinding them to the risks they personally incur by disregarding ethics. Hence, paradoxically, a deeper anchoring in their own self-interest could indeed promote more ethical behaviour.

Embrace paradoxes, not platitudes

Paradoxes can be unpopular in the boardroom. Nonetheless, they are essential because we do not live in a black and white world. Rather, we are complex beings navigating an even more complex world. An ethics suitable for such a world will be more tolerant of paradoxes than of the platitudes that too often dominate discussions about corruption in the corridors of power.

To be sure, complexity and contradictions are difficult to embrace and require a new way of thinking. But accepting them allows us to navigate the ethical grey zone in a way that avoids categorical judgments while acknowledging that some behaviours are more ethical than others.

It also clears the ground for more adult conversations about ethics and especially about corruption. These conversations are urgently needed today, as anti-corruption is at risk of itself becoming corrupted – converted to a moralistic mask designed to prevent us from looking unpleasant realities in the face.

Marc Le Menestrel is Visiting Professor for Corporate Governance and Sustainability at INSEAD.

I thank Benjamin Kessler, editor at INSEAD Knowledge, whom I met when I arrived in Singapore. It has been the start of a productive and pleasant collaboration, writing short pieces for this online outlet.

Click here to read the Article on INSEAD Knowledge

Follow INSEAD Knowledge on Twitter and Facebook.

The Key to Cultivating Agility in Decision Making

Marc Le Menestrel — 2018-06-25T01:44:00Z

How do you think? Can you be aware of your thinking? Can you choose how to think? In this piece, I introduce my way to teach people to choose how they think about things.

Decision-making excellence requires self-awareness and the ability to choose how to think in different situations.

Let's say a store has been selling large snow shovels for $15. The morning after a major snowstorm, the store raises its price to $20. Is this acceptable?

A large majority of business people in my seminars answer that yes, it is acceptable to raise the price of shovels after a storm. They invoke the law of supply and demand; they quote the example of street selling of umbrellas when it rains; they explain that the competitive context would not let them survive otherwise; they blame the customers for not having anticipated the storm, and many other reasons that resemble excuses.

In reality, they don't really think about whether it is acceptable or not for the store to raise its prices. They react, and then they think about how they can justify their “choice”.

Their reaction mostly comes from an implicit and unconscious identification with the business owner. From this perspective, they expect that raising the price of the shovels will help them make more profit. This is the way they think.

But a seminal study found that 82 percent of people (not business people but a representative sample) do not think it is acceptable to raise the price of the snow shovels after a storm. If the local customers are similarly minded, they are likely to be angry and lose trust in the shop if it does so. They will certainly refrain from buying anything else they do not absolutely need, and will consider that the shop is out to exploit them as much as it can.

Over the long term, then, it could be bad for business to raise the price of snow shovels after a storm.

It is thus crucial to realise how business leaders tend to be conditioned to think a certain way, e.g. the idea that they should exploit all available opportunities for profit maximisation. When this way of thinking directly clashes with the ethics of their customers, respect for nature or the will of their government, it can lead them to take wrong decisions and eventually destroy opportunities and lose profits.

Thinking about how we think

The way we think is a part of our experience of life, but also helps shape it. It is what makes us smart, or not so smart after all.

Each one of you has a very unique way of thinking. I do too. No two people's minds operate in precisely the same way. Furthermore, each of us is capable of many different kinds of thinking, not only depending on what we think about, but also depending on what we want to do, say, understand, or even who we want to be.

Being aware of our way of thinking, of its uniqueness and at the same time of its commonality with others' ways of thinking, helps us exercise one of our most critical abilities as decision makers: namely, choosing the way we think.

At the global level, our historical moment demands that we make this choice carefully, because new technologies and political events are critically altering our world, including how we do business. Such sweeping transitions are dangerous and we often prefer not to think about them. Still, they can also be an opportunity to make things better. Above all, we need to adjust our ways of thinking to meet the fast-changing world around us. As Einstein put it, “A new type of thinking is essential if mankind is to survive and move toward higher levels.”

Of course, we know that we are free to think what we want. But choosing how we can think about something is difficult. Often, we believe that there is only one way to think about something, as in our example of business owners esteeming five additional dollars per shovel above their most valuable asset: customer relationships. However, there are always many ways to think about something.

Consciously choosing the way we think is the expression of a unique freedom that human beings possess and can nurture. It is a way to be free, at the most evolved and beautiful level.

In my teaching, I invite participants to learn different ways of thinking in order for them to nurture their freedom and their power. With freedom and power comes responsibility. I am inviting them to be responsible for what they do with this thinking agility. They can use it to think more, or less, to think in a more altruistic manner, or in a more self-interested direction. They can use it to better understand the world of business and be more agile in their way of thinking.

Decision making for leaders

This is a crucial skill for today's leaders. Being able to understand different perspectives helps to anticipate the reaction of customers and to evaluate ethical risks in decision making. It is also critical to genuinely assess how various options align with the values of the organisation and of its people. Business people need to be trained not to make decisions blindly, especially decisions where core values are implicated. They need to learn to avoid the trap of justifications, to analyse and to think about all dimensions of a decision before acting, and especially before communicating.

For example, if you owned the store that sold shovels, the better business decision might be to lower prices after a snowstorm. How many more customers may come as a result? What would be the effect of securing their trust? How would this newly generated goodwill impact sales more broadly, beyond the snowstorm emergency? There is no definite answer to whether one should raise the price or not after a storm, but we should not simply react because there are compelling reasons to think seriously about both alternatives.

Leadership is an art as much as a science. It can be learnt by nurturing conversations where the mind is not necessarily driving the decision, but where the heart and the soul help remind it to stay open to other avenues of thinking.

Marc Le Menestrel is Visiting Professor for Corporate Governance and Sustainability at INSEAD.

Click here to read the Article on INSEAD Knowledge

Follow INSEAD Knowledge on Twitter and Facebook.

Corruption: Drawing a Line in the Grey Zone

Marc Le Menestrel — 2018-01-25T02:33:00Z

In this piece, I introduce one of my preferred model of ethics: a grey zone between night and day. Inspired by Escher, it helps to understand the very special reasoning pertaining to the frontier between good and bad. I also develop a comparison between the anti-corruption of Xi Jinping and Donald Trump.

Corruption can no longer be addressed as a legalistic or compliance issue by executives and directors.

Nor is it enough to regard it as an ethical issue. Righteousness is not and will never be a guarantee for directors and executives.

Corruption is one of these complex notions for which simplistic reasoning can give no more than an illusion of understanding.

Consider the following metaphor: Corruption would be to integrity what night is to day.

Day can be defined rigorously as the time between sunrise and sunset.

But who would deny that dusk is already the night coming, that twilight contains some daylight in it or that dawn announces the inexorable coming of day?

Moreover, seasons affect the length of the day. There are cycles and what is day today may be night tomorrow: A practice that is acceptable today may be considered corruption tomorrow.

And if one wants to approach corruption in a globalised world, one has to take into account that night and day, in practice, depend on where you are.

When the sun sets in the west, it rises in the east…

Xi and Trump

I'll illustrate my point with a concrete example – China's President Xi Jinping's speech to the 19th National Congress of the Communist Party of China, contrasted with the National Security Strategy of the United States of America by President Donald Trump.

First, let's consider the commonalities between the two leaders' statements. Both documents consider corruption a governance issue. Both embed the idea that corruption is antagonistic to the rule of law, which is formulated in both documents as a fundamental value. Both documents refer to the societal benefits of combating corruption.

Further, their perspective on corruption is like day and night with, of course, shades of grey.

For Xi Jinping, “corruption is the greatest threat our Party faces”. It is one of the “tests confronting the Party as they relate to governance, reform and opening up, the market economy, and the external environment”.

Xi wants to ensure “that officials are honest, government is clean, and political affairs are handled with integrity”.

The integrity of party officials will improve “the political ecosystem of the Party”, “strengthen internal oversight” and protect “its close ties with the people”.

Xi Jinping advocates anti-corruption to make the Chinese Communist Party better so as to contribute to the long-term stability of the country.

For Donald Trump, corruption also arises from weak governance and the failure of the rule of law. But he fingers a quite different set of culprits: “Transnational Criminal Organizations”, “corrupt foreign officials”, “corrupt elites”, “repressive leaders [who] often collaborate to subvert free societies and corrupt multilateral organizations”.

Trump's anti-corruption agenda is aimed at fighting “authoritarian states” and allowing U.S companies to “compete fairly in transparent business climates”. In other words, Donald Trump advocates anti-corruption to influence the global playing field, protect U.S. interests and contribute to political freedom and fair economic competition.

These two perspectives on corruption highlight two sides of what corruption can be.

On the one hand, corruption refers to the loss of integrity of a political system because of inappropriate economic incentives.

On the other hand, corruption refers to the loss of integrity of an economic system because of inappropriate political influence.

The question of whether economic or political power should drive global governance frames both Xi Jinping's and Donald Trump's perspectives on corruption.

Between the extremes

It is risky for globalised companies to make business decisions – such as which non-market strategies or sales practices to employ abroad – through one of these perspectives alone. We need both to cover the full spectrum of corruption.

Some theoretical input can help define the different forms of corruption and anti-corruption.

A stance towards corruption that stresses politics at the expense of economics, as in Xi's discourse, is relational. In a relation, two identified parties cooperate to benefit from their joint activity. Most importantly, these parties share a common identity and exist together as a collective. It is this collective that they intend to protect by promoting the integrity of the relation.

A stance emphasising economics at the expense of politics, like in Trump's National Security Strategy, is transactional. In a transaction, two anonymous parties compete to benefit from an exchange. The object of the transaction makes the exchange beneficial for each party. These individual benefits drive the exchange and need to be protected by the integrity of the transaction.

Both of these stances have an absolute definition of integrity that is both culturally grounded and philosophically sound. Each has its own values, and its own value.

However, social interactions are a mixture of relations and transactions, and should be treated as such. Transactions or relations, economics or politics, competition or cooperation represent extremes that should never pretend to capture the full reality alone.

Integrity is not about purity. It is about the drawing of a line in the grey zone, a dynamic process that engages the actors, their references and their context.

The limits of “zero tolerance”

Because corruption is a grey zone, the inconvenient truth is that corrupt behaviours are not entirely evil. Similarly, those that are not corrupted may not be paragons of integrity either. Unfortunately, “zero tolerance” discourses about corruption do not give credit to this complexity.

This is not to excuse the petty corruption or all the forms of relations or transactions that are so perverted that they should rightly be called crimes and necessitate punishment.

It is to acknowledge the need for an acute analysis of the good and evil of social interactions, and that such an analysis will lead to necessarily contradictory judgments due to the complexity at hand.

Accepting the grey zone doesn't mean denying that some acts are darker than others. It is because you accept it that you can aim towards light with full conscience.

So for corporate leaders, effectively combating corruption is, first and foremost, about a critical attitude to one's own perspective on corruption. Do not hold the idea of corruption at arm's length, as though it were a problem too sordid to soil your hands with. Question your notions of what integrity looks like; consider the possibility that, in the complexity of business relationships, integrity sometimes shakes hands with corruption.

The first step might be creating the space in your organisation for uncomfortable conversations and questions. Instead of trying to ensure your company isn't corrupt from your usual perspective, assume – as a thought experiment – that it is corrupt, according to an alternative mindset. Then thoroughly examine your business practices with that shadow perspective in mind. Outside of your comfort zone, you may discover surprising truths about your practices and unleash a new motivation to improve. And you will certainly be better prepared in the event of an accusation.

Marc Le Menestrel is Visiting Professor for Corporate Governance and Sustainability at INSEAD.

Click here to read the Article on INSEAD Knowledge

Follow INSEAD Knowledge on Twitter and Facebook.

The Ethics Challenge: Finding the courage

Marc Le Menestrel — 2015-03-25T02:18:00Z

What sort of courage does ethics require? The search for intellectual honesty faces many emotional barriers that prevent us from seing the truth: we are not as ethical as we like to think.

This easy piece published in a semi-academic journal shares my teaching about ethics, in particular to Directors during classes in Governance. I was glad to benefit from the edits of Ludo van der Heyden and the Editor.

The question that I wish to address here is going to the heart of ethics. The subject has been much debated over the last decades, yet a sceptic could rightfully argue that all the talk has delivered insufficient results in terms of change in business behaviour.

One of the main reasons for which ethics has not delivered may be that most of the effort has been directed at pointing to the lack of ethics in others. These others include employees, managers, CEOs and
senior executives, boards, shareholders,regulators, governments and other stakeholders. Having designed various strategies for “these others” to behave more ethically, we end up lamenting that, alas, our strategies fail miserably. We come back to a state of powerlessness, evoking human nature as the ultimate
culprit.

One of the main reasons for which ethics has not delivered may be that most of the effort has been directed at pointing to the lack of ethics in others. These others include employees, managers, CEOs and senior executives, boards, shareholders, regulators, governments and other stakeholders. Having designed various strategies for “these others” to behave more ethically, we end up lamenting that, alas, our strategies fail miserably. We come back to a state of powerlessness, evoking human nature as the ultimate culprit.

Ethical training should be seen as an investment that invites this courage, and sheds a new light on the – previously unsuspected – risks that we actually face. This training is unavoidable and quite different than any “compliance” training. Such investment may then lead to a wonderful “windfall”: it frees the mind, the body and soul, and prepares the individual, and his or her organisation, for unsuspected future benefits.

The hard climb to building ethical conscience

Participants in seminars I facilitate are regularly overcome with emotions when sharing personal experiences of corruption, intimidation or coercion. Often, strong ethical judgments cloud their mind and stress their heart. Many claim to be relieved to find a space where they can openly discuss the direct or indirect subversion of the democratic sphere, using powerful influential practices or lobbying organizations. Indeed, how many boards and executive committees honestly face up to the contribution business is making to the current destruction of our natural ecosystem – in nature or in our society?

Seeing the full spectrum of ethical and unethical behaviours requires an emotional effort that must not be underestimated. In a very human need of self-preservation, we typically avert or abort thinking about unethical topics precisely because of the deeply unsettling emotions they evoke. This occurs both consciously and unconsciously. As a result of these psychological processes, our thinking is constrained in a tiny corridor bounded by frightening shadows. In an attempt to fight our discomfort, we sometimes desperately focus on the positive aspects of ourselves or on the light at the end of the tunnel, becoming entrenched in a perspective that is blind to the biggest risks we actually face.

The courage that we need shall be found both in the mind and in the heart. The mind must learn to let go of the sometimes obsessive need of a positive self-image and a desperate pursuit of our goals. The heart must learn to love others, as well as ourselves, even in the shadows.

The Restraining Boundaries of Self-Rationalisation

Let us consider corruption: one of the most daunting challenges we face today. From Washington to Paris or Shanghai, I have been engaging with young and senior executives in various industries about corruption for more than 15 years. The quasi totality of the participants I taught would describe themselves as ethical managers, working for ethical organizations. Of course, they all say they would not be corrupted, or corrupt themselves. Yet, my learning process was to reveal – through role plays in ambiguous and difficult situations involving both time, competitive and hierarchical pressures – that, in one way or another, a large majority of them would indeed end up corrupting. And when this is pointed out, in the immense majority of cases, and in particular when working in groups, participants would spend most of their effort, not seeking alternatives, but rationalizing why they cut corners, and why they had no choice but to do so.

I have identified three steps in which participants typically engage when challenged to explain their choices.

Firstly, they try to deny that they are actually corrupting.

Secondly, they justify why they have done it.

Thirdly, they externalize their responsibility to others, and blame them for their being put in such a situation.

These rationalization mechanisms prevent them from being individually, and collectively, more astute in the face of corruption. In some of the cases I teach, there is actually no good reason to corrupt, and people do it because they can't think differently. Most of the time with corruption, we just do it because we don't try hard enough not to do it.

A genuine effort to minimize corruption, in and by organizations, is leveraged by first identifying the way people think, talk and act to perpetuate corruption. This, in fact, is not helped by hastily pointing fingers and apportioning blame to various “rogue elements” or “bad apples”. Changing attitudes to corruption firstly requires understanding how it comes about. From there, one can discover that the drivers of corruption lie in an emotional inability to think wide enough.

Furthermore, in my experience, understanding our own unethical behaviour is a stronger driver for ethical change than preaching and reinforcing ethical behaviour. Compliance efforts help, of course, but they sometimes become a mere attempt to protect top management and feed their self-perception of righteousness: it becomes a self-deceptive practice. Worse, when compliance nurtures a belief that it guarantees ethical behaviour, it actually becomes a hindrance.

The false comfort of ethical blindness

As indicated earlier, we – us humans – avoid discomfort, physical or emotional. When avoiding a direct awareness and confrontation of the potentially unethical aspects of our business interests, we typically switch to a reactive mode. We still deliberate, but our cognition is trapped in various forms of denial, rationalization and externalization of our locus of control – in other words, apportioning responsibility to elements beyond our control – and feeling safe again. By constructing these individual and collective protections at the psychological and emotional levels, we also isolate ourselves from the source of future problems. We become like ostriches with our heads in the sand, seeking refuge from what seems too large a challenge. We are in this case preparing ourselves for bad surprises; we are actually sowing the seeds of real nightmares.

Firstly, and paradoxically, ethics requires suspending judgment. As a teacher, I spend a tremendous effort in my preparation working on my own prejudices towards the people and companies I address. A typical set-up for failure is when I appear to be judging them, projecting my own prejudiced shadows onto the participants or their organizations with the illusion that it serves some good. In reality, it only produces a reaction that reinforces the vicious circles in which we are all trapped: blaming the messenger of bad news to escape our shadows.

To the contrary, a solid and efficient way to proceed is to be non-judgmental, so that participants feel that they occupy a safe, intellectually honest and credible space for courageous and smart conversations to take place.

The Duality of Ethics and the “grey zone”

We prefer to think and talk about our ethics in a positive light. We easily provide arguments to explain how ethical we are. Most companies have success stories about how they contribute to environmental sustainability, advance social justice and promote human values.

However, for all of us who are neither saints nor devils, our ethics typically fall in a grey zone. It lies somewhere on a continuum between being “completely unethical” and being “fully ethical”. There is some good in most of our actions, as well as some bad. If most of our actions are therefore both ethical and unethical at the same time, it is profoundly different to look at the ethical aspects, as opposed to look at the unethical aspects. In my experience, companies whose behaviours raise the most daunting ethical issues, have developed the strongest blinding bias towards their own ethics. It is normal and profoundly human to move away from the disagreeable, to want not to see it, and rather prefer to dull ourselves in good conscience.

But there is more: we also are biased against others. In a typical business setting, we are biased in favour of the ethical side of our own actions, while focusing on the unethical side of others' actions, especially if they are those of our competitors. In general, our ability to think about both sides of the ethical judgment is significantly influenced by our emotions, our interests, our mental habits and self-image, our cultural context, our work environment, and, finally, our power to act. An aspect of ethical training is thus to learn to see both the good, and the bad, of any situation or action. For instance, consider the following questions:

Is it ethical to close a profitable plant?

Is it ethical to compromise on the safety of a product?

Is it ethical to influence a government?

It is likely that you will naturally answer yes or no to these questions. Yet, there are substantial and compelling arguments to answer both yes and no. Thus, observe your own bias and observe your own (in)ability to overcome it. Sometimes, it needs others to show us the other side of our own thought, and then it becomes obvious. Training this ability to explore our own ethical perspective requires discomfort and effort.

Considering that an action has both an ethical and an unethical side does not preclude the comparison between actions, i.e. judging that an action is more ethical than another. On the continuum, some actions lie closer to “fully ethical” or “completely unethical” than others. It is not because we must reject an absolute and categorical synthetic judgment about the ethics of a particular situation that all becomes relative.

Interestingly, this duality is useful to decode discourses, and to perceive the implicit preferences and objectives that lie behind them. In a series of work about the way the oil industry was influencing the science and politics of climate change, it became very clear to my colleagues and I, that the ethical aspects of actions that were profitable to the industry were emphasized, while unethical aspects highlighted.

Drawing a line in the grey zone

For our own actions, analysing both sides of the ethics equation is the only way for us to consciously choose our ethical opinion.

With effort and training we can develop our ability to look consciously at both the ethical and unethical aspects of any action. As we have seen, this is emotionally difficult. It is also cognitively difficult, because the mind does not like the ambiguity of grey zones, and even less the frontiers of the grey zone, preferring to seek the simplicity of black and white assertions. Often over-estimated for its ability to control emotions and decisions, the mind prefers to categorize each action as either ethical or unethical. Accepting that both are true is a challenge for our logical thinking and it is particularly easy to dismiss it as pure relativism: everything then goes.

The truth is that separating grey situations into two categories, in an attempt to draw a frontier between what is unacceptable and what is acceptable in a particular situation, is essentially subjective. But it is not because each one of us may draw our ethical lines at a different point of the grey divide that the extremes cannot be objectively defined. As far as both black and white exist in themselves, the good and the bad may be clearly defined concepts. It is when a particular instance of an action, situation or person is totally reduced to one of them that we create a problem. As Shakespeare reminds us, the good and the bad are not a property of things, but of a particular perspective we take on them.

One of the goals of ethical training is to clarify what is objective (agreed upon by all) and what is subjective (specific to each one) in ethical judgments. For the objective, it is impressive how we can get absolute consensus on the negative and positive aspects of particular behaviours in a collective setting. If trust is present, all arguments for the good or for the bad can be made explicit, may be agreed upon and accepted. The plurality of experiences helps the uncovering of these multiple arguments. What remains subjective is whether, overall, these arguments should deem a particular action “ethical” or “unethical”. In reality, do we really need such a categorical opinion? And what does it mean? What does it mean to say that a particular grey is black or is white? Not a lot indeed. What we need is to consciously draw a line, to freely choose a frontier by saying something like “this is too bad for me to do it”.

For each one of us to consciously choose where we want to draw the line, we better be able to see both sides of the line. Having such a dual and systematic analysis increases ethical awareness at the individual and collective level and helps elaborate and improve conscious, free and powerful ethical judgment. It is a difficult process that requires us to separate the ethical analysis from the behaviour itself and to work outside of our comfort zone. Taking the pain to analyze systematically the good and the bad in our actions, doing so in contexts where a diversity of perspectives enrich the exercise, suspending our categorical judgments over people and actions, are the intellectual and emotional efforts we have to pay in order to generate alternatives that we can freely choose, instead of merely living in denial and providing excuses.

Uncovering Ethical Risks

The concept of Ethical Risk refers to unexpected negative consequences stemming from a lack of ethics of our actions. Because we tend to be unaware of the unethical aspects of the actions that we choose, especially when these actions are in our self-interest, we cannot anticipate the negative consequences emanating from them. Indeed, it is likely that the stakeholders concerned will respond in an adversarial manner by seeking to impose negative consequences on us. These can be legal and reputation costs in particular, but also breach of trust and revocation of license to operate. At the individual level, it is sometimes the whole meaning of professional life that becomes questioned, which then becomes a source of profound suffering. Because we tend to deny the unethical aspects of our actions, these negative consequences are unexpected and constitute bad surprises: these are ethical risks.

As I said, when confronted with the unethical side of our actions, we tend to react negatively, emphasizing the ethical aspects of our actions and denying their unethical aspects. For instance, because we have implemented a compliance program, we find the exposure of our unethical aspects unfair, and we trap ourselves in a reactive attitude. These attitudes further reduce the self-awareness of ethical risks and can progressively lead us to an increased propensity towards unethical action. This is the “slippery slope”.

Such reactive attitudes deal with ethical risks only superficially, because denial and justification are merely designed to appease our minds and are only effective for our own conscience. They also lead to increased secrecy and confidentiality surrounding unethical aspects of decisions taken, and consequences learnt. As a result, the whole organization becomes trapped in a culture of self-censorship and deception and eventually, we begin to believe in our own propaganda.

Who? Me?

For others, denial and justification tend to nurture the adversarial attitude of stakeholders that are alerted or harmed by our unethical actions. Offended by our lack of understanding, frustrated by our lack of attention for issues impacting them, disabused by what they perceive as a lack of good faith, they push us towards an ethical crisis. We then face escalated costs in order to mitigate unexpected negative consequences, which can be a good opportunity for PR companies, but not for us. In a series of crises that I have investigated with colleagues, this nightmarish slippery slope leading to boycotts, dismissals, violent events or even societal crisis, can be fatal. A key learning from it is that the cost of anticipating ethical risks would have been pocket money compared with the cost they actually bear on us when they crystalise.

A Paradigm of Ethical Rationality

In reaction to our unethical behaviours, we end up pointing to external influences, as if we had no other choice. In this manner, we reduce our own power to identify a profitable alternative course of action. We reduce our freedom to choose, and deny ourselves a choice. Indeed, without proper ethical analysis, a typical justification of an unethical action is that an alternative course of action would have been too costly.

Inclusive awareness of ethical and unethical aspects triggers a natural search for more ethical solutions.

Awareness of potential ethical costs increases the relative attractiveness of alternative, more ethical actions.

A rational analysis of the benefits of a more ethical alternative can avoid an exaggeration of its costs and benefits.

The re-framing of the situation, an adjustment of the terms of a new paradigm by which we measure success often allows the identification of new opportunities otherwise hidden to us.

Eventually, with some ethical effort, an alternative and more ethical action may be implemented and without much additional cost, even considered as a strategic investment. I have witnessed wonderful experiences of individuals, teams and organizations rejecting corrupt practices to discover a simpler process to promote their products and ensure the smoothness of their processes.

I recall in particular an executive who stood up in front of his boss to refuse indulging in a practice that was decidedly “too much”. As a result of his disobedience, the boss of his boss, a senior executive of the company, summoned him to his office where he explained that he refused to act against his own values. That was to be the long awaited call that the senior executive was unconsciously waiting for, and the beginning of a strategy with the executive committee to modify certain practices. The company eventually became a leader within its sector group to fight against corruption, and that senior executive later took executive positions worldwide. It was impressive how he was the only one to be able to raise these subjects in meetings, beyond emotion or guilt, opened views to both sides and intelligently, and powerfully pushed the frontier towards the better.

For him, like for others, avoidance of ethical risks opened the path to unexpectedly positive consequences. It transformed the individual, the team and the company by recovering their true identity, their meaningful purpose and unleashed again the pleasure of working and doing good business.

Ethical Training Reloaded

Proper training about ethics and ethical risks allows the identification, mitigation and transformation of ethical risks, at once improving organizational efficiency and developing organizational identity.

In my experience, ethical training shall always start at the individual level. However, it is particularly interesting to work with executive teams, so as to both share our ethical analysis and confront our different perspectives. Rather than looking for systematic alignment about where to draw the line, we first look for consensus on the extreme and establish a common understanding of the various shades of grey. We can then rely on the diversity of personalities and characters present to enrich the team's capabilities to face ethical situations. Again, rather than judging, it is first important to understand the full dynamics that has led to some ethical or unethical decisions, independently of whether such decisions have led to success or failure. Further, at the level of the company itself, dedicated programs whereby a significant proportion of top executives are trained, are especially useful for companies intent to forge a culture or develop new attitudes towards emerging or transforming markets.

Regarding identification, ethical training allows us to identify systematically the various unethical aspects of our actions, thus reducing the awareness bias, the tendency to stick with intuition and the “obvious” solution, and identifying ethical risks before they lead to bad surprises. At the individual, team or organizational levels, identification requires a safe space, a trusting environment and non-judgmental facilitation. This can be eased by a past crisis that has liberated a motivation to “do something about it”. Sometimes, different modalities and formalities are required so as to protect the company and so that individuals feel free to express themselves without fear of embarrassment or retribution.

Concerning mitigation, ethical training allows us to describe our behaviour more objectively and to anticipate the possible unravelling of ethical crisis. Simulations, case studies, sharing of personal and organizational issues are good supports for these stories to be told and for conversation to take place. The learning space shall allow participants to experience both their ethical and unethical behaviours so as to understand their attitudes at each side of the frontier. In terms of stakeholders, management are trained to recognize the legitimate part of stakeholders' reactions, communicate with more sincerity and engage with them, thereby preserving trust and alliances. Rather than behaving reactively, they learn to empathize and act proactively towards the mitigation of the unethical aspects of their actions.

With regards to transformation, ethical training enables us to spend at least as much time looking for opportunities. This intends to un-bias our tendency to justify the actions that we expect to maximize our interest, while being unaware of the unethical risks they bear. Decisions not to engage in more ethical actions become more salient, and the training allows participants to develop their power of discrimination.

It is this change at the individual level that makes the organization less vulnerable and more resistant to ethical crisis. Moreover, decisions to engage in more ethical actions do not follow a blind faith in favour of ethics. In this manner, ethical training develops resilience and fortitude: it turns ethical risks into opportunities by dedicating cognitive and organizational resources to creating good surprises.

It is a constant surprise to me to realize how much we are blind to our ethical shadows. Still, the individual and organizational courage to face the risks that these shadows entail quickly brings us to a change of ethical conscience and a natural transformation of our behaviour. There is no better driver of ethical behaviour than conscienciousness of our unethical behaviours.

The author wishes to express his gratitude to Ludo Van Der Heyden and Anthony Smith-Meyer for their editorial support in writing this article.

Marc Le Menestrel is Professor at the Department of Economics and Business of University Pompeu Fabra (Barcelona, Spain) and Visiting Professor of Ethics at the Social Innovation Center of INSEAD (Fontainebleau, France). He is a specialist of the role of ethical values in business decision-making and he has been teaching and coaching executives across a wide range of critical topics. Among his preferred ethics assignments, he is noted for his teaching about business influence on the science and politics of climate change, and teaching ethics to tobacco companies, banking, the nuclear energy industry amongst many others.

Click here for the pdf of this article

Fairphone: much more than a fair phone

Marc Le Menestrel — 2014-12-19T11:11:50Z

Fairphone is much more than a fair phone.

Fairphone is a fairer phone but it is firstly a movement. Any movement is a transformation of the world, something that continuously changes and evolves. Fairphone is a movement transforming the world, continuously changing and evolving. This is the most important thing I understood from a discussion with Laura Gerritsen (Impact and Development).

Fairphone aims to do things differently. It is “creative, innovative, involving and incorporating many different ideas aiming at changing something not envisioned to be changed.” The primary importance is given to “the process”, “the difference is in how to do things”.

Of course Fairphone has an ambition in terms of “fair economy”, an objective to pay more attention to “human values”. But this is “without determining top down what is fair”, which is done through “debate” as “fairness is subjective”.

The dynamics is not merely motivated by a clear vision of what has to be changed: “this can be debated.” Indeed, the opening of a conversation by providing a “platform for discussion” may be the first transformation Fairphone has already accomplished.

I especially liked the expression that “…in a sense, values are created”. In line with the approach taught in my course, this is an existentialist approach to ethics. Fairphone is not bound by a dogmatic approach defining first what is ethical. They first try to build a very large perspective in order to understand what happens in the field and then act appropriately (see the blog of Laura for what she does around mining, a major issue for the supply-chain of phones).

Fairphone has understood that ethics remains a grey zone. By promoting “transparency” through a debate they want to be “inclusive”. But transparency also means being open about what you have not been able to achieve and what remains to be improved, such as working conditions at mine sites. Hence, Fairphone is not exempt of unfair issues. There is much more to do evidently and they have noted that “being open about the issues you have not been able solve and why does not necessarily lead to more (negative) criticism, but is key to develop a constructive debate”.

In fact, they have been criticized a lot and this has empowered them. “If you take critics seriously, it leads to a good discussion and a good learning. It does not need to be always easy but it can be very useful.” Sometimes, misinformed supporters can also raise issues, for instance by saying wrongly that the phone is biodegradable or fully recyclable. Things are both fair and unfair which, as we know, does not imply that they are equally fair (see ethics as a grey zone).

In class, we often discuss why Apple, Samsung or Sony have not yet launched such a product. For Laura, this is not just about the product. “You can have 1 product over 20000 that is more fair and ecological but what does it mean?” More important is whether there is a change in approach and social and environmental values are integrated in the everyday decision making and activities of companies.

“At Fairphone, the DNA is different. Still, we know we are a small company and believe we need to work together with all players to trigger a change that goes beyond Fairphone. By establishing the market for ethical products we hope to motivate the entire industry to act more responsibly”.

More than a fairer product, Fairphone creates a movement with transparent and inclusive discussions about how to move forward.

Questions for reflection:

• Under which conditions a clear vision of the future is not necessary to accomplish a great project?

• Why, when and for whom it can be difficult to accept that a fairer phone may not be entirely a fair phone?

• Why, when and for whom communicating about ethical vulnerabilities can be appropriate?

• If a company can be “a movement”, what would it mean for you as a person to be “a movement”?

Values – Ethics - Decisions

Marc Le Menestrel — 2012-03-12T11:54:35Z

Description

We embark participants in a series of questions, situations and phenomena which make salient their values, their decision-making processes and their leadership attitudes.
A series of conceptual tools and frameworks helps participants to structure their understanding of values, leadership and decisions and prepare them to express their full potential when making decisions.
We give a special emphasis to ethical values and the trade-offs they may entail in business decisions, with the intention of empowering participants to strive in the grey zone of (un)ethical business.

Targeted outcomes

• Increase awareness of the role of values in business decisions

• Develop framework and conceptual tools for facing conflicts of values

• Prepare to become inspirational leaders by your values

Instructions for students

Read in advance of class two short case-studies: “Peter Green” and “The Talking Blanket” and reflect on your answers to the questions raised.

Ethical Risks: Identification, Mitigation and Transformation through Ethical Training

Marc Le Menestrel — 2011-09-12T08:53:40Z

The concept of « Ethical Risk » refers to unexpected negative consequences of unethical actions.

A proper training about ethical risks allows the identification, mitigation and transformation of ethical risks, improving organizational efficiency and developing organizational identity.

Identification

Due to the dual nature of the ethical judgment, most actions have both ethical and unethical aspects (Cf. Ethics as a grey zone).
Actors tend to be unaware of the unethical aspects of the actions that they rationally choose, in particular when these actions are in their self-interest.
Because of these unethical aspects, stakeholders act in an adversarial manner, imposing negative consequences on actors (legal and reputation costs in particular, but also breach of trust and revocation of license to operate).
Because actors are unaware of the unethical aspects of their actions, these negative consequences are unexpected and constitute bad surprises.

Ethical training allows actors to identify systematically all possible unethical aspects of their actions, thus reducing the awareness bias and identifying ethical risks before they lead to bad surprises. Such ethical analysis can be carried out at the individual, organizational or societal levels.

Mitigation

When accused of unethical actions, actors tend to react negatively, emphasizing the ethical aspects of their actions and denying their unethical aspects. For instance, because they have implemented a compliance program, they find the exposure of their unethical aspects unfair and trap themselves in a reactive attitude.
These attitudes further reduce the self-awareness of ethical risks and can progressively lead to an increased propensity towards unethical actions. This is the “slippery slope”. Such reactive attitudes mitigate ethical risks only superficially because denials and justifications are effective only for the conscience of the actor itself. They also lead to increase confidentiality of unethical aspects. On the other hand, denials and justifications tend to nurture the adversarial attitude of stakeholders that are alerted or harmed by actors' unethical actions, overall leading to ethical crisis. Actors then face escalation of costs for the mitigation of unexpected negative consequences.

Ethical training allows actors to describe objectively their behavior and to anticipate the possible unraveling of ethical crisis. Aware of the unethical aspects of their actions, trained actors recognize the legitimate part of stakeholders' reactions, communicate with more sincerity and engage with stakeholders, thereby preserving trust and alliances. Rather than behaving reactively, actors act proactively towards the mitigation of the unethical aspects of their actions.

Transformation

In reaction to their unethical behaviors, actors end up externalizing their locus of control, as if they had no other choice. In this manner, actors reduce their own power to identify a profitable alternative course of action. They reduce their freedom to choose. On the other hand, inclusive awareness of ethical and unethical aspects triggers a natural search for more ethical actions (Cf. Psychological attitudes towards ethical dissonance). A rational analysis of the interest of such a more ethical alternative allows avoiding exaggeration of its costs (without proper analysis, a typical justification of an unethical action is that an alternative course of action would be too costly). Further, awareness of potential ethical costs increases the relative attractiveness of an alternative more ethical action. The re-framing of the situation allows the identification of new opportunities otherwise hidden to the actors. Eventually, an alternative and more ethical action may be implemented with ethical effort and without much additional cost, considered as strategic investment. Avoidance of ethical risks then opens the path to unexpected positive consequences.

Ethical training allows actors to make sure they spend at least as much time looking for opportunities of more ethical actions than justifying the actions they expect to maximize their interest (i.e. unaware of the unethical risks these actions have). Decisions not to engage in more ethical actions are conscious, responsible and reflect a power of discrimination. They are not traps for the actor. Decisions to engage in more ethical actions do not follow a blind faith in the benefit of ethics. In this manner, ethical training turns ethical risks into opportunities by dedicating cognitive and organizational resources to the identification, mitigation and transformation of ethical risks.

Thinking Ethics as a Grey Zone

Marc Le Menestrel — 2010-06-23T16:38:43Z

Approaching the ethics of an action as a grey zone amounts to thinking ethics as lying on a continuum, in between being “purely unethical” and being “purely ethical”. There is some good in most actions, as well as some bad. In other words, most actions are both ethical and unethical. But it is not the same to look at the ethical aspects or to look at the unethical aspects.

My observation is that there is some dissymmetry in the ethical and unethical sides of the ethical judgement. Thinking about how ethical an action is entails a distinct cognitive, emotional and experiential process than thinking about how unethical an action is. Depending on the situation and depending on what to judge, one side of the judgement seems to be easier to perform, or be associated with more positive emotions, or observed to be easier to share with others. For instance, one can be biased towards the ethical side of one's own action while being biased towards the unethical side of others' actions. In general, our ability to think about both sides of the ethical judgement seems to be bounded and biased by our emotions, our interest, our mental habits and self-image, our cultural context and work environment, etc.

With effort and training, we can develop our ability to consciously look at both the ethical and unethical aspects of an action. Having a dual ethical analysis increases ethical awareness and helps to elaborate an improved ethical judgement. However, it is sometimes a difficult process which can be uncomfortable.

Considering that an action has both an ethical and unethical side does not preclude the comparison between actions, i.e. judging that an action is more ethical than another. On the continuum, some actions remain closer to “purely ethical” or to “purely unethical” than others. Also, note that this duality of the ethical judgement seems to be at work when one justifies an action by pointing its ethical aspects while at the same time rejecting an alternative by pointing its unethical aspects.

Nightmares, Dreams and Business Decisions : Teaching Values for Leadership Development

Marc Le Menestrel — 2009-12-04T16:32:00Z

Nightmares

As a decision scientist specializing in ethical values, I have been drawn to leadership development in a difficult and rather painful manner. Taking an analytical and systematic approach to values in business decisions, I was to uncover an array of nightmarish considerations.

Think about it. Which leader could honestly face the contribution of business to the current destruction of our natural habitat? With whom can you joyfully discuss the subversion of the public sphere using powerful influence practices or manipulative techniques? What sort of emotions arise when one share personal situations of corruption, intimidation or coercion? You are likely to arouse strong and negative emotions.

In my experience, most business people avert thinking about it. This avoidance of a direct conscience of the unethical aspects of business turns executives into a reactive mode. They still think a lot but their cognition is trapped in various forms of denial, rationalization and externalization of their locus of control. By constructing these protections, they also isolate themselves from the source of future and dramatic problems. They are preparing themselves for bad surprises.

In my executive teaching about “Values, Ethics and Leadership in Business Decisions”, I create situations where emotions are close to the real situations and I attempt to establish the trust that is necessary for participants to dare experiencing in the classroom the unethical person they can be. I then share a series of analytical tools to uncover the specific logics of ethical values in business decisions at the cognitive, behavioral and communication levels and we work on strengthening their ability to be proactive in front of these difficult situations. Months later, I may receive feedback that these experiences succeeded in empowering them to be the ethical person they wanted to be in crucial decisions.

Along the years, my own development lead me towards being less and less judgmental, giving increasing space to the participants and their values, while feeling less the need to impose my own values on others. In this manner, I reduced the rate of reactance behaviors. The context also helped me, the prevalence of unethical behaviors in public business discourses having increased. Still, I was in need of a more direct relation with the positive self in each participant. This pushed me to creating sessions where dreams will balance nightmares.

Dreams

My intention in “Dreaming and Visioning" Sessions is to connect participants with the source of their motivation and help them clarify their vision for the life of their dreams. These “quasi-spiritual” dimensions become additional layers, below and above, for their decision-making process. Hence, my objective remains to empower participants to take concrete and strategic decisions that reflect their own values and aspirations.

Even if the level of participants' commitment is often very high, the childish connotation of the word “dreams” for what could be conceptualized as mere imagination leaves space for those who want to live the experience lightly. Also, the distinct use of the words “dreams” and not “objectives” allows more distance with the fear of failure.

These strictly experiential sessions are structured as a series of exercises about 1) connecting with the past, 2) dreaming the future, 3) distinguishing shared and non-shared values and 4) building a vision with concrete bold actions. My explicit conceptual input along the process is kept to the minimum: I give instructions before each exercise and ask participants what they have learned afterwards. This allows me to dedicate myself to observing the processes, being present when someone needs it, keeping the group together when appropriate and answering methodological questions when raised.

It turns out that dreams, objectives, values and concrete decisions that are uncovered are rather fundamental. Over the hundred or so participants that I observed during AMP sessions at INSEAD or with CEOs and executive boards, it seems that a great majority are looking for a life that meet key essentials. They dream of someone that would love them or continue to do so, of an harmonious combination of their personal life with their professional life, of a social context where their values could be aligned with the ones of the community they are part of, and of opportunities to contribute to others.

In my experience, the communality among Europeans, Asians, Africans, Americans seems patent as if culture makes little difference at this deep level. The diversity of the audacious concrete actions each one identifies for himself is great but many say the first thing they will do is talking with their partner about the result of the session.

Since the start of my dreaming sessions in 2008, these sessions are said to have a very high impact on participants. They are happy to find there an opportunity to dedicate time to an integrative decision-making process about the conduct of their life. It is too early for me to have a sense of any lasting effect but these sessions have already contributed to my own development. I feel more balanced in my teaching of ethical values in business decision-making, thanks to the direct observation of executives who better see who they want to become and feel strong in their capabilities to move towards the life of their dreams.

These are personal reflections about my teaching to executives, prepared for the INSEAD Conference on Leadership Development – December 2009

Values, Ethics and Business Decisions

Marc Le Menestrel — 2009-09-18T09:50:00Z

How to act in the face of corruption, intimidation or coercion?

How to honestly discuss the impact of business activities to our natural habitat?

What to think about influencing the political sphere and the general public using subversion practices or manipulative techniques?

What to say when accused of unethical behavior?

Those who have never asked these uncomfortable questions may later be trapped in various forms of denial, rationalization and loss of power. They prepare themselves for bad surprises.

In this challenging session, we experience and discuss situations where unethical behavior may well be the easiest or most efficient response.

Looking for some "Ethical Rationality", we then work on a series of analytical tools to uncover the specific logics of ethical values in business decisions at the cognitive, behavioral and communication levels.

We thus can work on strengthening our ability to be proactive in front of these difficult situations: our power to draw the line in the grey zone.