Do the right thing. Why?

In the preview to Dead Man’s Chest, the sequel to the hit movie Pirates of the Carribean, the heroine Elizabeth Swann tells Captain Jack Sparrow, “This will be a moment when you have the chance to do the right thing." The roguish Sparrow responds with, “I love those moments; I like to wave at them when they pass by.”

We go through these same 'right or wrong' decisions hundreds of times a day, most of it occuring subconciously. There are those that we don't even think about, such as allowing pedestrians to cross as you drive by an intersection. But we inevitably face decisions requiring sleepless nights since it may make the difference between continuing to struggle or experiencing some Earthly pleasure (e.g. money, sex, chocolates, etc).

Call me naive, but I believe humans are born to do the right thing, with the exception of a few genetic anomalies. One may arrive at the same conclusion by simply having a conversation with young children who have not been corrupted by adult misbehavior. An elder relative of ours offerred an advice to my wife and I by suggesting that we try to have more than one child. She said that you'll never know if one of them turns bad! I listened to this worldly advise, but deep down, I was listening to yet another adult who had not lived up to her responsibility for raising responsible children.

There are lots of books about HOW to do the right thing and live a life of integrity (Steven Covey) or ethics in business (Noel Tichy). But I think that most of us struggle with WHY make the right and oftentimes difficult decisions to:

• pay the right amount of taxes
• be truthful to your family even if no one will know
• be honest about a product's shortcommings even if competitors lie about theirs
  

One of the posts talks about the last example which many of us have faced in a competitive sales situation. I somehow look at this as a spectrum of decisions between win-at-all-costs and the other -- a search for the customer who understands and therefore pay for the value of your service or product. The former could get you the sale immediately, the other one could take longer, but may provide you with repeat orders -- which most sales people know are the more profitable customers.

In my search for the answer to WHY people aim for integrity in public (e.g. work) and private (e.g. family) life, I've come across some postings on the web by Margaret Thorsborne, who is the Managing Director of Transformative Justice in Queensland Australia. In her book, The Seven Heavenly Virtues of Leadership, she referred to John Braithwaite, an eminent Australian criminologist, who attempted to answer the question: Why it is that most kids (and adults) do the right thing most of the time?

• socialisation about ethics, morals and values, usually a product of upbringing, religion, school
• conscience; it feels right; knowing the difference between right and wrong
• beliefs about 'do unto others'
• it's easier to do the right thing than the wrong; there are rewards for doing the right thing
• fear of consequences: loss of liberty, income and fines
• fear of disappointing significant others or being excluded
• Braithwaite proposes a sociological view of these influences and has concluded that shame plays a significant role in the development of that mechanism which we call conscience---our sense of right and wrong.

Whatever your reason is for considering a life of integrity, it's good to know that there are corporate examples of integrity in action such as the recent Coke-Pepsi espionage case, where a potential leak of a secret Coke formula was prevented by the 'right' action by Pepsi executives who assisted undercover FBI agents.

Thorsborne went on to include other studies proposing biological mechanisms (such as shame, fear, anger, excitement) that governs our behaviour and motivation. She concludes with a description of the life of integrity as a journey:

From a sociological and biological perspective, it seems that the getting of integrity is determined by the kinds of influences we have been exposed to over time. But I think it's also fair to say that each of us is a 'work in progress'. The shaping of a person's qualities and character is surely a lifetime job, rather than the result of some static genetic trait like blue eyes or height. Of course, there are those who claim 'well, that's just the way I am', implying that change is not possible. I believe this is a cop-out, and an excuse for not doing the hard work needed to do things differently.
So, for me, integrity is rather more of a journey than a destination. I don't think I'm there yet. I'm not old enough for a start. I'm still learning.

Going back to the issue about honesty in competitive sales situation, my belief is as follows:
As the web evolves to include information about buyer and seller reputations, I see the world of selling achieve a higher level of equilibrium where buyers will get exactly as much value as what sellers have communicated to them. On the other hand, reputations of sellers will be determined by customer experiences which directly impacts buyers' future success. Our current imperfect world allows people to hide dishonest actions, but the Internet and the etailers reputation systems, blogs, Google Earth, and other forms of communication, will eventually render everyone -- naked. You might as well start your road to integrity and nakedness...today.

Life is Difficult

Life is difficult' is the first sentence from a book entitled 'The Road Less Traveled' by Scott M. Peck. Once in a while, I remind myself of this line when I ponder about difficult choices in life. This is not to say that I don't indulge in a vacation in an exotic destination and stay in a 5-star hotel once in a while. It's just that from my experience, those vacations where I truly enjoyed myself, required a lot of hard work and preparation -- before the vacation. My interpretation of 'Life is difficult' by Mr. Peck, is that the worthwhile benefits of living is derived from hard work.

If you do a Google search on 'integrity in business' or 'honesty in business', you'll find millions of hits. There are pointers to organizations that promote these principles as 'Secrets of Success' such as the Impact XXI whose mission appears below:

To engage People of Influence in all major areas of society – Corporate, Business and Professional, Sports, The Arts and Media, Politics, Education,and Military – to be “BEST” leaders with integrity who use their influence, creativity, and resources to fulfill their life purpose, make a significant difference, leave a lasting legacy, and leverage their influence along with their peers to advance initiatives designed to help solve the world’s major issues.

I don't intend for this blog to change the world. As I stated a month ago, I simply wanted to thank those that helped point me the 'right' direction and see if I can have a conversation with others who like me, are thankful for choosing honesty more often than dishonesty.

I've come across other leaders and organizations promoting the path to honesty and integrity, and have even mentioned Warren Buffet as one of those in my previous posts. However, you will discover that some of these postings lead to a discussion on spirituality and religion. While I consider myself a religious person, one of my best friends is an atheist and a person I consider of high-integrity. It is my hope with this blog to have an inclusive conversation with others who have come to the same discovery that 'life is difficult' -- regardless of your spiritual state.

Worthwhile Returns

I received an e-mail from a close friend and ex-college roommate who was excited that I had started this topic about the value of integrity in business. For 2 decades, he's served his company which promotes integrity as their key principles. However, he felt 'uneasy' about the mention of returns and I've taken an excerpt of his response:

Clearly, upholding one's Integrity is not the be$t way to maximize return$, but it is a great way to maximize the happiness of all involved in a corporation while being financially feasible.

Note that I copied his e-mail feedback verbatim, including reference to '$.' Another colleague whom I highly respect for his technical capability recently told me how he avoided the business side of things since he thought that the only way to succeed is to be good at 'BS' (he wasn't referring to a Bachelor of Science degree).

I'd like to thank my friends for getting us to focus on the other important factor of ROI which is on 'returns.' More specifically, what are worthwhile returns on the practice of integrity? My friend was rather skeptical about economic return$ and I would agree to a certain degree. He also alluded to other intangible returns which I would categorize as worthwhile returns. However, in the business of commerce, the measure of success is evolving, but clearly defined by our stock markets.

I'm confident that few would argue the track record of Warren Buffet and Charles Munger, Chairman and Vice-Chairman of Berkshire Hathaway, Inc. I've taken an excerpt from a Goldman Sachs report of the historical outperformance of Berkshire stock versus the Standard and Poor (S&P) index:

The annual percentage increase in the price per share of the Berkshire Class A Common Stock exceeded the annual percentage increase in the S&P Index by 1.5, 0.1, 11.1, 13.5, 13.8, and 17.1 percent over the 1, 3, 5, 10, 15 and 20-year periods, respectively, ending December 31, 1997.

Incidentally, Berkshire's compounded annual return according to the report was 35.51% for the 20 years ending June 17, 1998. Not bad for a company that practices good corporate governance and value integrity in business. I've taken an excerpt from the 2005 Annual Report and Buffet's famous Owner's Manual:

Berkshire’s long-held acquisition strategy is to purchase businesses with consistent earning power, good returns on equity, able and honest management and at sensible prices. Businesses with these characteristics typically have market values that exceed net asset value, thus producing goodwill for accounting purposes.

Buffet outlines 13 Owner-related business principles in his Owner's Manual. The 12th principle refers to their views about communications:

We will be candid in our reporting to you, emphasizing the pluses and minuses important in appraising business value ... We also believe candor benefits us as managers: The CEO who misleads others in public may eventually mislead himself in private.

My message is simple: you have several choices in life. One can take you to a path of great wealth. The other, albeit more difficult path, leads to wealth measured in economic and non-economic terms were "worthwhile returns" continue to accrue beyond our Earthly existence.