You will recall that the shifty moneylender had put two black pebbles in the bag.
The girl put her hand into the moneybag and drew out a pebble. Without looking at it, she fumbled and let it fall onto the pebble-strewn path where it immediately became lost among all the other pebbles.
‘Oh, how clumsy of me,’ she said. ‘But never mind, if you look into the bag for the one that is left, you will be able to tell which pebble I picked.’
Since the remaining pebble is black, it must be assumed that she had picked the white one. And since the money-lender dared not admit his dishonesty out of fear, the girl changed what seemed an impossible situation into an extremely advantageous one.
I like this story because it is a simple illustration of the difficulty of so-called thinking outside the box, but why is that?
Starting as young children we are praised for coloring inside the lines and praise for coloring inside the lines continues as we grow.
The lines we stay inside my not be apparent to an onlooker, but they are obvious to our chosen world. Fashion is a great example, the Goth look that is seen as so outside-the-box by many is framed with as many rules and lines as is any mainstream look.
Fred H Schlegel had a nice suggestion, but it depended on changing the basic nature of the villain and when looking for out-of-the-box solutions we rarely can change people’s basic nature.
Becky Robinson came closest; she was honest and said that she had seen a similar problem previously. But in her synthesizing Becky allowed the crook to take the active role, assuming he would act ethically to maintain his honor, but if he had honor he wouldn’t have cheated in the first place.
Did Becky win? You decide in comments.
Creativity requires us to step away from many of our own basic assumptions as well as going outside the lines dictated by our world.
Doing this is how we enlarge our box to encompass the universe. (My apologies, I just found that this link didn’t work last week.)
It takes effort and lots of practice, but the rewards more than justify the work.
In response—mostly—to the financial crisis, the US government has taken so many actions that the list is almost too long to chronicle here. To pick a few…
The government has picked survivors in the banking industry.
The government has picked survivors in the auto industry.
The government has picked executives in many companies.
The government has set compensation levels in many industries.
And the government’s intrusion into previously private enterprise sectors has only just begun.
Of course private enterprise has never been a model of virtue and discretion. But, just because private enterprise has executed a series of excesses, is it reasonable to assume that federal regulation will produce unalloyed goodness?
If executives in private enterprise cannot foretell catastrophes ahead, is it reasonable to assume that those same executives, when working on behalf of the federal government, will have better foresight?
Massive Actions, Unintended Consequences
The economy is in uncharted territory. This is the first major crisis of the integrated, global economy. It simply has too many moving parts for any individual or organization to identify all the inter-relationships, much less to forecast the results of all those interconnections. The chart below makes the point exquisitely.
Historically the money supply has grown by 2-7% annually, with spikes prior to Y2K and following 9/11. In the past nine months, the Fed has increased the money supply by over 100%, almost ten times greater than the largest previous increase, during Y2K. The Fed might argue that this increase was needed to offset the loss of a comparable amount of bank lending, when credit dried up in the past year.
But how and when does the Fed unwind this massive increase? What are the long-range consequences of this action?
At the moment, no one can guess. However, we can be certain that many of the consequences will be significant, unforeseen, and unintended.
Transparency – The Only Cure for Unintended Consequences.
The Federal government now controls almost 25% of all domestic economic activity, not to mention 100% of the money supply. We need much more transparency, particularly with government sponsored enterprises such as Fannie Mae and Freddie Mac.
Recently our culture has cheapened transparency to the cliché “full disclosure…” after which the author lists some relationship, often trivial.
The US government pumped over $170 billion into AIG late last year, to prevent its collapse. This expense received very little exposure, either from the press or by the Treasury Dept. execs who made the “investment.” Where did this $170 billion go? Why was this expense necessary?
Neither elected congress people nor Presidential staff exhibited any curiosity or outrage over this “investment.” However, when AIG paid out $165 million in bonuses—only 1/1000 of the amount the Treasury Dept. had spent a few months earlier—elected officials went into hysterics. Selective transparency is no transparency at all.
“Sunshine is the Best Disinfectant.” –Supreme Court Justice Louis Brandeis
Meaningful transparency can have considerable impact. Witness the recent publishing of the expense accounts of British Members of Parliament.
In the US, the Federal Election Commission (FEC) regulates campaign contributions. Of course every politician running for office has thoroughly computerized records of donors and amounts and the FEC requires that every candidate report all donations to the FEC. That information might be interesting to voters making voting decisions. But candidates provide those reports to the FEC in thick, printed volumes, specifically to delay the FEC in compiling the results. As a result the FEC finally publishes the donation reports months after the elections are done.
Follow the Money—Post Everything on the Internet
With the expansion of the government into finance, autos, energy, and insurance, as well as health care, public disclosure is critical if our economy is to respond positively. Encourage your elected representatives to post budgets, and expenses on the internet.
Next up is an article from Clark Bosley who asks the companies he visits, “Do you have a copy of your company’s code of conduct?” Read what the answer portends.
Finally, a bit of cultural levity. We all know that Southwest Air Lines has a great culture, which now includes rapping flight attendants. But they aren’t the only ones, if you want more click here.
“The real character of the person can be known by what he does when nobody is watching. … Feudal culture is one where there is one set of rules for the king and another set of rules for the rest of the people. … What we are seeing is not the failure of entrepreneurship. It is the greed, ego and vanity of some super managers of some large corporations. That is not the essence of capitalism. Capitalism is all about creating an environment where individuals can leverage their innovation and their entrepreneurial abilities to create better and better opportunities.” –N.R. Narayana Murthy, Founder, Chairman and chief mentor, Infosys Technologies (Hindustan Times 4/19/09).
Satyam has shown that greed is a human condition, not just the province of the decadent West, reserved for various ‘leaders’ in developing countries or politicians in general.
Murthy’s thought that the real person surfaces when no one is watching are akin to the age old wisdom of Plato when he said, “In vino veritas” (In wine is truth).
And I think that in these two comments you find the real truth about anyone who aspires to positional or as-it-happens leadership.
Leadership isn’t about influence or vision; it’s not about how many follow you or heap kudos on your efforts. It isn’t even about honesty and authenticity—the leaders on Wall Street were both in their pursuit of profits.
It’s about what happens between you, yourself and your MAP at three o’clock in the morning when you’ve had too much to drink (real or metaphorical) and no one is looking.
Are there any basic attitudes that you can build into your company’s culture that will encourage, let alone mandate, ethical/moral behavior in the decision making process when ‘moral’ equates to risk?
“…moral dilemmas, the decision to tell the truth or to bury it entails a huge amount of risk and soul-searching. Viewed in that way, what we call “ethics” is really a set of decisions about which risk is easier to sleep with at night: opening up about an uncertain situation or trying to hide the worst of it from yourself and everyone else.”
There are three traits that must be deeply embedded in your culture are
Consciousness. This is also known as ingrained awareness of the ramifications of collective action.
Discipline. Neuroscience research over the last decade has demonstrated that continual, intensive focus changes the pattern of neurons within the human brain.
Empathy. When a company is truly empathetic, the recognition of the value of employees is just a starting point.
The quote above is from an article based on the video below; the speech was given this past January at a Carnegie Council for Ethics in International Affairs seminar entitled “Top Risks and Ethical Decisions.”
For full details read the entire transcript as well as the article, they’re well worth your time.
Last Friday I wrote that ‘right’ and wrong’ were moving targets.
With the large number of companies that have been destroyed or severely damaged by behavior ranging from stupid through unethical to downright illegal there is a call for more ethics to be taught at ever level.
Everywhere you turn you hear people saying that we need more ethics, but ‘ethics’ have never been clear cut.
Actually, I think they’ve always been situational, fluid and simultaneously contradictory. Look at the definitions from dictionary.com
(used with a singular or plural verb) a system of moral principles: the ethics of a culture.
the rules of conduct recognized in respect to a particular class of human actions or a particular group, culture, etc.: medical ethics; Christian ethics.
moral principles, as of an individual: His ethics forbade betrayal of a confidence.
(usually used with a singular verb ) that branch of philosophy dealing with values relating to human conduct, with respect to the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions.
All of the descriptions use words with no absolute concrete meaning; sticking to my usual example, murder has always been considered wrong, but the definition of murder, even today, keeps changing and often isn’t agreed upon even within the same society, e.g., the pro-choice/anti-abortion war.
Now look at the first four definitions for moral, the usual synonym,
of, pertaining to, or concerned with the principles or rules of right conduct or the distinction between right and wrong; ethical: moral attitudes.
expressing or conveying truths or counsel as to right conduct, as a speaker or a literary work; moralizing: a moral novel.
founded on the fundamental principles of right conduct rather than on legalities, enactment, or custom: moral obligations.
capable of conforming to the rules of right conduct: a moral being.
Same thing, there are no absolute terms with which to define it.
Perhaps, then, ethics should be defined by current law, but that certainly hasn’t worked. It’s far too easy to adhere to the letter of the law and totally ignore the spirit of it. That keeps you out of jail, but certainly doesn’t make you ethical.
As a friend said the other day, “An ethical man knows it’s wrong to cheat on his wife; a moral man doesn’t.”
Further, there can be conflicts between personal ethics and law, where adhering to one violates the other. Should law prevail or personal ethics? Whichever you choose, it’s because you agree on a subjective level.
People say that those decisions should be made for “the greater good.” Again, by whose definitions? I’m sure that Hitler believed his actions in “purifying the races” were for the greater good—as he saw it—however I, and a large number of other people, don’t agree.
But even though this example seems so black and white, you’ll find people who still agree with Hitler’s reasoning and work to carry it forward.
How We Decide by Jonah Lehrer is an exploration of “the neural machinery behind our decision-making processes: a network of dopamine-sensitive cells in the brain’s emotional and cognitive centers, which tie feelings and reason together so closely that the two operate almost as one. According to Lehrer, correct decisions require an awareness of both halves of the equation — and a perfect balance of visceral response and cognitive knowledge.”
I’m so far behind on my reading that I don’t know when I’ll get to it, but if one of you wants to do a guest review for Leadership Turn I’d be delighted.
The heavy reading comes from Max Bazerman, the Jesse Isidor Straus Professor of Business Administration at Harvard Business School. A working paper“shows that seemingly innocuous aspects of the environment can promote the decision to act ethically or unethically. Key concepts include:
Once people behave dishonestly, they are able to morally disengage, setting off a downward spiral of future bad behavior and ever more lenient moral codes.
However, this slippery slope can be forestalled with simple measures, such as honor codes, that increase people’s awareness of ethical standards.
Moral disengagement is not always a necessary condition leading to dishonesty, but it may in fact result from unethical behavior.
The decision to behave dishonestly changes levels of moral disengagement, and the awareness of ethical standards affects the decision to engage in unethical behavior.”
The paper is downloadable and I think you’ll find it interesting.
As always, your thoughts on the subject are of great interest, so please share them.
Are you as disgusted as I am? There is no shame and it’s unlikely to change.
If you can grab it do so and screw everyone else, they don’t matter. Only you matter.
AIG received 170 billion in taxpayer money and they plan to pay about $165 million in bonuses by Sunday.
According to Edward M. Liddy, the government-appointed chairman, “We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.”
The bonuses go to the “leaders” in the financial products division which is the same business unit that brought the company to the brink of collapse last year.
AIG says that the bonuses are contractual.
In the brave new world of the Twenty-first Century ethics are defined by law and morality is old fashioned unless it’s about someone else.
As a wise man once said, “An ethical man knows he shouldn’t cheat on his wife. A moral man wouldn’t.”
If these executives are the “best and brightest” we’re in bigger trouble than I thought.
The contract doesn’t mean squat anyway since the recipients could turn the bonuses down just as a number of CEOs have recently.
Just think, if they did perhaps some of their colleagues wouldn’t be laid off.
And if you think this is an isolated incident of the “Thain mindset” take a look at the ad that Visa is running once again. I saw it once in Business Week last year and found it in terrible taste, but then it disappeared.
I thought the company had realized that their timing for a new status card was atrocious, but I guess I was wrong. This full-page ad appeared in the March 16, 2009 issue.
Perhaps the card is targeted at the recipients of that $165 million.
Entrepreneurs face difficulties that are hard for most people to imagine, let alone understand. You can find anonymous help and connections that do understand at 7 cups of tea.
Crises never end.
$10 really does make a difference and you’ll never miss it,
Without looking at it, she fumbled and let it fall onto the pebble-strewn path where it immediately became lost among all the other pebbles.
The first is a new article from Malcom Gladwell, author of 
It’s about what happens between you, yourself and your 
Are there any basic attitudes that you can build into your company’s culture that will encourage, let alone mandate, ethical/moral behavior in the decision making process when ‘moral’ equates to risk?
Usually I only offer up one link when the reading is heavy, but today I have two.
Innovation is grounded in 
