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Embrace Ethics as a Key Driver for Innovation

At a recent business breakfast meeting, attended by vice-president level participants across several industries, we asked which key driving forces leaders saw as having a major influence on their organizations’ strategies. Across a range of others (social, technological, economic, environmental and political), we converged fast on discussing the implications of ethical constraints when going after innovation opportunities.

Big opportunity doesn’t need to be a big gamble

“Big data” emerged as the first bone of contention. You may have nothing to hide and be happy with insurance companies reading your driving data in order to grant you a better deal. Yet, would you also be okay with them analyzing your genes to tailor your health insurance?

The omnipresence of highly granular data allows formulating and answering surprising questions. Uber analyzed (probably in a more playful rather than ill-intentioned way) their users’ mobility patterns in order to identify one-night stand “hot spots” in major cities. Thanks to her purchasing behavior, Target figured out before the father did that a teen-girl was pregnant. Examples abound for people feeling exposed. Eventually they take action against what they consider “big brother.”

We agreed that over time adequate rules and laws are needed. Yet, while politicians craft and vote on those, it falls on businesses to shape them through their behavior while exploring novelty. As one participant remarked: Ethical behavior allows for grasping a big opportunity in a controlled manner and without a publicity stunt. Grasping big opportunity doesn’t need to turn into a big gamble.

Ethics transcend cultures

How then do we seize big opportunities in a measured, respectable and ethical way? When you think about it, the question isn’t new so we can source insights from beyond business, go back in time and also look across cultures.

Let’s first investigate the root of the word “ethics.” It derives from the (Ancient) Greek word “ἦθος” for which the dictionary offers the following meanings: (a) common where-about, (b) habit, custom, convention and (c) character, mode of thought and disposition. Aren’t all those to be cared about when setting up a new venture?

People in the West may be familiar with the “Four Cardinal Virtues.” They were first named in Aischylos’ theater play “Seven against Thebes” (667 BC), elaborated upon by Plato in “The State” and “The Laws” (both about 350 BC) and later formulated by Cicero (44 BC) in “De Officiis” – On [the Stateman’s] Duties: 

  • Wisdom and prudence
  • Equitableness 
  • Temperance 
  • Braveness

Take braveness. It’s not about how bold your ambitions are. It’s about how great your mind is. Remarkably, Cicero dedicates an entire book to the leader’s duties—and not to her rights or characteristics. He describes “The Virtuous” as the one embracing and living all four of the Cardinal Virtues.

The concept of Cicero’s “virtuous leader” appears to transcend cultures. A central theme in the teachings of Confucius (551-479 BC) is human order and how to achieve it. His guiding principle is the concept of “The Noble” which comprises five virtues:

  • Humaneness 
  • Knowledge 
  • Veracity 
  • Customs 
  • Justice.

Question: Where are today’s books on the “virtuous” or “noble” CEO and leader?

Answer: They are not needed. These books have been written more than 2,000 years ago. We conclude: Confucius and Cicero should then be read in the light of modern leadership.

I have not done the research but wouldn’t be surprised if ethical principles in other cultures arrived at similar concepts. Mores may differ. Yet, the foundations of ethics appear to transcend cultures.

Don’t “break things to create things”

Some hold this to be the most important mantra of innovation: “To create things you have to break things.” Let’s have a closer look: What do we have to break?

For sure, to create novelty, we need to break mental barriers in our brains. Most often they are formulated with an “it is impossible” statement. It is impossible, e.g., to lend money to the poor, to build a sexy electric car, to have an office building that doesn’t consume but produces energy. While we might need to break our mind blocks, Cicero and Confucius are very clear that, in order to create things, you don’t have to break the law or infringe ethical principles.

Were “credit default swaps” guided by prudence? 
Is it brave to gamble “leveraged” billions which are not yours? 
Am I temperate if I strive for “world domination” of whatever market? 
How equitable is it to fragment work that can only be picked up by an online army of “e-lancers”?

Surprisingly, when creating novelty, laws and ethics can turn from constraints into guidelines. You can brainstorm asking: “What if there were no laws hindering us?” If the resulting solution looks appealing, then focus all creativity on getting the same done by still complying with the law.

Let me illustrate that with an admittedly humble example. Working with the logistics company TNT we confronted a problem “impossible to solve.” The biggest perceived hurdle was to “respect all legal requirements.” We set out to break them on paper: What if logistics companies didn’t need to prove they were not smuggling stuff? The resulting process proofed very simple indeed. Yet, that concept only turned into a truly superior solution when we asked: How do we get the same done while still respecting the law?

Business is in the lead to create, commercialize and to drive acceptance

When we commute to work, what if we could turn that idle seat next to us into a useful resource while still respecting the laws around passenger transportation? Or when I leave for vacation, what if I could let my London-city apartment to someone else and still be in line with the legal framework of the hospitality industry?

This is not only a question about change driven by innovators such as Airbnb or Uber. People, interest groups and entire countries struggle with the “creative destruction” produced by concepts like “industry 4.0” or the application of genetic engineering to healthcare. Couldn’t the underlying great opportunities be reaped far better within an ethical framework of virtuous and noble leadership? Business is clearly in the lead to recognize those potentials—politicians or customers won’t do that for us. Shouldn’t then businesses also adopt a noble and virtuous framework to exploit these opportunities?

It is said that success in innovation depends on creativity, the ability to commercialize and to drive the acceptance of the resulting change. For the first two, “off the shelf” cookbooks are available. Aren’t ethical guidelines a key ingredient for what it takes to succeed in the third?

Dr. Michael Ohler is a principal with BMGI. This article was originally published on LinkedIn. You can follow Michael on LinkedIn here.

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