Published!

One of my research papers is going to be published in a journal put out by St. Edwards:

Bribery, Economic Development, & Cultural Change: Curbing Corruption in China
Summer 2007 issue, Perspectives in Business

It should be available via the link above soon.

Ruminations on Systems

One of the terms that's been thrown around quite a bit in the MSOLE program is "systems theory." It took a while to get my brain around this concept, but now that I have, I can see why my professors bring it up all the time.

Systems theory basically states that most things exist as part of a system, and are often a system themselves. So a human body is a system, made up of organs and other stuff. Organs are systems made up of cells, which are systems made of molecules, and so on. A thing is a system if it's components are varied and work together in some way to create the thing. This is a crappy explanation, but think of it this way; a plant is a system - lots of different types of things make it up - cellulose, chloroplasts, water. If you hack off the roots, it may die, and no longer be a living plant. A rock is not a system. It may have several components at the molecular level, but they're not interrelated. If you hack a piece off of it, it's still a rock.

Systems that are self-correcting - those that need to maintain some kind of equilibrium to survive are called negative-loop systems. Systems that grow or shrink are called positive-loop systems. So our bodies are negative-loop systems; when we get to hot, we sweat to cool down, and when we get too cold we shiver to warm up. The survival of the system depends on equilibrium. But a cancer is a positive-loop system; if allowed to grow unhindered, it can disrupt the body's negative-loop system.

Take this to a sociological level, and you have systems like families, cultures, countries, and so forth. Systems theory, as it applies to business and leadership, is really useful for taking a wider view of things like corporate change efforts, government regulation, and culture.

My current class is on business ethics. There's lots of interesting debate on the dichotomy of capitalism, the publicly-held business model, and ethics. If publicly held corporations exist in order to provide value to shareholders, and everything else serves that goal, there's a lot of gray area when it comes to what is acceptable and what is not. I'm doing some research right now on the difference between personal and professional ethics, and it seems like personal ethics are often more Kantian (absolute) in nature, where traditionally business ethics are more utilitarian. So the big question becomes, who gets the utility? If it's the stockholders only, then other people (employees, community members, etc) pretty much get the shaft. This seems like a very linear way of looking at ethics and responsibility. Put your stakeholders in order of importance, and make decisions accordingly.

Proponents of newer models of global business ethics obviously think otherwise. There are lots of models out there for how to convince a corporation to give equal weight to other people who are affected by these decisions, like consumers (who may not want to pay for shoddy products), community members (who might not be happy about excess toxic waste), or employees (who may not feel so good about layoffs or restructuring). But most of the stuff I've read for this particular class so far goes at it from a linear standpoint, and I don't think it's a linear problem. I think it's a systems problem. Screw with your customers to drive up profits at the end of the quarter, and you may be facing lawsuits the next quarter. This is because you're messing with the system, which consists of everyone affected by your business. Cut employees to reduce costs, and you end up with low morale, high attrition, and reduced efficiency. It might not bite you this quarter, but it will within a year or so. Again, look at the system as a whole. These decisions may not negatively impact profit to shareholders first, but it will effect them within one or two business cycles.

Ultimately, I think systems thinking forces us to take a longer term look at the consequences of our actions. If Krispy Kreme had thought about the potential longer-term problems that might ensue from cooking their books by over shipping to vendors right before the end of the quarter (and then picking up the excess donuts after), it seems like they might have changed their practices a bit. A 75% drop in stock price since 2003 might not seem like an acceptable loss, in hindsight.

I think infusing more systems theory into the field of corporate ethics could be really useful. It's still pretty utilitarian - the greatest good to the greatest number - but because you have to see the issue from a more birds-eye standpoint to understand the systemic effect of decisions, those decisions are less likely to be harmful in the long run.

Machiavelli and Ethics

When someone calls an action "Machiavellian" it tends to imply that person acting is doing so entirely out of a desire to acquire and retain power, without any regard to ethics. The thing I've always found so interesting about most unethical behavior - political, financial, social - is that in the best of situations, it's generally a wash. That peon you're screwing over to win favor with your boss - she might be your boss in five years. Not too bright, Machiavelli. That social program you're shutting down? It might be saving your budget this year, but the problems it causes are going to cost taxpayers much more than what you're saving. That river you're polluting to save yourself the cost of upgrading your plant? You're going to have to pay the piper eventually, whether it's when legislation catches up and you have to pay to clean it up, or you get your ass sued off for giving a bunch of people leukemia. Somehow, I don't think that Machiavelli was such a short-term thinker. A fast power grab today is not a good idea if it permanently tarnishes your reputation in the future. I think you can be a heartless bastard and still understand this fact.

I think the orientation towards long-term thinking is the rational side of ethics. We've so divorced ourselves from the "softer" side of our humanity in regards to work, that it's sometimes difficult to argue for ethical, respectful behavior. There seems to be a gulf between what is "professional" and what is "ethical", and I've spent a lot of time over the last two years contemplating why this may be. I have some theories, but they're not ready for prime time.

What I do know is that I can make a damn fine argument for behaving ethically to the most self-interested person on the planet. The thing is, I'm a fairly big fan of the free-market economy, in theory. But that economy is currently so short-term focused, that ethical atrocities seem to be taking place unchecked. If we could all pull our heads out of our collective asses and look down the line a few years, we might come to understand that instant karma is going to get you eventually, if not instantly. So the next time you humiliate an employee just because you can, or you vote against a needed social program because you don't want to pay $200 more in taxes per year, think about the potential long-term cost of those actions. Machiavelli would be proud.