Lately, a lot has been written about evil and greedy corporations. We’ve seen what happens when the business environment becomes conducive for making bigger and bigger profits, while taking larger and larger risks — the bottom will eventually fall out.
People want to believe that this phenomenon was caused by evil and greedy corporations who made bad choices and did the wrong things.
But I think there’s more to it than just that.
There is a book by Charles MacKay (over 150 years old) that is part of the financier’s canon entitled, “Extraordinary Popular Delusions and the Maddening of Crowds.” This book reviews famous cases of crazy investment schemes and crashes throughout history. The common theme through all of these stories is the power of suggestion and the ability of human beings to abandon reasonable thought in certain environments.
It is in these “mad” environments that leadership breaks down and the darker side of human behavior (like selfishness and greed) is able to take hold.
Dr. Philip Zimbardo (famous for the Stanford Prison Experiment of 1971) speaks about this in his book, “The Lucifer Effect,” identifying seven environmental factors that lead to human evil. Notice how these factors are all driven by the way people act both as individuals and in a group setting. The slippery slope of evil begins by:
- Mindlessly stepping into a new or strange environment
- Dehumanizing others
- The De-Individualization of Self
- The Diffusion of personal responsibility
- Blind obedience to authority
- Uncritical conformity to group norms
- Passive tolerance to bad behavior through inaction or indifference.
Businesses and the people that work in them are prone to doing bad things when the work environment changes and the moral and ethical compasses (driven by leadership) disappear.
The brighter side of corporate responsibility and leadership was recently echoed by Ron Shaich, founder of Panera Bread. He noted how corporations have been failing to meet their obligations as good citizens and community leaders:
“Given that the business community is responsible for its sorry reputation, I think we’re also responsible for restoring its luster.
Enter new approaches to capitalism — some are calling it conscious capitalism or enlightened business. I’d call it simply “enlightened self-interest.” This notion of a conscious and long-term approach to value creation — when put into proper application — serves long-term shareholders extraordinarily well and has the capacity to favorably reshape the public’s perception of corporate America. It is built on the fundamental premise that every business has a deeper purpose than merely short-term profit maximization and, more importantly, a responsibility to all of its stakeholders (customers, employees, vendors, investors, community). With such a model, profit is merely the byproduct of delivering something that serves society and a broad range of stakeholders.”
So, are corporations inherently evil?
I’d say “No.” Businesses are made up of people. And people have the propensity to do either good or ill, depending on leadership, culture, circumstance, and personal accountability.
I think the challenge is to be mindful of these factors and let the better part of nature drive the way in which we conduct business (and ourselves) every day.