Why the Most Successful Businesses Have Strong Values – Mike Eichenwald’s World Economic Forum Blog

 

It has been more than a quarter century since the new Federal Sentencing Guidelines for Organizations in the United States shined a spotlight on the importance of ethics and compliance in corporate governance. And yet it can seem as if we are no closer to seeing our leading companies meet a basic standard of fair play and appropriate behavior. One can hardly glance at the front page of a newspaper without being confronted by another story of misconduct—whether by a single bad actor or, worse, an entire organization. This is despite tens if not hundreds of millions of dollars spent every year on ethics and compliance related activities.

These scandals come at a crossroads moment. We are in the midst of the Fourth Industrial Revolution, a fusion of technologies that is increasingly blurring the boundaries between the physical, digital and biological spheres. The result is a period of seemingly endless challenges. The Forum’s Klaus Schwab, though, has boiled them all down to a single fundamental question: How do we ensure this latest revolution does not “deprive humanity of its heart [and] soul,” but rather lifts it “to a new collective and moral consciousness based on a shared sense of destiny”?

Of course, the poor decisions and malfeasance at the core of today’s scandals are a disturbing reminder that we still haven’t mastered one of the challenges of the previous industrial revolution: meeting a basic standard of fair play and good conduct. And being able to do that is even more important, as we stand at the dawn of a new era that will cause us to confront what it means to be human in an age of intelligent machines. Schwab has challenged global business to consider and make the right decisions today to ensure the Fourth Industrial Revolution has a human heart.

So how can business leaders do a better job of creating the conditions that enable organizations not only to stay on the right side of the law but to do the right thing, consistently and at scale? And how can we operationalize a sustainable set of human values at the core of our business strategies and operations?

New data from LRN suggests that the solution lies in a more deliberate and rigorous effort. Rather than focus on the surface aspects of governance – rules, regulations, requirements, policies, checklists and procedures – we’d clearly do better to focus on what LRN has defined as the organization’s core: its sense of purpose, commitment to values, consciousness of the other and recognition of interdependence, as well as the ability to scale real trust in a way that binds people together and shapes the way they relate to one another. Moreover, this focus needs to be a central part of the way we do business, rather than a periodic discussion that arises only when it’s time for training or an annual ethics acknowledgement.

Click here for five steps every business leaders should take.