Why It’s Good for Business When Customers Share Your Values

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, February 15, 2024 

by Daniel Aronson 

Carolyn Geason-Beissel/MIT SMR | Getty Images

Values matter. Too often, however, they are relegated to the realm of fables instead of finance.

Take honesty, for example. We tell our children the story of the boy who cried wolf to teach them that when someone is dishonest, others are less likely to believe them the next time. But if we look just a tiny bit below the surface, the financial cost of the boy’s dishonesty immediately comes into focus: It results in the loss of his family’s entire flock of sheep.

If we calculated the loss caused by the boy crying wolf, we undoubtedly would find that it dramatically outweighed the combined gains generated by strategies like using AI-optimized grazing patterns, feeding the sheep a high-growth diet, or using consultant-recommended wool-marketing strategies. And yet, while all those things would clearly be considered business decisions, acting on values is not. But that’s wrong.

There is a very strong business case for acting on values. A $100 billion company I worked with discovered that there was a high return on investment from acting on its values and making sure customers knew about that. In fact, the return was many times greater than the ROI from its investments in upgraded technology or marketing campaigns. Yet the importance of technology and marketing are clearly understood as key areas of the business, while values-related impacts are left off of spreadsheets and are rarely — if ever — used to determine which actions have the highest ROI. Read the rest here.

When It Comes to Half-Truths, No News Is Bad News

Insights by Stanford Business, March 15, 2023

by Theodore Kinni


 iStock/PeopleImages

Voluntary disclosures, like those issued by managers in quarterly earnings calls, inform investment decisions across financial markets. They can buoy — or puncture — corporate valuations and stock prices. But it isn’t always clear what effects result from the policies governing these disclosures, especially when it comes to rules about half-truths and the duty to update.

In a new article in Management Science, Anne Beyer, a professor of accounting at Stanford Graduate School of Business, and Ronald Dye of Northwestern’s Kellogg School of Management, use static and dynamic models to understand the effects of regulation on both voluntary corporate disclosure policies and the investors who depend on them.

Half-truths are disclosures that are true in and of themselves but misleading in light of other information managers know but choose to withhold. For example, if a company announces that it will be losing one of its major customers but doesn’t mention that it’s also aware that another major customer is likely to leave, that would be a half-truth. These kinds of omissions are illegal under federal securities law, but their definition is not universally agreed upon. This creates loopholes that can make it difficult to hold managers legally accountable for skirting the whole truth.

Legality aside, whether permitting half-truths in disclosures is preferable to prohibiting them is an open question. Many disclosure regulations aim at providing transparency for investors and other stakeholders. However, it is not self-evident whether barring managers from issuing half-truths leads them to disclose more information.

On the one hand, if a prohibition of half-truths is enforced, then a firm that wants to make a disclosure must disclose the entire truth and cannot selectively withhold part of the relevant information. This may cause the firm to not make any disclosure. On the other hand, if half-truths are allowed, a firm may be willing to share some information on a topic that it would be unwilling to share if full disclosure was required. Read the rest here.

Three Ways Companies Are Getting Ethics Wrong

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, November 29, 2022

by David Weitzner



Making business decisions that are both ethically and strategically sound has always been incredibly tricky. Leaders are called upon to act in a manner that is consistent with their personal values, builds solidarity and trust among diverse stakeholders, enhances their company’s reputation, and prevents scandals, while also being mindful of the bottom line.

This leadership challenge is getting ever more complex. Investors are measuring companies against environmental, social, and corporate governance (ESG) indexes. Employees are demanding extensive diversity, equity, and inclusion (DEI) commitments. And customers want to buy brands that are tied to strong corporate social performance (CSP).

As counterintuitive as it might seem in the burgeoning ethical complexity of ESG, DEI, and CSP, a few companies have found that when it comes to ethics, simpler is better. They meet the demands listed above by rejecting the notion that ethics are necessarily complex. They refuse to abdicate their ethical responsibilities; they craft value propositions that do not lean on social value initiatives to obscure or distract from how the company creates financial value; and they are transparent about how they do business with all stakeholders. Read the rest here.

Becoming a leader of conscience

strategy+business, August 2, 2021

by Theodore Kinni



Photograph by phototechno

Say what you will about economist Milton Friedman’s position on the responsibility of business, the idea that increasing profit within the rules of the game was the sole and righteous goal of executives clearly simplified leadership values and ethics. I suspect that is one less-recognized reason that so many CEOs avidly embraced Friedman’s monolithic view for so long. But now as more and more leaders are expanding the scope of their responsibilities and companies are adopting—and compensating leaders on—ESG (environmental, social, and governance) metrics, an increasing number of thorny ethical dilemmas are sure to come along with it.

G. Richard Shell, chair of Wharton School’s Legal Studies and Business Ethics department, pointed out during a recent interview for this column two generic types of ethical problems that leaders face. One type involves a personal problem in which the leader is aware of an ethical lapse—perhaps a colleague’s conflict of interest or behavior that puts the company at risk. “Class one ethical dilemmas are ones in which executives feel the burden of their own conscience,” explains Shell. “These problems have an emotional quality to them. You feel the tug of conflicting loyalties, or you feel guilty if you don’t do something.”

The second type of dilemma is organizational in nature. “Class two involves values that relate to the firm and its relationship to society,” Shell says. “They more often have to do with your responsibilities to the firm, its brand and stakeholders, and its code of conduct in terms of the firm’s social role. They are more cognitive than emotional because you have to process costs and benefits.” Coca-Cola’s response to Georgia’s voting rights bill is an example of this kind of dilemma.

Although the two kinds of ethical dilemmas have different dimensions, they can be assessed using the same framework, according to Shell. He calls the framework CLIP—consequences, loyalties, identity, and principles—and describes it in his new book, The Conscience Code: Lead with Your Values, Advance Your Career. Read the rest here.

Do you really want a CEO to be a role model?

strategy+business, January 12, 2021

by Theodore Kinni



Photograph by RgStudio

When Fortune magazine named Elon Musk as the 2020 Businessperson of the Year, its CEO, Alan Murray, announced the news with palpable distaste: “I have never been a Musk fanboy; he is a mix of some of the worst characteristics of today’s leaders — more messianic than Adam Neumann, as allergic to rules and governance as Travis Kalanick, nearly as narcissistic as Donald Trump.” So why honor Musk? He has been extraordinarily successful at turning bold visions into successful companies. As a result, Tesla’s stock is up more than 1,000 percent since the summer of 2019, making its CEO and largest shareholder, with a nearly 20 percent stake, the second richest person in the world.

Musk is the latest in a long line of celebrated leaders who aren’t exactly paragons of good behavior. Steve Jobs was another notable example. In his acclaimed biography of Jobs, Walter Isaacson documented his subject’s famously petulant and abusive interpersonal conduct. But then Isaacson spun it to support his conclusion that Apple’s cofounder and, later, savior was the “the greatest business executive of our era.”

Murray’s ambivalence to Musk and Isaacson’s efforts to excuse Jobs got me thinking about the role that CEOs and other senior leaders inhabit as behavioral exemplars. Programs for corporate or cultural transformation invariably require that senior executives model the behaviors they are trying to encourage in managers and workers. When Jon Katzenbach and his colleagues at the Katzenbach Center (PwC Strategy&’s global institute on organizational culture and leadership) formulated their 10 principles of organizational culture, they specifically called that dictate out. “The people at the top have to demonstrate the change they want to see,” they declared... read the rest here

Leaders Should Focus on Human Dignity at Work

strategy+business, November 28, 2018   

by Theodore Kinni


With bankruptcy looming, management appealed to employees to accept pay cuts and “pull together and win.” The workers did. After the company limped along for five long years, the turnaround came. The company’s leaders marked the occasion by giving themselves hefty bonuses, but didn’t bother to restore worker pay. A complete breakdown in the relationship between management and employees ensued, and Donna Hicks got a call.

Hicks is a conflict resolution expert. During her long association with Harvard University’s Weatherhead Center for International Affairs, she has worked with governments, corporations, and other organizations to reconcile seemingly unreconcilable differences between groups of people. In the mid-2000s, the BBC enlisted her to co-facilitate, with Desmond Tutu, first-time encounters between victims and perpetrators in the Troubles in Northern Ireland. Hicks found a thread connecting all of these experiences: Conflict is exacerbated by violations of dignity.

“The common denominator is the human reaction to the way people are being treated,” she writes in Leading with Dignity, her second, sometimes redundant, book on the topic, which tightens its focus to business. When people’s dignity is violated in the workplace, she writes, “they feel some of the same instinctive reactions that parties in international conflicts experience — a desire for revenge against those who have violated them. People want their grievances listened to, heard, and acknowledged. When this doesn’t happen, the original conflicts escalate, which only deepens the divide.”

Moreover, leaders play a major role in dignity violations and the outcomes that they produce. “The extent to which leaders pay attention to, recognize, and understand the dignity concerns underlying people’s grievances makes an enormous difference as to whether these conflicts can be resolved,” Hicks writes.

If you’ve been watching the leadership spectacle currently playing on the world stage, you might not be surprised to learn that most leaders, and the rest of us, too, have a woefully underdeveloped understanding of dignity. “Most people do not have a working knowledge of dignity,” Hicks writes. “I have found that most people are unaware of their own inherent value and worth, and are usually at a loss for how to recognize it in others.” Read the rest here.

Are American Workers Dying for their Paychecks?

strategy+business, April 12, 2018

by Theodore Kinni

Jeffrey Pfeffer, the Thomas D. Dee II Professor of Organizational Behavior at the Stanford Graduate School of Business (GSB), hasn’t been particularly sanguine about business management for a couple of decades now — perhaps he never was. From his Machiavellian take on power to his skepticism about leadership education, his recent books have punctured conventional wisdom and challenged executives to do better. In his brutal new book, Dying for a Paycheck, Pfeffer steps up the attack.

The book’s thesis is straightforward and blunt: American workplaces and management practices are destroying individual and organizational health. To prove it, Pfeffer partnered with GSB colleagues Joel Goh, a doctoral student (now a professor at the National University of Singapore), and Stefanos Zenios, a professor of operations, information, and technology, and surveyed a broad range of employee health and wellness research.

They identified 10 workplace exposures within the control of employers that significantly affect human health and longevity. And we’re not talking about the industrial accidents that plagued the American workforce a century ago. Rather, the exposures in the 21st century include: being laid off; not having health insurance; irregular work shifts; working more than 40 hours weekly; confronting job insecurity; facing work–life conflicts; having low control over one’s job and job environment; facing high job demands; having low levels of social support at work; and working in unfair situations. Read the rest here.

How Leaders Can Play the Loyalty Card

strategy+business, April 2, 2018

by Theodore Kinni

In his 2007 book Think Big and Kick Ass in Business and Life, a well-known real estate developer and reality television star discussed employee loyalty at length. “I value loyalty above everything else — more than brains, more than drive, and more than energy,” he wrote.

But is that an effective people strategy for a large-scale organization? Probably not. The idea that leaders should place personal loyalty above all else when appraising employees is something of an outlier in the literature of management. Experts have a lot to say about the duty of CEOs to employees. But vice versa? Not so much. In the few instances I’ve found in which loyalty arises as an employee duty, it’s always framed as loyalty to the company or the company’s mission, not as personal loyalty to the CEO.

That doesn’t mean that employee loyalty isn’t important to leaders. It is, in fact, vitally important. Leaders need people who will stand by them when the going gets tough, who won’t undermine them as they seek to execute plans, who will trust them when the way forward isn’t entirely clear, and who won’t sell them out at the drop of a hat.

But how do you get loyal employees? It seems there are three common approaches. Read the rest here.

Ethics Should Precede Action in Machine Intelligence

MIT Sloan Management Review, June 29, 2017

by Theodore Kinni


As analytics and Big Data continue to be integrated into organizational ways and means from the C-suite to the front lines, Josh Sullivan and Angela Zutavern believe that a new kind of company will emerge. They call it the “mathematical corporation” — a mash-up of technology and human ingenuity in which machines delve into every aspect of a business in previously impossible ways and produce insights that will allow previously unimaginable solutions — new businesses, strategies, products and services, and so on.

Sullivan and Zutavern don’t think the mature mathematical corporation exists yet, but they do have a privileged view of the forces that will produce it. Both are executives at Booz Allen Hamilton Inc., where Sullivan organized and leads the company’s data science and advanced analytics capabilities, and Zutavern is developing applications of machine intelligence to organizational leadership and strategy.

In their new book, The Mathematical Corporation, Sullivan and Zutavern explore how company leaders can prepare for and accelerate the transformation to a new corporate model. The following excerpt from Chapter 7, edited for space, examines the inevitable ethical conflicts that will arise — and have already arisen — as the ability of companies to collect and parse personal data explodes. And more important, it points out the need to proactively anticipate those conflicts. Read the excerpt here.

The Sisyphean Task of Activating Boards of Directors

strategy+business, Feb. 22, 2017

by Theodore Kinni

Ira M. Millstein opens his new book, The Activist Director (Columbia University Press, 2016), a mashup of memoir and handbook, as if he were standing in front of a jury. “I will build the case for adopting a board-centric approach to corporate governance by placing more activist directors in the boardroom — people who will ask the tough questions, challenge management practices, and resist those who put their own agendas ahead of those of the corporation and investors like you,” writes Millstein, the senior partner at corporate law firm Weil, Gotshal & Manges and adjunct professor at Columbia Law School. “Some will call this pie-in-the-sky idealism. I prefer to call it pragmatic optimism.”

In addition to being an optimist, 90-year-old Millstein is a patient man. He has been making this particular argument for nearly 40 years, since the late 1970s, when he began helping the Business Roundtable draft a series of reports that defined the role and responsibilities of boards. At the time, shareholder activism was starting to manifest itself in leveraged buyouts and hostile takeovers, and Millstein wanted “to ensure that boards exert some initiative to restore corporate competitiveness.”

Toward this end, Millstein didn’t simply write about boards — he advised them. And he advised them to be aggressive. Most notably, he served as external counsel to the board of General Motors for about a decade starting in 1985. During that period, GM was losing money and market share. Yet chairman and CEO Roger Smith, the “Roger” in Michael Moore’s scathing documentary Roger and Me, refused to treat the board as anything more than a rubber stamp — which was the de rigueur role of most corporate boards. Braving Smith’s legendary temper, Millstein helped GM’s board find its feet. And when Smith retired, he advised the board as it took a more active role in governance — hiring Robert Stempel as CEO and then, within two years, firing him and other members of GM’s senior management team when they did not move quickly enough to right the ship. Read the rest here.

Exaggerated Truth-Telling Is Commonplace, But Not Admirable

LinkedIn Pulse, Feb. 7, 2017

by Theodore Kinni


In 1919, as the White and Red armies fought a brutal, seesaw war for control of Russia, British War Secretary Winston Churchill prodded his government to commit troops to the fight. The Bolsheviks, he declared, were “swarms of typhus bearing vermin.” They “hop and caper like ferocious baboons amid the ruins of their cities and the corpses of their victims.” Churchill’s rhetoric was so inflammatory that, after he addressed the House of Commons on the topic, Tory Party leader A.J. Balfour felt compelled to comment. With quintessential British coolness, the former Prime Minister told the future Prime Minister, “I admire the exaggerated way you tell the truth.”

Unfortunately, exaggerated truth-telling is as commonplace in business as in politics. Walter Isaacson cites Steve Job’s “reality-distortion field” repeatedly in his go-to biography of the Apple’s mercurial chief. “[Jobs] would assert something—be it a fact about world history or a recounting of who suggested an idea at a meeting—without considering the truth,” writes Isaacson. He would conjure up an impossible production date, for instance, and demand it be met. Surprisingly, as Isaacson recounts, it often was.

Elon Musk seems to have picked up Job’s penchant for exaggerated truth-telling. Musk says that Tesla’s factory in Fremont, CA will produce as many as 500,000 vehicles in 2018—an “extraordinary leap in production” from less than 84,000 in 2016, according to Jeff Rothfeder’s insightful analysis in The New Yorker. Can Musk’s employees and suppliers deliver on his promise or is this exaggerated truth-telling? Well, as The Wall Street Journal calculates it, Tesla has missed Musk’s projections more than 20 times in the past five years. Read the rest here.

Best Business Books 2016: Management

strategy+business, Winter 2016

by Theodore Kinni






It’s satisfying when corporate wrongdoing comes complete with a villain, preferably someone larger than life and twice as mean. Having an evil mastermind à la Bernie Madoff to pin things on sets up a happy ending. The bad guy or gal is brought to justice and, voilà, all is right in the business world.

Unfortunately, we are often denied that satisfaction. Some organizational disasters — such as the Deepwater Horizon oil spill and Dieselgate — seem to occur as a result of unintentional internal combustion. Scapegoats always seem to be found, but it’s a stretch to argue that there was a black-mustachioed villain who put match to fuse. Instead, when the investigations are over, the real culprit turns out to be a hodgepodge of systems, processes, or managerial decisions that didn’t raise alarms until the consequences suddenly exploded.

This year’s three best business books on management offer compelling and useful advice on how to avoid such problems. In Pre-Suasion, the best of the group, Robert Cialdini explains how managers can be predisposed to make constructive decisions and can predispose others to take constructive action. In Managing in the Gray, Joseph L. Badaracco shows how managers can make difficult decisions in a more responsible manner. And in The Process Matters, Joel Brockner explores how the decisions that managers make when constructing processes can help prevent undesirable outcomes. Read the rest here.

TechSavvy: Beware the Paradox of Automation

MIT Sloan Management Review, October 20, 2016

by Theodore Kinni
Earlier this year, Facebook exorcised those pesky human editors who were introducing political bias into its Trending news list and left the job to algorithms. Now, reports Caitlin Dewey in The Washington Post, the Trending news isn’t biased, but some of it is fake. Turns out the algorithms can’t tell a real news story from a hoax.

Facebook says it can improve its algorithms, but errors of judgment aren’t the only pitfall in transferring human tasks to machines. There’s also the paradox of automation. “It applies in a wide variety of contexts, from the operators of nuclear power stations to the crews of cruise ships, from the simple fact that we can no longer remember phone numbers because we have them all stored in our mobile phones, to the way we now struggle with mental arithmetic because we are surrounded by electronic calculators,” says Tim Hartford in an excerpt published by The Guardian from his new book, Messy: The Power of Disorder to Transform Our Lives. “The better the automatic systems, the more out-of-practice human operators will be, and the more extreme the situations they will have to face.”

Hartford borrows William Langewiesche’s harrowing description of the crash of Air France Flight 447 to illustrate three problems with automation: “First, automatic systems accommodate incompetence by being easy to operate and by automatically correcting mistakes. … Second, even if operators are expert, automatic systems erode their skills by removing the need for practice. Third, automatic systems tend to fail either in unusual situations or in ways that produce unusual situations, requiring a particularly skillful response.”

The excerpt is worth a read — especially if it prompts you to ask if your company’s automation initiatives might entail similar risks. Read the rest here.