Interview with Stuart Hart on the Bottom of the Pyramid

Here are a few interesting quotes I found in a short interview with Professor Stuart Hart on the latest developments around the Bottom of the Pyramid concept in an interview in Business Ethics Magazine.

"Western capitalists need to enlist the entire human community in the capitalist dream, which is about pulling yourself up. Unless we can do that for everyone — in a way that respects local culture and doesn’t destroy underlying ecosystems — global capitalism is in trouble".

"When C.K. Prahalad and I started working on this in 1998, people thought we were nuts. Nobody would publish it. It became an underground paper on the Internet, getting a fair amount of corporate visibility. The inflection point was Sept. 11. After that, it was published almost immediately, coming out in Strategy and Business in January 2002. Suddenly people could see how this way of thinking had implications for security, because it deals with the roots of terrorism".

"We’re also looking at creating a worldwide network of collaborating BOP labs at other business schools".

If you have thoughts or experiences to share around this intriguing BOP concept, please enter your Comments.

The Value of Corporate Values

An outstanding in-depth article on the Value of Corporate Values can be found in an article by Reggie Van Lee, Lisa Fabish, and Nancy McGaw in this month's S+B.

Based on a survey at 365 companies in 30 countries, the authors claim "increasingly, companies around the world have adopted formal statements of corporate values, and senior executives now routinely identify ethical behavior, honesty, integrity, and social concerns as top issues on their companies’ agendas".

The highlights of the survey and article are:

  1. A large number of companies are making their values explicit. That’s a change — quite a significant change — from corporate practices 10 years ago. The ramifications of this shift are just beginning to be understood.
  2. Ethical behavior is a core component of company activities.
  3. Most companies believe values influence two important strategic areas — relationships and reputation — but do not see the direct link to growth.
  4. Most companies are not measuring their “ROV.”
  5. Top performers consciously connect values and operations.
  6. Values practices vary significantly by (continental) region.
  7. The CEO’s tone really matters.

The article provides quantitative data about these 7 findings and concludes with "A commitment to corporate values may be in vogue, but the public will remain suspicious until corporations both understand and can demonstrate that they are committed to using values to create value".

Top banker enters "business ethics" fray

The head of Switzerland’s largest bank has outlined his vision of how companies can regain public trust, in the context of a growing debate about "business ethics".

Peter Wuffli, group CEO of banking giant UBS, condemned what he called the "almost cyclical abuse of power by business leaders" that led to a series of high-profile corporate collapses in recent years.

However, he told the 35th annual ISC conference at St Gallen University that society now ran the risk of "going too far" and "crushing" business with arbitrary new regulations.
Wuffli said the time had come to "give corporations the chance to earn back the trust of society", and argued that businesses – like individual human beings – "need freedom".

"For a large, global listed corporation, there is simply no alternative to maximising the profit potential relative to relevant competitors."

However, he said this did not mean only "cold-blooded short-term profit maximisers [would be] rewarded by the financial markets".

He said companies could only be successful if they "balanced the interests of various stakeholder groups" – particularly customers and employees.

"Responsible corporate leadership means delivering on a profit-oriented mandate in a way that is fully transparent and in line with its stated values, vision and strategies," he said.

However, he concluded: "It is only individuals who can act responsibly. A company is as ethical as its people – every single one of them." Article in Swiss Info

What is an "outside accounting firm"?

Our home association bylaws mandate that an "outside accounting firm" be employed to do our accounting. Members of the Board maintain that that would not preclude a resident of the home association being contracted as our accountant so long as he or she is not an employee; being paid a salary, payroll deductions; etc.h, but not an employee of the association. Those on our newly formed ethics committee maintain that the intention of the authors of the bylaws was to preclude the use of a resident as accountant in that he or she would have a personal interest as a member of the homes association, and therefore, would be considered as an "inside accounting firm," not an "outside accounting firm." That "outside accounting firm" is meant that the firm is outside the physical residences of the Homes Association. We need to have an opinion from an ethics organization to support our position to ask for the release of this one-person resident accountant and hire the services of a firm outside the premises of our homes association. Please help.

Business Ethics for SMEs

This month, Ethics Today (the Newsletter from the Ethics Resource Center) focuses on ethics initiatives in smaller organizations. More often than not, resources and new insights for organizational ethics are assumed to have universal appeal. However, their research and experience have revealed that organizations with fewer than 500 employees represent a very different mix when it comes to effective ethics program efforts.

On the one hand, small businesses exist as streamlined examples of the impact of organizational leadership on a company's ethical culture.

On the other hand, smaller organizations are much less likely than larger ones to have in place what we now consider to be "formal elements" of an ethics program, namely written ethics standards, ethics training, a dedicated ethics office/advice line, and a means to report misconduct anonymously.

In May 2004, the U.S. Department of Commerce published a manual for corporate responsibility programs that integrates corporate governance, organizational ethics, and social responsibility. "Business Ethics: A Manual for Managing a Responsible Business Enterprise in Emerging Market Economies" was co-authored by ERC Principal Consultant Kenneth W. Johnson and Igor Y. Abramov, Senior Advisor, Market Access and Compliance, International Trade Administration, Department of Commerce.

Because the bulk of businesses in all economies, especially emerging market economies, consist of small to medium-sized enterprises (SMEs), note the authors, most chapters discuss specific issues facing SMEs. Some chapters have tables comparing the best practices of large, complex enterprises and cost-effective solutions for the SME.

Chapter 6 (pages 129-140) examines business ethics infrastructure -- the structures and systems that help enterprise owners and managers address issues of responsible business conduct. The manual details the best practices that have been developed by large, complex enterprises (LCEs). While valuable for similarly situated enterprises in emerging market economies, they can also serve as models for small to medium-sized enterprises (SMEs). By considering the best practices that have been generated over countless hours by larger organizations, SMEs can design business ethics infrastructure that meets world-class standards but is tailored to the requirements of an SME.

According to the authors, leading enterprises, government agencies, and NGOs have found that an effective business ethics program addresses functions at seven levels of responsibility. Table 6.1 describes how a typical SME might staff these seven responsibility functions. Also in this chapter is a box that lists "Ten Ways Small Business Owners can Prevent and Detect Fraud."

The book contains numerous practical examples, worksheets and checklists, a bibliography, a glossary, and-in its nine appendices-numerous examples of business ethics policies adopted by various countries and organizations.

The manual can be downloaded for free at: (Printed versions are available for sale also at that site.)

More on Business Ethics in SMEs can be found at the Ethics Resource Center , a great source of information on Business Ethics.

Firms are nervous about ethics and fast to fire

Two senior investment bankers at Bank of America were summoned to a meeting where their boss, visibly uncomfortable and flanked by bank lawyers, read them a statement. They were both dismissed and asked to leave the building immediately. The decision was final.

Stunned, the bankers asked if they had broken any regulations. No, they were told. Nor had they traded on any inside information. Within the hour, they had turned in their BlackBerrys and laptops and were on their way home to the suburbs.

This example illustrates one effect of heightened regulatory scrutiny in the United States after the collapse of Enron and other companies. Corporations and their boards are adopting zero-tolerance policies and increasingly holding their employees to lofty standards of business and personal behavior.

The result is a wave of abrupt firings as corporations move to stop perceived breaches of ethics by their employees that could result in law enforcement action, or public relations disasters.

In the ruthlessly competitive world of investment banking, the two investment bankers at Bank of America had been doing what presumably was their job. Acting on a tip from a rival banker, they had called a company preparing to merge with another and asked to get in on the deal.

In a different era, such a ploy might well have been seen as an example of what hungry bankers do to secure an inside edge with a client and maybe even a better bonus - not an inappropriate use of confidential information and cause for termination.

'We are in a regulatory frenzy,' said Ira Lee Sorkin, a senior white-collar-crime lawyer at Carter Ledyard & Milburn in Manhattan. Read on.

Supposed unethical behavior by MBAs applicants punished severely

"I know everyone is getting more and more anxious to check status" of applications, read the message posted to a discussion group by someone using the screen name "brookbond."

"So I looked around their site and found a way."

Over the next nine hours, about 150 prospective MBA students pasted a URL address into a Web browser and typed in a passcode in an attempt to learn their fates.

The consequences were severe. Harvard Business School, the MIT Sloan School of Management and Carnegie Mellon University's Tepper School of Business have pledged to reject any applicants who tried to get an early peek at their acceptance or rejection letter.

Read the rest of this story.

I'd say that's a pretty hypocrite action of those colleges, who in the past have largely neglected ethics in their courses.