The Business Ethics Blog

What does it take to design an ethical plan of action? What would you do if you were head of compliance at Volkswagen, or SNC Lavalin?

The question arose recently, as I spent a weekend as a speaker and judge at the terrific Ethics in Action case competition, held at Dalhousie University’s Rowe School of Business.

For those not familiar with the concept, a ‘case competition’ is an event in which teams of business students (typically 4 per team) are presented with business scenarios and tasked with giving a presentation, recommending to a panel of judges (playing the role of the ‘board of directors’) how the company should deal with the crisis. Students are judged on the quality of their analysis, the strength of their recommendation, and the poise with which they present it.

At the Dal competition, one of the cases teams had to address involved a company trying to recover from a string of bribery crises. The dilemma effectively was this: what should the company do, going forward, to recover from its problems and to attempt to prevent future trouble?

As we judges recognized, there’s no right answer here — or at least, no clear one. Lots of moves could be and were suggested: enhanced compliance training, careful screening of business partners, establishing a whistleblower hotline, and so on. But none of those moves, either individually or collectively, could come close to guaranteeing that scandal would not strike again at some point in the future. But each of them made a good deal of sense, and all were ingredients of a plausible path forward. Probably.

This implies a useful perspective on ethical problem-solving generally, namely this: every decision made in response to an ethical crisis is a kind of hypothesis. It is a guess — hopefully an educated guess — about what is going to work

This follows more generally from what we might call a “design” perspective on ethical decision-making. Because design (whether of machines or institutions) just is a process of hypothesis formulation and testing. In terrific 1985 book, To Engineer is Human – The Role of Failure in Successful Design, Henry Petroski argues that every structure that engineers build is an hypothesis — an educated guest to the effect that ‘yes, indeed, this bridge IS strong enough to bear the weight of all that traffic on a daily basis.’

What does this perspective imply about good ethical decision-making?

The most insightful work I know of on this topic is to be found in a brilliant 1996 paper by Caroline Whitbeck, called Ethics as Design: Doing Justice to Moral Problems. In her paper, Whitbeck discusses ethical decision-making as a design problem. The parallel between problem solving in engineering and problem solving in ethics, Whitbeck argues, suggests the following advice:

1) Some design problems have have no real “solutions”, where “solution” means “perfect answer. Sometimes we have to cope with a problem, rather than fixing it. Other problems are amenable to several possible design solutions, any of which might be “pretty good.”

2) Some practical problems are liable to suggest answers — design solutions — that are clearly wrong. Even if there’s no clear right solution, there may be plenty of clearly wrong solutions, and weeding those out is pretty useful.

3) Competing “pretty good” solutions may have different advantages & disadvantages. Just as two engineering solutions might have competing strengths (one offers better safety, where the other offers better durability, perhaps), different ethical solutions can have different virtues (as when one produces better outcomes, but the other does more to protect the rights of the vulnerable). Such competing virtues can be incommensurable, and it’s important to admit as much.

4) Finally, solutions to ethical problems, like solutions to engineering problems, typically need to achieve a particular performance or goal (there’s a job to get done), conform to specifications & constraints (you don’t have all the time and money in the world), and be reasonably secure against accidents and changes.

Overall, this design perspective has two major benefits. First, it reminds us that we are human, that our problem-solving is always a matter of looking for better solutions, not perfect ones. But it also reminds us that progress is possible, and that hard work to arrive at better solutions can pay off. There’s always a way to build a better mousetrap.

Should a bookseller help a convicted murderer and rapist earn a living? In brief: yes. It’s not an appealing conclusion, so sold your nose, and listen to the reasons.

Amazon apparently disagrees with me, or is at least willing to bow to public pressure on the matter. The company has apparently removing an ebook apparently written by convicted Canadian killer and rapist Paul Bernardo from its website.

Amazon came under fire last week for selling the ebook. The book, importantly, is not about Bernardo’s own criminal exploits — he’s not profiting off his own crimes. Rather, the book is supposedly a political thriller of some sort. But many people were far from thrilled to see the widely-despised convict publishing at all.

Why should Amazon distribute Bernardo’s book? Some commentators have mentioned the need to protect free speech: Bernardo is a convict, but even convicts retain fundamental rights. But free speech is a red herring in this context. Amazon would be within its rights not to publish Bernardo’s book. No one has a right to be published. That’s not what the right to “free speech” implies. The right to free speech simply means that when you attempt to speak (or write) no one may rightly take action to forcibly stop you from speaking or writing.

So Amazon is within their rights to stop selling the book, but they are still wrong to do so.

Consider the precedent Amazon is setting here. For the sake of consistency, we need to realize that Amazon is now effectively claiming the right — and perhaps the obligation — to vet every author prior to agreeing to sell his or her book. And in doing so, what principles should they apply? Should all murderers be excluded, or only murderer-rapists like Bernardo? Or all criminals? How about war criminals. That’s a category that (ethically if not legally) includes a number of past heads of state. Should Amazon sell CDs by rappers with criminal convictions? And so on.

For what it’s worth, Amazon currently sells books by a number of other serial killers and mass murderers, including the likes of John Wayne Gacy, David “Son of Sam” Berkowitz, and the most infamous mass murderer of all time, Adolf Hitler.

The argument for a nonjudgmental approach by Amazon is strengthened by the fact that it’s Amazon, in particular, that we’re talking about. Amazon’s dominant position in both book publishing and book selling means that it would be incredibly dangerous for the company to start picking and choosing, on moral grounds, which authors it chooses to work with. We, the public, should not want Amazon to help itself to that kind of moral authority.

Amazon should reverse its decision, and go back to selling Bernardo’s book. And we should respect that decision. Not because we think Paul Bernardo is especially worthy (or even, frankly, minimally worthy). The question isn’t who he is, but who we are.

Valeant Pharmaceuticals has suffered a crisis of trust over the last few weeks. More specifically, the trust that investors had in the company was substantially diminished in the wake of revelations that Valeant had an unclear but apparently too-cozy relationship with specialty pharmacy called Philidor. The loss in trust in this case was quite concrete, measured by a substantial drop in the company’s share price.

The source of this loss of trust was, as is generally the case, a question about the company’s ethics.

Doing business in the long run absolutely requires ethics. At the very least, doing business requires a degree of mutual respect, embodied in our commitment to getting things from others by offering them what we think they want in return. It also requires a commitment to basic honesty, and a commitment to honour our contracts. These ethical basics are essential because they are the foundation of trust. And if you don’t trust someone—at some level—you’re just not going to do business with them.

If trust enables business, then trust has a real value, in real dollars and cents. So what, then, is the dollar value of trust? I estimate the dollar value of trust, within the global economy, at roughly $102 trillion—in other words, the entire nominal Gross World Product for 2014. Without trust, all commerce on the planet would literally grind to a halt.

The fact that trust is crucial in markets is evidenced by the fact that businesses have come up with such a dizzying array of mechanisms designed to generate trust—everything from brands (which carry reputations) through to warranties, return policies, endorsements and third-party guarantors.

But what exactly is trust? What does it mean to trust someone? Functionally, it’s an expectation that someone will behave in certain ways. Trust is also an attitude—part calculation, part emotion—that involves an expectation of goodwill, or at least good behaviour. It is an expectation that the other party to a transaction will not do us harm. As my friend and fellow philosopher Daryl Koehn once put it, trust is a mean between paranoia and foolish faith.

But what happens when trust is broken? How can a company like Valeant (or Volkswagen, for that matter) regain the trust of consumers and the investing public? There are many ways to rebuild trust, and none of them is quick.

A company that has lost the trust of the investing public is likely going to need to show a consistent pattern of trustworthy behaviour over a substantial period of time. And the focus, here, is on the showing. CEO Michael Pearson has said how important ethics is to the company. And—present appearances aside—that may well be true. But in the light of the current wave of mistrust, the company is going to need to do more. It is going to need to engage in substantial disclosures, far beyond detailing the nature of its relationship with Philidor. In the face of a failure of disclosure, the company may well find that that it needs to engage in more disclosure than any company—even one with nothing to hide—would be fully comfortable with.