Archive for the ‘reporting’ Category
Moneyball and Business Ethics
Filed under: books, complexity, critical thinking, decision-making, ethics, management, reporting, strategy |
Comments (1) 
I’m finally getting around to reading Moneyball, Michael Lewis’s best-selling ode to the study of baseball statistics (and the source material for the new Brad Pitt movie of the same name). It’s one of the most engaging books I’ve read in a long time — something that won’t surprise those of you who happen to have read The Big Short, Lewis’s lively account of the 2008-2009 financial collapse.
What did surprise me as that Moneyball isn’t really a book about baseball. It’s fundamentally about epistemology. Epistemology is the critical study of knowledge itself — how we get it and how we use it. And though Lewis doesn’t (as far as I can recall) use that word, Moneyball is all about epistemology: the epistemology of baseball, yes, but much more than that. It’s fundamentally about how managers should use information to achieve better outcomes.
Moneyball holds important lessons for business managers generally, but in particular it holds lessons about business ethics. But the messages aren’t the obvious ones you’d expect from a book on baseball — they aren’t about the ethics of labour negotiations, for example, or the incomplete alignment of the twin goals of satisfying your fans and making money.
Three key lessons of the book, as far as I can see, are as follows:
1) The numbers matter. So, don’t guess — measure. In baseball, this means scouts need to look closely at a player’s stats, rather than relying on the fact that he’s got a “nice swing” or a “body made for baseball.” In business, it means measuring actual performance — not just bottom-line financial performance, but social and environmental performance, too, rather than just relying on the vague feeling that your company is “doing OK.”
2) The numbers don’t come out of thin air. The numbers you have available to you aren’t just a feature of the universe around you. The numbers represent what happens to have been measured. The “bottom line” (net income) is no more a natural feature of business than “Earned Run Average” is a natural feature of baseball. Both are artefacts of a particular system, one with a particular history and its own set of biases.
3) Numbers can lead you astray. Managing based on the numbers someone else more-or-less arbitrarily decided to keep track of can result in disaster. This is especially the case when those decisions are rooted in idiosyncratic interests or biases. Lewis points out, for instance, that early baseball stats didn’t bother to record the number of walks a batter earned — mostly because one of the early promoters of baseball stats, a journalist named Henry Chadwick, happened to be a fan of cricket, a sport where there’s just no such thing as a ‘walk.’ Chadwick decided not to keep track of how many walks a batter achieved. The result was that there was no way to track which batters had the good judgment to watch a high-and-inside fastball sail past instead of swinging at it. It matters to their performance, but for a time there was no way for coaches to include it in their management strategies. The exact same point can be made about various elements of social and environmental reporting.
The overarching lesson, here, is about the need for (pardon the pun) a measured approach to the use of numbers in business. Numbers matter, and they matter a lot. The old saw that “you can’t manage what you can’t measure” is surely a vast overgeneralization, but one that contains a kernel of truth. But what matters even more than the numbers is knowing what the numbers mean, and what they can and cannot tell you.
Walmart, CSR Reporting, and Moral Grey Zones
Filed under: accountability, CSR, reporting, transparency, values |
Comments (2) It’s very hard to report on the good things you’ve done, when not everyone is sure that those things are actually good. Cutting CO2 emissions is pretty unambiguously good, as is working to reduce fire hazards in your suppliers’ factories. But in the realm of corporate responsibility reporting, there’s still lots of room for controversy.
Case in point: I recently had the chance to indulge in a careful reading of Walmart Canada’s 2011 Corporate Social Responsibility Report. Here’s a bit from the document’s intro, by CEO David Cheesewright:
We see this report as a powerful tool for corporate good. Our size gives us considerable influence and with it comes considerable responsibility – a role we embrace in order to help Canadians save money and live better.
Our goal is to present an open look into the impact of our operations in Canada over the past year. This latest report frames our diverse activities into four broad categories of CSR: Environment, People, Ethical Sourcing and Community.
In each area, we highlight our efforts and actions, both large and small – and summarize our current programs and challenges while outlining plans to keep improving in the future….
It’s a very readable 35-page document (more reader-friendly than some others I’ve read, which I think is really crucial if you want people actually to read the thing.)
One of the things that struck me about the Report is that there’s a genuine difficulty in reporting on this sort of stuff in a world replete with grey areas. There’s lots of lovely win-win stuff in the Report. But some of the stuff reported proudly is actually ethically controversial. A trio of examples will illustrate my point.
- Under the heading of “Community,” Walmart Canada proudly reports that “Walmart Canada thinks locally,” and that the retail giant does a lot to boost the prospects of Canadian businesses, to whom it funnelled just over $15 billion in 2010. This goes some distance toward countering a common criticism. But as I’ve pointed out here before, a focus on “supporting Canadian business” is often a mistake, both economically and ethically.
- Likewise, the Report indicates that their ‘Standards for Suppliers’ absolutely forbid the use of child labour. But there’s a good argument to be made that in at least some desperate parts of the world, child labour is a sad necessity. An absolute prohibition can make some kids’ lives worse.
- The Report also brags about its new line of organic baby food, despite the fact that there’s little clear evidence that organic foods are ethically better than other foods. The question is controversial, to say the least.
In all three cases, the company is portraying as ‘socially responsible’ something that, well, might or might not be, depending who you ask. But of course, child labour, healthy foods, and impact on local communities are precisely the sorts of things that critics (and maybe consumers more generally) want to hear about from Walmart. So it’s hard to fault them on doing, and reporting on, those things.
The point here really is not about Walmart Canada, but about the challenges of CSR reporting more generally. If CSR reports stuck to the unambiguously-great stuff, the reports would be vanishingly short and only minimally useful. And that would be a shame. The point of such reporting, I think is not to show that you’re doing everything right. It’s to show us what you’re doing.
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