Innovating Leadership:
Co-Creating Our Future
Hosted by Maureen Metcalf
Conversations with global thought leaders on leadership, culture, and innovation—designed for executives navigating complexity and building resilient organizations.
An Oxford Ethicist Reveals How to Strengthen Your Workplace’s Moral Compass
Episode Description
Ethical failures rarely stem from isolated bad decisions and more often reflect weakened moral systems within organizations. Maureen Metcalf speaks with David Rodin, former Oxford ethicist and founder of Principia, about how leaders can strengthen their organization’s moral compass beyond compliance or stated values. The conversation introduces practical ethical tests for navigating gray areas and explains how principled judgment, consistency, and character driven leadership shape trust, resilience, and long term organizational survival.
Key Takeaways
- Ethical leadership is a core capability that determines long‑term organizational survival and trust.
- Leaders must distinguish between moral principles and cultural customs to make sound ethical judgments.
- Strong ethical organizations build both clear systems (policies, incentives) and supportive cultures (norms, behaviors).
- Ethics is a learnable skill that improves decision quality in complex, high‑stakes situations.
- Organizations fail ethically not because most people are unethical, but because weak links go unaddressed.
Why This Episode Matters
Positions ethics as a core leadership discipline that protects organizational integrity, decision quality, and reputation long before crises expose moral weakness.
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Episode Content:
Enron. Lehman Brothers. WorldCom. And your company?
You clearly want to avoid this list of major “too big to fail” firms that extinguished due to a lack of ethics. While many leaders view ethics as a vague extra that’s not critical to business, the death of these companies proves otherwise: ethics is critical to survival.
So how do you keep your organization off this list, and instill a strong sense of ethics into your company culture?
Our podcast guest, David Rodin, offers practical advice. A former Oxford ethicist, and current chair/founder of ethics consultancy Principia, Rodin says to start with distinguishing ethics from compliance and company culture. They’re very different things.
He uses three tools or tests to determine ethical choices:
1. The Good. Ethically good actions create benefits for people – the more, the better, in fact. Bad actions, on the other hand, create harm or risk for others. In other words, you gauge your plan or action based on the consequences it will have in terms of people’s happiness and welfare. If it will cause harm, your decision is unethical; it’s time to reconsider.
2. The Right. Does your plan or action fulfill a duty or obligation to someone? You’ll create an ethical quandary if it goes against an obligation. Contracts are a clear business example – violating them can be both a legal and ethical shortfall. But even handshake deals and promises reside in this category. “My word is my bond” speaks to your organization’s ethical character. Rodin points out a bigger picture overlaying here: fundamental rights, including human rights. These duties and obligations extend from the social or national culture in which your business operates.
3. The Fitting. This may well be the most difficult lens to see through: does your plan or action fit your firm’s character and espoused virtues? You’ll need to look inside yourself and the company’s leadership; often, company character and virtue are unspoken parts of the culture, rather than codified and written down. It might help to work backward – consider what vices and behaviors the staff is told to avoid, and what that indicates about the company’s ethics. Add yourself to this equation: what values and virtues do you want to bring with your leadership style?
None of this will be easy initially. Ethics is about using judgment across situations, so it’s a way of thinking through decisions you must make in those gray areas. Compliance feels easier in comparison; you’re following a set of rules, laws, or standards often defined by others. Check the box on the compliance list, and you’re done. Ethical gray areas, though, never cease to bubble up.
As you implement ethical training and codes, remember that they must be practiced company-wide, from top leadership to the front line. In almost every case of firms failing from unethical practices, it only took a few bad actors to bring down the entire organization. Ensuring everyone knows and follows your ethical guidelines improves your odds significantly.
And, perhaps, the best benefit of all: you’ll sleep better at night.
Did you ever find yourself in an ethical quandary at work? How did you resolve it? Let us know in the comments so others can benefit from your experience.
Resources:
Learn more about David’s ethics firm, Principia, at https://www.principia-advisory.com.
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Maureen’s latest book is Innovative Leadership & Followership in the Age of AI. You’ll find details about it at https://bit.ly/LeaderInAI, or check out the Kindle version at https://amzn.to/44buVz8. The audiobook version is now available at https://amzn.to/4dTCleZ.
Her other 10 books are available on Amazon here.
Books we’re reading for fun or personal development right now include:
- Covert Cows and Chick-fil-A by Steve Robinson; it’s available in hardback at https://amzn.to/460LnmQ, on Kindle at https://amzn.to/3RVXhZs, and as an audiobook at https://amzn.to/3xPjBgn.
- The War of Art by Steven Pressfield. Paperback = https://amzn.to/3VEl7cU, Kindle = https://amzn.to/45JGm1L, and audiobook = https://amzn.to/3RPhC2y
- Everyday Ubuntu: Living Better Together, the African Way by Mungi Ngomane. Hardback (https://amzn.to/48Doh6j) and audiobook (https://amzn.to/48YCRF4)
- Nerve: Lessons on Leadership from Two Women Who Went First by Martha Piper & Indira Samarasekera. Paperback (https://amzn.to/3tOtzg4) and audiobook (https://amzn.to/41OYdT5)
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Guest(s):
Guest(s) Bio:
David Rodin is the Founder & Chair of Principia, the leading global advisory firm on organizational ethics. He is one of the world’s foremost authorities on ethics and organizational culture. His work has helped to transform the fields of organizational and military ethics, and he advises some of the world’s largest private and public organizations.
A distinguished moral philosopher, David worked for almost two decades at the University of Oxford where he was Co-Director of the Oxford Institute for Ethics, Law, and Armed Conflict and Co-Founder of the Oxford Changing Character of War program. A Rhodes Scholar from New Zealand, David began his career at Boston Consulting Group. In 2011 he was honored by the World Economic Forum as a “Young Global Leader”, recognizing the most distinguished young leaders in all fields below the age of 40.
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Transcript
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Maureen: [00:00:00] This is innovating leadership Co-Creating our Future. I’m your host, Maureen Metcalf, founder and CEO of the Innovative Leadership Institute, where we help leaders be future ready. Helping us in this mission today is David Rodin, founder and chair of Principia, the leading global advisory firm on organizational ethics, and we’ll be talking about how leaders can strengthen their moral compass and work their way through thorny ethical issues.
David, thank you very much for joining us.
David: Such a pleasure to be here.
Maureen: Most of us. Think we know what ethics are, but let’s start by level setting your [00:01:00] definition.
David: Ethics is a tricky word and it scares a lot of people, but in its most basic sense, it simply means the ability either of a person or an organization to do the right thing.
The field that I spent a lot of my career working on at the University of Oxford is a part of moral philosophy, which is really exploring what that means to do the right thing, how we can understand that more clearly and how we can work our way through some of these really, really difficult problems and questions.
Maureen: You’ve been at Oxford, which is one of the most prestigious universities. You also, early in your career, were working across militaries across the globe. How did those interconnect.
David: That was actually my academic specialism was the ethics of armed conflict and warfare. So through that I did a lot of work with military commanders and armed forces, really all over the world, in the uk, throughout Europe, and also in the us.
It was interesting when I was starting my career in the early two thousands, it was obviously right after nine 11. And the [00:02:00] kinds of wars that Western armies were fighting were very different to the wars that they had done for most of the 20th century. They were much messier. They were fighting irregular enemies like Al-Qaeda or isis.
What I discovered is that a lot of these commanders who, you know, were coming back from experiences in Iraq and Afghanistan, were really hungry for tools about how they could make very concrete life and death decisions. You know, decisions about who to target and what circumstances lethal force can be used.
They were really hungry for tools to think about that in a more concrete way, and so that kind of connection of ethics in the military was something that was very important to my career.
Maureen: You mentioned nine 11, I think of then how we thought about getting information from foreign combatants. What is ethical and what is effective?
That question evolved during that period of time.
David: Yeah, absolutely. And I think when we, you know, look back at that now, we really realize that there were a lot of actions that we took that stepped over a line, particularly around the use of practices that [00:03:00] really, I think ought to be, and now are considered to be instances of torture or crossing over that line.
But it’s not always clear to a soldier, to a commander. In the moment when you’re in a situation of very, very high stress. So these kinds of tools of ethical reflection, moral reflection, are really, really important.
Maureen: One might come onto the podcast thinking, well, we all know what ethical is, and yet you’re pointing to over time, situations evolve.
Our ecosystem evolves, and we’re facing conflicts and business issues, military issues, civil issues. That weren’t in play at other points in history, and I think of what’s going on in Gaza and that there were tunnels now underneath civilian properties. That was probably a question prior military organizations weren’t grappling with.
David: So when I think about ethics, I think it’s in many ways, a lot like medicine. You can use a kind of medical analogy. So there’s a part of ethics. Which is a bit like the kind of frontier medicine, you know, genomic [00:04:00] medicine or advanced neuroscience, where we’re really pushing the boundaries and we’re having to really discover what the right answers are.
So in ethics, you know, exactly as you say, you know, questions around how do we deal with our operations in Gaza, or how would we deal with our operations in China if we were to be a war between Taiwan and China? How do we respond to evolving norms around gender? For example, you know, how do we think about human rights in very difficult parts of the world, right?
These are questions that are really tricky and we have to find our way to a solution. Issues around technology, right? So how to use AI in an ethical way. This is something we literally need to discover. So there’s one part of ethics, which is like that, it’s like, like frontier medicine. There’s another part which is much more like hygiene, right?
To be healthy, you don’t only need advanced medicine, you need to be able to exercise well, eat a healthy diet, brush your teeth, we know what to do. There’s no mystery about that. The tricky thing is making sure that you do that stuff reliably every single day of the week. And there’s a part of ethics, which is like that, right?
So if you’re a leader in a large organization. Tens of [00:05:00] thousands, hundreds of thousands of employees. How do you get everyone in your organization lined up behind doing those basic things, treating colleagues with respect, acting with financial, probity, no, great mystery of what you have to do, but getting everyone in the organization lined up and ensuring consistency of delivery.
Day in and day out across everything you do everywhere in the world. That’s a really significant challenge. So it’s helpful to think about like what’s the frontier part of ethics where you really need to figure out a solution to something new and what’s a hygiene part where it’s about really aligning the organization effectively around what we know we have to do.
Maureen: Different organizations may have very differing perspectives on what’s allowed basic workplace civility. Some places. If you’re not using profanity, you’re not awake, and others, if you use profanity, you’re just considered not very sophisticated.
David: Hmm.
Maureen: Those two organizations will have some ethics that are absolutely the same.
You [00:06:00] don’t steal, you don’t cheat clients, but how we treat each other may be slightly different in the workplace.
David: Crucial things that we need to get straight is what is a difference between actual ethics, so things that matter morally or ethically, and things that are really just differences in what we might call custom and behavior.
Both of this, we feel very action guiding, right? So, you know, if you walk into one of those offices where everyone is cussing like crazy, you kind of feel a real pressure to do the same. So both of those are what a philosophies we call normative, right? They’re action guiding. But there’s a very, very big difference between, for example, you know, an expectation.
That like in a bank, everybody wears a suit and a tie, and in a tech company, everyone wears a T-shirt, right? We feel the pressure to do that, but we don’t think of that as a moral difference, right? We don’t think that we are doing anything morally wrong if we are not conforming to the dress code. Whereas there is a deeper kind of question, which is, you know, am I treating my colleagues with the appropriate kind of [00:07:00] respect?
Am I behaving in a way that is abusive or that is using power in an appropriate way? Those do start to become ethical or moral. So one of the big questions is, well, how do we know the difference? Right? How do we know what kind of just a, a kind of a customary difference that doesn’t really matter from a moral perspective versus something that really does?
And there are three very, very basic tests that I think are incredibly useful and they kind of reflect and draw from very significant bodies of. Philosophical thought around ethics, and I call this tests the good, the right, and the fitting. There are three things that will give you that sense for whether the difference is really about something that matters ethically or whether it is just an issue of custom.
Let me just run super quickly through them. So the test about the good is, is a decision to act in one way or another. Will it have an impact on people’s happiness and welfare generally? So morally good actions, ethically good actions are ones that create more benefits for more people. And bad actions are one that creates, um, harms and [00:08:00] risks for other people.
Right? No great mystery around that. If you have an action that is, you know, making somebody feel. Hurt or wounded or causing them distress, that’s starting to trigger an ethical question. Second test is, is it right? So is there a duty or an obligation that we owe to anyone? Could be a promise that we’ve made to someone.
Could be a contract, could be something much more fundamental like a human, right? Right? So are we doing something that might actually impinge on or infringe somebody’s basic human rights? That also tells you that there’s something ethical, moral at play. And the final test is around the fitting. So the idea of the fitting is.
It’s kind of looking inwards to ourself and saying, what kind of leader do I want to be? What kind of character traits or virtues do I want to bring to my leadership? What kind of organization do we want to be? How do we want to operate in the market? Do we want to be a courageous organization? Do we want to be an empathetic organization or a kind organization?
And what are the vices that we know that we might be susceptible to, that we want to avoid? So wherever [00:09:00] any of those three ideas is kind of coming into play, right? Where we’re doing something that’s really impacting someone’s welfare, how they’re doing, where it is impacting duties that we owe to someone, or where it has to do with these kind of deeper understandings of who we are, right?
Our kind of sense of our virtues, who we want to be as a leader or as an organization. Anytime that we are touching something like that, that tells you that there’s really something importantly, ethical at play there.
Maureen: This is where DE and I comes into play in some organizations, and this has gotten a lot of play in the US with outlawing or discouraging DEI policies.
Versus saying it is ethically right, that we include people across the spectrum and this is how we define them. It seems like organizations at their core need to define those principles and what they stand for.
David: That’s absolutely right, and I think the. DEI [00:10:00] conversation has gone a little bit off the rails in a lot of ways, and it’s become painted as being a very lefty woke, progressive tribal attitude.
You know, when I think about this as a moral philosopher, you know the questions that I wanna be asking about this as well. What’s our starting point? When we think about setting up A-A-D-E-I program, our starting point is that we want to be fair and equitable to all of our people, and we want to create fair and just opportunities for all of our people.
That’s a very, very basic fundamental idea, right? That’s not just a kind of work progressive idea. That’s also an idea that that conservatives, I think, can very much get behind. If you take that as your central idea, one of the things that you need to recognize is that there are also tensions and trade offs within that idea.
Because when you think about justice or equity, you can think about that at two different levels, right? So you can think about that at the level of the relationship between a minority group and a majority group, and you can say, well, it’s, it’s unfair that minorities. Have been excluded from certain kinds of, [00:11:00] you know, privileged positions for a long period of time, they’re underrepresented.
That’s clearly unfair, but there’s another way of thinking about fairness, which is a, like a, an interpersonal individual one, right? You might say, well, if you have two candidates and one of them, you know, looks like they are more qualified than another and they don’t get that position, then you might say that’s unfair at an individual level.
So now we have a kind of like a, a tension or a trade off between those two different accounts of fairness. What ethics kind of helps you do is work your way through that and say, well, why might it be right to privilege? One understanding of fairness, you know, that, that maybe that kind of group equity over individual fairness in some circumstances, but what kind of, what might be left over?
One of the ideas that we use a lot and bring from moral philosophy is an idea of, of a moral remainder. Many kinds of moral dilemmas that we face, you have to resolve one way or another, and there’s no often no perfect solution. So what you end up with is something left over a kind of moral remainder. If you have a, uh, a DEI policy that privileges group equity for certain [00:12:00] kinds of positions, then maybe there is something that’s left over around individuals who are excluded that needs to be recognized.
And ethics brings you a way of, of navigating and resolving those kinds of tensions. Without getting sucked into this highly partisan emotional debate that we often find ourselves in.
Maureen: Can you give an example of just a specific case? What does that look like? What’s the remainder? If I’m competing with a white man and I get the job because I’m female and we need to be more inclusive of women, and I’m competing against you.
And I am privileged because people who look like you have been privileged in the past.
David: Yeah.
Maureen: How do we make it right for you? Because we gave me extra points in the calculation of
David: Yeah. Addressing the moral mandate. Can mean a lot of different things in different circumstances. So in some circumstances, what you need to do is give some kind of a compensation or make somebody closer to the position that [00:13:00] they would’ve otherwise been in.
I don’t think that’s the right solution. In cases like this. In cases like this, it can often just be a matter of being, you know, really open and honest about the situation and actually saying, you know, look, if it was just a complete head-to-head on your CV and your experience, you would’ve had the job.
But there are really important commitments and reasons that we have for going a different way, and we wanna have an honest conversation about what those reasons are. It’s maybe also about creating an idea of what the destination is and how we end up with a community in which, you know, we can all actually prosper better off together than we otherwise would’ve been able to do.
Maureen: I understand in the big picture, if I’m the one who doesn’t get the job, I’m still gonna be angry.
David: Yeah. And you know, that may well be very, very understandable. One of the advantages of really positioning this not as kind of just the next three letter acronym that rolled on that we all have to get behind, but actually, you know, taking the time to go through and explain even if at an individual level that might feel unfair, your [00:14:00] individual achievement sits within this broader social context, which might mean that.
The way that you got to have a better CV was that you experienced privilege earlier in your career. It’s a way of taking it out of that very personal, emotional context and situating it in a broader context of what kind of justice and and equity can actually mean. I may still disagree. I may still feel really hurt, but at least you know, I’ve been taken through that and there’s a broader element.
And that sense of respect that’s been given to me, right? That that doesn’t kind of pull the wool of my eye and say, you know, look, this was, it was based on this completely impersonal decisions. You know, I, I get to understand really what it, what was behind it
Maureen: when we’re looking at more or less qualified candidates among everyone who meets the criteria.
So you’re not selecting an unqualified candidate over a qualified candidate. You’re looking at people who are relatively close. And giving an extra point to our diverse candidate.
David: Yeah, I think that’s a really, really important point. Again, [00:15:00] I think one of the advantages of thinking about this way is you, you know, you can also think about the limits of that policy, right?
So it doesn’t mean necessarily getting to perfect numerical equality between all groups and all right. It’s, it’s a directional question
Maureen: in each situation. It’s considered based on our principles and the specific candidates at hand.
David: Absolutely.
Maureen: What does real implementation look like? Because you and I competing may be different than two other candidates competing.
How do you. Define the principles. How does that overlay with your culture? Are there processes?
David: So one of the really important differences to get your head around is the difference between ethics and compliance. So although the two are very closely connected and ethics is very strongly supportive of compliance objectives, they’re not the same because compliance is about meeting standards that most often are defined in law and they’re black and white, whereas ethics is not.
Ethics is really about. Your people being able to and having the skillset to [00:16:00] make judgment calls in situations that are often really unclear. They’re not black or white. They may be very, very gray. How do you do that? Is it matter of just having education programs or training programs either for leadership or for people?
And the short answer is no training. Um, and education is certainly a part of it, but it’s really not sufficient to create a real sense of ethics within the organization as a whole. With Principia, we do a lot of work with organizations that are really having to invest in building ethical capacity through the organization often because they’ve come through some kind of very significant trauma or crisis around ethics and conduct.
Ethics, unlike compliance, is really fundamentally about making judgment calls. So compliance most often is about the black and white. That’s often defined by law or regulation. Ethics is about making good decisions in those situations that may not be black or white. They may be gray or ambiguous. Second point I think I would make is that [00:17:00] that’s a skill or capacity that you need right the way through the organization.
Obviously, you need it amongst your leadership, the board, the leadership team. But you also need it as you go down through the organization as well. So there’s a very nice concept that the military has had for many years, which I think is also very relevant to business, which is the idea of the strategic corporal.
So the idea is that in the kinds of conflicts that western militaries that are increasingly fighting now, you know these complex counterinsurgency situations, very, very junior personnel can be taking decisions that can have strategic consequences. In a situation where everything is reported, if they choose to target a, a building that turns out to have civilians in it, right?
That can have a strategic level impact on the campaign. Same is true in many businesses. Even very junior people within your business can take decisions that can have very significant positive or negative impacts if they make those calls incorrectly. So you are faced really with the challenge of how do you [00:18:00] create that capacity right the way through an organization.
A lot of leaders will go immediately to training or education, and that is absolutely a piece of it. Ethics really goes hand in hand with culture. You can’t do ethics well or really operate as a responsible business without creating a culture that will support the kinds of values and the kinds of ethical commitments that you want to undertake.
Really understanding how to build and manage a culture of ethics within an organization that’s really at the core of, of what we do, and it’s really at the core of what I think leading for, for ethics is about. We’ve learned a lot about how to do that. The short answer is it’s complex and it’s tricky and it involves really working with.
Every piece of the organization. So again, if you think that you can set up what’s often called the other CEO office, so the chief ethics office and you know, kind of give them the mandate to, uh, create an ethical company and think that it’s just gonna sit within that function, I think that’s a real fantasy.
You have to be looking at what your leadership is [00:19:00] doing. You have to be looking at what’s happening in hr. You have to be looking at how that interacts with risk, uh, and compliance. And then of course, how you are really setting up your frontline managers, your frontline people to be really engaging and carrying these ideas forward.
So it really is a, a kind of whole org challenge
Maureen: that sounds like then I need. Systems. I need processes almost, it flows down all the way to the performance appraisal that my performance criteria include ethics.
David: It absolutely does. And you know, we sometimes say to our clients that ethics is a little bit like digital or AI in the sense that, you know, if you think you’re doing digital well or AI well, and it’s sitting only within your CTO office, you’re probably not doing it properly at all because it needs to be sitting in every part of your, of your organization.
So it absolutely needs to be driven down into processes and appraisals, and progression is a really great example of that. Setting in place appropriate [00:20:00] expectations and norms within a code of conduct, and then enforcing those in an appropriate way. You would be amazed at how many businesses have a fantastic code of ethics, but then it turns out that senior people or rainmakers or other people within the organization are essentially untouchable.
That obviously corrodes the sense of ethics immediately. You 100% need to be embedding your ambitions around ethics, into processes, into policies, into artifacts. But that’s really only half the story. To kind of pick up on this computing metaphor, those policies, those processes are a little bit like the hardware of a computer.
They’re the kind of the hard wiring that you can use to build behavioral expectations or ethics expectations into the organization. But the hardware will only work if it’s complimented by the right kind of software, which in an organization is the organization’s culture. What do we mean by culture? We mean basically everything that goes on inside your people’s head, their [00:21:00] understandings of what the policies say, or of what the CEO says when he or she gets up and gives a speech.
Their values and their norms, their sense for who is really respected and lauded as a successful professional within the organization. All of those things going on in your people’s head, that makes up the culture that has to be interfacing in the right way with the policies and processes. Just like in a computer, you can have the fastest processor you like, but if you’re running the wrong software on it, it’s not gonna take you anywhere.
Good.
Maureen: How do you help people actually build that sense of ethics? Because it sounds like this is a skill or a habit that I can learn, so when I am in an existential situation, the right answer. For my organization is relatively clear.
David: Again, I think there are two critical parts to this. So one is understanding some of the tools of ethical decision making that we have from moral philosophy and [00:22:00] ethics.
So those three ideas that I mentioned earlier, the good, the right, and the fitting. Each of those we can use as decision making frameworks for understanding what might be the right answer to a, a really difficult dilemma and what might be the wrong answer. So part of it is actually just learning some of those basic concepts, some of those basic tools and frameworks, and learning how to apply them to difficult circumstances.
And it really is a skill. You know, you can learn it, you can get better at it. Just like you know, you can learn cashflow analysis for financial decision making. Exactly an analogous way. There are like hard skills that you can and need to learn. So that’s one part of it. But the other part is, and I think really a big part of what good ethical leadership is about, is about creating an environment where people feel empowered and encouraged to use those tools and to actually make.
The right decision. So that starts obviously with leadership, communication and much more even than communication. Saying the right things is actually visibly doing the right things, right? So [00:23:00] setting an example, because that is what creates people’s sense that they have not only a permission, but really, you know, the full support of the organization to take good decisions, to take right decisions, even if in the short term it might not be the best for the organization in strict financial terms.
Doing the right thing often or sometimes is not in the short term, there can be cost to doing the right thing over the long term. Of course, doing the right thing is what creates trust with your customers, with your stakeholders, with your employees, with your regulators. It’s what enables you to thrive and succeed over the longer term.
But in the shorter term, as an employee, I need to know that my leaders have got my back, and if I take a decision that maybe means that. I haven’t made quite as much money as I could have done by taking a really irresponsible decision that I’ll be supported and really encouraged to do that.
Maureen: As I think of my range of clients, the thing everyone I work with has in common is they consistently do the right thing and buy the right thing.
I [00:24:00] mean, consistently do what’s best for their clients, no matter how it impacts profitability.
David: Doing what’s best for the client rather than what’s necessarily gonna be most profitable for you is clearly a really important ethical principle, but it’s not sufficient, right? So think about, for example, situations which many professional services firms face.
We do a lot of work with professional services. So if you have a client who comes, you know, and you’re a lawyer or an accountant, and they want to, you know, engage in some very, very aggressive or shady accounting practices, which is going to. Be financially beneficial for them. Then, you know, as the accountant, you’ve gotta think, is it enough just to say, well, I’m acting in the best interest of my client, or do I really have a broader set of responsibilities that I need to think about?
I think it’s a great example where you’re absolutely right, putting clients ahead of your own need. Is it a really important ethical principle? But there might be situations where actually you need to step back and say, gosh, you know, I’m not gonna do what is best for my client because I think that might [00:25:00] not be the right thing in a broader context.
Maureen: Years ago, I came out of Anderson Consulting, Accenture and the Arthur Anderson side of the business is no longer in business because of accounting with Enron.
David: Absolutely right. Great example.
Maureen: I assume many of those accountants were highly ethical people who did what their client asked. Now, things obviously went off the rail, so my assumption could be wrong.
David: It’s a great example, I think for two reasons. I mean, one is just, it’s an incredibly vivid example of how. Getting ethics wrong can literally be terminal, literally terminal, even for a great world-leading global firm like Arthur Anderson was. And I think the second thing that’s right about what you’ve said is that many, if not most of the people, partners within that firm.
We’re incredibly ethical people who wanted to do the right thing, and it doesn’t take many people to actually bring about an incredibly serious existential risk. You know, the right way to think [00:26:00] about ethics within an organization is it’s not about an average. You could look across your whole organization and say.
As an average, we are doing incredibly well. We’re really ethical. We’ve got people who are committed to this and who have the right skills. But if you have, you know, one team or one small group of people who are not bought into that, that can be enough to sink an entire organization. So it’s really what’s often called a weak link problem, right?
Like a chain. The only thing that matters in a way is like how strong is your weakest link?
Maureen: That was a wonderful example of tens of thousands of employees and one project was the weak link.
David: Absolutely. Right? Yeah. Who paid the price?
Maureen: Do you wanna talk about the World Economic Forum that has informed part of what you’re doing?
David: Yeah, so the World Economic Forum is a group that I’ve been involved with for many years as part of their Young Global Leaders program. They’re an incredible organization that does fantastic work supporting global businesses and organizations across many different areas. But as many listeners may know, they’ve had some issues of their own [00:27:00] recently with some accusations coming out around the way that some of their employees have been treated internally.
Again, I think it’s a really interesting example of how even organizations that are incredibly committed to improving the state of the world, which is the WFS slogan, can sometimes have blind spots and sometimes not see things that are right in front of their face. I think it’s a, a really great example of that.
But look, I think it’s been a terrific conversation. You know, if I want your listeners to come away with anything, I think it’s really a sense that ethics is incredibly important to the long-term success of any organization. It involves, in one sense, a set of hard analytical skills that can be taught, that can be improved and can be learned.
It’s not to say that those. Tools and frameworks will give you an infallible pathway to get into the right answer. But what they do allow you to do is to frame these really [00:28:00] difficult, controversial, contested issues. You know, the kinds of issues that can really tear organizations apart or create deep schisms between parts of the organization and different parts of the world, or from different genders.
It creates a framework that allows you to position those. Really difficult conversations in a way that has structure, that has logic, that has transparency, that you can explain internally to your own people, externally, to your stakeholders, and will enable you to get to a better decision point than if you just follow your gut or, or take it in a kind of more intuition stick way.
The final thing I think I would say is really, you know, this point around the connection between ethics and, and culture is, is incredibly important. Organizations that have good ethics are organizations that invest in building an ethical culture, and they really look at ethics as something that touches every single part of the way that they operate, the way that they run their business, and they maintain it and they feed it as part of the hygiene of running the [00:29:00] organization.
So I think, uh, you know, to me those are the, the three really crucial points.
Maureen: I really appreciate the point that it is from the top person to the weakest link in the organization, especially the hygiene of it. This isn’t something we do once a year during an audit. It’s what I do every morning when I. Get dressed to go to work.
It’s my mindset, it’s my behavior that we treat people with ethics, however we define that and it is observable consistently.
David: That’s absolutely right, and I think linked to that. Which is incredibly important is, is ethics, is is social, right? We, we do it together. We do it with our colleagues, with our friends, around the water cooler.
Part of what it takes to build a really strong ethical culture is to really foster those opportunities to do that, to have those conversations, to talk together and to learn how to make good ethical decisions in a shared way.
Maureen: David, thank you so much for sharing your research, [00:30:00] your insights, and your wisdom.
After decades of experience in this space, I think we’re at a point in time in history where ethics is becoming more complex and the frameworks are becoming more crucial.
David: Absolutely. Pleasure to be here. Thank you.
Maureen: For our listeners, one last question. How would they reach you if they wanna learn more?
David: You can find us at our website, principia advisory.com and I’m always happy to receive an email then and have a conversation.
Maureen: Thank you, and we’ll have your information also in the show notes.
David: Thanks so much.
