Does Good Ethics Mean Good Business?

Good ethics means good business. And even in those rare times that it doesn’t – or you think it doesn’t – you should probably just do the right thing anyway.  

Let me tell you a quick story.  

Summer 2018. The United States was embroiled in a humanitarian crisis at the southern border. Customs Border Protection (CBP) was separating migrant families—children in cages, moms and dads in separate jails.  

The nation was outraged. But ire was not focused only on politicians and border officials. People were also demanding that the business world take the border crisis seriously—starting with ensuring that their own hands were clean. Was CBP using your products to facilitate the separation of families? If so, you were part of the problem.  

Take Wayfair, the e-commerce company that specializes in home goods. Wayfair sold bedroom furniture to contractors working for the federal government. Pressure on Wayfair rose within its own employee ranks, who argued that Wayfair was complicit in the harm being done to migrant families. Ultimately, the protest culminated in an organized walkout from its Boston headquarters.  

As Wayfair made headlines, astute business leaders began to listen to rumblings from their own employee and customer ranks. One large company in particular began to realize they could be the next Wayfair. They were my client, so I had a front row seat.  

What’s our responsibility?

The question for this company was simple: What is their responsibility for how the product they sell is used by others? Going further, did they have a moral responsibility not merely for how their product is used, but for who uses it?  

This issue of third-party use was a screaming hot problem for this company’s leadership.   

The question could not be answered by their impressive and expansive legal team. This wasn’t, strictly speaking, an issue of the law. Yet the Chief People Officer’s hair was on fire every day fielding pressing inquiries and even outright demands from their (until then) devoutly loyal employees. Employee activism was turned up to 11.  

The question could also not be answered by their PR people. This wasn’t an issue of messaging, though the comms team was bailing out from speculative negative press pouring down on them. Independent groups—including some of the company’s own employees—took to the streets, right out front of the company’s headquarters, to protest unethical third-party use. 

I worked with this company’s most senior executives to determine a sound basis for answering this ethical challenge. All were frustrated and exhausted. They genuinely believed that they were an ethical corporation who did a tremendous amount of good in the world. Most of its clients were good actors. Why should it be their responsibility to determine who could use their product?  

But as we focused on the ethical question—as distinct from the legal and PR challenges—they knew what they had to do. I remember a conversation with one c-suite exec, who said, “Look, are we really going to do this? Are we going to say that we have a moral responsibility for not only how, but even who uses our products?” 

Yes. They were.   

The challenge of benign misuse

We referred to this challenge—where the product is used as intended, but by actors with whom the company has principled ethical differences—as one of benign misuse. This was contrasted with malicious misuse, where the product itself is intentionally misused in some way for a nefarious end.  

Consider: Manufacturer builds widget X. After production and shipping, X is then sold in a store, in a box, on a shelf. Or perhaps X is sold as a piece of software, to be installed on a computer. Once purchased—taken off the shelf or deployed in a laptop—what happens with X is, in a sense, the purchaser’s business.  

No one holds Microsoft responsible if Al-Qaeda uses Microsoft Word to write up their latest manifesto. No one accuses Bic of racism if someone buys their pens and uses them to compose a racist letter. 

So why should any company care—much less be held responsible—how their product is used by others? Why should they monitor who is using it or have any responsibility here at all? 

The pragmatic answer is simple: their own employees demand it. And I get the employees’ perspective. Who wants to spend their long days of creative labor designing, building, developing, and selling a product only for it to be used by some unsavory lot?  

Another reason a company should care is that, increasingly, caring is what the market demands.  As Edelman’s leading research on market attitudes has shown, companies are no longer able to stay safely “neutral.” Customers are paying closer attention to firms’ sense of corporate responsibility, and many are demanding that companies be invested not just in shareholder interests, but also in broader stakeholder interests.  

Courageous corporate responsibility

Ultimately, the breakthrough for the business leaders I was working with in the summer of 2018 was this realization: we have a license to operate in the world because of the good we do for the world. If our product delivers some of that good but is used by others to support values that are diametrically opposed to ours, it tarnishes the purpose for which we exist. 

Hence, ultimately, this company’s leaders decided that they should do the right thing here, regardless of what the business impact might be. What they did was radical at the time: they publicly declared that some of their customers were no longer welcome to use their products, for principled reasons.   

They knew they were stepping over a ledge from which they could not backtrack. This company fully expected to lose market share. Yet they did it anyway because, after clarifying their moral position—as distinct from their legal or PR position—they were confident it was the right thing to do. Then came the twist none of them expected: after making these controversial moves, the company gained customers. 

The company’s market saw their actions as authentic ethical leadership. Some clients chose to leave, but most went with them into this brave new world of ethical business practices for third-party use. New customers made their voices heard, telling us directly why they switched to this company’s services. And their employees rewarded them, too, celebrating the announcement and choosing to stay in their jobs.   

In the heat of the summer of 2018, this company’s CEO had a problem. Ultimately, he came to see that his problem was best understood as a moral question, a philosophical puzzle. He answered that question by leaning into the ethical principles he had long claimed to embrace. He did this with courage, fully expecting to lose market share in doing so. He did it anyway, hoping he and his team could sleep well at night knowing they did the right thing.   

They slept well. And they woke up to increased market share. Good ethics means good business.