Ethical Effectiveness

I believe that most companies and organizations have one of two orientations toward ethics. Either they view ethics and ethical questions as subordinate or secondary to their mission or they think of ethical concern as adjacent to their purpose and mission.

In the first case are organizations that believe that their are ethical questions that exist at the tactical level of their operations. Examples are organizations that have policies about discrimination and harassment. In such organizations these areas have a certain importance, but they are not central to the strategy of the organization.

In the second case, we have organizations that believe that there are ethical concerns and duties that they apply not only to those within the organization, bit to those outside it. Examples are those that recognize and institutionalize concepts of social responsibility, good corporate citizenship and sustainability. Again, while not per se subordinate to the mission and goals of the organization, they are adjacent rather than at the center of organizational purpose.

In both cases, the organization’s orientation to its ethical concerns may be and often are both authentic and sincere, which is to say that people in the organization see these ethical duties as flowing from positive intentions (as opposed to PR postures) and requiring the demonstration of positive virtues (as opposed to merely paying lip service to expected virtues.

I strongly believe that most people in such organizations care about being good and about doing good. However, I think that in either case that these are views are consistent with working in organizations whose core purpose, whether to “feed and foster communities” (McDonald’s) or “to save people money so that they can live better.” (Walmart), is to models of success that also entail high social costs (sometimes called externalities) and which sometimes even create harm (mostly described as unintentional). In these sorts of organizations, there are always tradeoffs to be made with the goals of effectiveness and the desire to act ethically.

There is a very exceptional kind of company or organization for whom the ethical and the effective are inextricably intwined, by design. In these organizations their purpose is not simply to profit and do good, but rather to profit by doing good. The two examples that best exemplify this sort of commitment, I think, are Patagonia and Interface. One of these, I expect, almost everyone knows, and the other, I am guessing, very few people know about.

Patagonia is a globally successfully maker of outdoor clothing and gear. For much of it’s existence it has been committed to making its products and conducting its operations in environmentally sustainable ways. More recently, Patagonia changed it’s ownership structure so that it’s profits feed a perpetual trust that it committed to fighting the climate crisis. As founder Yves Chouinard put it in his statement about Patagonia’s new ownership schema: “We’re in business to save our home planet.”

Interface is one of the world’s largest suppliers of floor covering. Founded in 1973 by Ray Anderson, the company makes carpet tiles and modular flooring for commercial and industrial markets. It became a huge business and most of its products and manufacturing were intensively consumptive of fossil fuel materials. Not only were their operations based on petroleum as the core material input, but their manufacturing processes also made them a big polluter. In 1994, Anderson committed to completely transforming the business to become a net neutral, zero waste, operation and eliminate its use of fossil fuel and its by-products. Importantly, Anderson pursued this path with the intent of both increasing growth and profit.

Patagonia and Interface are exceptional companies that adopted a strategy of what I call, ethical effectiveness. I coined the term, in part, to echo the distinction made by William McDonough and Michael Braungart in their book, Cradle to Cradle: Remarking How We Make Things. They characterized two approached to product design and manufacture that aimed to respond to pollution and climate crisis: eco-efficiency and eco-effectiveness. The approach of eco-efficiency is remedial in its focus, it tries to make products less bad, reducing or mitigating their harmful effects. Eco-effectiveness, on the other hand, aims to made good effects part of the intention the design. McDonough and Braungart wanted to change our approach to manufacturing things: eco-effectiveness was the name they gave to the design discipline of making things better by making better things.

I want us to use the concept of ethical effectiveness to drive a movement to change the way that we design and manage organizations. Ethically effective organizations do not simply do well and do good, but to use what they make, how they make it and how they manage the operations of their organizations to drive positive social and environmental change, not as a side benefit, but as a core purpose. We know that building an ethically effective company is possible; both Patagonia and Interface have demonstrated that centering an ethical mission is not only compatible with profit, but that it also can drive growth. We need to more closely study how companies become ethically effective and to multiply examples, as there are surely others on this path.