Principled Profit

Guest Blog By Lauren Bloom

[Note from Shel: Yom Kippur, the Jewish holiday of atonement and forgiveness, starts tonight, and I’m pleased to post this timely commentary on the economy, forgiveness, and Yom Kippur from my new friend Lauren Bloom]

This week marks the observance of Yom Kippur, or the “Day of Atonement,” the holiest day in the Jewish calendar. Yom Kippur offers practicing Jews the opportunity to request and receive forgiveness for their mistakes and broken promises throughout the year. It’s a lovely tradition, and one that recognizes a fundamental fact about each and every one of us: We all make mistakes and, when we do, we need to apologize for them.

Just this week, we’ve seen what colossal damage corporate greed and dishonesty can do. As Shel Horowitz observed in this blog less than a month ago, the financial crisis gripping America could have been avoided if Lehman Brothers, Merrill Lynch and other investment banks had followed common sense ethical principles. But because they let avarice overcome their good sense, American taxpayers are out $700 billion that may never be recovered, thousands of people have lost their jobs, retirees have watched their pension assets dwindle, the credit markets have dried up, homeowners across the country are facing foreclosure, and there’s no end to the crisis in sight. Somebody – the greedy financiers who created this disaster, the regulators who let them get away with it, the corporate Boards who failed to ask tough questions -– owes the rest of us a huge apology.

When a mistake is this enormous it can be tempting to say that an apology wouldn’t do any good, but nothing could be further from the truth. The bigger the mistake, the more an apology becomes a necessary first step toward healing. This week of Yom Kippur offers a wonderful opportunity for everyone who contributed to the financial crisis, regardless of their religious affiliation, to step forward and ask the American people for forgiveness.

Thank you, Shel, for the opportunity to guest on The Good Business Blog.

Lauren Bloom is an attorney who speaks and consults on business ethics and the author of The Art of the Apology – How to Apologize Effectively to Practically Anyone. Visit Lauren online at www.businessethicsspeaker.com and www.artoftheapology.com.

Yikes! Seven hundred billion of our tax dollars to bail out Wall Street–and that’s on top of what’s already been spent on Bear Stearns, Fannie Mae, Freddie Mac, and AIG.

That’s $700,000,000,000. Now, I might support a bailout if we got our money’s worth out of it–but not this bailout–not only doesn’t it give us what we want, it includes one of the most dangerous and far-reaching clauses ever included in any legislation in this country:

“Decisions by the Secretary [of the Treasury] pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

That’s worse than a mere blank check. It’s complete and total immunity from oversight.

What on earth is the rush to pass such a bill? No one should have that kind of power.

Then let’s look at the rest of the bill. As I understand it, it…

I can’t help wondering–would Lehman Brothers, Merrill Lynch, and other fallen giants be in such trouble if they’d followed common-sense ethical principles?

My award-winning sixth book, Principled Profit: Marketing That Puts People First, suggests a number of reasons to say no to a sale, focused on core ideas of honesty, integrity, and quality. In other words, successful businesses have standards both for how they behave and for whom they choose to do business with.

So many of the loans coming apart in the subprime crisis didn’t meet the basic criteria of quality–there was no assurance that the borrowers had enough resources to pay back the loans.

Yes, these loans provided a path to home ownership for many Americans who could not have otherwise afforded them–a worthy goal. But those ownerships turned out to be temporary, and those forced from their homes are now in worse shape. Perhaps if proper lending criteria had been applied, the market would have responded by lowering inflated home prices–and those who got burned would have had a safer and more secure path to real home ownership, and the financial titans wouldn’t be fighting for air.

Oh, and one more question: Why was Bear Stearns considered worthy of a bailout (something I wasn’t at all sure was a good idea) but not these latest casualties?

Here’s another entry in the Alice-In-Wonderland contradictions of our world: An auto-industry trade group, the Alliance of Automobile Manufacturers, launched a national campaign to cut fuel consumption and CO2 emissions, caled Eco-Driving.

All well and good–except that this is the same group that bitterly resisted attempts to achieve a fleet average of 52 miles per gallon by 2030.

Found both of these links in the How Online blog–found the juxtaposition quite telling:

First, an inspiring (and long-overdue) article on MarketWatch about how people are seeking MBAs not just to acquire personal wealth but to make a difference in the world. I could quote many parts of this terrific article, but I’ll pick just one:

“The New Green Focus for Future MBAs” headlines Greenbiz.com. And, it’s the most popular story on the site. At the same time, a new poll by Experience Inc. shows more students are hoping for a job with a green-minded company. The poll says 81% of students believe there is value in working for an environmentally aware company, while 79% would likely accept a job at an eco-friendly company over a conventional one.

“In a few short years, eco-friendly practices have gone from being new-fangled selling points to becoming essential requirements, with states vying with each other to offer incentives and legislation that promote green technology and business. While the corporate world is scrambling to devise strategies to address sustainability, business schools across the country have been incorporating it into their curriculum for the past several years, both in response to student demand and in line with industry trends,” Greenbiz says.

But the same page of the same blog links to another story (International Herald-Tribune) that shows, once again, the same-old-same-old of too many giant corporations just doesn’t work. and deceptive business practices have cost General Motors, and its auditor, Deloitte & Touche, over $300 million combined:

Under the settlement, GM would pay $277 million to investors, while its auditor, Deloitte & Touche LLP, would pay $26 million, pending approval from U.S. District Judge Gerald Rosen in Detroit.

The two-year-old class-action lawsuit claimed that GM misstated and mischaracterized its revenue, earnings and cash flow, artificially inflating the company’s stock price and debt securities.

Let’s hope those green and ethical MBAs of tomorrow remember that they know better when they’re presented with opportunities for fraud.

Very interesting discussion about the ethics of disclosure over at Joan Stewart’s Publicity Hound blog.

A reporter raised the question about whether doctors who endorse products in communication with the press should disclose that they get paid by the drug company.

The general consensus, of course, is that they should absolutely disclose this relationship, and that PR people who don’t get this are not to be trusted in general.

One person brought up the example of “Dustin Hoffman playing a crazed PR man who was sick of lying and sold “Boxy but Safe” Volvos.” And that sparked this comment by me, since I believe Volvo’s safety reputation is in serious danger at the moment:

L.M. Steen’s example of the “boxy but safe Volvo” caught my attention–because I have wondered for several years why Volvo allowed itself to be purchased by Ford–a company that has given the public ample reasons *not* to trust it on safety (two examples: Pintos that explode, Explorers that roll over). Considering that safety was the main brand attribute that Volvo stressed for decades, I think the only reason there hasn’t been a huge backlash is that Ford is very quiet about its ownership.

Of course, I’ve been saying for years that honest business actually works better. My award-winning sixth book, Principled Profit: Marketing That Puts People First, shows how honesty, integrity, and quality are the cornerstones of business success. And my Business Ethics Pledge encourages businesses to declare their values publicly–not only to create a climate where this kind of behavior is not tolerated, but also to improve the public’s perception of the signing company.

Putting subtle pressure on its managers to get a Republican victory in November because they don’t like a particular bill Obama supports. Sheesh!

Find a gazillion stories about this here, including MSNBC and the Minneapolis Star-Tribune.

Particularly cogent analysis article by Ron Galloway on Huffington Post: http://www.huffingtonpost.com/ron-galloway/wal-mart-never-saw-it-com_b_116402.html

One of my favorite marketers, the brilliant and unconventional Sean D’Souza in far-away Aukland, New Zealand, claims he built his entire Psychotactics business on strategic alliances.

And I believe him.

Strategic alliances are that powerful. Two world-class examples:

Apple, IBM and Motorola joined forces in the 1990s to design the PowerPC computer chip–which dominated at least Apple’s product line (and I think was used in various IBM models as well) for the next several years.

And a person in the audience of one of my speeches reminded me that until it formed a strategic alliance to supply operating systems, Microsoft was just another two-bit hole-in-the-wall computer business.

The comments on Sean’s blog page got into a discussion of the typical Internet-marketer JV, but Sean correctly responded,

The downsides to strategic alliances? I know of few. One is, that because they’re not motivated by money, there’s less momentum–that is they’re less likely to be motivated to help. But this hasn’t been true for me. Our alliances have literally built our business, and continue to do so. And the entire relationship is built on trust. And respect.

The downsides to Joint Ventures, I can list by the dozen. The essential problem with joint ventures is money. When the money dries up, so does the motivation. But it’s also an upside. I don’t know. Call me crazy. I prefer alliances over joint ventures.

I agree with Sean. In fact, I posted my own comment, “Most people can’t see beyond the typical JV arrangements to see the much greater power of strategic alliances (and the friendships that can come out of them)” to grow a business.

Strategic alliances have been an essential tool in building my business, and I haven’t yet structured one like the typical Internet-marketer JV (though I may, down the road). At the moment, thanks to a strategic alliance with Sean’s Aukland neighbor Mark Joyner of Simpleology (another fantastic marketer–what’s in the water down there?), I’m about to participate in what could be the most powerful strategic alliance of my career, a partnership that involves one of the most famous names in marketing as well as a large publishing corporation. I’ll tell you all about it once the papers are signed.

Meanwhile, if you want to know more about strategic alliances, I cover them in some detail in my award-winning sixth book, Principled Profit: Marketing That Puts People First. Incidentally, my alliance and friendship with Mark came about because he ordered this book, and I was brave enough to seize that opportunity to begin a correspondence with him.

Watch out for these snakes! Some people have no ethics at all.

I got an email this morning that purported to be from the IRS. The subject was “2008 Economic Stimulus Refund. [Scanned]”

And it started like this:

Over 130 million Americans will receive refunds as
part of The White House program to jumpstart the economy.

Our records indicate that you are qualified to receive the
2008 Economic Stimulus Refund.

The fastest and easiest way to receive your refund is by
direct deposit to your checking/savings account.

Please follow the link…

And ended with *a numeric URL*!

I don’t bother to report most phishing scams–I get a dozen or so every day) but this one, I forwarded to the IRS. Unfortunatley, it bounced.

Fascinating and far-ranging interview with European philosopher Slavoj Zizek on Democracy Now this morning.

He covered war, energy, US presidential politics, and much more. But the statement that really got to me was:

A true act creates the conditions of its own possibility. That is to say, it appears impossible, you do it, and the whole field changes: it’s possible.

He went on to cite President Nixon’s opening US relations with Maoist China, and postulated that if Obama becomes president, he will seize a similar window with Cuba.

But this concept has reach far beyond international relations. In sports, the 4-minute mile was an unassailable barrier for decades; once Roger Bannister broke it, many people followed quickly. In science, it was unthinkable in 1955 that a human being would walk on the moon before 1970. In energy and the environment, the work of Amory Lovins and others show new ways of reinventing society as a more earth-friendly place (see my article here). And in business ethics, I like to hope that my Business Ethics Pledge campaign will make a similar difference in the consciousness that ethical business is actually more profitable.