There’s an old saying about the purpose of businesses that goes: “The business of business is business”. For the greater part of the 20th century, companies have interpreted this statement as a cue to prioritise the maximisation of profit and shareholder value – make money, no matter the cost, was the basic business attitude.
In the 21st century however, the business of business is changing, especially in the technology industry. The immense size, power and impact technology businesses have on our world today demands a new attitude and approach, one that regards a business as a social entity that not only seeks to maximise value for its board shareholders but other stakeholders as well – these being individual people (in the form of users or customers) as well as society as a whole.
In short, the business of business today is to become a force for good. The aim of business in the 21st century, therefore, is to improve the health and well-being of the people’s personal lives and transform local and global communities for the better. But can businesses be ethical in their pursuit of turning a profit? How does one become an “ethical business”? And is this something you should even aspire to?
Ethics + Business ≠ Charity
First things first, of course, businesses need to generate income in order to exist and survive. In fact, without money and profit a business inevitably fails. Nobody is making the case that business ought to be unprofitable and lose money for the sake of being socially and ethically responsible. So what then distinguishes a traditional for-profit business from a business that is oriented towards social change?
It’s quite simple actually. The main difference between the two is that the latter makes an explicit commitment to create some kind of positive social or environmental impact. An ethical business is therefore an organisation with a business model that focuses on three P’s: people, planet, and profit.
This notion is also referred to as a triple-bottom line accounting model. This model requires businesses to make particular commitments to address social and environmental problems, either by improving their own business practices or by working in partnership with other organisations to address social/environmental problems in a proactive and collaborative manner. Pledges and commitments of this kind can usually be found within the mission and vision statement of a business, especially with startups who are looking to raise investment for turning their visionary ideas into a reality.
Value of ethics for your business
Failing to build legitimacy, credibility and trust as a business can have significant financial impacts. Technology businesses are struggling as a result of declining trust and credibility in the way they operate. Facebook is perhaps one of the most obvious examples in this sense; you can read about voter disenfranchisement that was facilitated by the social media platform in our previous article. When it comes to responsible technology, there are four main reasons why you should implement ethics into your business:
- Legitimacy refers to the extent to which a business or organization respects, upholds and abides by the social and cultural values within the immediate community.
- Trust is possibly the most valuable asset of any company; this is especially true for young technology businesses. Without trust you will need to work twice as hard, if not harder, to convince people that your product or service is worth the risk of handing over personal information. Trust involves the ability of a business to operate in good faith with all other stakeholders within the community without ever undermining key social values and relationships.
- Integrity is also significantly valuable for a business but in an inverse way. When a business isn’t true to its core values and identity, it negatively affects public perception and thus its reputation, which weakens customer loyalty, renders marketing campaigns less effective and ultimately impacts your financial bottom line in the form of declining in sales.
- Credibility refers to the ability of a business to provide clear and true evidence that has the best interests of the community in mind. When businesses acts in “bad faith”, in contrary to its core values, a consequence of this is the loss of faith of the community and its people in your business. This often results in negative PR or media coverage, which in turn adversely damaging your reputation and rband. This ultimately impacts your sales revenue and therefore hinders the growth and success of your business.
Being ethical and lawful
Thinking ethically about how you run your business ensures that you operate within the law and adhere to the rules and regulations within your particular region, country or industry. Many technology companies are known to have purposefully breached the law in order to gain market dominance over close competitors.
Google is one example of a technology company that has been fined close to 10 billion euros as a result of breaching European anti-trust laws; the media publicity around these fines did not reflect well on Google and the fines raised questions around how ethical Google is in relation to respecting laws and regulations which have been put in place to prevent monopolisation and market dominance. Google could have avoided a lot of negative publicity and protected its reputation and integrity as a business if it had operated in accordance with its own core ethic: “Don’t be evil” – a good example of misalignment between performative business ethics and actual business behaviour.
Certified Ethics?
There are also ways to prove, to a certain degree, that you care about ethics. B-Corporations (or B-corp) for example is a private certificate that is granted to for-profit businesses and organisations that achieve an adequate score based on their “social and environmental performance”.
External certifications mainly largely because high performance standards are not only difficult to implement, but also challenging to maintain over time. A business that can remain certified over a longer period of time proves that it’s achieving the high level of ethical standards it set itself.
While obtaining official certifications is a good way to build trust, some businesses – startups especially – are either not big enough to qualify or can’t afford the costs associated with becoming certified. However, there are other ways.
Financial risks & consequences
Given the numerous risks associated with running a technology business, it is crucial that you understand that ethics can assist you to promote and guard your technology product or service. This is where the Responsible Technology Assessment can be a great resource. The business of a good business entails a s a lot more than just turning a profit – the ultimate goal is to run a business that aids and assists the progress of human society in the most beneficial manner possible.
In the end, businesses are like people: we only deal and interact with the people we like and trust the most. A socially responsible business therefore is like a person who is themselves likeable, trustworthy and responsible. Run your business in the same way you would treat your twin brother or sister – with care, love and respect.
If you want to find out more about your and your business’ ethics, take our Responsible Technology Assessment here.