December 07, 2009

"Is "Business Ethics" Old Fashioned?" - By Sanjay Anandaram

The TV channel had headlined the story “Education or Business?” The story was about how students had been taken for a ride by the administrators of a couple of educational institutes that had taken large sums of money as fees and then not provided admission to the students. The police, the students’ families and even the local MLA were all interviewed. The administrators of the institute were not available for comment. The headline “Education or Business?” was troubling. Was it implying that education and business were mutually exclusive? Or, was it, even more so, implying that cheating students with false promises was unacceptable behaviour in education but, and here’s the rub, understandable and even acceptable if it were yet another business?

Is business assumed to be corrupt and unethical? And therefore is it perfectly legitimate to indulge in practices that might not be considered ethical as long as it benefits the company? What then does it mean for entrepreneurs starting out to create something of value?

The CEO of a venture funded startup told me he wanted to create a company that was admired by all. The attributes he used to describe “admired” were illuminating: well-known brand, financially successful, large number of well-known customers, a thought leader, attracted top class talent. I asked him about the kind of culture he wanted to create. He responded by saying “open and professional”. And what about integrity and ethics? He looked at me and said that one needed to be practical and “real” in business in India!

Really?

Over 20 years ago, as a fresh sales person at a then young and small computer company I was asked to sell computers in a state where my company did not have any real presence. The state was perceived to be among the more backward and corrupt states in India. There was hardly any private sector worth mentioning and almost all the purchases were made by various department of the state government. Upon returning from my first visit, I told my boss that it would be impossible to sell without financially taking care of various people typically involved in government purchases. My company was and is known for a zero-tolerance policy on issues of integrity. The integrity at all costs mantra had been drummed into all of us right from the Chairman downwards and we all swore by the mantra. We were proud of that mantra. No one was penalized for losing business because of unethical practices indulged in by competition and customers. All very well but how on earth was I expected to sell in this state where apparently everything had a price? I was told unequivocally: “We’re aware of the situation. We also don’t believe that there’s 100% corruption there. Get us business from the 10% who’re not corrupt!” I returned and over the course of the next 12 months managed to bring in business from one of the more corrupt departments (the Public Works Department!) without diluting my company’s mantra or impacting my conscience. We lost a lot of business to competition in the course of these 12 months. But we had a small installed base of customers. The reason I was able to do it was because I had the full backing of my company, right from the very top, and was challenged to prove my worth vis-à-vis the company’s mantra.

It is true that we don’t have enough role models in business as far as integrity and ethical practices are concerned. It is true that more businesses choose the easy way out and succumb than those that don’t. Whether it is paying taxes or indulging in questionable business practices, what is the acid test? If there’s a doubt in our minds about a practice, what’s the company mantra? To err on the side of what we know is right or push the envelope, or even tear it perhaps? Should we do something as long as it is “not illegal” or should we refrain from grey areas and choose just the white?

How then does one answer the CEO who felt that one had to be practical and “real” to do business in India? Should one just say, as I was told over 20 years ago, to go and get business from the 10% that are straight?

Yet for all of us involved in today’s India, involved in building a new set of entrepreneurial companies and involved in creating jobs and wealth, the challenge remains. And one that we must all rise up to.

What do you think?

Sanjay Anandaram is a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He’s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own.