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	The Ethics Storm By Andrea Bonime-Blanc

Why should businesses avoid money-laundering schemes? Why should they make sure their partners aren't employing slave labor on infrastructure projects in remote jungles? Why not hire savvy consultants to drum up new business opportunities in unexploited locations? So what if employees download software from the Internet on workplace computers? Why not "massage" the numbers when that's what your competitors are doing?

Are we living through another pendulum swing from a go-go business period (the 1990s) to a period of regulatory and legal reform (post-Enron and WorldCom), or are we witnessing a larger paradigm shift to a time when business is increasingly internalizing the importance of ethics, compliance, corporate responsibility, good governance, and overall Corporate Citizenship1?

It is the contention of this article that we are living through a unique historical period (an ethics "perfect storm") when a confluence of new factors — from the rise of the Internet and "blogging" to the "commoditization" of intellectual property — is providing an unprecedented set of challenges and opportunities to business. It is no longer safe to do business-asusual as information and communication move almost literally at the speed of light. Stakeholders everywhere — of every shape, size, and cause — are training their microscopes on, and demanding better and more accountable behavior from, businesses and other organizations.

There is a rising feeling that the time for companies and other organizations to act on business integrity issues is now — not later or never. It may be "the end of plausible deniability" or, as the media has been reporting over the past few years as new and unprecedented waves of high-level CEO firings, prosecutions, and convictions have been taking place, we may be witnessing the downfall of the "Imperial CEO." Companies and leaders that "get it" and "live it" — i.e., integrate integrity into their business strategy and build an ethical culture from the top down and the grassroots up — will arm themselves with a powerful and enduring competitive advantage. Companies and leaders that do not may seriously hamper their ability to maintain a sustainable business model.

Maybe we are living in a period when corporate citizenship is not just a passing fad but something business is taking seriously — we may be witnessing the birth of the Corporate Citizenship Revolution. This article examines some key trends that support the contention that we are living through an ethics perfect storm that may be yielding the beginnings of a Corporate Citizenship Revolution.

The Age of Revelation (of Scandals, That Is)

No day seems to pass without several major headlines about yet another incident of corporate unethical conduct or questionable practices. Even the corporate crimes and misdemeanors of yesteryear (remember Enron and WorldCom?) still make the headlines and not in minor ways — at the time of the writing of this article, Andrew Fastow (former CFO of Enron) had just been convicted to six years in jail for his Enron crimes; Bernie Ebbers (former CEO of WorldCom) was just starting to serve a 25-year term in a federal prison without parole; and Jeff Skilling (former CEO of Enron) was sentenced on October 26, 2006 to 24 years in federal prison for his role in the downfall of Enron. And unfolding before us is potentially one of the bigger scandals of recent years: the drama at HP involving possible illegal (even criminal) corporate spying and impersonation that might have taken place in the apparent attempt by the HP Board and Board Chair to stem the flow of leaks of company confidential information to the press.

Tales of misconduct and woe are not confined to the context of the corporate world — scandals have become front page material in practically every other walk of life. Whether in sports (baseball and steroids), the nonprofit sector (United Way, the Red Cross), multilateral governmental institutions (the U.N. Oil For Food Program), multilateral non-governmental organizations (U.S. Olympic scandal), the highest levels of higher education (Larry Summer's resignation from Harvard), various branches and levels of government (Jack Abramoff, David Safavian, Tom DeLay, William Jefferson, Tom Foley, etc.), quasi-governmental institutions (Fannie Mae), religion (the Catholic Church), the military (Abu Ghraib), medicine and pharmaceuticals (Bristol Myers Squibb), or the law (Milberg, Weiss), there is no category of human activity or practical experience that has been spared from scrutiny, whistle-blowing, or Internet exposure. And, as a scan of the daily media headlines would confirm, the barrage of disclosures and discoveries is not likely to fade away anytime soon — if anything, the age of revelation (of scandals, that is) has only just begun.

Why are all these scandals happening almost simultaneously and in such a widespread manner and what does this say about our times? After all, business has always had to deal with ethical challenges and dilemmas, legal violations, crimes and misdemeanors. For decades (perhaps even centuries), depending on which way the pendulum of regulatory and government oversight was swinging, businesses that crossed the line either got caught in the act and were punished or got away with it.

The Virtual Revolution (and its Close Associates)

NOWHERE TO RUN, NOWHERE TO HIDE

Whether the current scandalous revelations are sudden or not, different from the past or not, more voluminous than before or not, business and other significant entities are confronting unprecedented and relatively novel challenges — and with them, opportunities. The challenges and opportunities are unprecedented because of their volume and intensity — thus creating a confluence of factors that is fundamentally challenging the old way of thinking and of doing business.

And they are novel because many of these challenges and opportunities did not exist even a mere decade ago; they are borne out of what might be called the greatest business revolution since the industrial revolution — the Virtual Revolution. They are challenges because they question the very way business does business, and they are opportunities because imbedded in these very challenges are opportunities for businesses to become "corporate citizens" and in the process develop a distinct and measurable competitive advantage and positive bottom line impact.

It is the rise of computing and the Internet that has resulted in the Virtual Revolution, which represents a fundamental shift from an economy and system of doing business that predominantly relies on industrial production and the trade of goods and products to one that is focused on the delivery of goods and a wide array of services, technology, and intellectual property through an ever-changing and increasingly sophisticated interconnected global network of instantaneous communication, information, and technology transfers. It is not too categorical to state that the Virtual Revolution has already fundamentally transformed the business equation forever.

THE POPULARIZATION OF TECHNOLOGY

Briefly, the Virtual Revolution began with the widespread adoption in the mid-1980s of personal computers. What followed in the 1990s and the rise of the Internet and the digitization of information was nothing short of an explosion of personalized computing and new forms of communication and information transfer that have by now totally revolutionized the workplace. With this transformation of the workplace have come a series of intended and unintended consequences that are changing the very tenor of how business is conducted and even the fundamentals of certain businesses. Through the popularization of technology and commoditization of intellectual property (witness the universality of illegal downloading of all manner of media, from music to movies and books to software), the media, entertainment, and software businesses are being forced to completely rethink the basics of their businesses.

THE DEMOCRATIZATION OF INFORMATION

Through the Virtual Revolution another heretofore unheard of development is what might be called the "democratization of information," where anyone, anywhere, anyhow may receive or post any information (whether right, wrong, or indifferent, true, false, or inbetween) about anyone or anything. Married to the Stakeholder Proliferation (alluded to later in this article), the democratization of information has become a powerful tool in the hands of heretofore powerless or less powerful entities the world over, many of which have an important message and cause that they can promote widely and instantaneously and which may very well be at odds with members of the corporate world. Witness www.WakeUpWalMart.com.

THE RISE OF CYBER-CRIME

Another serious, unintended (by some but not all) consequence of the Virtual Revolution is the rise of cyber-crime. Cyber-crime (or crime committed through the Internet) has proven to be as adaptable and able to mutate and survive as some viruses and other life-forms that have existed on earth since time immemorial. Whether it is child pornographers, spammers, illegal gambling operations, terrorist plotters, or con artists of every shape and size, the Virtual Revolution has thus spawned a whole new dimension of crime and punishment which both the criminals and the punishers are only starting to get their arms around.

CLOSE ASSOCIATES OF THE VIRTUAL REVOLUTION

Closely associated with the Virtual Revolution are three additional parallel and intertwined developments that are affecting the very nature of how business is conducted and therefore the shape and tenor of the Corporate Citizenship debate: Globalization, Stakeholder Proliferation, and the Emergence of One Language.

GLOBALIZATION

Globalization and the Virtual Revolution go hand in hand. Businesses have been exploring new markets and new frontiers since time immemorial. But in recent decades globalization has happened to an unprecedented extent, breadth, and depth. Explanations range from the dramatic improvement in transportation (especially air travel) and the need for businesses to secure new markets for future growth, to the overwhelming impact of technology brought about bv the Virtual Revolution.

The impact of globalization on the rise of the Corporate Citizenship debate has been overwhelming — from globalizing key challenges and important issues such as the fight against bribery and corruption everywhere to the globalization of key elements of corporate infrastructure, such as the expanded role of audit (from financial to other key measurements such as quality and health and safety), and the more recent emergence of Corporate Social Responsibility and Ethics and Compliance as key new corporate functions.

STAKEHOLDER PROLIFERATION

Stakeholder proliferation, or what might be better coined the "rise and empowerment of the multitudes," is characterized by the multiplication of interest groups, parties, and other entities organized around either one principal purpose (anti-Walmart) or a general cause (environmentalism) along an almost endless range of topics. Stakeholder groups also range from internal to an organization (such as shareholders, employees, management) to a vast array of external groups engaged in every walk of life (customers, governments, the media, vendors, and suppliers).

The impact of stakeholder proliferation on the emergence of Corporate Citizenship topics cannot be underestimated, as stakeholders of every kind are constantly examining, challenging, and exposing businesses on just about any major topic of stakeholder interest. And they will not go away — coupled with the constant technological innovation brought about by the Virtual Revolution, stakeholders are now armed with the best communications and analytical tools (mobile phones, PDA's, text messaging, blogs, websites, etc.) that have ever been available.

THE EMERGENCE OF "ONE LANGUAGE"

As the changes of the Virtual Revolution continue to impact global communications, increasingly one language is being used to communicate — and not just linguistically, with English becoming the predominant language of business worldwide.

The emergence of one language is also taking place in several other contexts — starting with the world of computing, where the convergence of operating platforms and other protocols is beginning to take place; in the world of law, where increasingly similar legal concepts are being used for contracts and other forms of commerce; in the accounting field, where efforts are being made to develop a universal set of accounting rules; and even in the world of culture, where music and TV, to cite two examples, are globalizing and homogenizing to a great extent (witness the multinational popularity of the musical idol TV format and the global appeal of hip-hop and other forms of popular music).

So, what does "one language" have to do with the Corporate Citizenship debate? Everything — as more people from different cultures, nations and organizations are able to speak and communicate with greater clarity, more directly and faster than ever before, businesses will have to pay increased attention on issues of corporate responsibility, governance, and ethics to prove their commitment to such issues. This will improve their bottom line, protect them against unjust accusations, and help fix problems when they occur.

Will the Corporate Citizenship Revolution Take Us From the "Ethics Perfect Storm" to A "Brave New Ethical World"?

Why are ethics (or ethical infractions) in the headlines every day, everywhere, multiple times and in multiple different guises? Why are more schools and universities teaching ethics than ever before? Why are companies establishing more ethics and compliance functions now than in the past? Are we more unethical? Or are we more aware? Are we achieving a new, post-Milton Friedman realization that the sole object of business is not just shareholder profit maximization?

Or is our new awareness consistent with Friedman in that ethical business behavior is indeed an aspect of shareholder profit maximization and that we have just been slow to realize this connection and to incorporate ethics into the corporate repertoire? Are we in an "ethics perfect storm" or is it that old pendulum that is swinging just a little bit harder and is about to swing back to the "old fashioned way of doing business"?

While it is possible that the pendulum of reform may swing back a little from time to time as it has over history — the tenor of our current Corporate Citizenship debate has been forever changed because of the indelible and irreversible change that the Virtual Revolution has wrought.

Not only in the overt technological changes and capabilities that we all have access to but in the more subtle and enduring impact that it has had on fundamental attitudes, behaviors, and actions — with the spread of access to information as well as the availability of greater quantities and breadth of information the fundamental way that business is interacted (and how business people interact) has changed forever. The incentives — both positive and negative — favoring transparency, accountability, and integrity have never been stronger.

It may be a bit early to make a categorical prediction that the Corporate Citizenship Revolution will endure and have a lasting impact, especially given the frailty of human nature and the fact that no infrastructure or superstructure can ultimately invalidate the downside of the human condition (i.e., greed, avarice, envy, jealousy, etc.). However, it is possible to say that thanks to the Virtual Revolution (and its close associates) the interrelated subjects of ethics and compliance, corporate responsibility, corporate governance and sustainability are all here to stay.

As with most things, the emergence of the Corporate Citizenship Revolution is the recognition of a necessity (necessity is, after all, the "mother of invention") — that of recognizing that profits aren't everything and that to achieve profits certain fundamental pillars of human behavior, sustainability, and responsibility need to be erected and maintained.

The question we will be pondering (and some of us working on feverishly) over the coming years is: Will the Corporate Citizenship Revolution last and fully establish itself? Or will it fizzle and be yet another example of a pendulum swing that while harder and farther didn't quite break the mold of yesteryear? I think that while we will all have to work hard at it, it is the former that will occur, and that a decade from today the elements of Corporate Citizenship will be well established within the business world.

Stay tuned.