Ethical Fading
Or, why we need to do more than just blame the circumstances
š Hey there! Welcome to aĀ new editionĀ of The Sunday Wisdom! My name is Abhishek. I read a lot of books, think a lot of things, and this is where I dump my notes and (so called) learnings.
I mostly write to educate myself; this is kind of my Feynman Technique in action. But if you like my writing, I would say this little hobby of mine just became a bit more purposeful. Nowā¦ time for the mandatory plug!
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Alright! On to this weekās essay. Itās about 2,200 words. The key ideas are from Simon Sinekās The Infinite Game.
Q: Is being ethical more important than being legal?
Let me start off with two short stories.
In 2015, Volkswagen was caught cheating on emission tests for its diesel cars.
Volkswagen had originally marketed their diesel cars as āclean dieselā ā which meant they were environmentally friendly and met emissions standards. However, in reality, the cars were emitting harmful pollutants at levels much higher than the legal limits ā the very opposite of what they were marketing.
To make sure nobody found out that their clean cars werenāt exactly ācleanā, instead of putting effort in improving the fuel consumption quality, they thought it would be better if they put their efforts in installing ādefeat devicesā in their vehicles.
These devices detected when the cars were being tested and temporarily adjusted the emission levels to appear lower than they actually were, thus defeating the very purpose of testing. Smart!
Now the second story. (See, I told you they would be short.)
From 2011 to 2016, employees at Wells Fargo Bank opened over 3.5 million bank accounts. All of them were fake!
Customers started noticing this deception when they were charged unexpected fees, received credit or debit cards randomly, or started hearing from debt collectors about accounts they did not recognise.
The scandal began when Wells Fargo set unrealistic sales goals for their employees, who were under intense pressure to meet them. As a result, many employees resorted to fraudulent practices to meet these targets. Most of the sham accounts went unnoticed, as employees would routinely close them shortly after opening them.
When this scam came to light, 5,300 Wells Fargo employees who were involved were fired.
Now, why did these events come to be?
While organisations may brush these incidents off by saying they were a āone-time mistakeā, or put the blame on āa few bad applesā, these werenāt isolated acts of a small group of people. These were the result of many many people acting over the course of years!
These are classic cases of Ethical Fading.
Ethical fading happens when an environment encourages people to act in unethical ways in order to advance their short-term interests, often at the expense of others, while falsely believing that they have not compromised their own moral principles.
It often starts with small, seemingly innocuous transgressions that, when left unchecked, continue to grow and compound.
Cultures that place excessive focus on short-term metrics often put intense pressure on people to cut corners, bend rules, and make some rather questionable decisions in order to hit the targets.
In 2020, two-year-old coding-for-kids startup WhiteHat Jr. became all the rage in India when it launched a multimillion-dollar advertising blitzkrieg, flooding television screens and digital media.
It was hard to miss the commercials, some of which claimed the companyās students ā some as young as six ā were being chased by global investors and bagging jobs at Google (with yearly packages worth $150k) because of the skills they had acquired through WhiteHat Jr. classes.
Eventually, the Advertising Standard Council of India deemed these commercials āmisleadingā and asked for them to be taken down. Soon after, the company that had prided itself on creating jobs for educated women who were not represented in Indiaās workforce started revealing perpetual discrimination and toxic holes in its workculture.
BYJUāS ā yet another controversial Indian edtech behemoth which acquired WhiteHat Jr. for a whopping $300 million in cash ā has a similar story to tell.
BYJUāSā own employees claim that its success is built on the back of an abusive and exploitative work environment and unscrupulous sales practices that involve profiling, pursuing, and pressuring potential customers from poorer backgrounds who are duped into taking loans they cannot afford to buy its courses.
In these kinds of culture, those who behave dubiously but hit their targets are rewarded, which sends a clear message about the organisationās priorities ā meeting the numbers is more important than acting ethically.
One of the ways we are able to deceive ourselves comes from the words we use; the use of euphemisms, to be exact.
Euphemisms allow us to disassociate ourselves from the impact of decisions or actions we might otherwise find distasteful or hard to live with.
For example, American politicians were aware that people find torture to be inhumane and inconsistent with their countryās values. So āenhanced āinterrogationā became the way for them to āprotect their homelandā after September 11 without feeling bad about it. Similarly, when you rebrand āglobal warmingā to āclimate changeā it suddenly stops being so alarming, and you donāt feel much bad about burning fossils.
We do the same thing in business. Itās common practice in the working world to choose language that softens or obscures the impact of our behaviour.
We talk about āmanaging externalitiesā instead of talking plainly about āthe harm our practices cause to the environment.ā Saying, āgamification to enhance the user experienceā is easier to swallow than āwe found a way to get people addicted to our product.ā
In this school of thinking, real human beings become mere ādata points,ā and ādata miningā is a more palpable way of saying, āWe are tracking peopleās every click, trip and personal habit.ā
Oh, and when the chips are down, we decide to āreduce head count,ā instead of calling it what it is, firing people.
Imagine if we actually started calling things what they are within our organisations. If we did, perhaps we would take the time to find more creative, and indeed more ethical, ways of achieving our goals. And in so doing, actually strengthen our cultures in the process. But alas!
Another kind of self-deception that contributes to ethical fading is when we remove ourselves from the chain of causation or ā as the CEO of Mylan, a global pharmaceutical company, once did ā blame āthe systemā for our own transgressions.
In 2007, Mylan bought the rights to the EpiPen brand. EpiPen is an auto-injector device containing epinephrine (adrenaline) developed in the 1970s by Merck. EpiPen is used for emergency treatment of severe life-threatening allergic reactions (anaphylactic shocks) from exposure to certain allergens such as peanuts, bees, shellfish, etc.
With 90% marketshare, and at a cost of $100 for a two-pack, it was a great business indeed! Combined with the fact that there was no generic option at the time, nothing was stopping Mylan from raising the price of EpiPen by an average of 22%.
Seeing the impact these price increases had on their stock value, in 2014 the board decided to up the ante. In the following year the company sped up the rate of EpiPen price increases from 22% to 32%.
After the fifteenth price hike since 2009, in 2016 Mylan announced that a pair of EpiPens would now cost an all-time high of $600, representing a 500% increase over just six years.
The company probably would have continued to raise the price had it not been for a massive public outcry and congressional inquiry by the House Oversight Committee of America.
When asked later if she was sorry for what happened, CEO Heather Bresch replied, āI wasnāt going to be apologetic for operating in the system that existed.ā
When asked, leaders often resort to cold and generic rationalisations to defend their position ā āWe have no choice, the market is highly competitive,ā or āEven if we donāt do it, someone else will,ā or āItās the industry standardā, or my personal favourite, āThereās nothing illegal in it.ā
These are rationalisations we tell ourselves to help us mitigate any sense of guilt or responsibility we may feel. Itās like stealing a watch from a rich friend and saying to yourself, āThey wonāt even notice. Besides, they can afford another one.ā
When such rationalisations become commonplace, the snowball grows and grows until unethical behaviour pervades the entire organisation and, in extreme cases, leads to the kind of corruption that happened at Wells Fargo or Volkswagen.
Accountability is when we take responsibility for our own actions, not when we blame our actions on the system.
Another way of evading ethical responsibility is when companies say things like, āIf they donāt like it, they shouldnāt buy it,ā especially when questioned about the negative effects of their products. āAfter all, the cigarette packet itself explains all its ill effects. Weāre not forcing them to buy it.ā
Though consumer choice is absolutely a factor, this cannot and does not completely remove an organisation from the chain of causation. Yes, the smoker is responsible for the damage they do to their health, but the cigarette companies are still involved in the chain.
In 2018, it was revealed that Cambridge Analytica, a political consulting firm, had obtained the personal information of up to 87 million Facebook users without their consent.
Facebook learnt about the data breach in 2015 but neither did they notify affected users nor did they take any strong action to prevent further breaches. Why? Because they werenāt legally required to do any such thing.
But think about it. Simply fulfilling oneās legal responsibility does not necessarily release them from their ethical responsibility.
After we click a box to accept their terms and conditions, many companies believe that they are free of responsibility from what happens after that. Legally that may be true, but ethically speaking, they are not.
Instagram, Snapchat, Facebook, TikTok, and any number of mobile gaming companies, cannot deny their role in making what is increasingly accepted as addictive technology, simply because there is no law against it yet.
These companies almost always explain that they add addictive features or collect personal data in order to āenhance the user experience.ā None of it is illegal, but all of it is a little uncomfortable.
Think about that for a moment. When a company responds to an ethical question (or defends an unethical decision) by explaining that they can legally do what they are doing (sell tobacco, build addictive features, etc.), thatās like someone who has been caught cheating by their long-term partner replying, āWhat?! Weāre not married. I broke no laws. Iām legally allowed to sleep with someone else if I want.ā
Ethical lapses happen and are part of being human. Ethical fading, however, is not a part of being human. Ethical fading is a failure of leadership and strategy, and is a controllable element in a company culture.
This means the opposite is also true: Ethically strong cultures are a result of what leaders build and what companies prioritise.
On November 25, 2011, outdoor clothing company Patagonia took out a full-page ad in The New York Times with the headline: āDonāt Buy This Jacket.ā
Though some cynics saw the headline as a publicity stunt by a high-priced brand that many people canāt afford, it is in the details of the ad that we can find clues about the kind of culture Patagonia has and that inspired such an ad in the first place.
In the body copy of the ad, Patagonia did something most other companies would consider unthinkable. They explained, in plain language, the environmental cost of making their product; in this case the bestselling R2 Fleece. The copy read:
āTo make this jacket required 135 litres water, enough to meet the daily needs (three glasses a day) of 45 people. Its journey from its origin as 60% recycled polyester to our Reno warehouse generated nearly 20 pounds of carbon dioxide, 24 times the weight of the finished product. This jacket left behind, on its way to Reno, two-thirds its weight in waste.ā
āThere is much to be done and plenty for us all to do,ā the ad concludes. āDonāt buy what you donāt need. Think twice before you buy anything.Ā .Ā .Ā . Join usĀ .Ā .Ā . to reimagine a world where we take only what nature can replace.ā
āWe did it out of guilt,ā says Patagonia founder Yvon Chouinard. āWe all know we have to consume less.ā
While other companies might use euphemisms to distance themselves from or cloud the impact of their actions, Patagonia takes full ownership of its role in the chain of causation and offers no exceptions or excuses that might lead the way down a slippery slope.
Patagonia is brutally honest with themselves and the public about how their actions impact the world, for better or for worse. They donāt portray themselves as victims of the system but rather a part of it, and they are doing what they can to change it.
Ethical decisions are not based on whatās best for the short-term. They are based on the āright thing to do.ā While short-termism at the expense of ethics slowly weakens a company, ādoing the rightā thing slowly strengthens it.
Patagonia has not only created a company more resistant to ethical fading, but has also set the bar for what acting ethically can look like in business. And thatās by design. āIf we can show the business community that weāre successful,ā says COO Doug Freeman, āwe think weāre holding ourselves as a great example for how business can be done differently.ā
In September 2022, Patagoniaās founder Yvon Chouinard, his spouse and two adult children decided to give away their ownership in the company Chouinard founded some 50 years ago, dedicating all profits from the company to projects and organisations that will protect wild land, biodiversity, and fight the climate crisis.
Patagonia is worth about $3 billion.
Today I Learned
This is a sad story!
Even with the best of care, the long process of giving birth has always been agonising and, dare I say, dangerous. Even today. But for 250 years, the great fear was puerperal fever, or childbed fever as it was more commonly known.
Like so many other diseases, it seemed to leap into ugly existence out of nowhere. It was first recorded in Leipzig, Germany, in 1652 and then swept through Europe. It came on suddenly, often after a successful delivery when the new mother was feeling quite well, and left the victims fevered and delirious, and all too often dead.
In some outbreaks, 90% of those infected died. Women often begged not to be taken to the hospital to give birth.
In 1847, a medical instructor in Vienna named Ignaz Semmelweis realised that if doctors washed their hands before conducting intimate examinations, the disease all but vanished. āGod knows the number of women whom I have consigned prematurely to the grave,ā he wrote despairingly when he realised it was all a matter of hygiene.
Semmelweis became interested in puerperal fever while working as an obstetrician in Vienna. He noticed that the mortality rate from the disease was much higher in one of the two maternity wards at the hospital, and he began to investigate why.
After ruling out various explanations, Semmelweis concluded that the difference was due to the fact that medical students who had just come from the anatomy lab after performing autopsies were going straight to the maternity ward with unwashed hands.
Semmelweis instituted a policy of handwashing with a solution of chlorinated lime before examining patients or delivering babies. The mortality rate in the ward where this policy was implemented dropped dramatically, from around 10% to less than 2%.
Unfortunately, no one at all listened to him.
Semmelweis, who was not the most stable of persons at the best of times, lost his job and then his mind and ended up stalking through the streets of Vienna, ranting at thin air. Eventually, he was confined to an asylum where he was beaten to death by his guards.
Streets and hospitals should be named after this poor man!
Timeless Insight
There are so many things that art canāt do.
It canāt bring the dead back to life, it canāt mend arguments between friends, or cure AIDS, or halt the pace of climate change. All the same, it does have some extraordinary functions.
Art has a strange way of bringing people together, even if they have never met. Art does have a capacity to create intimacy. It does have a way of healing wounds, and better yet of making it apparent that not all wounds need healing, and not all scars are ugly.
What Iām Reading
There is a power in accepting people the way they are ā our friends, partners, workmates, children, siblings, and especially ourselves. People really are born different from each other and those differences persist. Weāre shy, smart, wild, kind, anxious, impulsive, hardworking, absent-minded, quick-tempered. We literally see the world differently, think differently, and feel things differently. Some of us make our way through the world with ease, and some of us struggle to fit in or get along or keep it together. Denying those differences or constantly telling people they should change is not helpful to anyone. We should recognize the diversity of our human natures, accept it, embrace it, even celebrate it.
ā Kevin J. Mitchell, Innate: How the Wiring of Our Brains Shapes Who We Are
Tiny Thought
No one cares about your excuses at all, except you.
Before You Goā¦
Thanks so much for reading! Send me ideas, questions, reading recs. You can write to abhishek@coffeeandjunk.com, reply to this email, or use the comments. Andā¦ if you feel like Iāve done a great job writing this piece, be generous and buy me a few cups. āļø
Until next Sunday,
Abhishek š
PS: All typos are intentional and I take no responsibility whatsoever!