Ethical Tip for Starting a Business

Business is driven by a single ethical law and it’s simply this:  Will the world be a better place as a result of this activity or not? If the business activity does not pass this test, we have an ethical problem. However, before you can answer the above question, you need to define the words “better” and “world.” In other words, whose world are we making better?  This is where the debates begin.

Let us look at an example of this law in action. A pharmaceutical company wants to stop people using generic penicillin in Africa. One night the company’s chairman is confronted by his son who recently came back from Africa. The son asks, “Dad, how does stopping people from using generic penicillin make the world a better place? How can you even sleep at night knowing that these people in Africa need the generic penicillin at thirty-four cents and you want to increase the price to five-dollars? How does it even help your shareholders? How much extra money could you possibly get from these African nations anyway?”

Now the only way the chairman can argue against this ethic questions is to say, “Ah yes! Let me tell you why the world would be a worst place. If we continue to allow generic penicillin drugs to be sold at thirty-four cents, I promise you that those cheap drugs will be all over America and Europe. If that happens, we will lose money causing our shareholders to run away. Do you know that seventy-five percent of all our shares are owned by pensioners? We are owned by pensioners and the reason why pension funds are in a mess is because companies do not respect their trust. We need to preserve their capital and grow their wealth. Furthermore, for us to grow their wealth, we need to earn one billion dollars on every drug to begin making a profit and we only have ten years to do it before our patent expires.  If generic penicillin is allowed to stay at thirty-four cents, it will close down the whole private pharmaceutical industry. As a result, I believe hundreds of millions of more people will die from perfectly preventable diseases because you would have destroyed research and innovation in this sector.”

That is the debate.  Which is better? Which decision will produce a better world for human kind? Taken into account shareholders, those in Africa, the chairman ability to sleep at night, what the staff actually thinks, what the media will say, etc. This is how ethical debates are thought through, and how you get global ethics which affects the marketplace every single day.

Leading us back to the most important theme of all which is: The ethical purpose of every business is to make the world a better place. Every product made, every service delivered, every contract signed is done on a promise. For examples, companies promise that:  when you eat their chocolate it will give you a nice feeling inside and you will not die; when you drink their milk it will not be poisonous and that it will be the substance of life itself; and when you come to work for us, we will give you a great career, we will stretch you, and we will also respect the fact that you have a family. Therefore, when it comes to your business, your purpose is to deliver on your promises every single time.  As you do this, you will be profitable. The profits will come from:  delivering on your promise every time, making promises you can keep at a reasonable price, and providing tremendous quality. The most successful companies and most sustainable understand this–that we are in business to make the world a better place.