What Are We Doing Today to Prevent Our Company’s Next Ethical Disaster?

Green Paper Man Stopping

By David De Cremer

Imagine that you are walking past a restaurant where you clearly see that the condition of the electric wiring in the kitchen is posing a serious threat to the safety of the people inside. It is clear to you that it does not take much for a fire to break out. Convinced about your assessment, you run into the restaurant and try to persuade people to leave the restaurant. You tell them that this is needed to protect their future health and survival. What will be the response? Most likely people will look at you in a bewildered way and think you have lost all your intellectual abilities. In other words, will they consider you to be a leader, no, likely they will think you are a “zero” not a “hero”. Ok, let us do this thinking exercise again but now imagine that, in a parallel universe, you are walking past the same restaurant again. But this time, a fire has now broken out in the kitchen and people eating there are under severe threat. Imagine you run in and save several people from the fire. What will be their response now? Most likely they will look at you as a leader. Yes, you are not a “zero”, now, you are a “hero”.

What this thinking exercise tells us is that as humans we do not easily recognize the need for heroes when nothing has gone wrong yet. However, when things do go wrong, we all want heroes to rise to the occasion. A similar process happens when it comes down to the emergence of and the need for responsible leadership in business. Specifically, when decisions are being made but no clear data are available regarding potential negative consequences that could emerge, responsible leadership seems not to be around. But, if the data does come in showing that things have badly gone wrong, the need for responsible leaders suddenly is very much present. Consider the following examples:

  • When it became clear that data of about 87 million Facebook users were used for political purposes, Marc Zuckerberg, CEO and founder of Facebook, had to admit that in the past he failed to take a broad enough view of what his responsibility was. As a response, he suddenly expressed awareness that he and only him as the creator of the platform Facebook was responsible.
  • When it was found out that Volkswagen rigged diesel emissions data to pass the tests needed for these cars to be allowed on the roads, CEO Martin Winterkorn admitted that in the past he nor others in the company at the leadership level knew about what was going on. Not having considered their responsibility for knowing what happened in their company, after the scandal became public, he suddenly took responsibility for the fact that his company utilized such deceiving software.


Awareness and public display of responsible leadership often take shape when an ethical failure has actually taken place.

What these examples demonstrate is that a certain irony exists about the existence of responsible leadership in today’s corporate world. Awareness and public display of responsible leadership often take shape when an ethical failure has actually taken place. However, responsible leadership is harder to find at times when it does need to show itself, that is when decisions are being made and potential negative consequences have not emerged yet. Indeed, we know that ethical business failures do not happen overnight, but gradually take shape across months or even years before they surface. This gradual process is referred to as a slippery slope of unethical behaviour. Building on that knowledge, the power of responsible leadership then also lies in the ability to make decisions that prevent or identify these slippery slope processes from happening, so we can stop them before the symbolic “bomb of ethical failure” explodes in the face of the company and, unfortunately, wider society.

So, an important question then is: why do we see so much responsible leadership on display after ethical disasters happen, but hardly any beforehand (which could prevent the disaster)? Why is it that when things seem to go well, corporate leaders do not see much value in pursuing the honour of being responsible in anticipatory ways? The simple and short answer is that the corporate cultures we know today do not reward, but rather punish, responsible leadership. In fact, in today’s corporate culture, most of us fail to see the necessity and validity of responsible actions before any bad outcome takes place, indicating that corporate cultures are not fertile breeding grounds for responsible leadership.

The corporate cultures we know today do not reward, but rather punish, responsible leadership.

Think about it, what would be the most common response if a company leader suddenly decides to stall some important decisions and delay investments to ensure that the consequences of these have been accurately assessed from a broader perspective, especially so when the option to focus on the short term seems so obvious for many? Likely responses will be something like: “Hey, why do we have to make such costs to assess potential broad consequences, whereas our own interest makes it clear which direction we should move in?”, or “If we do this, are you willing to pay for the consequences?” But, the most devastating response will probably be: “show us the proof for why these cautionary steps are necessary in this time of the project.”

We all would consider leaders that step up and accept responsibility for their decisions and prevent potentially bad outcomes as inspiring and the real deal. But, at the same time, we seem to have developed a culture in which we only endorse the display of continuous responsible leadership if the corresponding actions can be guaranteed to actually prevent an ethical disaster. In other words, in corporate cultures, responsible leadership can only survive if leaders can show proof beforehand that slippery slopes in the works will eventually turn into tangible unethical events that will damage the company’s reputation and integrity. Needless to say this is an almost impossible task to do. For this reason, acting in responsible ways that includes not taking the most financially beneficial route on the short term is usually not endorsed. In fact, it is just not taken seriously unless it is already staring us right in the face. And this is simply the case because effective responsible leadership entails acting in anticipatory and value-driven ways, which creates a situation in which only the costs that come along with such decisions are visible but not the benefits of potentially preventing the outbreak of an ethical failure.

The obsessive requirement of being able to prove the future to receive support for value-driven actions taken by responsible leaders underscores the fact that in contemporary corporate cultures, financial costs are only evaluated in terms of what one can see. What one cannot see, is no reason to act upon. This simple logic reminds me of the story of the Viennese physicist Wolfgang Pauli who felt guilty while making a significant scientific discovery. He identified the existence of a sub-atomic particle, at the time one of the knottiest puzzles in nuclear physics. But, Pauli realised that this discovery came along with a cost. In his words when talking to a friend: ‘I have done a terrible thing,’ ‘I have postulated a particle that cannot be detected.’ Just like the physicist Pauli, in today’s corporate culture, deciding to incur financial costs because one has identified a potential ethical failure that is likely to surface in the future, but which remains unseen when making that decision, induces many leaders to feel guilty and subsequently to refrain from making such decisions. Responsible leadership therefore has ceased to exist as a lens by which corporate leaders can evaluate decisions that will impact the future.

Sadly, however, we only realize the elimination of responsibility in the decision-making process when it is too late. Take for example the statement made by Marc Zuckerberg on 4 April 2018 when addressing journalists worldwide: “I started this place, I run it, I’m responsible for what happens here. I’m not looking to throw anyone else under the bus for mistakes that we’ve made here.” Only when the security scandal exploded in the face of Facebook did its founder realize that he was responsible the whole time but did not take up the responsible leadership he needed to show. So, as long as all goes well and slippery slopes do not turn into actual ethical failures, the need to act as responsible leaders is not really being considered. However, when all goes wrong at the end, we display surprise and disapproval that responsible leadership was lacking and as by-standers we demand leaders to admit not having thought responsibly about their actions.

All of this highlights that demanding proof that ethical failures may occur in the future stalls the development of responsible leadership and an ethical work culture. Wanting your company to be led by those who will think and anticipate in responsible ways need – both financial and timewise – room to develop by giving more chances for decisions to be made in line with the values of the organization, ahead of when an actual ethical failure strikes and the evidence for why responsible decision-making is crucial becomes crystal clear. How do we incorporate this insight into leadership practices in today’s corporate world? Below, I outline several suggestions that those in leadership positions can use to make responsible thinking more integrative with their decision-making – and thus before ethical failures show themselves.


1. Create a focus on intentions and not only outcomes

Today’s organizations have purpose statements in which it is communicated which values the company wants to pursue (vision) and achieve (mission). Values translate themselves into intentions to optimize the achievement of those values. Unfortunately, when leaders feel that the intentions do not make much sense because the potential negative consequences that may hinder the achievement of important values is not yet visible, they will shy away from acting in responsible ways. Decisions will not be discussed anymore in terms of what one intends to achieve but more in terms of what one can achieve given the information one observes at that specific moment in time. Therefore, as a leader it is important that you keep using language that stresses the intentions underlying any decision. This way, values will stay onboard during the discussion and increase the chance of making decisions in more responsible ways.


2. Do not be too confident in your responsible leadership

As humans we are hard-wired to see ourselves in a positive light, especially so when it involves our image as a responsible person. Because of this self-serving tendency we easily become overconfident that we are acting in responsible ways even if we fail to behave like it. This feeling of overconfidence can make you blind to the possible negative consequences for stakeholders emerging from the decisions you take. For example, up until the privacy breach for using Facebook data by Cambridge Analytica became public, Marc Zuckerberg was always keen to express in the media that Facebook acted responsibly and was attentive to any security breaches, which as it turns out now was clearly a blind spot in their assessment. It is therefore necessary that when taking decisions, you have advisors – we can call them devil’s advocates around who pay special attention to whether all stakeholders are considered in the process and whether the question of responsibility is addressed adequately enough in the process leading to the decision.


3. Recognize the fact that any decision has a present and future consequence

As humans, when we evaluate business decisions solely on the outcomes and evidence that we can already observe, we are likely to prioritize the short term over the long term, and self-interest over our responsibility to serve the interests of others. For this reason, it is important to realize that when making a decision by ignoring possible future consequences you cannot prove yet, decisions will be based on what can be achieved most optimally in the present (but not in the future). At that moment leaders will not assess a decision in terms of whether enough responsibility is displayed towards preventing negative consequences but rather whether interests of the parties that are most visible are optimized to the largest extent possible. Leaders are therefore advised in those settings to think about how comfortable and fair they would feel if the decision they take in the present would feel if they would take that same decision in the future. If one would feel more hesitant and uncomfortable about this thinking exercise, then chances are high that one is about to make a narrow-minded decision that fails to account for the interests of all stakeholders involved.


Create a business environment in which financial budgeting allows for extra room to cover additional analyses of different stakeholder’s interests in the most important decisions.

4. Create budgets that allow for room to let responsibility do the talking

Create a business environment in which financial budgeting allows for extra room to cover additional analyses of different stakeholder’s interests in the most important decisions. In contemporary organizations it is often reasoned that if decisions turn bad, the penalties that then will have to be paid for failing to act responsibly in the first place can be labelled as next quarter costs. So, an attitude exists that financial latitude is created to cover the costs of failing responsibly from the beginning. Value-driven organizations in contrast take a different approach by re-labelling the financial latitude created to cover the costs that come along with the display of responsible leadership before decisions are taken.

This article was originally published on January 23, 2020.

About the Author

David De Cremer is the Provost chair and professor in management and organizations at NUS Business School, National University of Singapore, an honorary fellow at the University of Cambridge, and a visiting fellow at the Hoover Institution, Stanford University. Before moving to NUS, he was the KPMG endowed professor in management studies at Judge Business School, University of Cambridge. He is the founder and director of the Center on AI Technology for Humankind at NUS Business School and a fellow of the Royal Dutch Academy of Science. He has published more than 250 academic articles and book chapters and is the author of the books “Pro-active Leadership: How to overcome procrastination and be a bold decision-maker” and “Huawei: Leadership, culture and connectivity”.


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