Saturday, February 02, 2008

On the evilness of companies

Scientific American has a long article up on whether companies have to be evil to survive.

Do All Companies Have to be Evil? by Michael Shermer

In the 1987 film Wall Street, Michael Douglas’s character, the high-rolling corporate raider Gordon Gekko, explains why America has lost its standing atop the industrial world: “The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated.” He elaborates:

The point is, ladies and gentlemen, that greed—for lack of a better word—is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms—greed for life, for money, for love, knowledge—has marked the upward surge of mankind. And greed—you mark my words—will not only save Teldar Paper but that other malfunctioning corporation called the USA.

In the now famous “greed” speech, we find several myths that I hope to bust in this article: that capitalism is grounded in and depends on cutthroat com­petition; that businesspeople must be self-centered and egotistical to achieve success; that evolution is selfish and only winnows and never creates; and, of course, that greed is good.

Humans are by nature tribal and xenophobic, and thus evolution has enabled in all of us the capacity for evil. Fortunately, we are also by nature prosocial and cooperative. By studying how modern companies work, we can gain insights into the evolutionary underpinnings of our morality, including concepts such as reciprocity, altruism and fairness. When we apply these evolutionary findings to economic life, we learn that Enron and the Gordon Gekko “Greed Is Good” ethic are the exception and that Google’s “Don’t Be Evil” motto is the rule. Two conditions must be present to accentuate the latter: first, internal trust reinforced by personal relationships, and, second, external rules supported by social institutions. The contrast between Enron and Google here serves to demonstrate what in corporate environments creates trust or distrust.

I think Shermer makes some really good points, but I won't really go into the article here. Instead I will go more into what I think of the subject at hand.

Back in the days when I started at business college, one of the newer focuses were to ensure that students also learned some ethics, and not just cold management. This was caused by some rather spectacular cases of fraud, comparable in some sense to Enron, though obviously on a much smaller scale (Denmark being a much smaller economy after all). Those cases resulted in some rather noteworthy law changes, at least one suicide, and several jail terms.

In spite of such cases, I don't really believe that companies are evil, since I don't really believe that people are evil as such. People are greedy, and therefore companies should be regulated and kept under supervision, but that something for a different discussion.

These days, I mostly work in IT projects in financial companies. If there ever were companies that you would expect to be evil, or greedy, then it would be financial companies. Interestingly enough, I haven't found this to be the case - of course, a lot of that has to do with the fact that that sector is heavily regulated in Denmark, and thus the possibilities are limited, but a lot of it has something to do with the fact that many of the people in this sector are somewhat idealistic.
Yes, they try to make money, but they are very focused on the fact that they are actually helping customers making very important decisions, on which their entire future can be based.

So, what I am trying to say, is that companies certainly don't have to be evil, or even greedy. If the company culture is right, then it's quite possible to have a profitable company, focusing on their customers' needs, rather than profit.

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Blogger The Ridger, FCD said...

What's necessary is to realize that you don't actually have to make as much money as possible to be successful.

February 02, 2008 8:43 PM  

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