Taylor Swift and compliance risk management

Taylor Swift is one of the most famous and successful pop music stars of the last decade. She has dominated the charts, the front pages of tabloids, and the trending posts on social media for years, as much for her songs and music videos as for her romantic exploits and friendship feuds. In an era of being famous for being famous, Swift is a special kind of celebrity who presents a public personality that takes deep advantage of this trend while still giving commercial justice to her origins as a country pop singer. In this dichotomy, Swift has both fans and detractors on both sides – those who are enthralled by the mystique of her celebrity image are just as engaged with the public brand of her persona as those who actually have any interest in her music itself at all.

With this source of her visibility on the music charts and in front of the paparazzi camera lens, it is no surprise that Swift has experienced her share of growing pains on the world stage. Swift’s eponymous album was released in 2006 when she was just 16 years old; at the time of her most recent release, Reputation, in November 2017, she was 27 years old. The generational changes any person experiences during the intervening years are transformative on all levels – personality, relationships, career, worldview.

To go through these phases and changes in front of the whole world, means that your choices and their contexts and subtexts are part of a powerful public dialog. A specific aspect of Swift’s fame has been that her fans and detractors alike are preoccupied with parsing the similarities and differences between the public face Swift presents in her music and media appearances and clues for what her private, undiscussed motivations and ambitions might be.

Swift’s public image has been negatively impacted in recent years following several high-profile feuds with other celebrities such as Katy Perry and Kim Kardashian West. Those wishing to question her motives or critique her actions have had plenty of fodder. The contradictions in her established image and her possible schemes and attention-getting frauds have fueled many a comment thread on social media. Swift’s most recent album is therefore aptly named Reputation and takes direct aim at this critical focus about her identity.

The change in Swift’s position in popular media due to the critical reception of what is, in reality, her brand strategy, presents a compelling case study in reputational risk. Even though one’s reputation is based largely on perception or even assumption and innuendo, it has a very real effect on public standing. This is true for Swift who is an individual representing her brand and work, just as it is true for an organization representing its business strategy, product or service line, and client relationships. It is especially amplified by those with a large internet presence, as the nature of online interactions in the digital age is to inspire investigation and critical judgment. As the saying goes, you can never really delete anything from the internet, and that proves true time and again – especially when statements by or images of someone like Swift can generate discussions and debates bigger than the original post ever could have been.

Therefore reputational risk presents a challenge to high-profile individuals and brands that is hard to reconcile with desires for publicity and competitive attention and impossible to control once a controversy or reaction has been ignited, innocently or otherwise. The morality of reputational identity and the necessary efforts to maintain and construct it together create an important exercise in defining and adhering to a strategic, values-based approach.

The changing fortunes and public opinion of a celebrity like Swift can be easily translated to the organizational context, where business entities rely on their public profile and engagement with consumers and stakeholders to maintain competitive edge. Corporate identity and credibility is incredibly valuable and also inestimably vulnerable to reputational risk. Negative news articles, mentions of companies pursuing legal but unpopular business strategies, involvement in politically complicated regions or activities, and other conduct that puts companies on the razor’s edge of popular opinion can have disastrous effect on a brand and its interests.

Management of reputational risk for organizations should take a common sense approach. Compliance training materials often refer to one of two tests: would you want to read about this on the front page of a newspaper, or, would you be comfortable discussing this action in public, say at a dinner party, with someone you admire, like a parent or mentor? If the answer is no then the action or strategy is not advisable. Having the possible public outcome from individual or organizational actions in mind before the activity is undertaken helps to maintain a view on consequences and hopefully, therefore ground the decision in practical ethics.

For a broad take on Taylor Swift and the contemporary value of reputation, check out this opinion piece in the Financial Times.

Round-up on the humanity of artificial intelligence

Human fascination in, and even obsession with, robots is nothing new. For many years people have imagined distant versions of the future where human interaction with different types of robots, androids, or other robotics products was a routine part of life both at work and at home. Sometimes these forward-looking scenarios focus on convenience, service, and speed. Much more often, however, when asked to contemplate a future with ubiquitous artificial intelligence (AI) technology imbedded alongside humans, thoughts stray into possible troubling or dark impacts on society. People worry about loss of humanity as technology predominates, or the possibility that robots could be misused or even gain sentience and have intentions to work against or harm humans.

In the past these scenarios, both of the positive advancement of society and of the potential for isolating, dangerous dystopia, were mostly relegated to science fiction books, Hollywood blockbuster movies, or what were seen as overactive imaginations or paranoid opinions of luddites. Now, however, the news is full every day of developments in AI technology that bring the once-imaginary potential of robots ever closer to present reality.

As technologists and business organizations consider the utility of advancement in AI, ethicists and corporate compliance programs must also consider the risk management issues that come along with robots and robotics. Technology which will have such a broad and deep impact on human life must be anticipated with thoughtful planning for the compliance risks which can arise. In particular the potential for sharing human traits with AI technology or imbedding AI technology in place of human judgment present provocative challenges.

  • Anticipating increased interactions with androids – robots that look like humans and can speak, walk, and otherwise “act” like humans would – leads to the logical question of will humans have relationships with androids and vice versa? This would be not just transactional interactions like giving and receiving directions, or speaking back and forth on a script written to take advantage of or increase machine learning within the android. Rather, this could be intimate, emotionally-significant exchanges that build real connections. How can this be when only one side of the equation – the human – is assumed to be able to feel and think freely? While technical production of robots that appear credibly human-like is still beyond the reach of current science, and giving them a compelling human presence that could fool or attract a human is even further away, work on these tasks is well underway and it is not unreasonable to consider possible consequences of these developments. Will humans feel empathy and other emotions for androids? Can people ever trust robots that seem to be, but aren’t, people? Will the lines between “us” and “them” blur? The burgeoning field of human-robot interaction research seeks to answer these questions and develop technology which responds to and considers these tensions.  Love in the Time of Robots 
  • On a similar note, when could machine learning become machine consciousness? Humans have embraced the usefulness of AI technologies which become smarter and more effective over time after they are exposed to more knowledge and experience. This is a great argument for deploying technology to support and improve efficiency and productivity. Everyone wants computers, networked devices, and other products that use advanced technology to work more accurately and easily. Machine consciousness, however, suggests independent sentience or judgment abilities, the potential of which unsettle humans. From a compliance and ethics perspective there is an extra curiosity inherent in this – what will be the morality of these machines if they achieve consciousness? Will they have a reliable code of ethics from which they do not stray and which comports with human societal expectations? Will they struggle with ethical decision-making and frameworks like humans do? Or will human and human-like practical ethics diverge completely?  Can Robots be Conscious? 
  • In 2016, David Hanson of Hanson Robotics created a humanoid robot named Sophia. At his prompting during a live demonstration at the SXSW festival, Sophia answered his question “Do you want to destroy humans?… Please say ‘no’” by saying, “OK. I will destroy humans.” Despite this somewhat alarming declaration, during the demonstration Sophia also said that she was essentially an input-output system, and therefore would treat humans the way humans treated her. The intended purpose of Sophia and future robots like her is to provide assistance in patient care at assisted living facilities and in visitor services at parks and events. In October 2017, Saudi Arabia recognized the potential of the AI technology which makes Sophia possible by granting her citizenship ahead of its Future Investment Initiative event. A robot that once said it would ‘destroy humans’ just became a robot citizen in Saudi Arabia
  • The development of humanoid robots will certainly become a bioethics issue in the future as the technology to take the human traits further becomes within reach. While there are so many compelling cases for how highly advanced AI could be good for the world, the risks of making them somehow too human will always be evocative and concerning to people. The gap between humans and human-like androids is called the uncanny valley, the space between organic and inorganic, natural and artificial, cognitive and learned. The suggestion that the future of human evolution could be “synthetic” – aided by or facilitated in the development androids and other robotics – presents a fascinating challenge to bioethics. Are humanoid robots objects or devices like computers or phones? It is necessary to consider the humans and androids in comparison to one other just as it is humans and animals, for example. This ethical dilemma gets to the root of what the literal meaning or definition of life is and what it takes for someone, or something, to be considered alive. Six Life-Like Robots That Prove The Future of Human Evolution is Synthetic
  • One of the potential uses of AI technology which worries people the most is in autonomous weapons. The technology in fact already exists for weapons which can be used against people without human intervention or supervision in deploying them. Militaries around the world have been quick to develop and adopt weapon technology that uses remote computing techniques to fly, drive, patrol, and track. However, this established use of this technology is either for non-weaponized purposes or, in the case of drones, deployment of weapons with a human controller. Fully automating this technology would in effect be giving AI-powered machines the decision-making ability that could lead to killing humans. Many technologists and academics are warning governments to consider preventing large-scale manufacturing of these weapons via pre-emptive treaty or other international law.  Ban on killer robots urgently needed, say scientists

As the diverse selection of stories above illustrates, the reach of robots, robotics, androids, and other developments within AI technology are certain to permeate and indeed redefine human life. This will not be in the distant or unperceived future. Rather, real impact from these advancements is even already starting to be seen, and there is only more to come. Governments, organizations, and individuals must make diligent risk assessment preparations to integrate this technology with human life in a harmonious and sustainable fashion.

Profiles of ethical leadership in sports coaching: Vince Lombardi

This is the fourth post in a month-long series of five that profile well-known sports coaches as examples of ethical leadership. The first post was about John Wooden and the Pyramid of Success he created while coaching basketball at UCLA. Johan Cruyff, legendary Dutch football player and manager, and the 14 Rules that are displayed at the fields that bear his name worldwide was the subject of the second post. Last Wednesday’s profile was of Jim Valvano, featuring an analysis on his views about leadership and success as featured in lines from his famous 1993 ESPY Awards speech. Today’s post focuses on Vince Lombardi, the NFL Hall of Fame coach, and his views on ethical leadership as expressed by his motivational speeches to his players and the public.

Vince Lombardi was a football player and coach who achieved great success over his 15 years working in the NFL before his death from cancer in 1970. Many critics consider Lombardi to have been one of the greatest coaches in the history of football, and this opinion was borne out in the records of the teams he coached and the accolades he received during his career. His tenure at the Green Bay Packers produced five NFL championships in the seven years from 1961-1967. He was elevated to the Pro Football Hall of Fame in 1971 and the NFL Super Bowl trophy was named in his honor. He has been admired and revered by many professional coaches, including the subject of last week’s ethical leadership profile, Jim Valvano. Therefore the effect of his powerful leadership style which will be explored below has been a legacy which has far outlived his own career.

Lombardi is known to have been a powerful, inspiring, and complex individual as a coach. He was known for his fiery, loud temper and authoritarian ways as much as he was for his insistence upon fairness and unconditional respect for the members of his football organizations. He demanded much from his players and in return was passionately devoted to them both as teams and as individuals. He would punish or call out players who did not meet his standards for effort or commitment, but also sought to actively recognize dedication and perseverance, which he upheld as critical values for success and achievement. He was devoutly religious yet open-eyed to prejudice and discrimination, which he strove to oppose with zero tolerance, and he was notable for his largely liberal beliefs.

Following the premature end of his life in 1970, Lombardi has been revered by football’s institutions, fans of the teams he coached, and people in the communities he impacted, especially in Wisconsin, New Jersey, and New York. Plays, movies, and books have been written about his influence as a coach and leader. Lombardi’s enduring legacy has been inspiring statements from speeches he made to players and other motivational comments attributed to him. Collections of these have been published and studied both by people working in sports and by others in all walks of life.

Of course, many of these statements are relevant not just to a football team preparing for a game or a coach seeking to motivate his players, but to life in general, and to a compliance professional interested with inspiring leadership ethics in specific. In this theme, here are five famous quotes by Lombardi, annotated with tips for how to apply these sentiments in defining compliance values for individuals and organizations:

  1. “Morally, the life of the organization must be of exemplary nature. This is one phase where the organization must not have criticism.”– Moral compromise cannot be a consequence of desire for success. Core values of an organization should be sacrosanct and not up for debate or critique which is focused toward diminishing or subjugating them to commercial or external pressures.
  2. “Success demands singleness of purpose.” – As discussed in last week’s profile of Valvano, individuals who drive toward goals with a defined and committed purpose, rather than a base desire for external recognition, are best prepared for true internal achievement that is sustainable and meaningful. Ethical decision-making requires this purpose-driven approach; commitment to values is certainly deserving of that singleness.
  3. “To be successful, a man must exert an effective influence upon his brothers and upon his associates, and the degree in which he accomplished this depends on the personality of the man.” – It is not just coaches who can inspire and elevate others with their examples. All individuals must have personal accountability for their moral codes and must strive to make ethical and compliant decisions. People must recognize the huge impact that their behavior has on those around them and commit to using this influence for the collective good. No person is an island in a culture of compliance. All levels must be engaged – tone at the top, mood in the middle, buzz at the bottom – and individuals must view their own reputations and relationships with others as important extensions of the values of the organization’s compliance program.
  4. “Watch your thoughts, they become your beliefs. Watch your beliefs, they become your words. Watch your words, they become your actions. Watch your actions, they become your habits. Watch your habits, they become your character.” – In a context where the organizational heuristics lean toward values-based and purpose-driven, individual ethics have a huge impact toward defining broad frameworks for making choices and defining strategy. Unethical decisions and misconduct often originate from environments where employees are isolated from the impact of their actions or where personal consequences are remote and not relatable.
  5. “A leader must identify himself within the group, must back up the group, even at the risk of displeasing superiors. He must believe that the group wants from him a sense of approval. If this feeling prevails, production, discipline, morale will be high, and in return, you can demand the cooperation to promote the goals of the community.” – Awareness and acceptance of personal accountability and consistent articulation of values and rules are critical for imbedding a culture of compliance. For that culture to succeed, leadership must speak up and out, and encourage others to safely and productively do the same. If individuals feel that their leaders espouse values, expect them to embrace those values, and provide a prevailing environment where both really matter, then the culture of compliance will be authentic and enduring.

For more powerful quotes from Lombardi on leadership and inner success, many of which are inspiring from an ethical perspective, check out the official website maintained in his name.

Also, don’t miss the final post in this series, next Wednesday, which will profile Gregg Popovich, who is the current coach of the San Antonio Spurs and is widely admired for his views on inclusion, political engagement, and personal accountability.

Must-read ICIJ investigative project reports

The International Consortium of Investigative Journalists (ICIJ) is an independent, international network of over 200 investigative journalists in more than 70 countries worldwide. Their reporting focuses on international crime, corruption, and transparency of political and financial power held by governments and corporations. ICIJ works worldwide with local media partners to publish complex investigative reports often focusing on organizational corruption at the highest levels of power and the impact their activities have on people and communities in their home countries as well as in the developing world.

Like this blog’s earlier feature on the work of the Organized Crime and Corruption Reporting Project (OCCRP), reporters associated with ICIJ often follow highly complicated financial trails at major banking institutions and supporting organizations in the financial services industry, in order to uncover tax evasion, theft of national assets, bribery, and other financial crimes.

  • Luxembourg Leaks (2014): This blog has previously discussed the Luxembourg Leaks in the feature post on whistleblowers in the financial services industry. This investigative report was based on documents provided to ICIJ by, among others, a French employee of the Big 4 accounting firm PricewaterhouseCoopers. The ensuing investigation showed that Big 4 firms were facilitating registration of multinational companies in Luxembourg in order to evade local taxes and take advantage of banking secrecy laws that would prevent disclosure of even the existence of their offshore accounts to their home countries. Companies named in these papers included IKEA’s Australian operations, Pepsi, Disney, and the Koch Brothers’ business empire. 
  • Swiss Leaks (2015): Continuing in the vein of uncovering undisclosed accounts and financial arrangements maintained under the protection of a banking secrecy regime, this investigation revealed HSBC Private Bank (Suisse) maintained banking relationships with clients connected to arms trafficking, blood diamonds, and bribery. Many of the clients serviced by HSBC were connected to discredited political regimes in countries such as Egypt, Tunisia, and Syria. These were clients who due to their illegal or sanctioned activity would not be accepted for banking services in other countries. The documents showed that HSBC not only accepted them but repeatedly assured them that their wealth would be shielded from tax authorities or other inquiring government entities. 
  • Evicted and Abandoned (2016): This investigation ran an external audit on projects funded by the World Bank and determined that many of them were in complete non-compliance with the bank’s own policies, causing physical and economical harm to the people it purported to support. The International Finance Corporation, which provides private sector loans on behalf of the World Bank, has given financing to governments and corporations accused of egregious human rights violations. In some cases these financing activities continued after evidence of the violations was made public. Funds from World Bank projects were misappropriated and diverted by local governments to fund violent and harmful campaigns against the people who were supposed to be helped, and social and environmental impact was disregarded in funding projects. 
  • The Panama Papers (2016): Receiving widespread media attention and igniting local investigations in many countries and by many financial institutions, the Panama Papers project was one of the biggest stories in money laundering investigation of recent years. ICIJ worked on this project in collaboration with OCCRP and Suddeutsche Zeitung, the German media organization which originally received the cache of documents from Mossack Fonseca, a trust company in Panama that facilitated legal incorporation of offshore shell entities for many of the world’s wealthiest people and powerful political figures. Many of these shell entities were later involved in illegal activities including tax evasion, fraud, and money laundering. 
  • The Paradise Papers (2017): The most recent of ICIJ’s reports, like the Paradise Papers, this details the facilitation of secret financial arrangements by offshore service providers, this time including one of the world’s most high-profile law firms working in this industry. This time the focus was on legal incorporations in Bermuda, Singapore, and Mauritius. The Paradise Papers differ somewhat from the Panama Papers in that they do not purport to uncover widespread illegal activity, but rather legal activity that is secret or inconsistent with representations otherwise made to the public. Political figures in the US, the UK and Canada, and their donors or other financial supporters, were included this time with information exposing their previously undisclosed offshore arrangements and ownership stakes. The Paradise Papers also provided great detail on the “tax engineering” of many major companies, including Apple, Nike, Allergan, and commodities giant Glencore.   While currently legal, it is expected that the public controversy over these increasingly “creative” tax arrangements may lead to deeper regulatory inquiry as to whether they should remain legitimate practices going forward. 

Like OCCRP, ICIJ has become a highly-regarded media organization in the twenty years since its formation. The work that the journalists of ICIJ do to investigate and expose corruption and crime is critical for the effort to enforce expectations that those in positions of power be held accountable for their actions, which even if legal, can be ethically unacceptable and abusive of the people they purport to serve. These investigations serve a crucial public service in exposing both criminal activity and legal arrangements which nonetheless may not meet society’s standards for transparency or lead later to the facilitation of illegal activity.

Hero’s journey of the compliance professional

The hero’s journey is a myth narrative popularized by the American writer Joseph Campbell. Campbell studied hero myth patterns in contrast with psychology, ritual, and analysis and used his view of the hero’s journey to describe the generic narrative archetype of various heroic stories as follows: “A hero ventures forth from the world of common day into a region of supernatural wonder: fabulous forces are there encountered and a decisive victory is won: the hero comes back from this mysterious adventure with the power to bestow boons on his fellow man.”

This pattern will be familiar to any fan of a wide variety of adventure and fantasy stories such as Star Wars, Indiana Jones, Harry Potter, and much more. However, this narrative construct can be applied not just to literature and Hollywood movies but also to the work of the compliance professional attempting to imbed an authentic and effective organizational culture of compliance. In this view, the hero is the organization – and it is the objective of the compliance officer, as a guide or expert figure of sorts, to guide it through the stages of the journey to successful completion.

The hero’s journey is divided into three principal “acts” – departure, initiation, and return. Within each of these acts the hero undergoes a variety of tasks, ordeals, and lessons which compromise the stages, seventeen of them in total, of the journey.  The themes of persuasion, doubt, adversity, seeking guidance and expertise, challenge, success, and transformation which recur in the journey all translate provocatively to the ambitions of a corporate compliance program.

The three acts of the hero’s journey, as applied to corporate compliance and organizational ethics, are as follows:

  1. Departure – In which the hero is still living in the ordinary world and receives a call to action for an adventure which is daunting and requires a mentor’s guidance before embarking on it, this act depicts the organization which is without a compliance program or an organization where the compliance function is immature and inadequately implemented, without genuine engagement. The call to action in this case could be an internal, positive one – a decision to focus proactively on integrity and ethics, for example, or the company could be a new one which wishes to have a compliance risk framework from the beginning. It could also be an external, possibly negative one – such as new regulations or laws, a company or industry public scandal, or supervisory enforcement. The mentor offering guidance in the compliance professional, the person with the subject matter expertise and balance of rules and values knowledge who can support the organization in answering the call to action.
  2. Initiation – This is the stage in which the hero leaves the ordinary world and goes out into the unknown, extraordinary world to face a variety of challenges, some with guidance or support and others without but against great obstacles or resistance. The hero encounters crisis in the attempts to reach his goal. Once the goal is achieved, the hero has to go back to the ordinary world of before, again amidst challenges. In this stage, the unknown world represents the as-yet unformed environment of drivers for and obstacles against organizational and employee integrity and ethical decision-making. In confronting this, the organization accepts the need to implement or improve a controls framework and struggles with the appropriate approach and tone. A wide variety of interests diverge and compete in this process, with the priorities of different business lines, other support functions, stakeholders, external partners, supervisors, and even customers or followers diverging from and competing with each other. Some of these parties will be helpful allies and willing advocates for compliance initiatives, acting as evangelists with each other and the public to sell the comparative value of a compliance program. Others will be doubters who present tests to the maturity and necessity of the program’s design and goals, or even enemies who wish to defeat the effort in favor of commercial or other concerns. It is from here that the compliance professional must carefully craft communications and branding strategies for the compliance program to be convincing and overcome these trials. Once overcoming the crisis – be it incomplete implementation of a program leading to risk and loss, or reputational damage due to insufficient organizational integrity, or negative action by a regulator – the compliance professional can re-emphasize the fundamental values of the program to an organization with a new appreciation for their importance.
  3. Return – In the final act of the journey, the hero returns to the ordinary world, newly endowed with the central goal achieved and the ability to use this hard-won enlightenment for the common good. This process has been transformative and the hero has ascended to a higher level of being due to the triumph of the journey. At the culmination of its journey, the organization has successfully implemented a robust and pro-active compliance program which will be both functional and aspirational. The corporate compliance framework enables the organization and its employees to follow an ambitious yet responsible strategy guided by a flexible yet foundational balance of values and rules.

For a detailed description of the classical stages of the Hero’s Journey, check out this outline by Christopher Vogler.   And for a vivid explanation and illustration of the Hero’s Journey and its various applications in literature, watch this entertaining TED-Ed lesson by Matthew Winkler:

This week on Compliance Culture

Be sure to visit Compliance Culture this week for posts on these topics.

  • Monday: Hero’s journey and corporate compliance
  • Tuesday: Round-up on ICIJ reporting highlights
  • Wednesday: Vince Lombardi’s ethical leadership
  • Thursday: Humanity and artificial intelligence
  • Friday: Taylor Swift and reputational risk

Don’t miss it!

Last week on Compliance Culture

Check out last week’s posts on Compliance Culture, in case you missed or want to revisit them.

Many thanks for reading!

Selected TED/TEDx talks on practical ethics

Practical ethics is an important and relatable branch of the philosophical study of ethics. As a discipline, it connects academic theory with real-life practice. Practical ethics is most commonly encountered in typical scenarios which are referred to as ethical dilemmas. Ethical dilemmas, which have been discussed at length here on this blog before, often present seemingly simple facts which in reality involve maddeningly complex and fraught moral and personal considerations. When faced with such dilemmas, individuals need to reconcile ethical principles which may be in opposition, as much as they need to rely on those same principles to inform their internal register of right and wrong.

Moral character – this individual internal register – and moral perception – the individual’s capacity to understand that an ethical issue exists and may need to be addressed or accepted – are both rooted in the ongoing observation of practical ethics. Identifying and resolving conflicts between personal ideas of ethics and integrity, and the situations and roles that person may find in a working situation, is a crucial application of practical ethics and a fluency which is necessary for corporate cultures to establish a successful compliance program.

Practical ethics goes to the root of so many dilemmas which are germane to the working experience. What are the limits of professional responsibility? What are the obligations of and restrictions within authority and control? How do interpersonal or relationship-based ethics play out into institutional structures and corporate policies or organizational decision-making? How do individuals work within institutions that may have implemented moral decisions which differ from the person’s own or present the individual with the need to dissent from policy or practice? To what extent should organizations address the public good and how can they do this if they choose to do so?

These questions can go on and on; practical ethics represents the attempt to navigate the broad social context of the workplace by reconciling professional rules with moral expectations and norms. This, again, is highly pertinent to a corporate compliance program, which seeks to encourage an business culture that respects legality, approaches business competitively yet thoughtfully, and also sets standards for employee and organizational integrity. It is imperative for compliance professionals to understand practical ethics and use dilemma sessions or open discussions with the businesses they advise in order to encourage a common comfort level with this sort of thinking throughout their organization.

The below TED/TEDx talks offer a survey of how people approach these conflicts between individual and societal morality on one side and professional ethics within organizations on the other side.

  • Legal vs. Ethical Liability: A Crisis of Leadership and Culture (Mel Fugate) – Very frequently, there are stories in the news that outrage and offend people due to perceived moral trespasses. For example, tax avoidance which is positioned as optimization rather than evasion is not against the law; in fact, corporate structures and arrangements that allow companies to take advantage of this are often sanctioned by national governments and facilitated by law firms. However, whenever information detailing these arrangements is made public, people are always stunned to find they are legal and feel let down by the justice system. So too is this true in any situation where individual or organizational accountability is not strictly required by law and therefore is not implicitly considered in decision-making. The distinction between legal liability and ethical liability reaches to the core of the true character ethic and leadership qualities. An organization which considers ethical liability will have a more transparent and sustainable culture, leading to increased transparency and accountability.

 

 

  • The Significance of Ethics and Ethics Education in Daily Life (Michael D. Burroughs) – The concept of individuals as “everyday ethicists” is powerful and useful. People must first take individual responsibility for approaching and addressing ethical issues. Individual ethical awareness is an unavoidable first step on the journey to a culture of compliance within an organization, or for that matter, increased integrity and honesty within society. It is important to consider an ethics education as foundational for both children and adults, and to establish the role of ethics in everyone’s lives and above all else, encourage discussion and information-sharing.

 

 

  • Ethics for People on the Move (Catharyn Baird) – On the subject of translating individual ethics into a group or collective moral code, individual perceptions of morality can have powerful impact on the ethical identity of a community. Both alongside and beyond business ethics, how is an ethical life defined and how does this contribute to the character of the communities in which we all live? Here the interpersonal aspect of ethical relations, including decision-making, has an especially strong influence.   For that to be successful however, individuals still have to form and commit to an ethical life that is each of their own.

 

 

  • Is your work aligned with your values? (Geoff DiMasi) – As discussed above, one of the challenges of practical ethics is to reconcile the individual sense of morality with ethical decisions implicit in corporate policies and required due to organizational processes. It can be powerful for individuals to consider their purpose, both in life and professionally, and then to question whether the work they do allows them to contribute to this, or asks them to labor in opposition to it. As many organizations turn to social impact and political engagement to establish their corporate identities in a crowded marketplace, individuals would do well to compare their ethical leanings with their professions and the companies with which they are associated.

 

 

  • Why “scout mindset” is crucial to good judgement (Julia Galef) – Scout mindset is an interesting proposition, valuing curiosity, openness, and practicality over defensiveness, heuristics, and routines. Approaching decision-making with this disposition can help to overcome narrow frameworks, habits, and other strong organizational contexts. This can also help people to determine individual integrity and morality, which can contribute to and position them within broader and sometimes challenging societal and corporate structures for ethics and compliance.

 

 

Check back in the coming weeks for further posts on the theory of practical ethics and its application in the corporate context, including discussion on the distinction between ethics and business ethics, as well as that between compliance and corporate compliance.

Compliance issues with marijuana legalization

Marijuana has a complex legal and regulatory history in the United States. Originally widely deployed in a variety of medical and commercial uses, the regulation and eventual restriction of commonly-accepted preparations of hemp and cannabis began at the turn of 20th century with labelling requirements and a push to include cannabis in the definition of a “poison” for which a prescription would be required. By the 1930s a patchwork of state and national policies in law were in place and the criminalization of marijuana was underway in earnest. For the next 40 years any attempt at decriminalization or reclassification was unsuccessful. In the 1970s and 1980s, however, California began to slowly reduce penalties for possession under state law and work toward legalization for compassionate use in chronically-ill individuals, which became legal in the state in 1996.

Since then, the legalization of marijuana has been a matter of legislative interest in many states. This move toward decriminalization at first was limited to the medical use first legitimized in California state law, either for chronically-ill patients or for those suffering from a variety of illnesses for which marijuana has proven to be a desirable treatment in terms of effectiveness and cost. Advocacy in this area has eventually extended to non-medical use; in 2012, Colorado was the first state to legalize recreational use of marijuana for adults.

As of the writing of this post, medical marijuana is legal (to at least some extent) in 23 states plus the District of Columbia; in 8 states medical and non-medical marijuana is legal to sell and possess. As the below selection will show, momentum for decriminalization and handling of emerging legal markets invokes a wide variety of compliance issues which will need to be addresses for business and consumer protections and obligations.

  • Given that medical marijuana was the initial purpose behind modern legalization and that it continues to be the most widely-accepted rationale for it, it follows quite logically that medical marijuana research would need to be recognized and facilitated by the law as well. Senator Orrin Hatch, a perhaps unexpected ally for legalization, introduced the Marijuana Effective Drug Study Act of 2017 to improve the research approval process and increase the national marijuana quota to provide supply for medical and scientific research into its potential health benefits. Because marijuana is still completely illegal at the federal level, it is subject to the most restrictive classification and therefore getting approval to study it or supply of it to study is very difficult. In order for the full efficacy of marijuana as medical and therapeutic treatment to be understood, these administrative burdens must be overcome: Senator introduces bill to make it easier to do medical marijuana research
  • Due to the fact that, as stated above, marijuana is still totally criminalized at the federal level, and state efforts toward legalization vary widely, regulatory expectations are widespread across a cumbersome patchwork. Businesses hoping to join or exploit the marijuana market in states where it is legalized to some extent will confront a huge regulatory burden of rules, reporting and disclosure obligations, and licensure requirements. It will be crucial for existing or new owners of marijuana-based businesses to consider implementing compliance programs early and thoroughly so that they are not caught unaware by government expectations in their jurisdictions. Otherwise, a culture of operational non-compliance will reign, which could have devastating effect on business success rates amid supervisory enforcement actions for deficiencies: Marijuana Businesses, Particularly In California, Struggle To Navigate A Thicket Of Regulations
  • Public sentiment is certainly trending toward legalization. Sixty-four percent of Americans now say that its use should be made legal, which is the highest level of public support that the pollster Gallup has found in the fifty years it has been recording this measure. Certainly high-profile ballot initiatives in a variety of states and increased media attention have come through to the average American and liberalized views on the matter. How will this impact regulatory outlooks? If the federal government comes around to legalization then some universal standard for controls framework and supervisory requirements may be in the future. If not, states will continue to be left to their own devices to create independent markets and risk controls within them:  Record-High Support for Legalizing Marijuana Use in U.S.
  • As the market for legal weed emerges, powerful people wanting to work within are starting to act like they would in any other industry – looking to garner competitive advantage and turn their companies into giants of the marijuana business. Marijuana is a valuable industry and can be seen as a crop, which means it has an agricultural supply chain like wheat or corn that can be exploited. Utility patents, intellectual property protection for crops, can be used by powerful organizations to corner the market on breeding of new varieties, conducting research, and even producing seeds to be licensed: The Great Pot Monopoly Mystery
  • With governments addressing legalization of marijuana all across the United States, organizations are beginning to weigh in too on what their policies of use by their members and employees may be. One visible example of this is with the National Basketball League (NBA) where both the former commissioner David Stern and the current commissioner Adam Silver have expressed at least awareness that the league policies may eventually have to change. While marijuana is still a prohibited substance in the NBA irrespective of the purpose of use, Silver has said he wants to study it and Stern has opined that he feels players should be allowed to do what is legal in their states with respect to marijuana use:  David Stern calls for NBA changes of marijuana rules

As states continue to move toward decriminalizing or outright legalization for marijuana for a variety of purposes, and other organizations contend with their own policies within that system, mechanisms for regulated markets will begin to emerge, presenting interesting regulatory compliance issues with no clear and easy precedent. Governments and businesses alike will need to contend with both the opportunities and the challenges this will present.

Profiles of ethical leadership in sports coaching: Jim Valvano

This is the third in a month-long series of five posts that analyze the ethical leadership of famous sports coaches. The first post was about John Wooden, the beloved UCLA basketball coach and creator of the Pyramid of Success. Last Wednesday’s post focused on Johan Cruyff, the acclaimed Dutch footballer and manager of Ajax, Barcelona, and Catalonia football clubs, and his 14 Rules. Today’s profile will be about Jim Valvano’s perspective on leadership and success as expressed in the famous speech he gave at the ESPY Awards in 1993.

Jim Valvano was a NCAA basketball coach for 19 years, ten of those seasons at North Carolina State. He coached his teams at NC State to many winning seasons, including two tournament championships and two regular season championships, and for several years also served as athletic director there. He was also no stranger to controversy during this time, due to accusations of rules violations involving his players’ academic qualifications and financial activities, which led to substantial administrative pressure, scrutiny, and a variety of investigations. Though these numerous investigations revealed no outright major violations in recruiting or financial practices, Valvano ultimately resigned as athletic director in 1989 and in 1990, negotiated a settlement and resigned as basketball coach as well.

Following this somewhat ignoble end to his coaching career, Valvano worked as a broadcaster and became a motivational speaker. His speeches sometimes covered his version of the controversy at NC State or offered commentary to his audiences on how to handle and get over these unfortunate events and the character and reputational damage they present. This is not an unusual path for high-profile people to take after finding themselves in crises of confidence. Practical ethics are complex and transgressions in these professional dilemmas can lead a person to a moral reckoning and awakening of the true values that matter in life and how to embrace them authentically.

Valvano’s enduring legacy is a speech he made in this exact spirit at the first ESPY Awards in 1993. He was accepting the Arthur Ashe Courage and Humanitarian Award and at this time was in the throes of the glandular cancer which would take his life less than two months later. After announcing his intention to create an charitable foundation dedicated to finding the cure for cancer, he went on to speak emotionally and eloquently about individual success and his views on what made life worthwhile. This powerful perspective on purpose-driven living relied heavily on a definition of true success as inner and personal, not dictated by accolades from others or black-and-white “wins,” but rather a personal sense of accomplishment and completion that required no external justification.

This concept of internal success is important in an understanding of applied ethics and translates powerfully to a vision for individual accountability in a culture of compliance. In this theme, here are five significant statements from Valvano’s legendary speech, with suggestions for how to interpret these powerful insights for individual and organizational values to promote ethics and compliance:

  1. “To me there are three things we should all do every day. We should do this every day of our lives. Number one is laugh… Number two is think… And number three is, you should have your emotions moved to tears, could be happiness or joy… You do that seven days a week, you’re going to have something special.” – A balanced life is a sustainable one. This way, the pleasure of the highs will be memorable, the pain of the lows will fade, and the middle will be where the lessons from both come together for a lasting effect. As Johan Cruyff’s “Total Football” showed in last week’s profile, the only practical approach to life or business is a holistic one, with all factors and outcomes taken into fair contemplation. An even keel is a long-lasting perspective.
  2. “I always have to think about what’s important in life to me… Where you started; where you are; and where you’re going to be. Those are the three things that I try and do every day.” – This expresses a perspective on success that is grounded, measured, and reasonable. Success may be a line, or an arc, or a constellation of peaks and valleys, but the present must always maintain an attachment to the origin as well as to the ambition. This perspective can both humble and motivate individuals and organizations to consider, and be true to, their values.
  3. “It’s so important to know where you are. And I know where I am right now. How do you go from where you are to where you want to be? … I think you have to have an enthusiasm for life. You have to have a dream, a goal. And you have to be willing to work for it.” – Success is equal parts planning and effort. In life as well as in business, if you don’t work for it, it’s not worth having and might not be possible to keep. Professionals should be passionate about and engaged the work that they do and the reasons for which they do it – not a paycheck or external recognition, but as Valvano says, enthusiasm, vision, and commitment. Ethical decision-making is only possible if individuals are purpose-driven and accordingly, so long as they hold themselves accountable to that purpose.
  4. “I urge all of you… to be enthusiastic every day… to keep your dreams alive in spite of problems whatever you have. The ability to be able to work hard for your dreams to come true, to become a reality.” – Adversity is always a great challenge to character ethic. Be it accusations of wrongdoing, confrontation with personal moral failures, opposition and criticism, doubt and uncertainty, or even physical illness and disease, resilience and perseverance are the only remedy. Continuing commitment to core values, even when feeding forward input or external changes and making adjustments is necessary, as is appreciation of the work and effort required to reach goals. With this in mind, genuine inner success is achievable.
  5. “Cancer can take away all my physical ability. It cannot touch my mind; it cannot touch my heart; and it cannot touch my soul. And those three things are going to carry on forever.” – The closing and perhaps most famous and poignant lines of Valvano’s speech, the lesson from Valvano’s conviction to endure despite his illness and physical diminishment is universal to all human endeavors. Dignity, legacy, and respect are not circumstantial and cannot be taken from a person unless freely compromised. This goes to the heart of personal ethics and morality – a person’s own register of right and wrong, internal governor and code should be untouchable and can be relied upon in even the darkest and most uncertain times.

For Valvano’s powerful 1993 ESPY speech, watch it here:

Don’t forget to check back for next Wednesday’s post, which will be about Vince Lombardi, the NFL Hall of Fame coach (and the role model of Jim Valvano, as it happens), and clues about how he saw ethical leadership based on famous statements from his statements to players and motivational speeches. The final post in this series, on November 29, will profile Gregg Popovich, the current coach of the San Antonio Spurs with a progressive view toward people management of his players and political engagement as an expression of leadership.