One problem is that the promotion of an ethical culture is often interpreted in such a way that the “defend and extend” tactic is considered the only criterion for ethical leadership (Hartung, 2009). In his new book, Create market disruption, Adam Hartung points out that success in the corporate environment is based on whether you uphold the old practice and gradually expand on that old practice without creating problems. However, trust in leadership is misplaced when that leadership is not disruptive.
Hartung cites Foster and Kaplan (2001) for the point that, for example, of the 500 companies in the S&P 500 in 1957, only 1/3 of the 500 were still in existence in 1994. This is the danger posed by executives who they seek to build their careers rather than their companies. Clayton Christensen fans (The Innovator’s Dilemma, The Innovator’s Solution, Y Seeing what’s next) will recognize this as your point as well. Christen teaches by example, and his examples on this topic are compelling.
Christensen (2003) points out, for example, what happened with Cabot Corp. when it sought to innovate; With their short-term profits curtailed by their investments in new process and material technology that could well have given tremendous long-term returns, the board fired the managers and brought in new management with instructions to return the business to normal. Its essence. products (p. 3). This left the company where it started and shows that the market punishes innovation.
So what’s an innovator to do? Henry Ford took his company back private after the Michigan Supreme Court ordered him to pay dividends to shareholders rather than build his company by paying his workers enough to buy a car.dodge vs. ford Motor Company, 204 Mich. 459, 170 NW 688 (Michigan 1919)). Many of the most innovative companies never go public or reprivatize. Consider HCA, Hospital Corporation of America, as a prime example: Being a public company is more trouble than it’s worth because shareholders need to be informed of information the company would prefer to keep private.
If ethical leadership is interpreted to mean defending the company’s markets and progressively expanding them, then the company is doomed. A company can innovate and succeed over the years only by taking big risks, and that is not consistent with maximizing shareholder returns.
Reference:
Christensen, C.M. & Raynor, M.E. (2003). The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston: Harvard Business School Press
Foster, R. N. & Kaplan, S. (2001). creative destruction. New York: Currency
Hartung, A. (2009). Create market disruption. Upper Saddle River, New Jersey: Pearson Education.