Marc Le Menestrel

The Key to Cultivating Agility in Decision Making

Marc Le Menestrel — 2018-06-25T01:44:00Z

How do you think? Can you be aware of your thinking? Can you choose how to think? In this piece, I introduce my way to teach people to choose how they think about things.

Decision-making excellence requires self-awareness and the ability to choose how to think in different situations.

Let's say a store has been selling large snow shovels for $15. The morning after a major snowstorm, the store raises its price to $20. Is this acceptable?

A large majority of business people in my seminars answer that yes, it is acceptable to raise the price of shovels after a storm. They invoke the law of supply and demand; they quote the example of street selling of umbrellas when it rains; they explain that the competitive context would not let them survive otherwise; they blame the customers for not having anticipated the storm, and many other reasons that resemble excuses.

In reality, they don't really think about whether it is acceptable or not for the store to raise its prices. They react, and then they think about how they can justify their “choice”.

Their reaction mostly comes from an implicit and unconscious identification with the business owner. From this perspective, they expect that raising the price of the shovels will help them make more profit. This is the way they think.

But a seminal study found that 82 percent of people (not business people but a representative sample) do not think it is acceptable to raise the price of the snow shovels after a storm. If the local customers are similarly minded, they are likely to be angry and lose trust in the shop if it does so. They will certainly refrain from buying anything else they do not absolutely need, and will consider that the shop is out to exploit them as much as it can.

Over the long term, then, it could be bad for business to raise the price of snow shovels after a storm.

It is thus crucial to realise how business leaders tend to be conditioned to think a certain way, e.g. the idea that they should exploit all available opportunities for profit maximisation. When this way of thinking directly clashes with the ethics of their customers, respect for nature or the will of their government, it can lead them to take wrong decisions and eventually destroy opportunities and lose profits.

Thinking about how we think

The way we think is a part of our experience of life, but also helps shape it. It is what makes us smart, or not so smart after all.

Each one of you has a very unique way of thinking. I do too. No two people's minds operate in precisely the same way. Furthermore, each of us is capable of many different kinds of thinking, not only depending on what we think about, but also depending on what we want to do, say, understand, or even who we want to be.

Being aware of our way of thinking, of its uniqueness and at the same time of its commonality with others' ways of thinking, helps us exercise one of our most critical abilities as decision makers: namely, choosing the way we think.

At the global level, our historical moment demands that we make this choice carefully, because new technologies and political events are critically altering our world, including how we do business. Such sweeping transitions are dangerous and we often prefer not to think about them. Still, they can also be an opportunity to make things better. Above all, we need to adjust our ways of thinking to meet the fast-changing world around us. As Einstein put it, “A new type of thinking is essential if mankind is to survive and move toward higher levels.”

Of course, we know that we are free to think what we want. But choosing how we can think about something is difficult. Often, we believe that there is only one way to think about something, as in our example of business owners esteeming five additional dollars per shovel above their most valuable asset: customer relationships. However, there are always many ways to think about something.

Consciously choosing the way we think is the expression of a unique freedom that human beings possess and can nurture. It is a way to be free, at the most evolved and beautiful level.

In my teaching, I invite participants to learn different ways of thinking in order for them to nurture their freedom and their power. With freedom and power comes responsibility. I am inviting them to be responsible for what they do with this thinking agility. They can use it to think more, or less, to think in a more altruistic manner, or in a more self-interested direction. They can use it to better understand the world of business and be more agile in their way of thinking.

Decision making for leaders

This is a crucial skill for today's leaders. Being able to understand different perspectives helps to anticipate the reaction of customers and to evaluate ethical risks in decision making. It is also critical to genuinely assess how various options align with the values of the organisation and of its people. Business people need to be trained not to make decisions blindly, especially decisions where core values are implicated. They need to learn to avoid the trap of justifications, to analyse and to think about all dimensions of a decision before acting, and especially before communicating.

For example, if you owned the store that sold shovels, the better business decision might be to lower prices after a snowstorm. How many more customers may come as a result? What would be the effect of securing their trust? How would this newly generated goodwill impact sales more broadly, beyond the snowstorm emergency? There is no definite answer to whether one should raise the price or not after a storm, but we should not simply react because there are compelling reasons to think seriously about both alternatives.

Leadership is an art as much as a science. It can be learnt by nurturing conversations where the mind is not necessarily driving the decision, but where the heart and the soul help remind it to stay open to other avenues of thinking.

Marc Le Menestrel is Visiting Professor for Corporate Governance and Sustainability at INSEAD.

I thank Benjamin Kessler, editor at INSEAD Knowledge, whom I met when I arrived in Singapore. It has been the start of a productive and pleasant collaboration, writing short pieces for this online outlet.

Click here to read the Article on INSEAD Knowledge

Follow INSEAD Knowledge on Twitter and Facebook.

Reflections on Governance and the Africa Directors Program: at the forefront of responsible board practice?

Marc Le Menestrel — 2016-02-28T10:28:02Z

I wrote this short piece as a Reflection Paper for the Newsletter of the INSEAD Corporate Governance Initiative. It illustrates my commitment towards the transformation of business governance and the profound impact that South Africa has on my reflections about who I am: descending from African ancestors and man of white skin.

When INSEAD Corporate Governance Initiative accepted the invitation of the University of Stellenbosch Business School and their Executive Education branch USB-ED to partner in the offering of the Africa Directors Programme, I was especially interested in the programme's intention to bring ethics at the centre of the governance discussion and practice.

Crises of many types are currently raising new challenges for business organizations. In a context where capitalism is being questioned in its foundations, improved governance has emerged as one response and a critical issue for the credibility of the whole system. A new paradigm is emerging where business and boards have a new and more active role to play, where responsibility and power are two keys going together. This includes a shift towards a stakeholder view of boards, away from the previous shareholder view which is now recognized as having imposed too many negative externalities on other stakeholders (employees, bondholders, communities, governments and the environment).

South Africa at the leading edge of governance for social transformation

In this respect, it is remarkable that South Africa plays a leading role in the current discussion about corporate governance. As part of the post-apartheid transition led by Nelson Mandela's arrival to political power, a committee on corporate governance was constituted in 1993. Chaired by retired Supreme Court of South Africa judge Mervyn E. King, the “King Committee on Corporate Governance” has produced a series of reports over the last 20 years - the “King Reports”- that apply to all listed companies in South Africa.

It is important to understand that the political changes of the post-apartheid South Africa is one more instance of what is a profound transition, one that goes much deeper than the already complex change of political and economic dominance from white to black ownership. As program co-director Arnold Smit taught me, the King Commission was about designing a corporate governance framework that would be able to mirror the values of a progressive constitution, one that would match the new democratic dispensation and one that should guide the rebalancing of South Africa's economic and business landscape to make it fairer and more inclusive for all the country's citizens. As it faces this challenge, South Africa is an important point of focus and even a source of inspiration for the wider transformation of our societies.

Leadership, sustainability and good corporate governance citizenship are at the core of this new vision for governance. The King committee has brought South Africa at the leading edge of the discussion about corporate governance, heralding a different approach, for example, than that which Sarbanes and Oxley have advocated for the U.S.. The latter does not question the supremacy of shareholders, and has instead focused on a greater ability of detecting responsibility for value destruction and in particular fraud. This is mainly because SOX came as a legislative response to the big fraud cases of the 90's and early 2000's (WorldCom, Enron, Tyco …).

The South African approach has to be applauded and has indeed been recognized. It certainly has increased the perception of a greater effectiveness of South African boards. For instance, South Africa ranked #3 in board efficacy according to the Davos World Forum Global Competitiveness ranking.

In this program for African Directors, we are of course guided by the King Reports, which are an inspiration to identify and discuss key principles that could be implemented all over the African continent, a context that offers a broad range of worldviews and business systems. Especially, we allow stakeholders to take a prominent position when conceptualizing the role of corporations. It is held explicitly that business organizations shall be governed in a sustainable manner and for the benefit of society as a whole. This view goes well beyond the primacy of shareholders model and brings new perspectives to the governance conversation. It acknowledges the un-sustainability of the shareholder view and considers that, for business to exist in the future, it has to pay greater attention to human values, ethics, social justice and environmental sustainability. This rejoins the idea that greater performance arises when looking not narrowly at profitability, but also considering social and environmental impacts like in the “Profit, People, Planet” framework. In a sense, this program is one of the first in the world that is strongly built on such a transformative paradigm.

Developing a Capacity for Directors to Use Power Responsibly

In terms of pedagogical intention, the program aims at building capacity of directors for the contribution of business governance towards societal transformation. When we go to the details, it is crucial to realize that, ultimately, governance is very much about the responsible and irresponsible use of power. Thus, building capacity in governance is about developing effective uses of power that contribute to effective corporate transformation, and ultimately beneficial societal transformation. The creation of business value is not an end in itself but a means towards a greater end: the transition to a more cohesive, just and sustainable society. Business rationality is reversed: society is not used as a means to profits but profits are a means to a greater purpose which is to benefit society in the respect of environmental impacts.

Responsible uses of power give meaning to power and the program intends to give meaning to the power of boards. Rather than top down lectures, this is achieved through facilitated conversations: conversations amongst business, political and social actors, conversations across business actors, conversations at board level with employees and stakeholders, conversations preparing these boards which ultimately require deep conversations amongst board members and finally conversations within each board member. In this program, we enter into conversations that give meaning to the use of power in business governance and that prepare board members for the responsible use of power for the benefit of corporations and their positive impact on “people and planet.”

As the world is undertaking a profound transformation on its own sustainability, it is critical that business governance develops a language that allows conversations about the use of board power and its impact on profits, but also people and planet. As a result, this program is unique in its ambition to discuss the broad extent of the power of corporations on their environment.

As an outcome of the program, participants become empowered to give new meaning to their contribution to the boards they chair or sit in. For instance, they find new ways to empower their boards to tackle issues of risks – where excessive risks often lead to fraud and then corruption. Resisting the temptation of excessive or unwarranted risk, and then fraud, and ultimately corruption is thus a novel manner to preserve the value creation of an organization. As my mentor Ludo Van Der Heyden puts it, value preservation more than value creation is the most important responsibility of boards. It is also an opportunity to enter into a new meaning for the role of board members, and through them, of business in society. It is an opportunity that promotes strategies that are based on sustainability and justice. By proposing a language that overcomes the narrow mindset of shareholders profit maximization, we open a space that gives business a greater purpose and a more positive contribution to society and its ongoing and necessary transformation.

Enlightened Power and Ethical Shadows

Going deeper into the theoretical realm, the articulation of governance has been traditionally approached either about interests (how to further the interest of a particular actor, how to coordinate interest of different actors), either about ethics (how to constrain interest by ethical principles, norms and rules). The reality is richer and more complex because it must articulate both.
Governance is about the smart articulation of both interests and ethics. A fundamental principle of this articulation of a bias that characterizes us all: each of us are very good to perceive, think and communicate about the ethical side of our own interests and, conversely, to see and communicate the unethical sides of the interest and actions of the other actors. There is generally very little awareness of our own shadows, while there remains a very strong bias against those who may judge us or infringe our particular interests. This bias creates a sort of tiny corridor where one thinks about ethics, focusing only on one's own interest like the light at the end of the corridor. A main objective of the program is to empower participants to be free from that sort of ethical bias, if not blindness, i.e. to bring light to our own ethical shadows. That is the challenge that needs to be overcome to allow for deeper societal and thus ethical discussions at board level.

The word ethics has been used a lot, so much so that in many quarters it leads to dubious or even cynical reactions. We indeed believe that it should be understood in the presence of another notion: enlightened power. Through the use of carefully designed and facilitated processes, such as a cognitive, emotional and shall we dare say a spiritual awareness of our and our corporation's negative and harmful shadows, we can liberate that enlightened power from having dared to bring new light to our shadows. In the program, the harnessing of directors' enlightened power increases capacity of participants 1) to be free to think strategically about a wider range of opportunities for action and vision, 2) to be emotionally more mature to fully hear and understand the hidden risks of strategies that oppose legitimate interests, so as to combine them better in resolutions that are more satisfactory to stakeholders 3) to enter into board dynamics that leverage the grey zones of interests and ethics in an inspirational manner.
As a result, and as a final comment, this program is not just about governance for social transformation. It also becomes an opportunity for personal transformation. A transformation that equips us with a way to talk about some of the most pressing issues that capitalism face today in Africa and beyond, one that gives us the language to find meaning in our professional life and experiences as a director so as to truly become actors building and contributing to a better world.

As directors become leaders of their organizations, and even enlightened leaders, they integrate the changes and new mindsets their corporations need to acquire by anticipating, integrating, living and being the change before leading, inspiring, supervising it on the others, and particularly on the corporation. Isn't this leading a responsible and new view of the board?

Marc Le Menestrel
Co-Director of the African Director program

The Ethics Challenge: Finding the courage

Marc Le Menestrel — 2015-03-25T02:18:00Z

What sort of courage does ethics require? The search for intellectual honesty faces many emotional barriers that prevent us from seing the truth: we are not as ethical as we like to think.

This easy piece published in a semi-academic journal shares my teaching about ethics, in particular to Directors during classes in Governance. I was glad to benefit from the edits of Ludo van der Heyden and the Editor.

The question that I wish to address here is going to the heart of ethics. The subject has been much debated over the last decades, yet a sceptic could rightfully argue that all the talk has delivered insufficient results in terms of change in business behaviour.

One of the main reasons for which ethics has not delivered may be that most of the effort has been directed at pointing to the lack of ethics in others. These others include employees, managers, CEOs and
senior executives, boards, shareholders,regulators, governments and other stakeholders. Having designed various strategies for “these others” to behave more ethically, we end up lamenting that, alas, our strategies fail miserably. We come back to a state of powerlessness, evoking human nature as the ultimate
culprit.

One of the main reasons for which ethics has not delivered may be that most of the effort has been directed at pointing to the lack of ethics in others. These others include employees, managers, CEOs and senior executives, boards, shareholders, regulators, governments and other stakeholders. Having designed various strategies for “these others” to behave more ethically, we end up lamenting that, alas, our strategies fail miserably. We come back to a state of powerlessness, evoking human nature as the ultimate culprit.

Ethical training should be seen as an investment that invites this courage, and sheds a new light on the – previously unsuspected – risks that we actually face. This training is unavoidable and quite different than any “compliance” training. Such investment may then lead to a wonderful “windfall”: it frees the mind, the body and soul, and prepares the individual, and his or her organisation, for unsuspected future benefits.

The hard climb to building ethical conscience

Participants in seminars I facilitate are regularly overcome with emotions when sharing personal experiences of corruption, intimidation or coercion. Often, strong ethical judgments cloud their mind and stress their heart. Many claim to be relieved to find a space where they can openly discuss the direct or indirect subversion of the democratic sphere, using powerful influential practices or lobbying organizations. Indeed, how many boards and executive committees honestly face up to the contribution business is making to the current destruction of our natural ecosystem – in nature or in our society?

Seeing the full spectrum of ethical and unethical behaviours requires an emotional effort that must not be underestimated. In a very human need of self-preservation, we typically avert or abort thinking about unethical topics precisely because of the deeply unsettling emotions they evoke. This occurs both consciously and unconsciously. As a result of these psychological processes, our thinking is constrained in a tiny corridor bounded by frightening shadows. In an attempt to fight our discomfort, we sometimes desperately focus on the positive aspects of ourselves or on the light at the end of the tunnel, becoming entrenched in a perspective that is blind to the biggest risks we actually face.

The courage that we need shall be found both in the mind and in the heart. The mind must learn to let go of the sometimes obsessive need of a positive self-image and a desperate pursuit of our goals. The heart must learn to love others, as well as ourselves, even in the shadows.

The Restraining Boundaries of Self-Rationalisation

Let us consider corruption: one of the most daunting challenges we face today. From Washington to Paris or Shanghai, I have been engaging with young and senior executives in various industries about corruption for more than 15 years. The quasi totality of the participants I taught would describe themselves as ethical managers, working for ethical organizations. Of course, they all say they would not be corrupted, or corrupt themselves. Yet, my learning process was to reveal – through role plays in ambiguous and difficult situations involving both time, competitive and hierarchical pressures – that, in one way or another, a large majority of them would indeed end up corrupting. And when this is pointed out, in the immense majority of cases, and in particular when working in groups, participants would spend most of their effort, not seeking alternatives, but rationalizing why they cut corners, and why they had no choice but to do so.

I have identified three steps in which participants typically engage when challenged to explain their choices.

Firstly, they try to deny that they are actually corrupting.

Secondly, they justify why they have done it.

Thirdly, they externalize their responsibility to others, and blame them for their being put in such a situation.

These rationalization mechanisms prevent them from being individually, and collectively, more astute in the face of corruption. In some of the cases I teach, there is actually no good reason to corrupt, and people do it because they can't think differently. Most of the time with corruption, we just do it because we don't try hard enough not to do it.

A genuine effort to minimize corruption, in and by organizations, is leveraged by first identifying the way people think, talk and act to perpetuate corruption. This, in fact, is not helped by hastily pointing fingers and apportioning blame to various “rogue elements” or “bad apples”. Changing attitudes to corruption firstly requires understanding how it comes about. From there, one can discover that the drivers of corruption lie in an emotional inability to think wide enough.

Furthermore, in my experience, understanding our own unethical behaviour is a stronger driver for ethical change than preaching and reinforcing ethical behaviour. Compliance efforts help, of course, but they sometimes become a mere attempt to protect top management and feed their self-perception of righteousness: it becomes a self-deceptive practice. Worse, when compliance nurtures a belief that it guarantees ethical behaviour, it actually becomes a hindrance.

The false comfort of ethical blindness

As indicated earlier, we – us humans – avoid discomfort, physical or emotional. When avoiding a direct awareness and confrontation of the potentially unethical aspects of our business interests, we typically switch to a reactive mode. We still deliberate, but our cognition is trapped in various forms of denial, rationalization and externalization of our locus of control – in other words, apportioning responsibility to elements beyond our control – and feeling safe again. By constructing these individual and collective protections at the psychological and emotional levels, we also isolate ourselves from the source of future problems. We become like ostriches with our heads in the sand, seeking refuge from what seems too large a challenge. We are in this case preparing ourselves for bad surprises; we are actually sowing the seeds of real nightmares.

Firstly, and paradoxically, ethics requires suspending judgment. As a teacher, I spend a tremendous effort in my preparation working on my own prejudices towards the people and companies I address. A typical set-up for failure is when I appear to be judging them, projecting my own prejudiced shadows onto the participants or their organizations with the illusion that it serves some good. In reality, it only produces a reaction that reinforces the vicious circles in which we are all trapped: blaming the messenger of bad news to escape our shadows.

To the contrary, a solid and efficient way to proceed is to be non-judgmental, so that participants feel that they occupy a safe, intellectually honest and credible space for courageous and smart conversations to take place.

The Duality of Ethics and the “grey zone”

We prefer to think and talk about our ethics in a positive light. We easily provide arguments to explain how ethical we are. Most companies have success stories about how they contribute to environmental sustainability, advance social justice and promote human values.

However, for all of us who are neither saints nor devils, our ethics typically fall in a grey zone. It lies somewhere on a continuum between being “completely unethical” and being “fully ethical”. There is some good in most of our actions, as well as some bad. If most of our actions are therefore both ethical and unethical at the same time, it is profoundly different to look at the ethical aspects, as opposed to look at the unethical aspects. In my experience, companies whose behaviours raise the most daunting ethical issues, have developed the strongest blinding bias towards their own ethics. It is normal and profoundly human to move away from the disagreeable, to want not to see it, and rather prefer to dull ourselves in good conscience.

But there is more: we also are biased against others. In a typical business setting, we are biased in favour of the ethical side of our own actions, while focusing on the unethical side of others' actions, especially if they are those of our competitors. In general, our ability to think about both sides of the ethical judgment is significantly influenced by our emotions, our interests, our mental habits and self-image, our cultural context, our work environment, and, finally, our power to act. An aspect of ethical training is thus to learn to see both the good, and the bad, of any situation or action. For instance, consider the following questions:

Is it ethical to close a profitable plant?

Is it ethical to compromise on the safety of a product?

Is it ethical to influence a government?

It is likely that you will naturally answer yes or no to these questions. Yet, there are substantial and compelling arguments to answer both yes and no. Thus, observe your own bias and observe your own (in)ability to overcome it. Sometimes, it needs others to show us the other side of our own thought, and then it becomes obvious. Training this ability to explore our own ethical perspective requires discomfort and effort.

Considering that an action has both an ethical and an unethical side does not preclude the comparison between actions, i.e. judging that an action is more ethical than another. On the continuum, some actions lie closer to “fully ethical” or “completely unethical” than others. It is not because we must reject an absolute and categorical synthetic judgment about the ethics of a particular situation that all becomes relative.

Interestingly, this duality is useful to decode discourses, and to perceive the implicit preferences and objectives that lie behind them. In a series of work about the way the oil industry was influencing the science and politics of climate change, it became very clear to my colleagues and I, that the ethical aspects of actions that were profitable to the industry were emphasized, while unethical aspects highlighted.

Drawing a line in the grey zone

For our own actions, analysing both sides of the ethics equation is the only way for us to consciously choose our ethical opinion.

With effort and training we can develop our ability to look consciously at both the ethical and unethical aspects of any action. As we have seen, this is emotionally difficult. It is also cognitively difficult, because the mind does not like the ambiguity of grey zones, and even less the frontiers of the grey zone, preferring to seek the simplicity of black and white assertions. Often over-estimated for its ability to control emotions and decisions, the mind prefers to categorize each action as either ethical or unethical. Accepting that both are true is a challenge for our logical thinking and it is particularly easy to dismiss it as pure relativism: everything then goes.

The truth is that separating grey situations into two categories, in an attempt to draw a frontier between what is unacceptable and what is acceptable in a particular situation, is essentially subjective. But it is not because each one of us may draw our ethical lines at a different point of the grey divide that the extremes cannot be objectively defined. As far as both black and white exist in themselves, the good and the bad may be clearly defined concepts. It is when a particular instance of an action, situation or person is totally reduced to one of them that we create a problem. As Shakespeare reminds us, the good and the bad are not a property of things, but of a particular perspective we take on them.

One of the goals of ethical training is to clarify what is objective (agreed upon by all) and what is subjective (specific to each one) in ethical judgments. For the objective, it is impressive how we can get absolute consensus on the negative and positive aspects of particular behaviours in a collective setting. If trust is present, all arguments for the good or for the bad can be made explicit, may be agreed upon and accepted. The plurality of experiences helps the uncovering of these multiple arguments. What remains subjective is whether, overall, these arguments should deem a particular action “ethical” or “unethical”. In reality, do we really need such a categorical opinion? And what does it mean? What does it mean to say that a particular grey is black or is white? Not a lot indeed. What we need is to consciously draw a line, to freely choose a frontier by saying something like “this is too bad for me to do it”.

For each one of us to consciously choose where we want to draw the line, we better be able to see both sides of the line. Having such a dual and systematic analysis increases ethical awareness at the individual and collective level and helps elaborate and improve conscious, free and powerful ethical judgment. It is a difficult process that requires us to separate the ethical analysis from the behaviour itself and to work outside of our comfort zone. Taking the pain to analyze systematically the good and the bad in our actions, doing so in contexts where a diversity of perspectives enrich the exercise, suspending our categorical judgments over people and actions, are the intellectual and emotional efforts we have to pay in order to generate alternatives that we can freely choose, instead of merely living in denial and providing excuses.

Uncovering Ethical Risks

The concept of Ethical Risk refers to unexpected negative consequences stemming from a lack of ethics of our actions. Because we tend to be unaware of the unethical aspects of the actions that we choose, especially when these actions are in our self-interest, we cannot anticipate the negative consequences emanating from them. Indeed, it is likely that the stakeholders concerned will respond in an adversarial manner by seeking to impose negative consequences on us. These can be legal and reputation costs in particular, but also breach of trust and revocation of license to operate. At the individual level, it is sometimes the whole meaning of professional life that becomes questioned, which then becomes a source of profound suffering. Because we tend to deny the unethical aspects of our actions, these negative consequences are unexpected and constitute bad surprises: these are ethical risks.

As I said, when confronted with the unethical side of our actions, we tend to react negatively, emphasizing the ethical aspects of our actions and denying their unethical aspects. For instance, because we have implemented a compliance program, we find the exposure of our unethical aspects unfair, and we trap ourselves in a reactive attitude. These attitudes further reduce the self-awareness of ethical risks and can progressively lead us to an increased propensity towards unethical action. This is the “slippery slope”.

Such reactive attitudes deal with ethical risks only superficially, because denial and justification are merely designed to appease our minds and are only effective for our own conscience. They also lead to increased secrecy and confidentiality surrounding unethical aspects of decisions taken, and consequences learnt. As a result, the whole organization becomes trapped in a culture of self-censorship and deception and eventually, we begin to believe in our own propaganda.

Who? Me?

For others, denial and justification tend to nurture the adversarial attitude of stakeholders that are alerted or harmed by our unethical actions. Offended by our lack of understanding, frustrated by our lack of attention for issues impacting them, disabused by what they perceive as a lack of good faith, they push us towards an ethical crisis. We then face escalated costs in order to mitigate unexpected negative consequences, which can be a good opportunity for PR companies, but not for us. In a series of crises that I have investigated with colleagues, this nightmarish slippery slope leading to boycotts, dismissals, violent events or even societal crisis, can be fatal. A key learning from it is that the cost of anticipating ethical risks would have been pocket money compared with the cost they actually bear on us when they crystalise.

A Paradigm of Ethical Rationality

In reaction to our unethical behaviours, we end up pointing to external influences, as if we had no other choice. In this manner, we reduce our own power to identify a profitable alternative course of action. We reduce our freedom to choose, and deny ourselves a choice. Indeed, without proper ethical analysis, a typical justification of an unethical action is that an alternative course of action would have been too costly.

Inclusive awareness of ethical and unethical aspects triggers a natural search for more ethical solutions.

Awareness of potential ethical costs increases the relative attractiveness of alternative, more ethical actions.

A rational analysis of the benefits of a more ethical alternative can avoid an exaggeration of its costs and benefits.

The re-framing of the situation, an adjustment of the terms of a new paradigm by which we measure success often allows the identification of new opportunities otherwise hidden to us.

Eventually, with some ethical effort, an alternative and more ethical action may be implemented and without much additional cost, even considered as a strategic investment. I have witnessed wonderful experiences of individuals, teams and organizations rejecting corrupt practices to discover a simpler process to promote their products and ensure the smoothness of their processes.

I recall in particular an executive who stood up in front of his boss to refuse indulging in a practice that was decidedly “too much”. As a result of his disobedience, the boss of his boss, a senior executive of the company, summoned him to his office where he explained that he refused to act against his own values. That was to be the long awaited call that the senior executive was unconsciously waiting for, and the beginning of a strategy with the executive committee to modify certain practices. The company eventually became a leader within its sector group to fight against corruption, and that senior executive later took executive positions worldwide. It was impressive how he was the only one to be able to raise these subjects in meetings, beyond emotion or guilt, opened views to both sides and intelligently, and powerfully pushed the frontier towards the better.

For him, like for others, avoidance of ethical risks opened the path to unexpectedly positive consequences. It transformed the individual, the team and the company by recovering their true identity, their meaningful purpose and unleashed again the pleasure of working and doing good business.

Ethical Training Reloaded

Proper training about ethics and ethical risks allows the identification, mitigation and transformation of ethical risks, at once improving organizational efficiency and developing organizational identity.

In my experience, ethical training shall always start at the individual level. However, it is particularly interesting to work with executive teams, so as to both share our ethical analysis and confront our different perspectives. Rather than looking for systematic alignment about where to draw the line, we first look for consensus on the extreme and establish a common understanding of the various shades of grey. We can then rely on the diversity of personalities and characters present to enrich the team's capabilities to face ethical situations. Again, rather than judging, it is first important to understand the full dynamics that has led to some ethical or unethical decisions, independently of whether such decisions have led to success or failure. Further, at the level of the company itself, dedicated programs whereby a significant proportion of top executives are trained, are especially useful for companies intent to forge a culture or develop new attitudes towards emerging or transforming markets.

Regarding identification, ethical training allows us to identify systematically the various unethical aspects of our actions, thus reducing the awareness bias, the tendency to stick with intuition and the “obvious” solution, and identifying ethical risks before they lead to bad surprises. At the individual, team or organizational levels, identification requires a safe space, a trusting environment and non-judgmental facilitation. This can be eased by a past crisis that has liberated a motivation to “do something about it”. Sometimes, different modalities and formalities are required so as to protect the company and so that individuals feel free to express themselves without fear of embarrassment or retribution.

Concerning mitigation, ethical training allows us to describe our behaviour more objectively and to anticipate the possible unravelling of ethical crisis. Simulations, case studies, sharing of personal and organizational issues are good supports for these stories to be told and for conversation to take place. The learning space shall allow participants to experience both their ethical and unethical behaviours so as to understand their attitudes at each side of the frontier. In terms of stakeholders, management are trained to recognize the legitimate part of stakeholders' reactions, communicate with more sincerity and engage with them, thereby preserving trust and alliances. Rather than behaving reactively, they learn to empathize and act proactively towards the mitigation of the unethical aspects of their actions.

With regards to transformation, ethical training enables us to spend at least as much time looking for opportunities. This intends to un-bias our tendency to justify the actions that we expect to maximize our interest, while being unaware of the unethical risks they bear. Decisions not to engage in more ethical actions become more salient, and the training allows participants to develop their power of discrimination.

It is this change at the individual level that makes the organization less vulnerable and more resistant to ethical crisis. Moreover, decisions to engage in more ethical actions do not follow a blind faith in favour of ethics. In this manner, ethical training develops resilience and fortitude: it turns ethical risks into opportunities by dedicating cognitive and organizational resources to creating good surprises.

It is a constant surprise to me to realize how much we are blind to our ethical shadows. Still, the individual and organizational courage to face the risks that these shadows entail quickly brings us to a change of ethical conscience and a natural transformation of our behaviour. There is no better driver of ethical behaviour than conscienciousness of our unethical behaviours.

The author wishes to express his gratitude to Ludo Van Der Heyden and Anthony Smith-Meyer for their editorial support in writing this article.

Marc Le Menestrel is Professor at the Department of Economics and Business of University Pompeu Fabra (Barcelona, Spain) and Visiting Professor of Ethics at the Social Innovation Center of INSEAD (Fontainebleau, France). He is a specialist of the role of ethical values in business decision-making and he has been teaching and coaching executives across a wide range of critical topics. Among his preferred ethics assignments, he is noted for his teaching about business influence on the science and politics of climate change, and teaching ethics to tobacco companies, banking, the nuclear energy industry amongst many others.

Click here for the pdf of this article

Dream your way to success

Marc Le Menestrel — 2012-08-28T09:10:59Z

It's not all about business plans and spreadsheets and getting to the next goal. The picture of real success is at least partly in your mind.

Business schools give you the tools: financial literacy, management and economic theory, marketing… it's how you put it all together in the working world that determines success or failure. And that ability to combine is not necessarily a logical function, but one that involves a certain amount of creative thinking - the kinds of right brain activity we think of as having minimal importance in the office or on decision making.

However, Marc le Menestrel believes that psychology and emotions have everything to do with the business world. He describes the complex web of forces that drive decision making as “dreams”.

This is the first two entry paragraphs of an article entitled "Dream your way to success" by Grace Segran for INSEAD Knowledge. Based on an interview carried out in Jakarta, Grace is introducing the theme of dreams in executive education.

Maybe it is this article that attracted the attention of CNN's journalist Rose Hoare who wrote a piece entitled "How seeing the big picture could bring success, fulfillment" which features excerpts from an interview she conducted with me. Below is her first two paragraphs, featuring the Dreaming Sessions and INSEAD:

(CNN) — Performance targets are built into an annual review that tells you how well you are achieving at work. Salary is another way of keeping score. But some experts believe in order to find real career fulfillment, you need to look beyond short- and medium-term goals.

At INSEAD, an elite business school in France, ethics professor and decision scientist Marc Le Menestrel conducts four-hour 'Dreaming and Visioning' sessions with senior executives, as part of a four-week program intended to hone decision-making.

The Prince of Wales's Business & Sustainability Programme: Brussels Nov. 2011

Marc Le Menestrel — 2011-11-10T13:39:00Z

On November 10, I was invited to teach a short session on Values, Ethics and Leadership to the Prince of Wales's Business & Sustainability Programme in Brussels.

Part of the University of Cambridge Programme for Sustainability Leadership, this programme appears to me as one of the most advanced and proactive programme in Sustainability and Leadership.

In fact, given the proactive positioning of the programme, I was expecting some reluctance from participants to see their “dark side”, which I believe is a pre-condition for any intellectually honest work on ethics.

In reality, I was surprised to observe that many of the participants were ripe for self-questioning and far from being self-serving in their thinking.

I believe this reflects the quality of the three days they had attended and I am glad to have experienced this particularly high-level and enlightened audience.

It was a priviledge to meet and discuss with executives at the highest level, for instance from the oil industry in Irak or Nigeria, thus gathering precious perspectives for my udergraduate teaching of these issues (see for instance my undergraduate seminar on Shell in Nigeria).

Even in a short session, it was possible to share concrete and effective ways to better think, act and communicate about ethical leadership.

In particular, I expressed the idea that a credible communication about sustainability requires to identify and share, in the appropriate manner, the extent to which we are not sustainable.

Ethics is one of the most difficult and fascinating dimension of business today, in particular because it links the very inner part in each of us with the destinity of our species. In this assignment, I felt how much walking this path requires us to be centred.

Ethical Risks: Identification, Mitigation and Transformation through Ethical Training

Marc Le Menestrel — 2011-09-12T08:53:40Z

The concept of « Ethical Risk » refers to unexpected negative consequences of unethical actions.

A proper training about ethical risks allows the identification, mitigation and transformation of ethical risks, improving organizational efficiency and developing organizational identity.

Identification

Due to the dual nature of the ethical judgment, most actions have both ethical and unethical aspects (Cf. Ethics as a grey zone).
Actors tend to be unaware of the unethical aspects of the actions that they rationally choose, in particular when these actions are in their self-interest.
Because of these unethical aspects, stakeholders act in an adversarial manner, imposing negative consequences on actors (legal and reputation costs in particular, but also breach of trust and revocation of license to operate).
Because actors are unaware of the unethical aspects of their actions, these negative consequences are unexpected and constitute bad surprises.

Ethical training allows actors to identify systematically all possible unethical aspects of their actions, thus reducing the awareness bias and identifying ethical risks before they lead to bad surprises. Such ethical analysis can be carried out at the individual, organizational or societal levels.

Mitigation

When accused of unethical actions, actors tend to react negatively, emphasizing the ethical aspects of their actions and denying their unethical aspects. For instance, because they have implemented a compliance program, they find the exposure of their unethical aspects unfair and trap themselves in a reactive attitude.
These attitudes further reduce the self-awareness of ethical risks and can progressively lead to an increased propensity towards unethical actions. This is the “slippery slope”. Such reactive attitudes mitigate ethical risks only superficially because denials and justifications are effective only for the conscience of the actor itself. They also lead to increase confidentiality of unethical aspects. On the other hand, denials and justifications tend to nurture the adversarial attitude of stakeholders that are alerted or harmed by actors' unethical actions, overall leading to ethical crisis. Actors then face escalation of costs for the mitigation of unexpected negative consequences.

Ethical training allows actors to describe objectively their behavior and to anticipate the possible unraveling of ethical crisis. Aware of the unethical aspects of their actions, trained actors recognize the legitimate part of stakeholders' reactions, communicate with more sincerity and engage with stakeholders, thereby preserving trust and alliances. Rather than behaving reactively, actors act proactively towards the mitigation of the unethical aspects of their actions.

Transformation

In reaction to their unethical behaviors, actors end up externalizing their locus of control, as if they had no other choice. In this manner, actors reduce their own power to identify a profitable alternative course of action. They reduce their freedom to choose. On the other hand, inclusive awareness of ethical and unethical aspects triggers a natural search for more ethical actions (Cf. Psychological attitudes towards ethical dissonance). A rational analysis of the interest of such a more ethical alternative allows avoiding exaggeration of its costs (without proper analysis, a typical justification of an unethical action is that an alternative course of action would be too costly). Further, awareness of potential ethical costs increases the relative attractiveness of an alternative more ethical action. The re-framing of the situation allows the identification of new opportunities otherwise hidden to the actors. Eventually, an alternative and more ethical action may be implemented with ethical effort and without much additional cost, considered as strategic investment. Avoidance of ethical risks then opens the path to unexpected positive consequences.

Ethical training allows actors to make sure they spend at least as much time looking for opportunities of more ethical actions than justifying the actions they expect to maximize their interest (i.e. unaware of the unethical risks these actions have). Decisions not to engage in more ethical actions are conscious, responsible and reflect a power of discrimination. They are not traps for the actor. Decisions to engage in more ethical actions do not follow a blind faith in the benefit of ethics. In this manner, ethical training turns ethical risks into opportunities by dedicating cognitive and organizational resources to the identification, mitigation and transformation of ethical risks.

Business and Biodiversity: the Next Sustainability Challenge

Marc Le Menestrel — 2011-08-05T16:13:29Z

As an aftermath of my growing interest for Biodiversity issues (See our initiative with Julian Rode Biodiversity and Ethical Business), I was proposed to lead the academic organization of the 26th Alumni Sustainability Roundtable at Insead. We have prepared an interactive process to draw from the expertise of a series of prestigious speakers.

Below is the abstract of the rountable, to know more, acces the INSEAD website of the roundtable

Business and Biodiversity: the Next Sustainability Challenge

23 September 2011

INSEAD, Fontainebleau Campus, France

There is a growing concern in business about biodiversity loss and change and about the risks and opportunities biodiversity entails for the bottom line. This roundtable will present and discuss the implications of biodiversity issues for the business world. In an interactive and participative process, participants will discover how biodiversity affects business through impacts and dependencies on natural resources. The purpose is also to identify critical trade-offs for society and business, and discover new ways of being smart in front of systemic interdependences. Improving our capacity to be part of the solution to one of the most comprehensive challenges the human species is facing is at the core of this debate.

Teaching Ethics to Chinese Executives

Marc Le Menestrel — 2010-11-29T10:58:44Z

In September 2010, I was invited by Renmin University to teach 2 days in their new CMPM program, a 5-module training experience inspired by Mintzberg's IMPM but dedicated to Chinese senior executives.

I had a few surprises during my intervention, but I was specially impressed by the proportion of female executives (close to 50%), their assertive character, the deepness of their reflections and their high-status profile. Could China be at the forefront of gender equality in business?

Click here to watch a video for CMPM participants.

From global consciousness to local presence: searching for pathways

2010-06-22T15:25:53Z

There are many ways to have a global consciousness. We can be conscious of our world, our natural environment, our civilization, our future, our destiny, our species... Some of these lines of thoughts are inspiring and some are painful, but most of them can lead us at some point to who we are, here and now.
Exploring the connections between our global consciousness and our local presence is a journey, an art of life with its beauty and surprises. It is an experience full of values, beliefs (…)

- Coaching & Self-Development / Executive Training, Leadership Development, Experiential Teaching, Dreaming and Visioning, Emotional Agility

From Nightmares to Dreams

Marc Le Menestrel — 2010-01-06T10:59:00Z

On the one hand, the crisis we are facing can be a nightmare. On the other hand, it can be an opportunity to realize some dreams. This two-part session is intended to help us move from one perspective to the other.
In the first part, we carefully evaluate the challenges pertaining to our current situations. We can then assess our responses and identify our needs for facing these difficulties as appropriately as possible. A second part leads us to these defining moments, where one find the (…)

- Executive Sessions / Ethics as Grey Zone, Executive Training, Ethical Risks, Ethical Rationality, Leadership Development, Experiential Teaching, Dreaming and Visioning, Emotional Agility