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As San Francisco celebrates the 50th anniversary of the Summer of Love, the city (and its now nearly indistinguishable sibling, Silicon Valley) are watching a very different summer play out: A Summer of Ethics.
In yet another iteration of a story that’s feeling all too familiar, three female entrepreneurs accused Binary Capital co-founder Justin Caldbeck of sexual harassment, leading to bungled attempts at a response and Caldbeck’s permanent exit. Susan Fowler’s depiction of sexual harassment and discrimination at Uber continues to rattle the Valley giant, and United’s “dragging” incident was followed by one airline mishap headline after another. Ethical issues are gaining more attention and prompting more outrage than ever before.
Slowly, brands are waking up to the fact that strong ethics and core values are no longer a “nice to have,” but a necessity. Failure to take responsibility in times of crisis can take an irreparable toll on the trust companies have worked so hard to build with employees, partners and customers. So many brands are still getting it wrong, and the consequences are real — public boycotting, massive fines, fired CEOs and falling stock prices.
This shift is what I call ethical transformation — the application of ethics and values across all aspects of business and society. It’s as impactful and critical as digital transformation, the other megatrend of the last 20 years. You can’t have one without the other. The internet stripped away barriers between consumers and brands, meaning that transparency and attention to ethics and values is at an all-time high. Brands have to get on board, now. Consider some oft-cited casualties of the digital transformation: Blockbuster, Kodak and Sears. That same fate awaits companies that can’t or won’t prioritize ethics and values.
This is a good thing. Ethical transformation pushes us into a better future, one built on genuinely ethical companies. But it’s not easy. In fact, it’s pretty hard. And it takes time. For decades, most of the business world focused on what not to do or how not to get fined. (In a word: Compliance.) Every so often, ethics and its even murkier brother “values” got a little love as an afterthought. Brands that did focus on values and ethics were considered exceptions to the rule — the USAAs and Toms shoes of the world. No longer.
We’re entering an era in which every single company has to go from self-protective, “check-the-box” compliance to a long-term focus on ethics, values and compliance. Companies need to start making that shift now, if they haven’t already. But change is hard.
Take Wells Fargo. Its ethical misstep wasn’t setting a goal to open more accounts. That’s capitalistic, but not necessarily unethical. CEO John Stumpf wasn’t strolling into local banks and ordering the 23-year-old kid behind the desk to create fake accounts. Rather, it was the result of thousands of tiny poor decisions, made by many people over a long time. When those bad decisions happen in a high-pressure culture without strong company values or ethics, it snowballs into a full-scale scandal. The CEO gets fired. A centuries-old brand is forever tainted.
And I’m not just harping on the “heartless bank” trope. Smaller, mission-driven companies are just as much at risk. Look at Thinx’s recent PR teardown. Miki Agrawal built a brand on an inspiring external message of feminism, empowerment and self-confidence. That’s admirable. But she put zero internal prioritization on making sure her own employees were supported and treated ethically.
The first step is acknowledging ethics and values as important, and making the decision to prioritize it above the bottom line. This has to come from the top. Leadership is the example, and it trickles down to every employee, every interaction, every day. Make it part of everything you do: Write it on the wall, make values the first slide in every deck, talk about it at every meeting, go beyond check-the-box policy training, encourage employees to speak up when they see something. It’s not an overnight change. It takes time, effort, technology, trial and (lots of) error. That’s why brands have to start now.
It’s hard, but not impossible. More and more brands are getting it right and becoming the “new USAA” or the “new Dove.” Three years after weathering headlines like “Citigroup CEO Says Employees Broke the Rules,” it’s now getting coverage for a recent hire — an on-call ethicist (with a direct line to the CEO) who is tasked with “saving Citigroup’s soul.” And smaller companies are getting it right, too, like Luke’s Lobster, which puts sustainability, ethical harvesting and community service at the very core of its fast-growing brand.
Ethical transformation is only just gaining steam and despite all the scandals and viral cellphone footage, we’re in the midst of an incredible moment. Brands are learning how to become values-driven in ways that go far beyond an “Our Values” webpage. I believe ethical transformation will be as important, if not more, than digital transformation in the long run. The two movements, in tandem, can improve communities, create thriving cultures and have long-lasting global impact.
We can’t eradicate all wrongdoing in business, but we can eradicate a reactive, self-protective, “stay out of jail” mentality that’s been pervasive for too long. The companies striving to do the right thing today are the ones that will lead us into the future. It’s a future of proactive ethics and tangible values. It’s going to take time, technology and more than a few scandals before we get there.
But we will get there. And we will collectively be better for it.
Patrick Quinlan is the co-founder and CEO of Convercent, a technology company that enables the world's biggest brands to instill ethics at their core of their organizations. Prior to Convercent, he served as CEO of Rivet Software, a technology firm operating in the governance, risk and compliance space. Reach him @Convercent.
This article originally appeared on Recode.net.
