Comm unit 12-14

Purpose and types of purpose

"An aspirational reason for being which inspires and provides a call to action for an organization and provides to society". Deep purpose: Deep commitment to both economic and social benefits; "practical idealism" Purpose as win-win: Where economic and social benefits intersect(and only when they intersect) Purpose on the Periphery: "Doing good" is kept separate from the core business ("doing well") Purpose as Disguise: Professed purpose/mission covers up questionable business or even misconduct

The impact of stock options on CEOs and companies

- Motivate risky behavior, don't lose money if the stock does bad - Instead of just receiving salary, executives could buy stocks and get back shares - Gov't basically mandates it (tax code change) - Intended to squash CEO salaries but it did the opposite

SCAMPER Technique

- Substitute (e.g., components, materials, people) - Combine (e.g., mix, combine with other assemblies or services, integrate) - Adapt (e.g., alter, change function, use part of another element) - Modify/Magnify (e.g., increase or reduce in scale, change shape, modify attributes) - Put to other uses (e.g., more than one way to use, more than one function) - Eliminate (e.g., remove elements, simplify, reduce to core functionality) - Rearrange/Reverse (e.g., turn inside out or upside down) based very simply on the idea that many "new" ideas are actually modifications of existing products, services, processes, and business models

Incremental (sustaining) innovation

- involves making small-scale improvements to existing products, services, processes, and business models. ----- focuses on improving existing offerings to align with current consumer trends and is considered a relatively low-risk approach for businesses.

Disruptive innovation

- occurs when a new product or service, drawing on new technology, engages the existing market. -disruption comes from new companies, which eventually displace established market leaders. Notably, most disruptive innovations are not overnight sensations. Instead, a relatively small group of customers embrace a disruptive innovation as early adopters and then a critical mass of customers builds over time.

Coporate Social Responsibility (CSR)

- the practice by which a business views itself within a broader context, as a member of society with certain implicit social obligations and environmental responsibilities. - is engaging in sound ethical practices and policies in accordance with the company's culture and mission, above and beyond any mandatory legal standards.

stakeholder theory

A firm should create value for all stakeholders. Stakeholders are interconnected. A central consideration in business ethics

Stakeholder analysis

All stakeholders should be considered relevant to a business, but not all have equal priority. Different groups of stakeholders carry different weights with decision makers in companies and assert varying levels of interest and influence. Stakeholder theory argues that corporations should treat all their constituencies fairly and that doing so can strengthen companies' reputations, customer relations, and performance in the marketplace

Self Knowledge and Alignment

Am I the kind of person who can effectively voice and act on my values? If I fear I am not, are there ways that I can help myself feel more confident and understand that I can do this?

Voice

Are there some strategies and tactics I can use to find the voice to act on my values?

Normalization

Are values conflicts the exception, or are they a normal part of our work lives?

Why is there a disagreement? (Maximizing shareholder value vs stakeholder theory)

Because there is more than one stakeholder besides just the shareholder, who shouldn't only have a say.

green washing

Carrying out superficial CSR efforts that merely cover up systemic ethics problems for the sake of public relations.

Choice

Do I have a choice in voicing and acting on my values?

stakeholders

Employees, Owners, Funders, Suppliers, Policy Makers, Shareholders, Customers, Managers

4 catagories (CSR)

Environmental, Ethical, Economic, Philanthropic

Integration thesis

Ethics isn't just about avoiding illegal actions. It's about conducting ourselves and business in a way that benefits rather than harms others.

FTX

FTX was a centralized cryptocurrency exchange specializing in derivatives and leveraged products that filed for bankruptcy protection in the U.S. in November 2022. FTX's founder and former CEO was arrested in the Bahamas, extradited to the U.S. and released on a $250 bond in lateDecember. He awaits trial on criminal charges in October.

GVV 7 Pilars: Values

Is there any common ground for people to talk to each other across what may seem to be different values sets?

Ethical vs. Legal

Law: How not to behave Minimum standard Sometimes ambiguous, and evolves over time (politics, interpretation, etc.)

Environmental Social Governance (ESG), including issues and trends

Non-financial metrics Not required (yet) No universal standard (yet) ESG investment options: mutual funds and ETFs (exchange traded funds) Demand from investors Current ESG rankings vary so widely in their methodology that companies have been able to "cherry pick" the most flattering providers "As this idea [ESG measurement and reporting]gains momentum, what was once part of an arcane, jargon-heavy debate confined to small groups of passionate experts is now seen as a necessary tool in shifting capitalism towards amore sustainable model."

Externalities

Occurs when an exchange between two parties (where a party can be an individual or organization) has an impact on a third party who is not part of the exchange. An externality, which is sometimes also called a spillover, can have a negative or a positive impact on the third party.

Sustainability

Replacement rate: reproducing a good at the rate at which they can be replenished. Ex. Filling a bath tub Systems thinking:

P&G Case analysis

Sachets that P&G use aren't environmentally healthy for residents in the Philippines. Need to focus on the entirety of triple bottom line.

Wicked problems

Space junk, Trillions pounds of trash: New technology tries to solve an old garbage problem.

Case Study: Follow Dubious Orders or Speak Up

Student intern Susan, conflicted about her boss (Mr. Moon)from her dream internship, Zantech, to email reveal companies for their information as a graduate student from her University when she isn't one.

Separation fallacy

Tendency to separate the business case from theethics case

Example: Innovation at Lego

The LEGO Group invests in innovating core play themes as well as exploring new play patterns. Digitalization is influencing how children play and the LEGO Group has stepped up investments to understand the intersection between digital and physical play and create new products to meet these changing needs.R&D activities include developing new technologies to enable learning through play; trend spotting; anthropological studies; and collaborating with educational institutions to deepen our understanding of children's development.

Theranos

Theranos Inc. was a consumer healthcare technology startup that claimed to revolutionize the blood-testing industry. Theranos CEO Elizabeth Holmes claimed that the company had developed a new technology to test blood, but these claims were later discovered to be fraudulent.

Traditional CSR vs. Creating Shared Value (CSV)

Traditional CSR: Reduce negative impact Give back; do no/less harm Cost focused The more you do and the better you do it, the more it costs Redistribute the value created by firms Creating Shared Value: Create positive impact Address societal needs /challenges Profit focused The more you do and the better you do it, the more profit it generates Expand the total pool of economic and social value

Purpose

What am I really working for? What is important to me? Why and how is my work meaningful and how can that affect my ability to voice and act on my values?

Reasons and Rationalizations

What are the typical objections or pushback I might encounter when I try to voice and act on my values?

Open Innovation

a situation where an organization doesn't just rely on their own internal knowledge, sources and resources (such as their own staff or R&D for example) for innovation (of products, services, business models, processes etc.) but also uses multiple external sources (such as customer feedback, published patents, competitors, external agencies, the public etc.) to drive innovation.

Design thinking

another well-known and widely-used technique for creative problem-solving. Design thinking encourages organizations to keep the user at the center of everything and is focused around asking different questions and looking at problems in new ways.

Innovation

any new idea, product, service, process, or business model, or a change to an existing product, service, process, or business model that adds value.

Enron

began to trade extensively in energy derivatives markets. The company hid massive trading losses, ultimately leading to one of the largest accounting scandals and bankruptcy in recent history. Enron executives used fraudulent accounting practices to inflate the company's revenues and hide debt in its subsidiaries.As a result of Enron, Congress passed the Sarbanes-Oxley Act to hold corporate executives more accountable for their company's financial statements.

short term vs. long term

companies choose between two decisions and how it could either change them for the short or long term

Stakeholders

customers, suppliers, employees, investors, communities, etc.

Business Ethics

determining what is right versus wrong in the business context. Ex. "You're at a yard sale and pick up a violin. The tag says $50. Let's imagine you actually know quite a bit about violins, and you know that this particular violin, if it were auctioned, could yield close to $1million." Should you tell the owners, or should you buy the violin and sell it yourself?

Legal compliance

extent to which a company conducts its business operations in accordance with applicable regulations, statutes, and laws. Ethical behavior builds on this baseline

The triple bottom line

it forces us to reconsider the very concept of the "bottom line." Most businesses, and most consumers for that matter, think of the bottom line as a shorthand expression of their financial well-being. TBL is Environment, Economy, Equity or Profits, People, and Planet.

shareholder primacy (maximizing shareholder value)

only valuing the value that the shareholder brings as a stakeholder in a company.

fraud triangle

pressure, opportunity, rationalization

Ethics

principles or standards of behavior to which we hold ourselves

Objects of innovation

product, service, process, and business model. Product innovation: can come in three different forms: the development of a new product, an improvement in the performance of an existing product, or a new feature to an existing product. Service innovation: involves introducing new services or improving the delivery of existing services, ensures and enhances the utility, performance, and apparent value of an offering. Some offerings are purely service, such as getting a haircut, hiring someone to paint your house, or taking an Uber to your friend's place. Process innovation: involves the implementation of a new or significantly improved production or delivery method, can include changes in the equipment and technology used in manufacturing (including the software used in product design and development), improvement in the tools, techniques, and software solutions used to help in supply chain and delivery system, changes in the tools used to sell and maintain goods, as well as methods used for accounting and customer service Business model innovation: refers to the process of creating, adapting, or fundamentally changing the way a company delivers value to its customers and/or generates revenue. It involves rethinking and redesigning various elements of a business's core model.

GVV (Give Voice to Values)

takes an action-oriented approach to values-driven leadership. GVV is not about persuading people to be more ethical. Rather, it starts from the premise that most people want to act on their values, but they also want their actions to be successful and effective.