Lessons From Armstrong

I had gotten tired of all of the election adds on T.V., but then the debates started and my interest has been awakened. I love all of the clean pictures of women in binders on the internet. However, I have done my duty and voted, and will send in my ballot today. But, today’s blog is not about the election, it is about leadership and organizations.

I was preparing for one of my classes and read a comment that I must have gone over before, but had not resonated with. However, the other day it hit me hard. I am one who does believe that people are an organization’s greatest asset, and try to treat people that way, but often wondered if there was an argument from business theory that would support this premise? Obviously, there are philosophical and humane reasons for treating people with respect, and employees that feel valued are much more productive, but I have been wondering how to create a strategic argument for the valuing of employees.

In the couple of sentences I discovered that there is a strategic argument for this premise. It has to do with the fundamentals of how we work today. I started working a real job, not a paper route or hamburger stand, in 1969. It was a product oriented company that made chain saws. Basically how the business was run, and all businesses in general at the time, were product based. Even retailers sold a product. And, caveat emptor was the order of the day. Buyer beware, make sure you do you due diligence before buying your product, its your fault if you get a lemon. However, in our current market expression the increased levels of competition have created a service based economy. This is more than just having retail or fast food places of business that serves customers, it is a philosophy for how we do business. We provide a service to a customer, and if they don’t like our service they can go elsewhere.

Therefore, who ensures that the service provided to a customer is good? It is people. Thus, we need to make sure our people can provide a high level of service for our customers to ensure they come back. As I tell my students it is always cheaper to keep a customer than to try and get a new one. This realization tells me there is a strategic purpose for ensuring that my employees have the skills and resources needed to provide good customer service.

This premise is supported with a market-based ethic. In fact, one could argue that there is a moral foundation for this ethic, or even capitalism in general. Zingales makes this argument in his book on a capitalism for the people. Capitalism brings with it a belief that competition “allows the best to emerge.” This presupposes that the market will reward or punish those who who follow or break societal rules. First we have to recognize that “Money was a manifestation of success but not the sole purpose of economic life.” Therefore, a moral capitalism will reward those who recognize the bigger picture of success, such as a triple bottom-line, and scorn those who do not meet this standard.

Where we see this happening right now is in Lance Armstrong. Nike, Radio Shack, Anheuser-Busch, and other large companies that Armstrong endorsed have all dumped him. Because of the strength of the doping allegations presented in the USADA report each of these companies were motivated to punish Armstrong for cheating. This is one example of how a moral capitalism works.

We the invisible hand can reward those companies that are valuing their employees for being socially responsible and promoting social justice. But, we can punish those who don’t by not spending our money there. This is a much more efficient process for fixing societal ills than a governmental monarchy telling us how to run our businesses.

And that is my thought for the day!


2 thoughts on “Lessons From Armstrong

  1. Sounds to me like you actually believe in ‘trickle UP’ morality! Just as ‘morality’ is more likely to come from the bottom up, the same can be argued for DEMAND that supports business. It’s actually NOT a ‘top-down’ situation, then…..?

    The biggest danger (IMHO) is that Nike would NOT have defunded Lance without pressure from the public who actually KNEW a bit about the situation. The more big business owns the media (and, hence, the message), the more they control what we, the public, KNOW about anything.

    I’m not putting MY trust in any ‘benevolent’ businesses, but in the LAWS and regulations that have been put it place because of past injustices. IF we had a world where people lived by the Golden Rule, I’d be more likely to agree that we need fewer ‘rules’…. I tend to believe that capitalism works fine in a world with a somewhat level playing field, but that is NOT what we have these days. Are you really willing to argue that Walmart must be a ‘moral’ company becsuse the Walton family now has more wealth than the bottom 40% of Americans combined???? Not buying it…..; I know too much about Walmart’s business model, and it’s why I don’t shop there. They seem to be doing just fine without me….

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