A Keynote by Former Secretary of State Madeleine K. Albright
On the first evening of the 2012 Global Ethics Summit, Ethisphere hosted the 2012 World’s Most Ethical Companies awards dinner, honoring the companies that received this year’s award. Keynoting the dinner was former U.S. Secretary of State Madeleine Albright. The following are her comments after an introduction by Ethisphere Executive Director Alex Brigham.
Thank you, Alex, for your kind words and good evening to you all.
I am delighted to be here and want to express my appreciation to the Ethisphere Institute and Thomson Reuters for inviting me.
Ethics in business is like ethics in government, we can never have enough and yet we do not always agree on the definition.
That’s why “Raising the bar on best practices” is a perfect theme for this summit.
It’s certainly a goal of interest to the Albright Stonebridge Group, the international consulting firm with which I am associated.
Our company tries to provide value, which in that profession, is not always the case.
Consider, for example, the story about the rancher and the stranger who tried to make a deal.
One day, the stranger drives up to this ranch and says to the owner, “If I can tell you within 15 minutes exactly how many head of cattle you have, will you let me take the calf that’s standing right over there?”
The rancher thinks for a minute and says, “Sure, why not?”
The stranger climbs up into his truck, pulls out a laptop, connects to the GPS, studies some satellite photos, and returns to the rancher.
“You have exactly 1,312 head of cattle.”
The rancher replies “that’s right.”
The stranger hesitates for a second before saying, “That means I get to take your calf” – which he does.
But then the rancher says, “Not so fast. If I can tell you within five seconds what you do for a living, you have to give the animal back – is that a deal?”
The stranger says, “Well, OK, I guess that’s fair.”
Immediately, the rancher says, “You’re a consultant.”
The stranger is amazed. “How did you know?”
The rancher says, “You came here without being asked; you told me what I already know; and you charged me for it. Now could I please have my dog back?”
Stories aside, when I was in government, I often turned to business executives and to leaders in the financial community for advice when making decisions about foreign policy.
The reason is that we had much in common.
Whether you are secretary of state or the CEO of a major corporation, you have to operate in a global environment.
You have to understand how to assemble an effective team.
You have to know when to hold your tongue and when to be blunt—which I might have been on one or two occasions.
And perhaps above all, you have to know how to manage risk.
That is where the toughest tests of leadership arise.
It is also a central concern of this summit — because there is a very clear connection between ethics and risk.
For some, this link is merely an annoyance — a potential distraction from the aggressive pursuit of profits which are, without question, all to the good – creating jobs, building capital, and generating growth.
In this view, corporate gains are essential building blocks of economic progress – and what could be more ethical than that?
After all, corporations are not charities; they have an obligation to shareholders and, when successful, contribute to society in multiple ways.
Such thinking reflects a conception of right and wrong that has many defenders, but when pursued too narrowly, also plays with fire.
In our era, the definition of ethics is far from settled and the concept of business as usual can be controversial; this means that there is always a danger of today’s financial advantage becoming tomorrow’s negative story.
And when a company’s reputation is harmed, more often than not, so is its bottom line.
Obviously, areas of vulnerability will vary depending on what part of the economic arena your company occupies.
Different firms are scrutinized for different things, including personnel practices, working conditions, environmental awareness, truth-in-advertising, and the quality of products and services.
Judgments about these are often calibrated according to culture – so that a standard that is fully acceptable in one nation may fall short in another.
In some countries, the rules for conducting business can also fluctuate—perhaps dramatically–from one time period to the next.
Meanwhile, good intentions provide no guarantee against bad perceptions.
Depending on whose opinion is being sought, the line can be perilously thin between welcome investment and unwelcome exploitation; between creating jobs and running a sweatshop; between building infrastructure and despoiling nature; and between providing medicine and profiting from the misery of others.
As a rule, big corporations attract little sympathy.
If a company is large enough to be noticed, it is almost certain to be faulted at some point by someone, whether in government, the media, civil society, or a competitor.
That’s why the working sessions at this conference include such titles as “What keeps you up at night?” “What’s next?” and “Tone from the Top.”
It’s good business to establish a reputation for ethical practices, but that doesn’t happen by accident, and it can’t be sustained without constant attention.
In this respect, as in others, private sector challenges bear a resemblance to world affairs.
There are obviously major differences between running a corporation and trying to manage U.S. foreign policy, but there are also similarities, and winning the battle of perceptions is one.
When America is thought to be acting on behalf of the common good, it is much easier than at other times to persuade countries to do what we would like.
During the Cold War, the United States was diligent in protecting its own interests, but also supported principles that were of benefit to people everywhere.
Despite Vietnam and other setbacks, we were defined by our democratic practices, our pace-setting technology, our reliance on free enterprise, and our commitment to individual dignity and human rights.
By contrast, the Communists had promised their citizens a workers’ paradise and then threatened to kill anyone who tried to escape.
There was no greater symbol of the difference between West and East than the barbed wire atop the Berlin Wall.
America’s historic association with human liberty paid dividends in that era and two decades later, it still does.
Just recently, an Iraqi woman was interviewed by the New York Times.
She was in traditional dress, wore a veil, and admitted that she was sympathetic to Iran and to the radical cleric Moktada al-Sadr.
But she also said that “Between Iran and the United States, only America is interested in freedom and human rights…There is nowhere like America for freedom.”
And this woman has plenty of company.
Surveys have shown consistently that millions of people in Arab and Muslim countries admire America’s democratic institutions, even if they do not always agree with our policies.
This support for democracy has become increasingly evident over the past year, as Arabs in North Africa and the Middle East have ousted four longtime autocratic leaders and now, in Syria, are threatening a fifth.
Although it is too early to say where all these changes will lead, the United States is better positioned to play a positive role than such potential rivals as an autocratic China, a theocratic Iran, or a Russia led by Vladimir Putin.
The lesson in this is basic – establish and defend your brand.
For a country, this leads to the right kind of identity – as an acknowledged leader, a trusted ally, a valued neighbor, and a respected voice on the world stage.
In business, the parallel challenge is not only to make our companies known, but to have their names associated with excellence and honor.
We all have our lists of how to accomplish this; mine is short.
To begin, we must be clear in our own minds about how we would like to be perceived, and then consider every decision with that imperative in mind – consistency matters and so does repetition.
Second, we must ask hard questions about the merits of every proposal and then use the answers to ask more.
Positive thinking is essential, but wishful thinking can lead companies into bad partnerships and into other entanglements from which there is no easy exit.
To guard against this, we must continually test our assumptions, and never consider an issue completely settled.
Sometimes it is better to keep away from a situation than try to do business in an environment where honesty is an alien concept and the only rule is that there are no rules at all.
At the same time, we should take full advantage of the opportunities that do arise.
In my view, the best bets are those that help emerging democracies to deliver on the promise of higher living standards–and that contribute to the formation of a large and civically active middle class.
That is where the potential for growth is highest, and the climate for doing business is most likely to improve.
Finally, I am convinced that the ultimate key to success in our era is a conviction that the Ethisphere is where we belong.
Companies will be associated with best practices only if their leaders refuse to settle for anything less.
And that will happen when leaders believe that setting high standards is not just smart, but right.
There are no iron-clad guarantees either in government or in business, but the best way to avoid getting caught doing the wrong thing is to insist that every action we take is as defensible in public as it is behind closed doors.
That is indeed, “Setting the tone from the top” and it is the surest way to procure both a sustainable bottom line and a good night’s sleep.
Thank you very much.