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The Model Corporation: Part One. Introduction

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The list of unscrupulous corporate activities shown in Table 1.1 clearly shows us what common sense already tells us; namely, that greatness is more than money deep, to paraphrase a classical adage.

A model corporation would be a great corporation, but just what is corporate greatness? Even if we can't find it, we can still describe it:  

  Consistently Positive Behavior + Consistently Positive Results

The Gold Standard for corporate greatness is to do business consistently in a positive manner in consistently producing positive results. It may not read like an ideal standard but it is. I challenge any corporation to meet it. I doubt if it will ever become the norm. Yet, I argue that it is every corporation's obligation to itself and to all of its stakeholders, including the environment and to society at large to do no harm and to seek greatness whether it ever reaches the ideal. Doing no harm yet failing to reach greatness, no small achievement itself, ought to be considered a grand "consolation prize."

An Unconventional Bottom Line

The conventional bottom line of business we all know about, the bottom line of results, the profit-revealing line. The unconventional bottom line, which I call the "bottom line of behavior," is not so familiar. Try to picture it as three-in-one bottom lines. One divides competent from incompetent behavior. Another divides motivated from unmotivated behavior. The third divides ethical from unethical behavior. All behavior below any one or more of these lines fall far short of what ought to be expected of any corporation and automatically rules out its being considered great regardless of how great its conventional bottom line might look.

Positive results can never be reflected in any set of financial measures. Achieving positive results does not require achieving double-digit growth in financial returns every year or maximizing shareholder wealth. Both of these goals are a sure invitation to corporate wrongdoing. Positive results are those that create a positive, multifaceted, and multidirectional value. The value is positive because good benefits have been provided without knowingly causing harm. The value is multifaceted because the benefits aren't just financial ones. And the value is multidirectional because the benefits are not just limited to shareholders and bonus recipients within the corporation.

Nature of Corporate Success and Failure

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One way to think of the conventional and unconventional bottom lines is to think of the difference they make when combined in how success and failure are managed. From the perspective of the conventional bottom line a success is a success because the desired results are gotten, and a failure is a failure because the desired results are not gotten. All successes are rewarded. All failures are penalized. That's how the notion of success and failure is usually treated in corporations.

Since corporations obviously cannot survive on just their good behavior (nor can Broadway survive on just good acting without enough paying audiences) the practical implications of the unconventional bottom line are mostly in its merger with the conventional one so that the positive and negative dimensions of corporate behavior are taken into account in considering the extent to which corporate goals are met. Adding the two bottom lines together gives a totally different picture of success and failure and allows for the total management and accountability of corporate performance.

An Old Truth

The merger of the two bottom lines conveys an old truth learned in childhood and often neglected in adulthood. Not all success is good, particularly ill-gotten success, where the ends justify the means. Not all failure is bad, particularly failure where all three kinds of behavior behind it were well above their own respective bottom lines.

This old truth needs to be revived and made a prevailing creed and practice throughout the corporate world. It is obviously a truth hard to honor in practice. It requires not only the acceptance of positive failures but also the willingness sometimes to reward major risk-taking efforts that fail despite plenty of competence, motivation, and integrity that went in to the efforts. While positive failures do not reflect greatness, they can help set the stage for it. Consider, for instance, a company that rewards the members of a project team that spent millions, their talent, and their energy on a worthy gamble that failed due to totally unforeseen circumstances. Such a company wisely knows that the same positive efforts, not being dampened, may very well succeed the next time.

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This old truth also requires intolerance of all negative successes and the additional moral courage to penalize the ill-gotten ones, which helps to explain why this old truth is not seen in the corporate world. Can you imagine in it, for example, a manager of a leading sales division being fired because he was unscrupulous?

[1] Zellner, W., et al. Everyone Loved Enron. Business Week, December 17, 2001, p34.

[2] Asmus, P. 100 Best Corporate Citizens: Companies that Serve a Variety of Stakeholders Well. Business Ethics, 2004, 18, (1), 4-12; Labaton, S. S.E.C. Says Fannie Mae Violated Accounting Rules. New York Times.com. December 16, 2004.

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I am a retired (1995)organizational psychologist who has since concentrated on the subjects of the collusion between government and corporations and matters of war and peace. I have just finished writing my final book (final because I am staring (more...)
 

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If there were no corrupt corporations there wou... by Gary Brumback on Wednesday, Feb 27, 2013 at 5:22:16 PM
Gary, corporations, despite what the Supreme Court... by Hal O'Leary on Wednesday, Feb 27, 2013 at 6:59:54 PM
Yes Hal, the bottom line is indeed corrosive and c... by Gary Brumback on Wednesday, Feb 27, 2013 at 8:47:06 PM