John Hagel argues that business ethics means different things in different eras. A century ago it meant efficiency and shareholder returns. Today it means fostering rapid learning for customers, employees, and partners. That shift makes profit and ethics the same thing, not a trade-off.
If I could pull back a bit from AI to the broader business issue, I do want to go back to Jonathan's observations. I think the question of is business ethical to me requires a prior— answering a prior question, which is what is ethical? We talk about ethics as if everybody agrees on what's ethical and what's not ethical. No one agrees on what's ethical and not ethical. That's a highly debated topic. So before we can engage around, is it ethical, I think we need to really be clear about what do we mean by ethical? What are our beliefs? And I think in that context, I believe we— again, I mentioned a shift in the global economy. You know, I think for almost a century, in business, we had a supply-driven economy that was shaped by massive capital investment. To be in business, you had to invest a lot of money. It was very capital-intensive, large factories, and the— there was what I call the industrial bargain with customers, which is if you want affordable products, great, we will provide them to you, but they're going to be standardized mass market products. That's the only way we can make them affordable to you. And we bought into that. And by the way, huge progress in terms of access to things that most households never would have been able to access 50 years ago. So progress in that sense of affordability and access to, to products that are highly functional in our lives. I think the problem or the challenge was it required massive investment. And I think that's what shifted our focus in ethics to returns to shareholders. The ethical behavior was to, if you were going to get a lot of money from shareholders, you better pay them back in a, in a responsible way. That's the ethical behavior. Um, and the key values in ethics, I mean, again, I'm using the term broadly, were efficiency and reliability. You know, to be ethical, you had to be efficient and you had to be reliable. That was an ethical company. And, you know, as Jonathan mentioned, the 1980s, a famous economist came out with the notion that the primary goal is to provide return to shareholders. Companies were behaving that way for almost a century beforehand. He was just describing what companies were doing on a daily basis. I think the interesting thing now is we have three related changes in the global economy. One is, to be in business requires much less investment than ever before, much lower investment. We're in a world of accelerating change and uncertainty, and most importantly, I think, a world where customers are becoming more and more powerful. And the focus now is shifting from a supply-driven economy to a demand-driven economy. What do customers need and want? What is going to be most helpful to customers. And if we're not focused on that, we're going to end up not providing returns to shareholders. So I think it— I tend to be an optimist in this regard. I think the ethical behavior of the future— we often talk about ethics versus profits. I think in the future, ethics will be essential for profits, and the ethics will now be different. It won't be efficiency, it won't be cost reduction, it will be learning. How do we help people to learn faster? Because in a rapidly changing world, that's one of the most important values to all of us. How do we help our customers learn faster? How do we help our employees to learn faster, our business partners to learn faster? Now suddenly, that's where the human being comes back into the picture, and I think will shape the ethics of the future for business. And be an absolute essential to provide return back to shareholders. I don't think it's be ethical or be profitable. I think it's be ethical to be profitable in the future.
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