The recent news of Walmart and bribery in Mexico brings transparency and the anti-corruption movement to the forefront. This discussion is about the effect of social media on truth, ethics and doing good. Walmart is in good company with other good companies.
Social Transparency Drives Transition to Fairness
No doubt, the immediate commentary that “everyone has to do business this way in Mexico” is fact based. Other emerging economies have similar stories. However, being a part of the global economic transition away from the “we can get away with it” thinking is a better place to be. Social media, real-time sharing of ideas, a camera on every connected smart phone, and other technologies are driving the change. In a good way, technology has driven business transparency and enabled a new global court of opinion that polices, judges, and even punishes when the law is broken.
Rules and laws exist to help us be ethical in government and business. The United States has the 1977 Foreign Corrupt Practices Act (FCPA) and globally there is the 2005 United Nations Anti-corruption Treaty. This new world where companies, governments and societies transition to fair play is the inevitable fate accelerated by the new invisible hand of technology.
Policing Corruption
We are the police, that’s right, you and me. Technology in everyone’s hands in the form of smart phones with cameras has made it impossible to avoid the front page. The wise adage to “never do anything that you aren’t comfortable seeing on the front page of the New York Times, or Wall Street Journal” has never been more real.
It may not seem like it, but people, businesses, and governments are realizing this point. Parents too, are advising their children that Facebook is permanent. Businesses are increasing focus on customer service like quality initiatives were 25 years ago. And world governments are being held accountable more and more every day.
Sure, there are control-mongers trying to restrict the rate technology becomes a pervasive player, but sane and logical thinkers know that it is only a matter of time.
Judging Violations
Technology has brought everyone into the conversation. The distribution curve of opinion has enough real-time participation today to identify the statistical normal, which ends up being the indicator and force of adjudication.
New analytics technologies are emerging to evaluate the real-time streams of data on social conversation platforms such as Twitter, LinkedIn and Google+. Businesses and governments realize the power this real-time information stream has in predicting, and guiding decisions. More importantly, the dramatic shift for business to engage in the social conversation has been the new focus of branding, marketing, and sales. A good example is Coca Cola’s Content 2020 plan.
Progressive C-level teams are realizing that the future is a collaborative partnership. This is coming to every country, it is inevitable. Why? Because, no company will be able to survive if they don’t, in this new future world of connected real-time content where participation will drive success, uncover unfairness, and judge the failures.
New Form of Punishment
Obviously, the FCPA laws have clear consequences for those that violate them. However, for businesses, punishment is going to be much more swift and intensely effective. The social feedback will be punishing for companies. The effect on their products and brands will be immediate. There will be some swing and over-reaction, initially, but a new equilibrium will result.
The severity of the punishment will be a function of the company’s response and behavior when an issue is uncovered. This is good for two reasons. First, it allows companies to respond in aggressive rebuilding activity working toward a positive outcome for all. Second it enables consumers to recognize insincere corporate responses, and continue punishing social feedback and by voting with their feet and purchasing power.
A good example of this severity is how BP handled the recent gulf disaster on the deep water horizon. Initial denial and even blind confidence made the court of social opinion judge BP harshly. By engaging in the social (media) conversation, and publicly working to improve the gulf, it’s economy, and people, it has rebuilt a good portion of its lost brand.
The same cannot be said for the home mortgage industry, which continues to languish, and has not accepted enough responsibility for the economic malaise affecting homeowners, and that industry continues to languish in a poor social reputation.
Rules to Live By During the Transition
Having executive experience successfully surviving an FCPA violation, here are a few rules to consider.
- Create a culture of transparent leadership in your organization. Not just the c-suite, but throughout the organization, across function, geographies and management.
- If you have a violation, get good counsel that has handled this before. Ensure that you are in charge, counsel is there to follow your direction, you don’t work for them. Ensure they balance your need to be a viable business during and after the inevitable process, is a parallel and primary priority. Don’t win, but lose the business in the process
- Self-disclose violations to the authorities. Do not hesitate. Hesitation creates a shadow of guilt and cover-up, which can only hurt. The legal benefits have been well recognized in legal communities focused on corporate governance, risk and compliance such as Compliance Week. And as well, the department of justice.
- Base your global business rules on the toughest common denominator. Regions where laws are loose will eventually be coming up to FCPA standards. Not the other way around. No business leader ever went to jail or paid a fine by following the United States’ FCPA rules in other countries.
- Allow some short term business objectives to become a medium term objective. This is a good thing as the long-term social perception is profoundly more important and will enable much greater longer-term objectives to be achieved sooner.
- Understand that when a violation happens, it will hurt. Friends will be lost, and partnerships may break down temporarily. But it is a path that will get easier every day, and one that customers will recognize and reward in the long term.
- Invest in training your people. Develop a solid code of business conduct that outlines clearly operational expectations and level of ethics expected of the organization. Strengthen your organization’s ethics culture by identifying unacceptable and corrupt practices.
How Long Will the Transition to Global Fairness Last?
I don’t know, but I think that it will be shorter than anyone has ever imagined. The technology and process a concept called time-space compression applies here.
While we may think it is a long way out with some countries controlling content and use of social media, we are also seeing similar governments topple under the strain that cannot be sustained.
Consider that the concept of consumerization of corporate IT has turned 180 degrees. Where IT departments gave employees corporate approved tools, today IT is directed by employees to make their devices (iPhones, iPads, Android tablets, etc.) work with corporate IT. The masses are in charge, and it’s good.
These shifts creating connected populations of real-time opinion are what I see as guiding, if not driving this transition to fairness, everywhere. It’s only a matter of time, and it is a good thing.
Tell me what you think, leave a comment.
Image Credits: UN Anti-corruption Treaty as of 02/04/2008, via Wikimedia Creative Commons. Ratifying nations in red, Signing but not ratifying nations in blue.
Good post, Andrew. I agree with the premise that the masses are beginning to call the shots regarding how companies are perceived. It will be interesting to see what affect this has on more traditional marketing efforts, as forms strive to imprint their brand messaging on a public that is increasingly turning to other sources for that information. Peer reviews tend to be viewed as more credible than other sources of consumer info.
best,
Tom