A just society prizes equity. Seeking it — achieving it — require careful thought and effort. Unfortunately, that does not always happen. How can we prevent a concept as important as “equity” from devolving into a catchphrase? “I Put That S**t On Everything” One measure of a catchphrase is its memorability. Here, Frank’s Red Hot…

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High-level deal making is an art. Now, some top entrepreneurs are partnering with a Nobel-winning contract theorist and other academics to combine art and theory into new best practices. How can we turn such innovation into advantage? In Deal Making, The Contract Comes Last And Least Deal making is too important to be left to…

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US and UK prosecutors promise leniency for errant companies that have tried hard to comply and cooperated with investigators. When does a thumb on the scales do justice? Rethinking Collective Punishment for Individual Wrongdoing Regulators and prosecutors in the U.S. and U.K. face a quandary. Does justice require harsh penalties against a company (and its…

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In a process as secretive as a papal conclave, involving only slightly less mystique, McKinsey’s senior partners refused Kevin Sneader a second term as CEO. Shareholder democracy has spoken. But what did it say? A Rare “One And Done” McKinsey & Company operates as unified global partnership. The firm’s approximately 650 senior partners elect the…

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Some day soon, computers may convincingly mimic human empathy. Will this lead to ethical artificial intelligence, or synthetic sociopathy? A Turing Test for Ethical Artificial Intelligence (“AI”) Technologists and ethicists have started to explore the form and meaning of a Turing Test for Ethical AI. The Original Imitation Game — Can Machines Think? 20th century…

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McKinsey & Company, the world’s premier consulting firm, will pay nearly $600 million to settle claims by U.S. states relating to McKinsey’s work for opioid manufacturers and distributors. This seems like a lot. It may represent value for money. But for whom? McKinsey’s Seizes First-Mover Advantage First Nationwide Settlement McKinsey’s settlement comprises 47 states, four…

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The new Administration’s commitment to Environmental, Social, and Governance (”ESG”) issues begs the question of a business’s end goals. We deserve an open and honest debate. Will we get one? Contending Theories of Corporate Purpose What should be a business’s end goal? Over the last 50 years, two competing approaches have duked it out. Dualism:…

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Parler

De-platformed within a 24-hour span by Amazon, Apple, and Google, social-media service Parler tries to rise from the dead. What’s the direct and collateral damage of success or failure? Framing In setting norms, how an issue is framed goes a long way towards deciding it. Whoever wins the framing battle often wins the policy war.…

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It’s been said that “you get justice in the next world, in this world you get law.” Does Boeing’s $2.5 billion settlement over 737 MAX crashes bear this maxim out? Boeing Cops A Plea — And Throws Two Ex-employees To The Wolves Last week’s column described the design and training decisions that caused two, Boeing…

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Upgraded Boeing 737 MAX commercial jets have returned to the skies. The blame game, however, goes on. Can we find a principle that cuts through the spin? Accidents Happen; Catastrophes Take Effort A total of 346 people died in two separate crashes of Boeing 737 MAX jets in October 2018 and March 2019. The crashes…

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Facebook CEO Jeff Zuckerberg & Apple CEO Tim Cook

In a free market, when companies fight over customers, it’s the customers who should win. Will that happen here? The Apple-Facebook fight over user privacy heated up last week, with Facebook taking out full-page advertisements in the New York Times, Wall Street Journal and Washington Post. The ads proclaimed that Facebook was “standing up to Apple for…

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Vaccination

By a 13-1 vote, an “independent expert” panel of the U.S. Centers for Disease Control and Prevention (”CDC”) just recommended who should enjoy priority for rollout of COVID vaccines. What would we do without experts? Two drug companies, Pfizer and Moderna, have requested and expect emergency approval of their COVID-19 vaccines. These companies estimate having…

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Retired Zappos CEO Tony Hsieh

Former Zappos CEO Tony Hsieh recently died in a house fire. He was 46. Hsieh was a man of many talents, ideas, and successes. The theme of his life was happiness: his employees’, his customers’, and his own. Here’s what we can learn from his example. A Dreamer Who Delivered The child of immigrants, Hsieh’s…

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Many thanks to J. Kevin Foster, host of Everything Ethics, for a great conversation about building ethical business cultures. Here is a link to the Part I of our discussion. After Kevin publishes the full video, I will post part II. #therightwaytowin

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Media billionaire Jeffrey Katzenberg recently pulled the plug on Quibi, his own start-up. As with any other box-office bomb, the post-mortem blame game may prove more creative, entertaining — and instructive — than the feature itself. Katzenberg founded Quibi with former eBay CEO Meg Witman. They raised $1.75 billion in start-up capital. This C-suite power…

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Former Wells Fargo CEO John Stumpf just paid $2.5 million in civil fines. Is the bank’s fake-account scandal finally over? Not for shareholders. The Fake Account Scandal People may remember the nationally televised @ss whuppin’ Senator Elizabeth Warren delivered to then Wells Fargo CEO John Stumpf. On Stumpf’s watch, 5,300 Wells Fargo employees opened as…

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Five ex-Kodak executives collected millions of dollars selling stock options they didn’t own. Then the story gets worse. (Under)statement from Mr. Know-It-All In a press (under)statement, Kodak Finance Chief David Bullwinkle (yes, Bullwinkle) said that the company had discovered deficiencies in its controls that had failed to prevent the unauthorized issuance of the company’s stock.…

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Ethical contracting doesn’t just happen. You have to think through each side’s business goals and vision for the relationship, as well as contractual incentives and processes to keep the parties working together. Many thanks to Leadership Talk Series Host Manish Pathak for a great conversation! For those interested in a battle-tested approach to deal-making and…

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Purdue Pharma has given up the ghost. The company faced $2.2 trillion in state and consumer claims, as well as $18 billion in sanctions from the federal government. The company will be reborn, but as what? Balrogs v Trial Lawyers Yes, Middle Earth has its wizard-killing Balrogs. But what creatures, for bloodthirsty, flesh-ripping rage, can…

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COVID shifts compliance-hotline calls in weird ways. Can you solve the mystery? Yesterday, I spoke with the Director, Ethics & Compliance of a major U.S. manufacturer. She told me that calls to her company’s compliance hotline have not lessened, but the wrongdoing has shifted from fraud and harassment to COVID protocol violations. At the same…

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For managers, ethical behavior depends not just upon the decision itself, but the processes and the purposes behind the decision. Taking a Stand in Expensify’s Name Using company letterhead, Expensify’s CEO, David Barrett, sent 10 million users a sharply worded email encouraging them to vote for a particular Presidential candidate, and against another. Did Barrett…

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Resembling fiddler crabs, senior Goldman executives seem to take with the giant claw, and to give back with the tiny one. A previous post described Goldman Sachs getting hit with over $5 billion in fines and disgorgement sanctions. These penalties relate to two senior Goldman bankers’ participation in a multi-billion-dollar bribery and embezzlement scheme. Taking…

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Goldman Goldman Sachs admitted wrongdoing in a bribery scandal and will pay over $5 billion. When senior executives break bad, the key question isn’t “Why?” but “When?” To see how your own company compares, take the the “Bagel Test”! Greed & Graft Goldman Sachs recently signed a deferred prosecution agreement with the federal government. The…

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There’s a dirty secret at the heart of corporate governance. Governance rules don’t create value. They only prevent it’s destruction. A business with perfect governance that doesn’t make money is worthless. So, how should we keep our eyes on the ball? What Makes a Business Valuable? A business is worth the returns it makes for…

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The federal government just fined JP Morgan Chase $920 million. And that’s because the feds decided to go easy on the bank. Now, as part of the settlement, JP Morgan must adopt the anti-fraud methods of a Mob bookie and casino boss. “Spoofing” Markets through Bogus Orders JP Morgan traders unlawfully manipulated the market through…

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Citigroup admitted to risk-management shortcomings and some compliance lapses. Federal regulators not only fined Citigroup $400 million but claimed authority over key staffing. Now the buck stops nowhere. This is bad for Citigroup. And for the rest of us. Bad Citigroup! Bad! Citigroup Board of Directors just signed off on consent orders. They admit “significant…

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Sheepdogs are boring losers. Wolves are cool winners. End of story? Not in real life. Hollywood likes to portray business winners as predators. They spot the prey, make the kill, then party hard, pilot yachts, and sleep with Margot Robbie. For a time, perhaps. In real life, such predators often end up sleeping with a…

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If my book wins a Pulitzer, I might receive a coveted WashU yellow visitor parking pass. (The red parking pass requires a Nobel.) From the blog: “An ocean liner hits an iceberg in the North Atlantic. Ten people scramble into one lifeboat, and wind and waves drive the lifeboat far from other boats. The passengers…

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Wells Fargo’s CEO Charles Scharf recently apologized for attributing lack of diversity at his bank to “a very limited pool of black talent to recruit from.” Comments like Scharf’s trigger rapid pile-ons and pushback. Many critics addressed his remarks directly. Coming from a different angle, I would ask whether, had Wells Fargo’s sale numbers disappointed,…

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A spate of blogs and press releases tout upgraded or “new and improved” capitalism, corporate governance, and executive-pay models. Before common sense can prevail, we have to use it. More power to people who want to make things run better. But, how much of what is proposed is really an upgrade, or new and improved?…

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Ethics Aikido is the art pushing back without pushback. It doesn’t take a black belt. Just one simple question. I used it once to stop a potentially scandalous $500,000 plane flight. We’ve all found ourselves in ethical jams. Our bosses or colleagues want to do something we think is wrong, or plays too close to…

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People don’t want to survive: they want to thrive. To show how, my podcast with World Commerce and Contracting explores The Right Way to Win: The ROI of Ethics and Success. The podcast covers: How ethics and business success reinforce each other How leaders send the message from the top How enforcement trends target middle…

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What makes us friends with somebody? Marriage v Friendship “Marriage” is an easier thing to understand. It is a civil contract and/or religious covenant with a defined beginning, defined rights and duties, and defined end. When entering or staying in a marriage, motives and conduct don’t matter. A person who got married for money or…

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A recent Corporate Compliance article featured my Best Practices for leveraging U.S. Department of Justice Guidance on Evaluating Corporate Compliance and Ethics Programs (DOJ Guidance). The DOJ will apply the Guidance in deciding whether to prosecute or fine you or your business. Wise people will take note. And use the Guidance to their advantage. Don’t…

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President Trump recently called for the U.S. Government to get a slice of proceeds from the forced sale of TikTok to a U.S. buyer. There may be legitimate national-security reasons for Trump to force TikTok’s Chinese owners to sell the personal-data-rich social media application to U.S. investors. And arguably, the forced sale will take place…

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Breakthrough inventions happen when we solve technical contradictions without performance trade-offs. For example, you need to cut a material fast but without building up heat. The solution: cut with a jet of cold, high-pressure water. Steve Jobs’s contradiction was running the world’s largest start-up: how to meld public-company size and scale with start-up innovation and…

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