Saturday, March 28, 2015

Germanwings 4U9525: The art of asking the right questions

The crash of the Germanwings flight earlier this week is still dominating much of the (Western) news media. It is not just the fact that it happened with a well known Airline with a good safety record (Germanwings is a part of Lufthansa) right in the middle of Europe – in fact one of us sat on a Lufthansa A320 just a day before the crash. But it is also the absence of any good explanation as to the cause of the crash.

Now that story has evolved over the last hours. First, we learned from the voice recorder of the black box that the co-pilot was alone in the cockpit and did not open the door for the pilot to come back after his toilet break. It was interesting to see how Lufthansa, the prosecutors and most media then jumped to the conclusion that the co-pilot deliberately crashed the plane.

While that is indeed one option, only few reports raised the question why the flight data recorder – the other black box – could not be found. Or why when it was found the hard disk with the data was missing. Because only those data would clearly document which actions the co-pilot actually took while alone in the cockpit. It is still conceivable, that we saw a repeat of an incident on a Lufthansa A321 just five months ago when iced sensors sent the plane on route from Bilbao to Munich on a similar descent and could only be saved by the pilot switching off the autopilot.

And maybe it was not suicidal intent but other forms of incapacitation that made the co-pilot behave that way. After all, as we finally learned today, he had a history of psychological problems and should in fact have been on sick leave rather than flying.

Nearly unanimously, most commentators jumped to the conclusion that his medical condition just proves that the plane was brought down intentionally by a mentally sick individual. And in particular Lufthansa appeared to be relieved to identify a rare singular individual case as the reason for the accident – rather than technical or other reasons which might have put the company in a much trickier position.

Or does it? After all, air crashes have a long history as case material and illustrative incidents in the business ethics debate. Even if we assume that an individual is to blame - more often than not such behavior occurs in a specific organizational context which normally leads to this behavior. One of the most recent examples is certainly the 2009 Crash of the Colgan Air  commuter plane in Buffalo (similar to this week’s case, a supplier of Continental Airways), which initially all looked like pilot error. However, as a brilliant PBS documentary illustrates, this incident revealed a host of unethical practices and infractions not just with the airline but in fact with the wider industry.

So, this is the time to ask the right questions. The first of which would be to get some more insight as to why the co-pilot did conceal his mental illness from his employer. Does Germanwings have a procedure for this? Do they just fire people like him, when such condition is revealed? Do they care?

A next question would be how on earth his depression could have gone unnoticed by his colleagues? After all, pilots spend a lot of time together and observe each other from up-close. How could it be that the pilot was totally comfortable to leave this co-pilot in charge for a couple of minutes? What does this say about the culture at Germanwings? Does anybody care about how his colleagues are doing?

The more important questions would look at the wider context of work in the airline. Germanwings recently had strikes as Lufthansa tries to impose a low wage no frills-system of wages and working conditions on their low cost branch, which competes with the likes of Easyjet or Ryanair. This is an object of fierce dispute and Lufthansa itself is in a middle of a merciless battle with their pilots. Just last week, thousands of flights on Lufthansa were cancelled due to a strike. This climate does not exactly encourage a young aspiring pilot – on the way to live his childhood dream – to expect an empathetic reception when broaching his personal issues.

The problematic working conditions at other low cost carriers are by now common currency. So the question we have to ask is in how far Lufthansa has made its subsidiary Germanwings in nothing but a clone of Ryanair and the others. This raises the question if we are actually talking about an environment where someone with mental health issues would think the last thing to disclose to his employer and to hope for empathy would be his personal troubles and problems?

Overall then, there are a lot of questions to ask to Lufthansa, the investigating bodies, and in fact the media. But there are also larger questions unanswered. European pilots associations now openly challenge why so many facts of an ongoing investigation are leaked to the press. Or why certain questions, most notably about the flight data recorder have not been addressed. One cannot help but having some uncomfortable reminiscences with the disappearance of MH370 in South East Asia about a year ago. As even the CEO of Emirates, Sir Tim Clark (far from being one of the inevitable conspiracy theorists in these incidents), has very vocally set out, the way the public gets (mis-)informed about those disasters raises serious questions. Questions, to which we ultimately need an answer.

Image copyright, Reproduced under Creative Commons Licence

Monday, March 9, 2015

Apple's big bet on consumer trust and privacy

The Apple Watch understandably took the limelight at Apple's big launch event today. But what is becoming increasingly clear is that to really understand the company we need to see it as so much more than simply a technology company. And we have to look beyond its products, however alluring they might be.

Nowhere is this more evident than in the area of corporate responsibility. For much of the past few years, the corporate responsibility community has been focusing hard on Apple's product supply chain. And for good reason, with a spate of labour violations plaguing the company (most recently from the BBC in December last year) despite some impressive commitments to responsible sourcing. But with the launch of the Apple Watch and its extended capabilities for health monitoring, research and diagnosis, along with the rapid growth of its Apple Pay system, it is the company's capabilities in data management and security that will likely define its reputation for corporate responsibility over the next decade.

As Tim Crook noted at the launch, the Apple Watch is "the most personal product we've ever made". It is not only wearable but collects real time data on users' health and fitness, enables them to make contactless payment direct from their financial services provider, and provides the possibility for a host of other applications relying on personal data. Keeping all of this data private and secure is going to be a big test for the company. Their success now will rely just as much on maintaining the trust of their consumers as it will on wowing them with cool new gadgets.

Apple is not alone in this of course. Other technology companies such as Facebook, Sony, Microsoft and Google have already learnt to their cost the necessity for maintaining the confidence of their customers in terms of privacy and security. Apple has had its own scares with breaches of its iCloud service, but its exposure to data security risks are only going to accelerate now that it is going increasingly personal. Apple is now not just in the technology industry but also in financial services and health services where the privacy and security concerns are accentuated even further.

Apple is making a big bet on consumer trust because it has a strong reputation for digital security already (say, compared to Microsoft) and it has less of the challenges in managing privacy compared to some of its others competitors. This is because it does not rely on ad revenue (and therefore intimate knowledge of its consumers) to drive profitability, unlike say, Google and Facebook. So it is already out ahead in many important respects. Whether it can maintain that pole position will remain to be seen. But what is clear is that Apple's reputation for corporate responsibility, and indeed its success in personal devices and services more generally, will increasingly be won and lost in the area of consumer trust and privacy rather than product design and execution alone.

Image copyright Martin Hajek. Reproduced under Creative Commons Licence

Monday, October 27, 2014

How Apple and Facebook have taken gender discrimination to a new level

Over the last week or so we have seen a vibrant debate unfolding after the announcement of Apple and Facebook’s latest benefit: Female employees can store and freeze their eggs on the company’s dime so that they can postpone pregnancy beyond the phase where they might want to just focus on their careers.

I put the case up for debate in my undergraduate classes on business ethics this week. It was a fascinating experience. To start, we assessed the upshot. There is a surge of female professionals who attempt at pregnancy in their forties and thus a surge in in-vitro fertilization and a host of other avenues to late motherhood luckily provided by progress in obstetrics these days. But there is also a fair number of women who just have to suck it up that by the time they can put their head around having babies, that ship has sailed.

Here, such an offer seems to be a big benefit. You can progress in an environment where your commitment to the job is 24/7 – like your male colleagues – and still enjoy motherhood at a later stage. And your babies will be built out of genetic material that is as good as it would have been had you dared at the impossible of merging both, career and motherhood. This policy indeed provides women with more options, more choice to freely decide what to do with their lives, their careers and their aspirations at the personal level.

But upon further scrutiny, my students unearthed three major problems. The first is fairly obvious: what is offered as an ‘option’ by the company may quickly become the ‘default’. What will happen now at Google if a 32 year old women tells her boss she wants to go on maternity leave? Given the options, she makes a statement clear and loud that she prefers her personal priorities over the company’s. In organizations, rules prescribe roles. This new option potentially excludes motherhood from what a ‘high potential’, future executive at Google should prioritize in her most fertile years.

A second focus of discussion turned out to unveil the unsaid. What about the male role in child bearing and rearing? The tacit assumption of such a policy seems to be that not a single of Apple or Facebook’s male employees will ever need similar help or support in his career because of having children. In some ways then the policy just reflects rather problematic gender stereotypes: mothers get distracted from their careers by having children; fathers just carry on as if nothing has happened. Yes, there are different biological constraints on women; but having and rearing a child also totally involves the father – unless he is a complete moron (or Google and Facebook’s model employee?). Fair enough, Facebook also extends an option to male employees to freeze their sperms: after all, a significant threat to post-40 pregnancy is not the female egg, but increasingly the deterioration of male sperm at that age. But the message is the same: postpone that baby business!

Which leads to a third objection which cuts to a deeper level. The age between 25 and 35 for a woman is the phase where biologically motherhood is the most likely. It is also the phase where most women are at the prime of their adulthood: mature enough to make tough life choices on partners and lifestyles, but also vibrant and physically energetic enough to dedicate full energy to their pursuits. By offering this option, aren’t Apple and Facebook just saying: ‘Give us the best years of your life, your kids can put up with whatever is left of you at a later stage’?

One of my students put it more bluntly: ‘If you translated this policy to other forms of discrimination in the workplace, such as racial discrimination, this would amount to saying to black people: “Look, you are very welcome here, but just to make it easier, we offer you this cream that will make your skin as white as everybody else’s here.”’ This new benefit essentially offers to a woman to be just like her male colleagues, happily stripped of all her female ‘impediments’. In some ways, that is gender discrimination at its worst.

Apple and Facebook deserve praise to recognize a common and pressing problem. Admittedly, they have policies regarding maternity benefits and childcare that are better than most other American companies. But the moral imagination they applied to this particular solution falls short of the creativity that made them billion dollar companies. If they are willing to throw $20,000 at the problem, why not offer more choice to both female and male employees? The women  (and men) contributing to the company are not just ‘human resources’ ready for maximum exploitation.
Artwork by Keoni Kabral, reproduced under the Creative Commons License.

Sunday, October 19, 2014

The future of business ethics research

This weekend offered an interesting opportunity to discuss, dissect and reflect on the state of the art of business ethics research and some of its future trajectories. At the Wharton School of the University of Pennsylvania a small group of business ethics scholars gathered from all around the globe to celebrate and honor the work of one of the faculty members, Professor Thomas Donaldson. Donaldson, a philosopher by training, can be considered one of the pioneers of the business ethics field and one of its most longstanding and certainly most influential voices over the last four decades.

Some of the speeches at the event focused on appraising and celebrating Donaldson’s impressive body of work, including many humorous interjections on Donaldson as a person by some of his contemporaries such as Norman Bowie, George Brenkert, Ed Freeman, or Pat Werhane. Most of the day though was dedicated to work by scholars who build on, extend, refine, and continue some of Donaldson’s work, including also entering a critical dialogue with his ideas.

Thomas Donaldson
Donaldson’s work is not easy to summarize as it covers a number of areas, incl. ‘hard core’ philosophical topics. Without downplaying any of those, one could argue that his work (mostly manifest in books and seminal articles) on corporations and morality, ethics and international business, and Integrative Social Contract Theory (ISCT, together with Thomas Dunfee) count among the most influential ones for the business ethics field. Much of the day was dedicated to develop those ideas further, and in particular ISCT seems to still have a long life ahead.

Taking a step back after reflecting on Donaldson’s work for 1½ days, it strikes that next to his solid contributions it is both his approach and his choice of topics decades ago which have maybe the strongest potential to inform work in business ethics for decades to come. Donaldson deserves credit for breaking out of the extant consensus in both, the narrower business ethics field as well as the general gist in management studies with an innovative take on at least three core research topics.

What is the unit of analysis in business ethics? 

For most of its short history, certainly until the mid 1990ties scholarly work in business ethics was mostly looking at the organizational level, or even below that, at the level of individual decision-making. What is to admire about Donaldson as a scholar is that he broke out of that consensus, most remarkably when publishing his book and papers around ISCT. The basic tenet of ISCT is that whatever happens in terms of ethical or unethical behavior in businesses is intricately linked to the outside world of business, to institutions that govern business, to wider socio political processes that incentivize or constrain whatever businesses – let alone individuals within them – are doing.

There are solid grounds to argue that this approach to researching ethical issues in business is still of highest relevance today.  On the opening panel of the conference Professor Margaret Blair gave a somewhat sobering account of recent court decisions in US corporate law. Blair, a longstanding authority and critic of the current shareholder dominated view of the firm, gave a short tour d’horizon of court rulings reflecting shareholder dominance as being stronger as never before (Ebay vs Newmark, Trado, CitizensUnited, Hobby Lobby). When the strongest institutions (in this case the law) governing business advocate a model of the firm which flies in the face of much of the basic tenets of the field of business ethics it appears that the odds are very much stacked against any of the aspirations of the field ever coming to fruition in the real world. 

The inspiration then from Donaldson’s work for business ethics scholars may be to further and refine some of the ‘Donaldsonian Themes’ (so the title of the conference); but it is fair to argue that the vision, courage and intellectual entrepreneurship to come up with new approaches of conceptualizing business in its wider societal context is maybe the biggest example and benchmark Donaldson has left for a next generation of business ethics scholars. Be it the relation of business and politics, be it the role of business in economic inequality, or be it the role of business in new technologies and big data – these are all new ethical challenges which ask for wider and deeper conceptualizations of the role of business and its embeddedness in wider society.

Business ethics is not an epiphenomenon

For most of its history, and to some degree still today, business ethics has been considered as a subfield of management that deals with side-effects of business, with fringe occurrences, with phenomena, that maybe are of interest to the odd practitioner here and there. Certainly many scholars in the core disciplines of management, such as strategy or finance would echo such a view.

During the conference many colleagues highlighted that Donaldson throughout his career has worked in overcoming this categorization of business ethics work. That includes a lot of his writings but also his service to the academic community of management scholars. He was actively leading the subgroup ‘Social Issues inManagement’ of the Academy of Management but also engaged in a number of ‘field constituting’ ventures. Most notably his time as Associate Editor of Academy of Management Review (the top journal  for management theory) in the mid 2000s has led to a spate of work originating from scholars in the business ethics field, which was developed under his editorship into papers that speak to the core of the management discipline.

The purpose of the firm, the effect of business on the ecology, the role of business in development or peace – just to name a few examples of business ethics topics – are no longer side-shows. Many of these questions - certainly post financial crisis – are topics that touch the core of the management discipline. Donaldson has left a great example that business ethics scholars have to raise their voice louder and speak to a wider community. Business ethics has something to bring to the party, and Donaldson in is writing and service, has shown how to do this really well.

Management research is a multi-disciplinary venture

One of the things that stands out when looking at Donaldson’s work over four decades is that research in management as an applied discipline is best when it is phenomenon driven. That partly explains the enormous variety of issues he has taken on. The intellectual rigour, theoretical precision and an impressive skill at interesting and accessible writing is what has set a benchmark for ongoing scholarly work. What strikes most is his success – together with other colleagues – to establish philosophy as a legitimate core discipline in management research.

Many management scholars still consider economics to be the main theoretical foundation of management studies – a view maybe still strongest reflected in some of the management studies communities in Europe. In the 1960s, certainly with the rise and growth of marketing and parts of organizational behavior research, we can now consider psychology as a legitimate member of the canonized disciplines of management inquiry.

But this project of widening the theoretical and disciplinary avenues to management research is not over yet. In his writing Donaldson has certainly elevated philosophy as a strong candidate; in his editorial work at AMR he has contributed to make approaches from political science, sociology and others more familiar to the core community of management researchers. We can argue that continuing to widen the disciplinary focus of research in management is truly a ‘Donaldsonian Theme’ and a task for current and future generations of business ethics scholars.

To conclude then, just this week Rolling Stone magazine ran a story on the influence of the Koch brothers on American politics. So as an afterthought - at the end of the conference there was arguably one topic conspicuously absent during the discussion: namely the phenomenon of power (corporate or political, alike). Looking at contemporary debates on, for instance, income inequality or on the roots and fallout of the financial crisis, this seems a somewhat conspicuous omission.  One explanation though could be that – as Richard DeGeorge, chair of the philosophy department during Donaldson’s PhD studies, pointed out at the conference – Donaldson as a student did not take too much liking in Karl Marx’ writings…

The good news then is that this weekend’s conference was not a celebration of Donaldson’s retirement. He will continue as Wharton faculty to be an active scholar and thus surprise, challenge and inspire us hopefully for many more years to come.

Top photo by frankrizzo805, reproduced under the Creative Commons License.

Thursday, June 26, 2014

Disrupting management ideas

Over the last days we have seen a captivating debate unfolding. Jill Lepore’s article in The New Yorker on the concept of ‘disruptive innovation’ has garnered quite some attention. Not at least from its progenitor, Lepore’s Harvard colleague Clayton Christenen, who appears to be anything but amused.

Disruptive innovations - put simply - are new products or services that create new markets, while at the same time turning existing solutions to customer demands obsolete, and thus destroying existing markets and the companies that serve them. In his many books, Christensen initially developed the idea from a corporate context (such as his floppy disk, steel, or construction equipment examples) but it quickly branched out into other sectors.

The article is a fascinating read not just because it takes on an idea largely uncontested in academia and beyond. Moreover, the concept of ‘disruptive innovation’ had quite a substantial impact on the real world. Lepore writes as a historian and delineates the superficial and ideological nature of the idea. The piece is also worthwhile reading as it exposes Christensen’s ‘case study’ approach (after all, a hallmark of its intellectual birthplace) to thorough historical analysis. The latter perspective debunks and exposes the data at the heart of Christensen’s ‘disruption’ theory as utterly wanting.

Now it is always fun to question conventional wisdom and powerful ideas, especially when they come from a Harvard Business School professor recently honored as the No 1 in the Top50 Thinkers ranking. As some of our readers might remember, we also enjoyed doing a similar job on his colleague Michael Porter’s ‘big idea’ on Creating Shared Value earlier this year. But there is the danger that those skirmishes just remain internal quibbles inside the ivory tower of which another former Harvard colleague, Henry Kissinger, once said that they ‘are so vicious because there is so little at stake’…

Lepore’s article clearly goes beyond that. Two things seem worth highlighting. First, she contextualizes a management theory in a wider intellectual historical context, and second, she shows that as such management ideas are deeply ideological constructs:
"Beginning in the eighteenth century, as the intellectual historian Dorothy Ross once pointed out, theories of history became secular; then they started something new—historicism, the idea “that all events in historical time can be explained by prior events in historical time.” Things began looking up. First, there was that, then there was this, and this is better than that. The eighteenth century embraced the idea of progress; the nineteenth century had evolution; the twentieth century had growth and then innovation. Our era has disruption, which, despite its futurism, is atavistic. It’s a theory of history founded on a profound anxiety about financial collapse, an apocalyptic fear of global devastation, and shaky evidence. […] 
The idea of progress—the notion that human history is the history of human betterment—dominated the world view of the West between the Enlightenment and the First World War. It had critics from the start, and, in the last century, even people who cherish the idea of progress, and point to improvements like the eradication of contagious diseases and the education of girls, have been hard-pressed to hold on to it while reckoning with two World Wars, the Holocaust and Hiroshima, genocide and global warming. Replacing “progress” with “innovation” skirts the question of whether a novelty is an improvement: the world may not be getting better and better but our devices are getting newer and newer. […] 
The idea of innovation is the idea of progress stripped of the aspirations of the Enlightenment, scrubbed clean of the horrors of the twentieth century, and relieved of its critics. Disruptive innovation goes further, holding out the hope of salvation against the very damnation it describes: disrupt, and you will be saved."
Disruptive innovation in its reception in business, academia, public administration and politics had some rather devastating (side-)effects – as Lepore eloquently points out. The crucial lesson of her essay though lies in its unmasking of what sounds like a rather technocratic ‘theory’ as something that is deeply informed by a particular view of the world, by a particular normative take on how humans historically have evolved.
As the article points out, such functionalist and technocratic ‘theories’ totally ignore other dimensions of human life. ‘Disrupting’ – sold as a good thing and the natural way of how organizations evolve - ignores other important dimensions of human development, especially if the concept gets branched out and expedited beyond business to schools, hospitals, prisons, museums etc. The ethical implications of such a theory are totally ignored in Christensen’ framework – argues Lepore.

One central lesson of this article for everyone concerned with the role of business in contemporary society – be it academics, executives or politicians – points to the pivotal role of understanding the intellectual heritage and presuppositions of those core theories and ideas that have shaped contemporary social (incl. business) reality. In that sense, Lepore’s piece is a truly ‘critical’ contribution to management – and the set of historical ‘criteria’ by which she does the job should encourage particular management academics to move beyond the confines of their discipline. To understand the power of ideas we have to look at the broader picture of their origin, their contemporary drivers, but also their wider implications for society.

Photos (top by Andy Kaufman; middle by Nicolas Nova) reproduced under the Creative Commons license.