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P H I L O S O P H Y F O R B U S I N E S S ISSN 2043-0736
Issue number 31
18th July 2006
I. 'Why Good People Do Bad Things in Business' by John Renesch
II. 'Language in Business' by Lawrence J.C. Baron
III. 'Swallowed Up' by Rob Harrison
People doing bad make bad business cultures, and bad business cultures make
even good people do bad. John Renesch calls this chain reaction a 'pandemic'
which can only be defeated when the good get 'conscious'. Can the necessary
level of conscious be achieved? or how close can we get? can bad people get
conscious too? what about those who are fully conscious, and good, but lack the
courage to make a stand in the face of intimidation? These are just some of the
questions raised by John Renesch's challenging article.
Way back in the mists of time, my main preoccupation was the philosophy of
language. So I am pleased to see Lawrence Baron raise the issue of the
importance of language within the business arena. Baron's main concern is
linguistic competence and the dangers arising from misunderstanding, for
example, in the field of medicine. The solution is to engage in dialogue at
every opportunity. Meanings are not static entities magically attached to
words, they are created and refined through the process of communication
From Ethical Consumer Online comes an article on a hot topic, the recent highly
publicised takeovers of ethical companies like Bodyshop and Green & Blacks by
large multinationals. Is this process inevitable or can it be resisted? and
should we want to resist? It boils down to the question which is ultimately
stronger, the ethical spirit of the companies taken over, or the corporate
culture of the companies taking them over.
I. 'WHY GOOD PEOPLE DO BAD THINGS IN BUSINESS' BY JOHN RENESCH
The Negative Influence of Systems on Human Behavior
Everywhere in our culture these days you hear people speak poorly of the
business community. It's as if the masses have silently agreed that 'business
people' are not very nice -- that they will screw you whenever they get the
chance -- all in the name of greedy self-interest.
I have even heard wisecracks made about 'business people' in the presence of
men and women who are, in fact, part of this much maligned community. I have
seen and heard these people laugh at the jokes and cutting comments as if these
judgment are about the other 'business people' -- not them.
I recall going into a bookstore some years back and asking about a book called
Business Ethics. As the clerk moved to the computer to check his inventory, he
muttered, 'Now there's an oxymoron.'
Most of the time when people refer to 'business people' it is done with a
negative connotation. We see it in the news media when the newscasters and
writers refer to 'the suits' who are, after all, the 'business people' who
'only are interested in the bottom line.' We hear it whenever anyone in any
artistic endeavor references how the influence of the 'business people' has
made economics the only priority. We've heard 'business people' referred to
pejoratively in professional sports, as people start seeing their heroes as
mere pawns in big business dealings. How often do we hear, 'Well, what can you
expect? It is a business after all.'
Several years ago Nations Bank acquired California's own Bank of America and
CEO Hugh McColl blatantly ignored promises he made beforehand and laid off
thousands. The San Francisco Examiner -- while critical of the morality of
McColl's actions -- summarized their story with an implied endorsement of the
man 'who you'd definitely want in your corner when it comes to business.' This
characterization of McColl made my blood boil -- not so much for the
affirmation of his actions but because the newspaper was so ready to accept the
practice of un-kept promises and betrayed trust as 'business as usual.'
If we take a few minutes to see who these 'business people' are we will find
that most of us belong to this community of people loosely defined as 'business
people.' Surprised? Well, if you work for a company or own your own business,
you are part of an economic system that traditionally honors economic gain more
than anything. As a player in that system, you contribute in a very direct way
to business being the way it is. Therefore, you ARE one of those 'business
people' who you've probably criticized before. If you are a manager or an
investor you are one of the 'business people.' If you work for a governmental
agency, or a non-profit organization, and do things differently because of
budgets, funding or following manager's procedures, you are one of them.
Near as I can tell, the only people who aren't part of this economic system
that has become so dominant these days are monks or nuns in monastic settings
who grow their own food and are completely self-reliant.
In other words, anyone who deals with, is persuaded by, or receives gain from
money or the exchange of goods and services is a 'business person.' They are
all parts of the system of commerce we call business.
Now that we can see that most of us belong to this group of people we've come
to denigrate so often, why do 'we' have this reputation for being so greedy,
unethical, ruthless and uncaring, and myopic when it comes to people, life
balance, and the environment?
The answer lies in the system we all make up -- the business system or the
culture of economic dominance in which we all play our various roles. Normally,
good people will tend to behave in ways they would never consider when they are
immersed in certain social systems. This is very obvious in some cases -- like
religious cults, teenage gangs, militia groups, revolutionary terrorists and
other groups that usually appeal to a smaller part of the population. I suppose
the worst case example of a system-gone-wrong would be a lynch mob.
I'm using the term 'system' to describe a set of expectations and relational
dynamics -- like 'rules' that people subscribe to. For instance, a relatively
benign example: your family may have a tradition of making a toast during a
particular holiday before dinner and, when the situation occurs, you feel
certain pressures to conform. So you join in the toast.
But some systems can be much more demanding. Let's say you are a rookie police
officer assigned to a precinct where there has been a tradition that you never
learned in the police academy. You are told by your partner that 'this is the
way we do things here' and the intense intimidation on the first day gradually
becomes a routine months later. Eventually, you may be the veteran telling the
new rookies 'how things are done' on the job. It has simply become the way you
do the job.
Systems in business are what corporate consultants call 'company culture.' One
great story about how corporate cultures can be perpetuated is the story of the
five apes which I included in my last book -- Getting to the Better Future. Here
Put five apes in a room. Hang a banana from the ceiling and
place a ladder underneath the banana. The banana is only
reachable by climbing the ladder.
Have it set up so any time an ape starts to climb the
ladder, the whole room is sprayed with ice cold water. In a
short time, all the apes will learn not to climb the ladder.
Now... take one ape out and replace him with another one
(Ape #6). Then disable the sprayer. The new ape will start
to climb the ladder and will be attacked unmercifully by
the other four apes. He will have no idea why he was
attacked. Replace another of the original apes with a new
one and the same thing will happen, with ape 6 doing the
Continue this pattern until all the original apes have been
replaced. Now all of the apes will stay off the ladder,
attacking any ape that attempts to, and have absolutely no
idea why they are doing it.
This is how company policy and culture is formed.
We underestimate the power and influence of the systems we belong to,
particularly those systems to which we become attached emotionally. Each of us
is a member -- formally or informally -- of many systems. And most of these
systems include an emotional component, like a loyalty, some personal
identification or source of pride, something that represents meaning to us.
Each of us has a nationality, a race, religious background, family heritage,
education background, childhood experiences, and other historic influences
which still affect us in subtle ways. Each of us belongs to some community, in
some city or town, in some state or province, in some country, possibly
belonging to one political party or another, work within some industry or
profession and belong to a group of co-workers or friends with whom we share
many values. We may be a fan of certain sports and admire certain superstars or
actors or musicians or other people who influence us. In all so many ways, we
identify with many of these systems or cultures or communities.
On their own, systems do not have consciences. The only thing that keeps a
system moral and a sense of integrity is the people who make it up. If the
people within any system tend to take it for granted or take a nap from the
every day events that occur within the system, bad behavior can start
manifesting. If some person, a human being, doesn't notice when this occurs, it
is likely to go unchallenged and even devolve into 'the way things are done
here.' This is how Enron's debacle happened. This is how empires implode. This
is how political dynasties come to an end. This is how seemingly successful
companies shock the world by declaring bankruptcy. The organizations or systems
begin to tolerate shadow-like behavior which festers into even darker and more
entrenched ways of being and then, out of the blue, they disintegrate seemingly
overnight and people wonder what happened. This is the insidious nature of
The antidote is consciousness. The answer is at least one person who notices
and says something. Be they whistleblowers or simply people who haven't fallen
asleep, these people are the sole antibody to this organizational pandemic.
Hundreds of systems influence each of us. Like chords tied by the Lilliputians,
our Gulliver is pulled in many directions -- most of which we are unaware. One
way to be more aware of these forces, these pressures to act and think in
certain ways, is for us to become more conscious, to know ourselves so well we
don't make any choices that are not conscious choices. We don't unconsciously
Can this level of consciousness really be achieved? It certainly is an ideal to
strive for, however, even if it is never reached. I know I'm a long way from
being this conscious although I strive for it constantly in my own growth. The
greater one's consciousness, the more aware one becomes about the choices one
is making and, therefore, one can exercise conscious discernment about what he
or she will do or won't do.
Until this state of consciousness is realized, people will make many
unconscious choices because they are unaware of the influences of the systems
in which they live and work, now or in the past.
Good people do bad things in business because they do not appreciate the power
of the systems that influence them while they are 'asleep' from a consciousness
perspective. Like people who can be easily hypnotized, unconsciousness allows
forces to permeate us in ways we hardly understand. These forces find their
ways into our psyches and search out each and every shadow or bit of darkness
within us. These bits of darkness are our unconscious insecurities and fears
which make us vulnerable and susceptible to anything which panders to these
hidden parts of ourselves.
The only reason there is darkness within us is that we haven't become aware of
those parts of ourselves; we've denied them and pushed them back into our
subconscious, evicting them from our consciousness and burying them in the
catacombs of our minds where we hope to never see them again. This burial makes
us susceptible to the ghosts which can come to haunt us later when the
oh-so-subtle but so very powerful forces of the systems in which we hang out
have their way with us.
The world's most dominant system is the economic system that drives almost
every other system around the globe. Economics is the '800 pound gorilla' and
most of us do what it wants! Business is wedded to this monster gorilla, making
it one of the most dominating and intimidating forces in the world. When such
dominating systems do something even a 'little bad' the effects can be
disastrous. Likewise, when systems this powerful do anything the least bit
'good' the effects can be amazingly beneficial. Think about it. All the other
systems are prepared to interact with business in a certain way -- a way that
they have come to expect over the years. Any departure from the common
perception of business people being 'bad' could have an incredibly beneficial
result in the world.
All we need is for more 'business people' to become more conscious so they can
be more themselves and less like automatons of the system to which they belong.
So, all we need to do in order to have 'good people' do 'good things' in
business is for people to become more aware of themselves, the influences that
surround them and make responsible choices despite pressures to choose
1. This story came to me over the Internet without any attribution; I am
grateful to whomever wrote it and would gladly acknowledge them if I knew the
name of the author.
(c) John Renesch 2006
II. 'LANGUAGE IN BUSINESS' BY LAWRENCE J.C. BARON
How does language affect business? Usually, this question is reduced to second
language skills, for example, learning Japanese, or preparing company
communications in the language of the intended audience.
What I want to consider is how does language, as a business communication tool,
and not as a second language skill, affects the bottom-line in business.
Precisely: what is the causal relationship between language and the
bottom-line? And to do this I will look at some of the interesting stories I
have found in the public domain media and which I write about in my blog,
Language in Business.
It should not come as a surprise to discover that language does affect all
business sectors and walks of life. However, what is interesting from an
applied philosophy point of view is that the same issues appear again and again
irrespective of the sector.
LANGUAGE AND SAFETY
What can be said in all confidence is that language does have a prima facie
causal effect on safety standards. Matters of safety introduce three important
questions. Do professional service providers, such as healthcare workers, also
have some moral duty to have a sufficient level of language skills? As users of
professional services, do we have some moral duty not to create an unsafe
situation, or compromise our relationship with professional service providers,
because of our language skills? And how serious is language in safety matters?
Healthcare is not only big business but also an important sector where
professionalism and safety go together. An important setting is of course when
healthcare professionals have to treat patients who also have a language
problem. In these situations it is typical for patient and doctor to
communicate through an interpreter. In many cases that interpreter would be a
very junior member of the family, maybe a child at school. This is a very
inadequate situation. And when a professional interpreter is used there are
usually serious delays involved.
A very effective and efficient way of solving the availability of interpreters
in a health centre was to create a network of interpreters over the internet.
The San Mateo Medical Centre, USA, covers a group of institutions and
healthcare professionals who see a number of patients who do not have the
necessary English language skills. This network connects patient, interpreter
and doctor via the internet using a form of video conferencing. An environment
where safety standards can easily be compromised due to language differences,
is, nevertheless, kept under control by means of some imaginative thinking and
Lubna Kerr's story from Scotland is a good example on how language can be
rendered useless by professional assumptions, as in this case, but presumably
by clients as well. Lubna's father was misdiagnosed as suffering from stress,
but in reality required a heart bypass. However, this was discovered after it
was too late to save his life. The healthcare professionals assumed that
because Lubna's father was Asian he worked too much and therefore needed to
In this story the patient did not have any language problems and was well
educated, so he could understand what was going on. The honest assumptions in
this case probably thwarted any possible chance of a dialogue that might have
developed between doctor and patient. The important point here is that even
when there is a common language, assumptions can still compromise safety
standards. Lubna, who is a pharmacist, has now started the Ethnic Minority
Diabetic Service precisely to help ethnic minority patients and healthcare
workers learn and understand the language and cultural issues involved in
LANGUAGE AND MEDICINE PACKAGING
If spoken language is a source of unfortunate confusion or breakdown in the
system, written language in the healthcare sector is no less subject to
misunderstanding. There are two stories from the USA that concern the language
on packaging for drugs. In one case an FDA advisory committee recommended
that, when handling attention deficit hyperactivity disorder drugs, giving more
information in an understandable language helped patients and doctors much
better than giving more stringent warnings.
Using ambiguous language could easily lead to serious consequences when dealing
with dangerous drugs; and presumably other toxic products. This is best
illustrated by the story that appeared in redorbit.com. The packaging for a
pain relief drug included the following: 'The usual adult dosage is 2.5 mg to
10 mg every three or four hours as necessary.' This could well be interpreted
to mean that someone can take up to 80 milligrams of the drug a day, but 50
milligrams can kill a patient not used to strong painkillers.
LANGUAGE AND PERSONAL RESPONSIBILITY
It is reasonable to assume that those in a position of authority should also
have the responsibility to minimise, if not eliminate, any deterioration in
safety standards. This, of course, should not exclude language issues. There is
a story from Dulles, USA; that seems to imply a moral responsibility not only
on those in authority, but also on the individual who is doing the actual work.
The Dulles story concerns a supermarket which employs a number of people with
limited English language skills. Because of the language barrier these
personnel could not and did not follow company training sessions in hygiene and
safety and as a consequence these were compromised. For example, hygiene
standards did not meet statutory requirements. Hence, regarding the personal
responsibility issue, we can ask, for example: should we allow ourselves to be
put in a situation where we can compromise the safety of others because of our
limited language skills?
The management in the Dulles story, however, not only solved the safety issue
by introducing multi-language training material on their intranet, but as a
result both customers and employees became more loyal to the business. I see
this case as both parties meeting each other half way. The management providing
the training tools in the right format and language, and the individual
employees following the training.
In both the San Mateo story and the Dulles story we can see how the negative
effects of language can be mitigated by technology. However, just because
modern technology can solve some problems we must's allow ourselves to be
overcome by assumptions which had a devastating effect in the Lubna story.
LANGUAGE AND AVIATION
Is language related to safety standards an absolute requirement or a relative
one? We can say that the supermarket 'got away with it' whilst their staff were
not following any training programme. Can we accept, 'got away with it' in the
aviation industry? The aviation sector is, in my opinion, another example where
we find a personal moral duty to have good language and communication skills.
The link between language and safety standards in aviation really concerns
aviation in the developing world rather than the regulated skies of the
developed world. However, ICAO are introducing new English language
requirements by 2008 to improve standards; see for example the web sites of
ICAO and IATA.
It was reported that in the 2005 Cypriot airline crash, the cockpit crew
might have contributed to the accident because their English was not adequate
enough to deal with emergencies in the cockpit. And from NDTV.com we read
that with the rapid expansion of the aviation sector in India, internal
airlines there are having to use pilots from South America or the new republics
in central Asia whose English is not always good enough for the job. An accident
waiting to happen, maybe.
So far I have tried to show, in principle, that safety and language are
causally linked. And since the details and money involved are reported in the
relevant news stories I shall skip giving those details here. I have also tried
to show that language, not only creates an institutional moral responsibility,
but also a personal moral responsibility.
LANGUAGE AND DISCRIMINATION
Language does not only introduce issues in personal morality but also in
political philosophy and philosophy of law. One of these issues is this: is
language a racial issue? And is language discrimination the same as racial
discrimination? The task here is to distinguish between political bandwagon
issues and philosophical issues.
In all the cases cited so far we can easily ask ourselves: is it fair that our
safety is compromised because someone does not have a good command of a
language? But is this the same as asking: can we discriminate, for example in
employment, against someone who has a poor command of our language?
Fortunately, most legislative assemblies have already answered this question;
the problems start at the implementation stage.
We find the race question covered in the two stories from the USA. From
California we had the story of a proposal to make shops put up signs in
English, in some cases against the will of the shop owners. And from
Philadelphia there was the story of Geno's Steaks restaurant whose owner
put a sign saying that this was America and 'when ordering, please speak
English.' Apart from the good copy these stories make, some of the business
issues involved are, for example, how free should people be to run their
business as they see fit? And, when does a communication policy become a race
Despite these stories, there are real discrimination issues linked to language.
A report by the Irish Vocational Education Association claims that employers
do take advantage of the fact that some immigrants do not have good English
language skills. And this story repeats itself in Sydney where there are
reports that construction workers imported from Asia do not only compromise
building site safety regulations, but equally important, they are subject to
exploitation because they do not speak English.
It also seems to be the case that being an English native speaker is in itself
not a natural advantage in today's labour market. A report by the British
Council predicts that English native speakers will lose their advantage in
the labour market the more people learn English as a second language. A few
months after this report appeared, and taking it at face value, we are told by
the Provost of UCL that university applicants from Europe can have an
advantage over British students because they have a better command of English.
We might look for an answer to the language-race question in a report that
appeared in The Star Online, Malaysia, about the president of the Bank of
China when he was doing his road show in Hong Kong prior to the bank's
floatation. Although the president faced no undue pressure to speak English, he
still decided that he would be better off doing so. Maybe there is a principle
that says that practical business needs always take precedence over political
niceties. On the other hand, we have a story from the European Union of the
French president walking out of an EU summit meeting when the head of the French
UNICE business lobby started speaking in English. But I don't know weather to
regard this story as ballast to the race-language debate or as dead weight
dragging down the debate.
APPLIED LANGUAGE IN BUSINESS
We finally move from ethical issues to philosophy of applied language. What
constitutes an effective and efficient global business language? The success of
the president of the Bank of China was not so much that he gave
presentations in English, but that he also answered questions in English. There
are many Chinese executives, we are told, who regularly give presentations in
English, but not all feel comfortable taking questions in English. I wish to
argue that by taking questions in English, what was a business presentation
became a business dialogue.
Those involved in selling would already appreciate the importance of asking the
right questions. But asking questions is also important for those who are
buying. This is part of the advice the National Institute for Automotive
Service Excellence, USA, give to members of the public when taking their
car for repairs. Hence, questions are not only important for information, but
also to start a dialogue. Which is probably what those polled in a Badenoch and
Clerk survey had in mind when they voted communication skills as the most
important skills for a successful career in finance.
If communication is about manipulating others then the research reported by
the American Psychological Association gives us some insight into how to
achieve this. This research focused on how to word messages to achieve maximum
compliance. In an experiment conducted amongst hotel guests, more guests reused
their towels when asked, in a note in their room, to identify with other guests
who reused their towels in order to improve the environment (40.1% compliance),
than those who were asked to help the hotel save energy (5% compliance).
Adopting effective language in business makes sense, but how best should we
communicate these corporate messages? Writing in Business Week on how to be an
ace speaker, Carmine Gallo says that the ideal time for a pitch is 30
seconds and for the first presentation the ideal would be three slides with 3
lines each. According to Gallo, some of the successful business people and
Presidents of the 20th century did follow some of the habits mentioned in the
Gallo also suggests that the ideal email length is a screen-full. Anything else
must be really justified. If you read so far you would have noticed that it took
me more than just a screen full to introduce the subject of language in
business. What is certain, however, is that whilst we are reading this, stories
about language in business are evolving, others are maturing and new ones are
NOTE ON REFERENCES AND LINKS
Sometimes the link I have for a story disappears. There are a number of reasons
for this, the story is no longer available in the public domain, moved to
another pages and some stories are just simply taken off the web site. However,
in most cases the story can be found in other media or even from the
institutions involved. Some links might also require a free subscription.
1. Language in Business
2. Citing medical errors, California seeks to ban child interpreters
in SFGate By GARANCE BURKE, Associated Press Writer, October 24, 2005
3. San Mateo Medical Center aims to lower language barriers
Silicon Valley/San Jose Business Journal - February 13, 2006
4. A Pronounced Improvement In Health
By Samantha Booth
Daily Record and Sunday Mail Ltd, Mar 7, 2006
5. Dire Warning Not Urged for ADHD Drugs
(c) 2006 The Washington Post Company, March 23, 2006
6. The Killer Cure: ; A Deadly Dose; FDA-Approved Language Called "Extremely
c 2006 Sunday Gazette, 2006/06/06
Story from REDORBIT NEWS: (c) RedOrbit 2005
7. New cultures, challenges: It's a polyglot world
Copyright (c) 2006 The Seattle Times Company, February 19, 2006
8. ICAO http://www.icao.int/icao/en/trivia/peltrgFAQ.htm#20
9. IATA http://www.iata.org/training/courses/aviation_english.htm
10. Crew confusion found in Athens plane crash
By Don Phillips, International Herald Tribune, SEPTEMBER 7, 2005
11. Foreign pilots facing language trouble
(c) 2004 NDTV.Sandeep Phukan, March 20, 2006
12. Can you read the signs? Language issues resurface
Los Angeles Times
Copyright (c) 2006 The Seattle Times Company March 30, 2006
13. Geno's Steaks
From Wikipedia, the free encyclopedia
First saw the story in Reuters
14. Report claims immigrant without English face exploitation
Free registration with web site
Copyright Unison.ie March 10th 2006(c) http://www.unison.ie
15. Language barrier
Copyright 2004 News Limited
16. Native English speakers losing out to global spread of English
I first saw the story on Reuters Website Feb 21, 2006 (c) Copyright Reuters
English Next 2006 By David Graddol available from the British Council website
17. ‘Better English’ gives EU students university edge
The Sunday Times, June 18, 2006
Copyright 2006 Times Newspapers Ltd.
18. Bank of China chief's fluent English sways investors
The Star Online
(c) 1995-2005 Star Publications Malaysia Bhd Co No 10894-D May 27, 2006
19. Chirac leaves summit as Frenchman speaks English
I first saw the story on Reuters website, but now it can be read on the
20. How to Communicate for Better Automotive Service
National Institute for Automotive Service Excellence
Link to ASE web site:
I first saw the story in The Morning Times, USA
21. Leadership and communication top City 'must have' skills poll
Author: Georgina Fuller, PersonnelToday.com, 29 May 2006
(c) Reed Business Information 2006
22. Professor Sir John Krebs FRS
Darwin@LSE Public Lecture Date: Thursday 16 March 2006
The Selfish Gene: thirty years on PDF file: Page 7
23. Shaping Pro-Environment Behaviors Certain Messages Work, Don't Work
2006 American Psychological Association
24. How To Be an Ace Speaker
By Carmine Gallo, Copyright (c) 2006 Business Week Limited. June 15, 2006
(c) Lawrence J.C. Baron 2006
III. 'SWALLOWED UP' BY ROB HARRISON
When ethical companies are taken over
Ethical companies are key players in the campaign to get big business to take
ethical issues seriously. They demonstrate that alternative ways of doing
business are possible, and they can feel like allies ranged against less
enlightened mainstream producers. To ethical consumers it can feel like
betrayal to wake up one day and discover that a former ally has been bought up
by the opposition.
This was all thrown into particularly stark contrast recently with the
announcement that The Body Shop -- one of the most outspoken campaigners -- had
agreed a sale to L'Oreal/ Nestle -- one of the most vilified of multinational
companies. In the ethiscore and Ethical Consumer rating system of course we
already have an answer to the question as to whether we should continue to buy
their products. And the answer will be that, most of the time, a more ethical
option will be available.
But what else should we make of it? Should it be celebrated or condemned?
Because not all takeovers are alike, the boxes overleaf look in more detail at
the specific circumstances surrounding some of the more recent events and
significant purchases. Here we try to understand these takeovers in the
context of broader changes going on.
Business commentators tend to see these acquisitions as part of a general trend
by multinationals to move in on the ethical sector. The sales growth of
ethical products is now so significant that the risk of being involved seems
lower than the risk of not being involved. Big companies have begun to
understand that corporate responsibility is a really important issue, and at
the same time that it is a potentially very profitable trend.
According to Ethical Corporation magazine, there are three main ways that
multinationals are moving in:
(a) Launching new ethical products
This would include Nestle's controversial Fairtrade coffee and Kenco's
Sustainable Coffee labelling, both launched in 2005. WalMart also announced a
`huge expansion into organic food' in May this year.
(b) Buying ethical brands
According to ethical business specialist Craig Smith, 'My guess is that they're
hedging their bets at relatively low cost. It can be extremely expensive to
create brands like these.' Others compare this practice with that of big
pharmaceutical companies which are increasingly buying risk-taking innovative
companies rather than doing their own research and development. It's also
worth noting that it can be difficult for a big brand with a tarnished
reputation to launch its own ethical products, and that buying a new brand is
one way of trying to get round this problem.
(c) Other routes
These would include `reengaging with their consumers' like Marks & Spencer has,
having worked on minimising supply chain risks over a few years. Also mentioned
in this context is new-style cause-related marketing such as Bono's Project Red
which includes American Express and Gap among its partners.
Win win or lose lose?
Another view of all this acquisition and ethical mainstreaming is that
campaigners for social change should be celebrating. Roger Cowe, a financial
commentator states: 'If you want to change what people consume on a grand
scale, you have to penetrate mass markets. And you can't do that if you're a
small specialist brand stuck in the organic or wholefood niche, even if that
means you are on supermarket shelves. It is a familiar dilemma: stay pure and
have a big impact on a small scale, or compromise and have a small impact on a
Both Craig Sams from Green and Black's and Anita Roddick from The Body Shop are
on record as saying that they believe that an acquired ethical company can
influence its new parent to improve its corporate behaviour. This remains
possible although does not appear to be demonstrated in the case of Ben and
Jerry's (see overleaf).
Others are not so positive about this turn of events. Judy Wickes from the
Social Venture Network in the USA describes corporate takeovers of socially
responsible businesses as 'a threat to democracy when wealth and power are
concentrated into a few hands.' And David Korten, in his book `When
Corporations Rule the World' explained how sustainable business 'should be
human scale -- not necessarily tiny firms, but preferably not more than 500
people -- always with a bias to smaller is better.'
It is also important to be wary of the potential impact of big multinationals
on the ethical standards bodies themselves. There is no doubt that
manufacturers generally like to try to influence regulatory standards. When the
organic movement rejected any trace of GM ingredients in its labelled produce,
pressure in the US to review its decision was intense. Although the organic
and Fairtrade labels have held firm to date, perhaps things might be different
in ten years' time when multinational suppliers -- more focussed on the bottom
line -- dominate both markets?
In addition, we cannot be certain that the only way to penetrate mass markets
is via transnational corporations. Both Ben & Jerry's and Green & Black's were
enjoying explosive growth just prior to being taken over. Who is to say that
this kind of growth might not have continued without the assistance of the new
Finally, we should be wary of multinational corporations acquiring smaller
ethical companies as a route to new ethical markets which saves them from
having to address core issues across the rest of their business. ECRA and the
ethiscore system of course remains designed to highlight this kind of
inconsistency for consumers.
Perhaps the most compelling case in favour of a certain wariness toward the
trend to acquisition by multinationals is the loss of `vision' that can
occur. For ethical products to remain exciting, they need to be constantly
re-inventing and innovating their approach to the issues as well as the quality
of the product itself. With the scientific management style, focussed on
quarterly profit forecasts so characteristic of most corporations, it is
difficult for this kind of innovation to flourish.
In a worst case scenario, a big company might buy up and deliberately `neuter'
an ethical competitor to take the pressure off its own less-than-ethical
products and practices. And while we don't yet have good evidence of this
occurring, it is clear that inside most multinationals 'it's a
struggle...[between those]...who want to try to be more socially responsible,
and those that don't.' A boardroom victory for the wrong side might
sideline a previously successful ethical brand.
In the USA, where acquisition of small ethical companies is more common, social
entrepreneurs are getting together to try to find ways to protect the vision
when a purchase occurs. They call this process `institutionalising social
mission' and research is more advanced than over here.
According to the US publication Business Ethics, 'If social mission is to
endure in companies -- if we are to create an abiding socially oriented
economic sector, instead of tasty morsels to be devoured by multinationals -- a
similar evolution must occur. Social concerns must be woven not only into
management processes, but into ownership structures as well.'
A super-ethical niche?
At Ethical Consumer one of our goals is to help bring about markets where the
majority of goods traded meet minimum ethical standards. In the global
economy, such a market has never been seen before, and we do not have a map
which shows us the best route to get there. Ethical products produced by
multinational corporations may get us there, or they may not. Small
locally-focussed democratic enterprises may get us there too, or they may
not. We simply do not know, as neither route has been tried and tested. On
the face of it, it would seem that the multinational route would certainly get
us there quicker. And we do know that some of the global problems facing us do
require an urgent response. But for some of the reasons discussed above, this
route is clearly risky.
Mark Palmer, marketing director for Green & Blacks, has suggested the eventual
evolution of a kind of two tier moral market. 'Ethical trading will be a
requisite. But there will be some blurring and confusion. In ten years time,
there will be the super-ethical niche brands, and bigger brands that carry the
spirit into the mainstream.'
For Ethical Consumer readers, the super ethical niche products will continue to
appear from a new generation of social entrepreneurs. For each Body Shop or
Green & Black's that joins the mainstream there is a Lush or a Divine bubbling
up underneath. It remains to be seen whether niche or mainstream ethical
products will deliver the greatest change. Both types of product do not of
course exist in isolation and will continue to influence each other. Although
there are specific issues of concern around each particular takeover, and there
is a case for improving the structures that `institutionalise social mission',
it is difficult to see why the mainstreaming of ethical products should not be
seen as anything other than a triumph for those campaigning for change.
The Body Shop
Products: Cosmetics and toiletries
L'Oreal turnover: £9.8 billion
Date of purchase: March 2000
Price paid: £652 million
'Before' Ethiscore: 11
'After' ethiscore: 3.5
The Body Shop, and its founders the Roddicks, have developed a reputation as
'campaigning traders'. Going beyond the development of ethical products, they
used the company's high street position to campaign vocally 'against animal
testing' as well as on other issues like Shell in Nigeria and multinationals
generally. This has made their acquisition, by one of the most vilified
multinational groupings in the world (L'Oreal/ Nestle), particularly hard for
some former supporters. To some degree the unique voice of The Body Shop had
already been stifled following its stock-market floatation in 1999.3 In
addition, pre-takeover reports had identified Body Shop as struggling
financially, and in need of a partner to prosper. According to the Economist,
'L'Oreal says The Body Shop will be able to operate as an independent unit,
which sounds sensible. But will L'Oreal really be able to resist slipping its
ethically-challenged wrinkle cream onto the shelves next to the bracing and
naturally-inspired body scrubs offered by The Body Shop?'
Green & Blacks
Purchaser: Cadbury Schweppes
Cadbury turnover: £4.7 billion
Date of purchase: May 2005
Price paid: £20 million
'Before' Ethiscore: 16
'After' ethiscore: 8.5
This takeover has already been the subject of an extended debate in the letters
page of Ethical Consumer. Cadbury Schweppes, although no stranger to controversy
over workers' rights in its chocolate supply chains and other issues, has not
attracted the same levels of criticism as other chocolate multinationals.
According to William Kendell, Green & Blacks' chief executive, 'we would never
have sold...the company...if we had not been convinced of their complete
commitment to our values. We know that they will help us bring the benefits of
organic farming and ethical trading to more people than we have been able to
Neil Makin from Cadbury Schweppes is also on record as saying: ' We wouldn't
want to buy these companies if we were going to destroy their brand. With our
Bournville Quaker forefathers we have something of a social and ethical
Ben and Jerry's
Products: Ice Cream
Unilever turnover: £28 billion
Date of purchase: April 2000
Price paid: $100 million
'Before' Ethiscore: n/ a
'After' ethiscore: 3.5
This takeover was the most high-profile takeover of a socially responsible
business in its day. What lessons does it hold for the bout of more recent
acquisitions? Firstly, sales are good. In 2003 it had already become the top
selling 'premium' ice cream in the USA with sales of $212m -- a 70% increase
over 1997.3 However, the ethical culture of the organisation is widely
recognised not to have fared so well. Its latest social audit found that only
45% of employees thought that the company was taking its social mission
seriously.13 20% of Ben & Jerry's employees were fired in the first 3 years
after acquisition and Unilever no longer donates 7.5% of Ben & Jerry's pre-tax
profits to charity. Although it is fair to say that disclosing this kind of
data in its own social audit shows that some serious commitment remains.
In one way, the Ben and Jerry's takeover was unusual. It was a 'hostile'
takeover of a publicly quoted company and, as such, left one founder, Ben
Cohen, less than ecstatic. He is on record as saying, 'I think that most of
what had been the soul of Ben and Jerry's is not gonna be around anymore'. He
also offers this advice to other social entrepreneurs considering selling to a
large organisation: 'Don't do it! Stay independent.'
Tom's of Maine
Purchaser: Colgate Palmolive
Colgate turnover: £5.5 billion
Date of purchase: March 2006
Price paid: $100 million
'Before' Ethiscore: 16
'After' ethiscore: 10.5
Tom's of Maine was America's top selling 'natural' toothpaste brand and it had
ECRA's highest rating for environmental reporting, animal testing policy and
for paraben-free products. Colgate Palmolive currently has ECRA's worst rating
in these categories as well as criticisms for involvement in Oppressive Regimes
and Political Activity. According to founder Tom Chappel, maintaining ethical
standards such as bio-degradability of ingredients and staying in Maine were
'deal breakers going into the process'.
Other similar takeovers
Small ethical companies being taken over by larger players don't always make it
into the press. There has been a clear trend for some time in the USA and it is
now beginning to be felt here.
Samantha and Odwalla (premium juice) by Coca Cola
Natural Boca Burger (veggie burger) by Kraft/ Philip Morris
Cascadian Farm (organic) by General Mills
Stonyfield Farm (organic yoghurt) by Danone
Seeds of Change (pasta) by Mars UK/ Europe
Rachels Organic (dairy) by Dean Foods (USA)
Kallo Foods (wholefoods) by Koninklijke Wessanen
PJ Smoothies (drinks) by Pepsi
Not quite the same thing, but the Pret-a-Manger sandwich chain sold 33% of the
company to McDonalds in 2001.
1. Ethical Corporation: March 2006. Ethical Product Marketing, Saha and Webb.
2. Ethical Corporation: May 2005. Buying responsibly -- Roger Cowe.
3. Mother Jones: Jan/ Feb 2003. Culture Change: David Goodman
4. Wal-Mart plans huge move into organic food: Guardian May 13 th 2006
5. See the Comments by Ben Cohen in Mother Jones op cit 3 above.
6. Business Ethics: Summer 2003. Why social mission gets squeezed out of firms.
7. BrandRepublic.com. Ethical brands: Moral minority 3rd August 2005 10 USA
Today 21/ 3/ 06. Big companies buy small brands with big values. Theresa Howard.
8. Green & Blacks website: viewed 26/ 4/ 06
9. Sustainability RADAR Aug/ Sept 2005 Reprinted on www.greenbiz.com
10. The Economist March 23 rd 2006 The body Beautiful: Mixing Money and Morals
[From http://www.ethiscore.org Ethical Consumer 101 July/ August 2006.
Reproduced with permission.]