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ISSN 2043-0736

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Daniel Silvermintz

Tom C. Veblen

Marco Senatore

Peter S Borkowski

Dena Hurst

Sean Jasso


Geoffrey Klempner

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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 48
1st October 2008


I. 'Corporate Virtue (or 'Why be Ethical'?)' by Simon Geschwindt

II. 'Wall Street Skull and Crossbones' by John Renesch

III. 'The Long and the Short of it' by Michael Levy

IV. 'Prescriptive Entrepreneurship' by James O. Fiet with Pankaj C. Patel,
reviewed by Andrew Browne



The shadow of the current crisis in the global financial markets hangs heavily
over this issue of Philosophy for Business. As I write, an amended version of
the proposed 700 billion Dollar rescue package to prevent US banks from
catastrophic failure goes back to the vote in just a few hours time, and it is
anyone's guess which way the vote will go.

In the current climate of remorse and recrimination, it worth while remembering
Nietzsche's motto, 'What does not kill me, makes me stronger.' As with the Wall
Street crash in 1929, there is an opportunity for business people and
legislators to learn from the experience -- or, at least, those who are still
in business or still in office after the storm has finally passed.

Two experienced observers from the USA, John Renesch and Michael Levy offer
their views on the current situation and the prospects for a remedy against our
repeating the same mistakes in the future.

Also in this issue, Simon Geschwindt of Dialogue Works offers his thoughtful
reflections on different argumentative strategies for dealing with the
individual who laughs ethical principles to scorn: a problem which any
organization or business which seeks to improve its ethical standing must face.

Dr Andrew Browne, himself retired after a successful career as an entrepreneur,
reviews 'Prescriptive Entrepreneurship' and gives his critical assessment of the
value of the authors' advice to would-be Richard Bransons.

Geoffrey Klempner



The question, 'Why should we be ethical?' is central to the concept of
corporate virtue and business ethics, yet reaction to pressure to behave
ethically, especially when the going gets tough economically, can vary from
indifference to downright hostility. And for a few, it is anathema. There are
people in all walks of life who, whatever the circumstances, continue to behave
badly in order to advance their own narrowly drawn interests.

To be effective leaders, managers at most levels need to be able to confront
such people.

How can you argue with someone who claims to have built a life of material
success on lying and cheating, and sees no reason to change his ways? One such
example is fictional. He is taken from the film, The Emperor's Club. He is
Sedgwick Bell, an immensely wealthy head of a major US steel corporation, with
a Clinton-like swagger and similar disregard for the truth. At school he lied
and cheated; he still lies and cheats.

He is eventually confronted by his former history teacher, Mr Hundert, who
tells him, 'All of us at some point in the future are forced to look at
ourselves in the mirror and see who we really are.' He says Bell will see
himself as a liar and a cheat, and, because Bell lives an unprincipled life, he
will pity himself. Bell responds with a typical, 'who gives a shit?', arguing
that Hundert's life of principles has amounted to little, and that he, a rich
aspiring Republican senator, will do what people in the real world do -- lie,
cheat, steal -- namely, whatever it takes to get to the top.

What can you say to someone like that? Hundert's answer was a feeble expression
of impotence and disappointment. But it needn't have been. If it had been
possible to keep Sedgwick Bell engaged in dialogue a while longer, and if
Hundert had been armed with the right arguments, Bell might have been forced to
question his lack of morals.

 What it means to be amoral

In answering the question 'what can you say to someone like Bell?' it helps to
know what 'someone like Bell' really is -- not just what they think they are,
but what they really are. Two descriptions that spring to mind are 'amoral' and

Bell says that he will do just what he claims people in the real world do --
lie, cheat, steal. On that basis he would probably claim to be an amoralist --
someone lacking any belief in moral principles. The amoralist can be one of two
types: someone who is amoral but is still part of a moral community; or someone
who tries to operate completely outside the moral community. Bell, a CEO and an
aspiring senator, clearly belongs to the first category.

The usual response when people like Bell say 'I don't give a shit' is, 'Come on
-- you must care about something!' One obvious reply would be, 'Sure. I care
about myself!' It's provocative, but it does present an opportunity to open a
dialogue. Unwittingly, Bell has taken the first tiny step towards undermining
his claim to be an 'amoralist'.

The next step is to explain that even if he is an amoralist, that needn't make
him completely uncaring about anyone else but himself. It doesn't necessarily
make him a psychopath. He could care for someone, but be ruthlessly uncaring in
general. He might care for his only child, but not care less about anybody else.
Or he might care for others occasionally, but only on inclination and

If Bell finds one person that he does care about, you can try to get him to use
his imagination to extend that care to others. If he claims not to be able to
think of anyone, remind him that he accepts that at rock bottom that he does
care about himself at least. Having established that much, go on to suggest
that in that case, surely it matters what others 'do unto him'. An amoralist
wouldn't care for virtues such as telling the truth, keeping promises,
fairness, honesty and so on. Bell has already denied respect for possessing
such virtues himself. But if he answers that he finds it important in others,
then he cannot claim to be an amoralist.

Otherwise, Hundert could try: 'Would it be acceptable to you if everyone
behaved like you do, even when it is against your own interests?'

If he replies that he simply doesn't like it because it goes against his
interests, and because he will then have to devote time and energy to combating
it, this is not a moral issue. If, on the other hand, he disapproves of such
behaviour in others per se then he has taken a moral stance.

As an extension of his concern for what others might do to him, he might like
to 'do unto others as he would have done unto himself' -- to get that far he
has to put himself in their shoes.

If, however, Bell is prepared to behave to others in a way that he would
disapprove of if they behaved likewise to him, then he is a hypocrite. On the
other hand, even though he might raise his fists at the word, he may not deep
down really care.

'What would happen if everyone behaved like you?' Mr Hundert asks him.

'Not good,' he replies with a wry smile. 'But I'll survive better than most
because I'm used to it, and I know the ropes. Anyway, it's a daft question,
everyone doesn't behave like me, and nor will they ever.'

'Is that because they are morally superior to you?' Hundert counters.

'I don't understand the term 'morally superior'. They would like to behave like
me if they could get away with it, but they won't because they're afraid to.'

'What about people who have been brought up to act morally, and who wouldn't
dream of doing otherwise -- who would be incapable of behaving like you, even
in the absence of social constraints?'

'If there are such people, then that's fine for them. But not for me.'

'You're different.'

'No, I'm realistic. At rock bottom, the majority is no different from me. Under
conditions of extreme stress, hunger, depravation and so on -- or even an
economic crisis -- all this morality stuff just flutters out of the window.'

'Why introduce a rock bottom environment? It's more appropriate to test
people's behaviour in their usual environment. You behave like a jungle
dweller, while you live in the lush environment of 21st century America! What
people are really like is about what they are actually like!'

'Okay. Maybe I'm not an amoralist,' Bell accepts, with a bored glance towards
the door. 'But you still can't expect me to respect your moral standards. We
come from different worlds. I come from the world of American big business. You
come from the world of education. I've come a long way to accept that I have
some kind of a morality. But I insist that at least it's my own -- and not

'That makes you a subjectivist. But, at least you're not amoral.

However, even if we've persuaded Sedgwick Bell that he's not amoral, and that
he is part of the moral community, he can still come up with all sorts of
reasons for behaving badly, 'Reasons' are nearly always rationalizations --
excuses. At this point, ethical dialogue is lost.

 Excuses: The End of Ethical Dialogue?

An excuse offered by a US military police officer to justify her involvement in
ill-treatment of prisoners in Iraq's Abu Ghraib prison was that she was only
obeying orders. In most cases justifying actions by appealing to authorities is
a betrayal of personal responsibility.

'My religion dictates it' was one of the excuses exploited for decades by the
white minority in South Africa to excuse apartheid, and is used to justify
religious fundamentalist crime in the East and in the West.

People are especially prone to excusing unethical conduct if it involves a good
cause. Robbing the rich to feed the poor sounds heroic, but it is still theft
and still unethical.

Another excuse is that an action didn't harm anyone. One example is
justification of stealing from shops so large they won't notice the effect, or
because they are insured. There is never 'no harm'. And the fact that there
might be little harm doesn't justify the action, which, again, is still theft.

Another excuse is 'Everyone does it' -- and its partner, 'It's always been like
that'. That is what used to be said about slavery! These excuses come under what
professional ethicists call 'moral conventionalism'.

'I didn't gain anything personally' justifies improper conduct on the false
assumption that actions are unethical only where there is a personal advantage.

 Tu Quoque (Latin for 'you too') is the assertion that because your accusers are
themselves guilty of wrongdoing, they have no right to accuse you of doing
something wrong. The argument is fallacious because whether your accusers are
guilty of wrongdoing is irrelevant to your own responsibility for wrongdoing.

Another excuse for moral prevarication is the slippery slope argument. It
claims some morally acceptable practice should not be allowed because it will
inevitably lead to morally unacceptable consequences. For example, 'sanctioning
euthanasia will open the floodgates to the killing of the sick and elderly --
look at what happened in Nazi Germany!' This argument is fallacious unless it
can be demonstrated that the morally objectionable consequences are indeed

It is clear that where there is rationalisation, there is not honest dialogue.

 It's nice to be nice

It is rational to assume, or to take as fact, that most people are happier when
they have the approval of their family friends and peers, and that this is to be
achieved by behaving ethically towards them. As our first step we can ask Bell
if he enjoys the approval of his immediate friends and peers. He does, though
this seems narrowly restricted to colleagues and employees. Do his employees
understand the extent of his ruthlessness, and will they still approve when
they know that he appears not to care about them become exposed?

We can point to more apparent facts: that ethical behaviour brings personal
advantage. In the long run it's prudent to be ethical. It's good for business.
Being ethical boosts self-esteem, and earns you the respect of family, friends
and peers. Good managers are sensitive to the costs associated with a poor
ethical climate. By any measure, loss of confidence in the organisation is the
single greatest cost of unethical behaviour. Some of the cost drivers are:
deterioration of relationships, often resulting in a damaged business
reputation; declining employee productivity due to self-protective behaviour;
displaced employee creativity; ineffective information flows throughout the
organisation; declining employee loyalty, high employee turnover and
absenteeism, and internal theft and embezzlement.

A measure of self-interest is ethically expected, but once it becomes the sole
motivation, decision-making degenerates into a series of cost-benefit
calculations. When that happens, ethics capitulates to expediency.

We can further appeal to everyday ethical understanding, such as the normal
possession of a conscience. This is the awareness of the moral aspect of
behaviour; conscience nags you (hopefully) to prefer right to wrong. This step
might not be successful: people with no conscience who act badly can feel just
as good about themselves as someone acting well but with a clear conscience.
Sedgwick Bell would seem to fall into that category.

Apart from appealing to conscience, what other reasons are there for being
ethical, particularly in an age when there are no religious sanctions for bad

Sedgwick Bell might say: 'If God is not watching me, and I don't care a jot
about people's opinion of me, and I don't believe in karma and reincarnation,
and I'm indifferent towards being liked or disliked, then what is there to stop
me from behaving badly?'

Perhaps Bell would care about what he will bequeath to those left behind. A lot
of very powerful business people and politicians have cared very much about
their legacy. Because 'you know not the time nor the place', and because all
that will remain of you after you've passed on is other people's memory of you,
whatever you were doing at the moment of your death could be of considerable

This leads to a useful, though self-interested, ethical maxim: never do what
you wouldn't want to be uncovered on your death. But Bell probably wouldn't
give a shit.

Even at this stage there is still one more step. Taking into account the rights
and wishes of stakeholders (those to whom you should behave ethically) is a
necessary condition of acting morally. However, it is not a sufficient one.
Twixt the will to act morally and the actual act comes the moral courage to
carry it out.

Bell doesn't seem to care -- yet. Although he has accepted that he is not
amoral, and that he is part of the moral realm, his way of relating to others
is still subjective and idiosyncratic.

Bell started off by apparently failing to understand ethics. He criticised
those who behave well for being frightened of being found out if they don't.
But these are the people with courage -- those with the ability to act against
short term self-interest for the greater good. These are the risk-takers. Who
really knows what the greater good is? These are the people who think
long-term, rather than seeking instant gratification, without even knowing if
there is a long-term. They are the grown-ups.

To join them, Bell doesn't, as Mr Hundert suggests, need to look in a mirror at
himself in a hypothetical situation. He just needs to look at others in the here
and now.

Staying ahead of the game

To be effective leaders, CEOs and managers faced with the pressures to survive
in the cutthroat environment of global economic slowdown need to build their
companies on solid foundations.

We need long-term thinking. Leaders hold on to their position by anticipating
market, social, and especially legislative changes -- 'staying ahead of the
game'. Those companies that act proactively on an ethics policy gain immensely
in terms that positively impact the bottom line -- reducing exposure to legal
violations, enhancing employee loyalty, satisfying pressure groups, and -- most
of all -- convincing consumers that they are buying from people whose basic
moral values are upheld even in the jungle of free markets.

(c) Simon Geschwindt 2008


Simon Geschwindt
Head of Communications
Dialogue Works
The Old School Business Centre
Newport SA42 0TS

Tel: 01239 820440
Mob: 07870 679844



In 2002 I wrote about the 'modern-day tyrants ' suggesting they might be the
master manipulators of Wall Street. In part I stated:

     These modern day tyrants value short-term financial
     gratification more than anything else. Their actions are
     totally inconsistent with a sustainable world in which
     people are valued and life is affirmed. They create no real
     value in the world, certainly not in the way most of us
     think about adding value, such as an exchange of something
     for something else. Their sole purpose is to make a profit,
     and to do so with the least amount of capital as possible.
Fast forward six years to this past week...

The other evening I was watching a segment of the movie 'Pirates of the
Caribbean' starring Johnny Depp as Captain Jack Sparrow. In one scene Sparrow
and a fellow pirate make a toast, apparently one of the pirate codes -- 'Take
what you can. Give nothing back.' In light of the financial fiasco confronting
the whole world today, this seemed very timely for the consciousness (or lack
of it) that has been allowed to permeate our corporate environments in recent

We apparently learned nothing from the Enron, WorldCom, Arthur Andersen debacle
earlier this decade. Nor from the savings and loan scandals of the 1980s. Or the
many other indicators that predatory capitalism only works for a very few at the
expense of the vast majority. Americans are most probably going to pay for all
this maleficence.

If markets were truly free and unfettered, the market fundamentalists might
have a valid point. But those who manipulate the market to their advantage
cannot honestly justify that position when they themselves tilt the playing
field in their favor. This is not a free market but a skewed market that
required some restraints.

Those who have mastered this game -- those who made fortunes while leaving the
rest of the world in ruins -- have no conscience. They leave others to clean up
after them and slink off into the darkness with their loot. They truly do
subscribe to the pirates code: Take what you can. Give nothing back. This makes
these dubious characters the modern-day pirates, far worse than mere tyrants.

If you happen to know any of these modern-day pirates and are keeping quiet
about them out of some distorted sense of loyalty I suggest you blow the
whistle and do it now! It may prevent another bunch of greedy SOBs from
pillaging the public trough in another few years.

(c) John Renesch 2008


Web site:

John Renesch is author of Getting to the Better Future



How can the world financial system allow a trillion dollars to be written-down
or written off within the last few months? How can oil jump from less than $12
to $147 over the past few years and then fall down to $91 in a couple of weeks?
What kind of manipulation is this? To a lay person, it sounds like an economic

In every walk of life you are always going to get opposite view points no
matter how sound and effective the argument for or against. In fact, a
distinguished debater can argue the case for both sides of a dispute and
articulate each case in parallel terminology that will make sense to opposing
parties. For instance, take the price of gold and how it is traded on the
commodity markets and how it obtains its changing values.

Gold is a metal and every ounce that has been mined over thousands of years is
still around. The quantities keep increasing as the gold nuggets are dug out of
the ground every day. It has an industrial use and a jewelry use. If these two
components were the only way to value gold its price would be more stable and
lower. However, it is also perceived to be a hedge against inflation and also a
supposedly safe haven in a world of economic and political chaos. Both these two
components depend on how well the intellectual propaganda machine operates its
rhetoric on events played out on the world stage.

With the help of the media and hi-tech, information is fed to the public at
warp speed. The trades are performed on mercantile exchanges. The contracts are
margined so a small percentage of the monthly contract price is required to
trade each contract of 100 ounces. The value can increase and decrease at a
fast pace due to all types of leveraged derivatives and electronically traded
funds known as ETFs.

On the other side of the value of gold, as a commodity it does not yield any
monetary interest. Also, there is a charge when dealing on exchanges and if
delivery is taken large quantities will need to be stored in a bank for
security. When demand for the yellow metal drops it becomes a depreciating
asset that is a liability because money has to be paid out to store it. Over
the past 30 years the price has swung from $250-$1000. Today, the price is
around $850 an ounce because of the financial market turmoil. Since most people
who trade commodities lose money it is a speculation only for people who enjoy
gambling in a casino. When fear evaporates the price may fall twice as fast as
it went up.

Oil and food commodities are different as they have an end use. Nevertheless,
outrageous prices have been allowed to spiral out of control by a lack of
regulation by people in power who believe in the myth of keeping alive a free
market. When prices can be controlled by perceptions, ideas, thoughts and
suggestions, then my friends we are dwelling in the PITS of humanity and the
markets are not free. They are held captive by topsy-turvy reason and logic
that many self-interest experts can explain as factual. Supply and demand is
paramount but figures can and do become distorted, thus supplying propaganda
and fallacies with room to air.

The financial markets are worth 62 trillion dollars. They are extremely complex
these days and contain collateralized mortgage notes that are turning out to be
of little value. These also depend on credit swaps, which is the rate banks
lend each other money. The lower the ratings of a financial institution the
higher interest it has to pay to stay in business. When credit rating agencies
such as S&P and Moody's downgrade them at a crucial and vulnerable time, they
prematurely go into bankruptcy or are taken over by the government as is the
case in AIG, brought about mainly by the negative forces of short sellers.

If that were not enough, hedge funds that are unregulated have sprung up and
they can short stocks at will. If they work in conjunction with each other,
which is deemed to be illegal, they can bring down sound financial institutions
in a matter of days if the company is having temporary liquidity problems. Even
if everything is legitimate in the short selling, once it reaches a certain
level mutual funds and the public become fearful and they sell the stocks they

The web of greed and fear becomes ever increasingly wound up in unregulated
markets that resemble a Wild West shoot out, otherwise known as free market
capitalism. The reverse is being projected when commodities or stocks reach
overvalued levels. Both long and shorts are governed by erroneous thought
process when extreme values are extended beyond normal expectations. This is
what is going on in a nutshell but of course it is much more intricate as the
devil ego/ intellect is in the details.

Understand, very few values are what they seem to be in a financial world
controlled by minds that cannot distinguish truth from opinions.

There is no doubt that many companies in the financial arena have brought about
their own destruction by their own avarice and greed. They dreamt up many
derivatives and collateralized notes that were backed up with valueless assets.
Many bosses who should be accountable for the collapse of their companies were
paid millions of dollars when they were kicked out; yet, the common
shareholders are left with zero. In one instance recently, the head of one of
the government backed agencies is reported to have received $20,000,000 in
severance pay. Many financial institutions are now been taken to the cleaners
by the same type of derivatives they devised and traded. -- Karma, maybe?

Well, maybe, however it still has not stopped the onslaught of new derivatives
that arrive on the world scene on a daily basis, for more speculators to trade
away corporate enterprises and commodities, with highly sophisticated leveraged
financial instruments.

The government declares they are in favor of free markets and do not want to
bring in the up-tick rule that would limit short sellers. It limits the short
trade as the speculator can only short a stock when it has traded up. This
levels the playing field, somewhat. They also do not want to stop naked short
selling, although some say it is already illegal. This means that, without new
regulations, the short sellers can take advantage of a bad situation and
fast-track its demise with the help of the media who assign them lots of free
air time to make their self-fulfilling prophecies.

Who is to blame for the farces in a USA comedy of financial errors?

Is it the bosses who allowed the greed to rampantly spread?
Is it the short sellers who feed from avarice?
Is it the media who will go to any lengths to sensationalize a story?
Is it the government who allow it all to happen?

Perhaps all are all equally guilty and are doing more damage than any terrorist
organization can do. However, they all have one thing in common... They are all
extremely well educated with financial and business accruement.

The mighty have indeed fallen; they have fallen short of grace, compassion,
kindness and generosity. The quest for mastery by intellectual, sophisticated,
power crazed people knows no decent or wholesome boundaries.

(c) Michael Levy 2008


Web Site:

Michael Levy is the author of the book Invest With a Genius



 Prescriptive Entrepreneurship
James O. Fiet with Pankaj C. Patel
Edward Elgar Publishing
Cheltenham UK, 2008

Can you actually teach someone to be entrepreneurial? Empirically it would not
appear a suitable subject for learning. Just casual knowledge of the
entrepreneurs of our time -- Bill Gates, Richard Branson, Rupert Murdoch and
their peers -- would seem to support a view that they are born and not made.
Almost by definition an entrepreneur is a 'self-made man schooled in the
University of Life'. Yet entrepreneurial ability is essential to all new
business and every nation's economy. In recognition of this there has been a
growth in the number of books and academic courses in entrepreneurship in
recent years.

When I took a degree in business studies at university in the late 1960s, the
subjects we were taught were those deemed by the academic staff as likely to
provide us with the tools to be successful managers. Core subjects like
economics, accounting, marketing and statistics were mixed with options in the
then popular subjects of industrial relations, sociology and industrial
psychology and operational research. This was fairly standard business
education offered by probably a dozen universities in the UK and many more in
America, who saw themselves as forward thinking compared to the traditional
universities who largely followed a creed that a good degree in any subject
(even philosophy!) was a fitting grounding for a career.

On completing any business studies course a graduate was considered to have an
armoury of management techniques that could illuminate and inflect their
careers in business. What we were definitely NOT educated to do was start and
run a business, take risks, spot business ideas, raise seed capital etc. -- in
short to be entrepreneurs, people able to start, run and own their own small
businesses. The late 20th century was the era of the large multi-national
corporation, and business education was channelled to providing a feeder
programme of desk fodder.

The end of the 20th Century arguably saw the rise of an entrepreneurial culture
with 'new economy' firms like Microsoft eclipsing the 'old economy' of General
Motors etc. in industries where the cost of entry was not prohibitive. Aided by
a vast growth in the availability of credit, the development of stock markets
accessible by even the smallest of companies and tax breaks for investors, the
promotion of innovation and small companies became a growth area. The
encouragement of small firms was deemed an economic priority by many Western
Economies. Business education responded by introducing The Case Study.

Students would be given a written screed providing copious empirical
information about a company that had succeeded -- or dramatically failed -- and
were asked to discuss this in seminar groups, role play, and decide how they
would act in such situations. The fact that such case studies were descriptive
of the past and lacked the human dimensions and behavioural traits or time
frame of the original participants were accepted as weaknesses, but they did
not completely devalue the exercise as an attempt to bring business education
and reality closer together.

I think it is fair to say that the growing number of academic books on
entrepreneurship over the past twenty years have focussed either on essentially
a case study based approach or have adopted a high flown language that is often
difficult to apply in practice. Behavioural scientists have criticised the
universality of many of the ideas proposed and there is little evidence as yet
of entrepreneurial education actually producing a conveyor belt of Richard
Branson clones (dread thought).

This has led to an attempt to create an academic field based on the theory of
entrepreneurship, which management writer Peter Drucker termed 'Systematic
Entrepreneurship', an essentially prescriptive approach involving a series of
steps that form a practical 'how to' manual for people looking for business
ideas and/ or successfully growing an enterprise. While doubtless some people
would argue that entrepreneurial skills are not capable of analytical
definition since they involve personal abilities, luck etc., a number of
writers have begun the search for an entrepreneurial model that can be taught.

James O. Fiet is Brown Forman Chair in Entrepreneurship at the University of
Louisville and came to academia with the benefit of 14 years in business. His
book is an innovative, accessible and thought provoking addition to the
literature on what he claims is today's 'hottest subject in business schools'
(p.6). Although the format and language of the book are academic -- sometimes
painfully so for the general reader -- the intention to deconstruct and
systemise the entrepreneurial approach is one that will interest all those
aspiring to run a business.

Fiet first argues that prescriptive entrepreneurial teaching should be'theory
driven and empirically tested.' (p.11). This is not based on describing
entrepreneurial behaviour in past situations as this approach does not take
account of the role of pure luck or the differing economic and cultural
conditions that apply. 'To have prescriptive value, entrepreneurship research
must eventually cumulate [sic] academic results by following a program that
answers key questions about the decisions made by aspiring entrepreneurs'

At the risk of being overly reductive, Fiet's book boils down to the production
of a checklist for entrepreneurs (conveniently summarised in a series of
appendices). He stresses the importance of information gathering and the need
for a systematic approach to data analysis on any potential product market.
Finding business ideas is to be carried out through 'information channels'
which is a rather strained way of describing all the people you know divided
into groupings such as 'family', 'fellow members of the golf club' etc.
Although Fiet comes agonisingly close to academicising the bleeding obvious, he
is seeking to systemise something that is inherently intuitive and, as such, is
true to his objectives.

Information channels give rise to 'consideration sets' which are basically new
ideas. These consideration sets are then subject to financial analysis in terms
of their ability to create wealth. There is no Midas touch involved here; Fiet
is not suggesting that bad ideas can be made into good ideas. He is proposing a
systematic model, based on a checklist of points and questions for valuing
business ideas. If garbage goes into it, then garbage will come out. However he
argues that such an approach will at least allow entrepreneurs to make informed

Fiet claims somewhat contentiously that 'The most unusual aspect of the ideas
presented in my approach to prescriptive entrepreneurship is that they have
been experimentally tested against the most accepted approach to discovering
ideas, which is entrepreneurial alertness' (p.17). Firstly he tests out his
approach by confirming that a number of serial entrepreneurs use an approach
broadly similar to the one he is proposing. However he acknowledges his own
stricture about the lack of validity of retro-fitting a schema to past
successes. This leads to the more ambitious project of trying out the approach
in a series of research studies.

Fiet and his research assistant carried out three research studies which appear
to show that using his framework for generating and evaluating venture ideas
'the discovery of ideas with the potential to create wealth [increased] from
2.5 to 9.6 times' (P.17).

Those appalled by the lack of statistical validity in much published scientific
data will not be surprised to learn that the research studies cited were of very
small populations and were from selected groupings including, as so often in
such research, a group of barely representative graduate students. The fact
that they are free and available to academics makes groups of graduate students
a ready research pool but care must be taken when extending any subsequent
results to the general population.

The research groups were not geographically diversified, and the participants
were self-selecting, bringing further bias into the study. In one project, 967
potential subjects were invited to participate. Of these, 110 expressed
interest. 47 actually turned up for the training of which 'Approximately half
of the initial group dropped out' (p.130) presumably leaving around 23/ 24
people in a far from random grouping which would hopefully be split into a
control group and a test population. This implies a scientific research project
based on a test population which has inbuilt bias and involves around two groups
of a dozen people all of whom are based in or near Louisville -- one study is
based in a 'Midwestern data processing company' (p.109). However many
statistical equations the author invokes he is building an argument on shaky

Perhaps aware that the results presented from the research studies was capable
of differing interpretation, Fiet then goes on to devote Chapter 6 to further
statistical justification of the results and uses 'statistical tests developed
in medical research' (p.17) to try and buttress the research results. This is
the least successful or interesting part of the book. Fiet's claim, referred to
earlier, that his ideas were experimentally tested leads him to devote too much
time in defensive repetition and self-justification.

The final section of the book deals with another newly created term: Forgiving
Business Models. A business model shows how a business will perform
financially. A Forgiving Business Model is one where the amount of risk is
minimised by passing this on to customers or suppliers. A simple example of how
to make a business model more forgiving would be having a long-term fixed price
contract with suppliers removing the risk of price fluctuation or dealing with
suppliers who cannot sell to anyone else. Although one may feel that such steps
are simple and obvious, Fiet carries out a valuable service by drawing attention
to the need to pro-actively reduce risk in order to reduce the vulnerability and
failure rate of small businesses.

Fiet's view of ethical questions is interesting. His approach seeks to give
potential entrepreneurs a framework for innovation and market growth yet he
accepts there must be limits on what an entrepreneur can do in furthering his
business. He suggests that 'In my view, simple self-interest seeking is ethical
when it does not involve misrepresentation or breach of a fiduciary duty'
(p.186). This is an academic definition, not real-life prescriptive guidance
for entrepreneurs. Fiet makes exactly the same statement on page 217. In fact
some whole sections on 'Ethical Questions' and 'Pedagogical Implications' are
repeated with only marginally different wording in chapters 8 and 9, suggesting
an unusual carelessness in the editing of this book.

Anyway, however many times this simplistic mantra is repeated it does not get
us very far. Where is the line between misrepresentation and enthusiastic
marketing? Is anything allowed as long as it does not misrepresent or breach
fiduciary duty? Equally problematic is Piet's undefined (and probably
indefinable) concept of 'guile', a bad thing which is to be avoided. He
suggests: 'It may involve the strategic misrepresentation of information to
gain advantage' (which some might think is a fair definition of the whole point
of advertising and marketing) which again begs an awful lot of questions
(p.185). Analytical philosophers may drool at the prospect of unpacking such
loaded terms, but they will do little to set an ethical prescription in this
tricky area.

Now, it seems to me, that 'how far can you go' is the key question for any
entrepreneur and is at the heart of every corporate governance debate. Forget
the trite academic terminology. Is it acceptable to hire a private detective to
spy on a competitor? Can I make the (untrue) statement that 'I will walk away
from this deal unless you accept my terms' as a negotiating tactic? Can I screw
an extra 5% discount from this supplier even though I know their financial
position is perilous? Can I fire that woman even though I know she works to
support a handicapped husband? Entrepreneurial education and business ethics
both need to come to terms with such tricky questions if they are to actively
engage with the real world.

James Fiet is to be congratulated on his attempt to break the entrepreneurial
process down into a checklist based system for finding business ideas,
evaluating the financial implications of those ideas and selecting which to
exploit. His attempts to justify them empirically are less successful but do
not invalidate the good intention. At the end of this book I was, however, left
with the feeling that deconstructing entrepreneurship is a bit like
deconstructing comedy. While all the analysis and contentions may be true, they
somehow miss ingredient X which is the most fundamental constituent of all.

(c) Andrew Browne 2008