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Critical Thinking

2016: The Year of 'Moral Flexibility'

By Critical Thinking FOXBusiness

What do Elizabeth Holmes, John Stumpf, D.J. Koh and Hillary Clinton all have in common? A really bad year they’d just as soon forget. They’re not alone in that respect; we’d like to forget it too.  

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Holmes and Theranos are being sued by investors, customers and Walgreens who say they were defrauded by the charismatic entrepreneur and her flawed blood testing technology. And Stumpf lost his cushy CEO job and gave up at least $41 million in stock because he pushed Wells Fargo employees too hard to meet overzealous sales goals.

Meanwhile, Koh may have cut some corners on quality and reliability testing in an effort to rush Samsung’s Galaxy Note 7 out the door. Now he has a botched recall of 2.5 million phones that may spontaneously catch fire at any time on his hands. Lucky for him, 2.8 million recalled Samsung washing machines are not his department.

And had Clinton chosen not to use a private email server for U.S. State Department business and spend months hemming and hawing about it, she might very well be heading to the White House in a few weeks.

Besides a bad year, all four leaders have something else in common. Underlying their troubles is a growing cultural phenomenon that makes it more and more acceptable for leaders to play by their own rules, integrity be damned. What that amounts to is ethics and quality taking a backseat to wealth and power.

It was bad enough when leaders used the ends justify the means excuse, employing questionable means to achieve noble ends. Never mind that. Now it’s “the ends” we have to worry about. Of course, they’re still shrouded in noble-sounding rhetoric, but the goals of a growing swath of today’s leaders are anything but virtuous.

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Tech startups used to be about creating great products, achieving sustainable growth and profitability, maybe an IPO and a company built to last. Everyone wins. Today, it’s all about growth for growth’s sake. Popular memes like “fake it ‘til you make it” and “move fast and break things” have become euphemistic licenses for entrepreneurs to break the rules.

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We now have dozens of wildly overvalued unicorns, many of which are addicted to a cycle of making over-the-top investor pitches with overstated claims and fudged revenue projections to raise more capital at higher valuations. The result is the corruption of a once virtuous process and a private equity bubble that benefits no one.

How else can we explain the way Holmes became one of the most celebrated entrepreneurs in Silicon Valley, raising more than $750 million at a most recent valuation of $9 billion, based on claims of a technology breakthrough that had never actually been vetted by anyone?

Sure, she had a vision of bringing real-time diagnostics to the masses at affordable prices from a few drops of blood. But anyone can dream up and sell a far-fetched idea. Without the talent and ability to bring it to fruition, “the means” can become a slippery slope of deception to justify ends that are little more than fantasy.

Parker Conrad, the hard-charging founder and CEO of HR benefits startup Zenefits, was forced to step down in February when it was discovered that he was helping unlicensed salespeople circumvent state regulations and illegally sell health insurance to businesses to accelerate growth. The company ended up taking a $2.5 billion hit to its valuation.

Bloomberg BusinessWeek has accused Hampton Creek founder and CEO Josh Tetrick of sending out hundreds of overzealous Creekers to buy up millions of dollars of inventory of the company’s flagship product, Just Mayo, in an effort to overinflate revenues and raise capital at a higher valuation.

And Jessica Alba’s Honest Company got nailed by the Wall Street Journal for making products with a chemical it deemed toxic when its labels expressly said they were made without it. That led to lawsuits, layoffs and talks of a sale to Unilever at far less than its once lofty $1.7 billion valuation. Never mind the irony of the company’s name.

The phenomenon is hardly limited to the startup world.

Despite discovering that thousands of employees were creating millions of fake accounts to meet his “eight is great” sales goal (eight Wells Fargo products per customer), Stumpf foolishly stuck by his mission. Why? That’s what he’d pitched investors. That was apparently more important than defrauding customers.   

In the movie Grosse Pointe Blank, John Cusack’s character sites “moral flexibility” as the attribute that landed him a job as an assassin with the CIA. Not exactly the kind of characteristic you want to have in someone running a big bank, diagnosing diseases, making incendiary products you take everywhere, or commanding the most powerful nation on Earth. And yet, here we are.

Let’s hope morals get a little backbone in 2017.

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