Principled Profit: The Good Business Blog

Musings on the world-wide movement for ethical business, frugal marketing, and how honesty, integrity, and quality combine with deep relationship building to create business success. By the originator of the Ethical Business Pledge campaign and award-winning author of Principled Profit: Marketing That Puts People First and five other books

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Wednesday, October 25, 2006

Connecting the Dots: Ford Earnings Losses, Skilling Sentencing, Democratic Gains in Polls, and Bush's Sunken Ratings

The four big issues I name in this post's headline--Ford Motor Company's massive earnings losses of $5.8 billion in the third quarter of 2006, Enron CEO Jeffrey Skilling sentenced to 24 years, Democratic hopes raised with some 48 House seats in play and at least four of the six Senate seats needed to shift control expected to go Democratic, and the no-confidence vote President George W. Bush has been getting in recent polls--may seem on the surface to have nothing in common--but actually, there's a strong thread running through all of them.

This is the common thread: The American people are totally sick of being lied to, manipulated, and stepped on by powerful interests who care only about a narrow agenda of partisanship and greed. To say it another way, the real issue in the psyche of America right now is ethics.

And as someone who has started an international movement to tilt business toward higher ethics and written an award-winning book, Principled Profit: Marketing That Puts People First, about how ethics is one of the strongest drivers for business success, I see this as a positive trend.

And it's clearly time for a change, in both business and politics. In my opinion, the last ethical Presidents--both of them had a strong sense of personal integrity, even as their politics were vastly different--were Jimmy Carter and Ronald Reagan. Now, as regular readers of this blog know, I have no love for the policies of Reagan, or for some of the very creepy people he surrounded himself with (some of whom have prominent places in the GWB administration)--but the man himself always impressed me as someone who honestly believed in the things he was saying, and the numerous ethics scandals of his administration never seemed to enmesh him personally, and seemed far more a matter of a hands-off governance style. As for Carter...could anyone imagine that the man who freely admitted to "lust in my heart" but knew how to control that lust going through the shameful charade that Bill Clinton engaged in? And Carter as an ex-president has been a world statesman for social and economic justice around the world. I daresay he has made more of a difference in the last 26 years than in his four in the Oval Office.

So how does Ford fit into all of this? It's simple. Not once but twice, Ford has been caught with its ethical pants down, putting short-term profit above human safety, failing to rework known design flaws that cause fatal accidents, because its actuaries decided that paying the wrongful death lawsuits would be cheaper than fixing the problem. You'd think the company would have learned from the mess it made with the Pinto's exploding gas tanks in the 1970s, but they were back with the same attitude about the Explorer's little problem staying upright in hot weather--a problem the company apparently was well aware of before the car even began production. Compare that short-sighted and dangerous attitude with the amazing response of Johnson & Johnson to the Tylenol poisoning scare--and it's not at all surprising to me that J&J rebounded very quickly after spending a vast sum to warn everybody about the problem and institute a massive recall of all Tylenol products.

I can tell you that when I went car shopping two years ago, I didn't even bother checking into Ford. I figured any company that would rather pay death benefits than spend a couple of bucks to fix a known cause of fatal accidents was not a company that I wanted to entrust with my family's safety for the next five or ten years. And I suspect a lot of other people have done the same. The safety blowback may have even been a factor in Ford's quiet decision a few years ago to purchase Volvo, a car manufacturer known for its concern with safety.

I would absolutely love to see Ford start practicing all the groovy, concerned, and earth-friendly messages that Bill Ford says the company stands for--but I have to laugh when we get all these Green talking points from the company that unleashed the massive, gas-hogging Expedition. Sure, Escape hybrids are a step in the right direction, but a small one. My non-hybrid gas-powered small sedans get better mileage than an Escape even with the hybrid boost. So I don't expect that a lot of people buy Escapes because they want to save gas.

Skilling, of course, got hit hard in part because he was unlucky enough to have his literal partner in crime Ken Lay drop dead before the sentencing. But as the New York Times points out, the sentence was as strong as it was because people got hurt by his lies:

The higher sentence, the judge said, was because he found that Mr. Skilling had lied to the Securities and Exchange Commission about the real reasons for his sales of Enron stock before the company’s collapse in December 2001. Mr. Skilling said he sold the stock only because of the impact on the market of the 9/11 terrorist attacks.

And one very positive aspect of this case is that the government is going after his--and Lay's--ill-gotten gains. Of course, the lawyers will get a huge chunk, but they are actually discussing restitution to those who were badly burned as the company's failure sucked the life out of their retirement savings.

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Before I close...a quick thank-you for several recent articles encouraging people to help stop future Enron and Ford scandals by joining the Business Ethics Pledge...and especially to blogger Jill Draperand e-zine editor John Forde (sorry, I can't find a link, but you can subscribe to his newsletter at for their rousing endorsements.


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