What Are My Core Obligations?
53
multiplicity of duties creates serious practical problems. How
do you know what your duties are in a particular situation?
How do you prioritize your duties? And what do you do
when one duty contradicts another? Another layer of diffi-
culty is that we shouldn’t assume we can sort out our duties
in a sensible or rational way. Growing up, most of us learned
a long list of do’s and don’ts—obey your parents, keep your
room clean, be respectful, and so on—and we learned from
parents and other authority figures. Quite often, their strong
voices echo inside us, telling us unconsciously what we should
and shouldn’t do and generating a wide range of feelings.
Even worse, there is very strong evidence that, even when
we are fully aware of our duties, internal and external forces
often keep us from doing what we know we should do. A
famous example involved students at Princeton Theological
Seminary. They attended a lecture on the biblical parable of
the Good Samaritan. By design, the lecture ran overtime, so
the students were late for their next class. On their way, they
passed a man—an accomplice in the experiment—who was
slumped in a doorway, groaning and coughing. Only ten of
the sixty-three students were Good Samaritans and stopped
to help him.
14
The others went directly to class.
A century ago, the American psychologist William James
wrote, “The trail of the human serpent is over everything.”
15
James stated what contemporary social science has repeatedly
and unambiguously confirmed: in countless, often unseen
ways, our interests, biases, and blind spots shape and often
distort what we firmly believe to be clear, objective thinking
about the consequences of our actions, as we saw in the last
chapter, and about our duties.
Chapter_03.indd 53 11/06/16 2:23 AM
Managing in the Gray
54
The Tysabri case forces us to ask what the second question
really means in practice. What do you do when you are try-
ing to take your basic obligations seriously, but duties assail
you on every side? And how can you grasp, with clarity and
without bias and distortion, what your core human obliga-
tions really are?
Practical Guidance: Awaken Your Moral
Imagination
There is a time-tested way to answer this question. It is to rely
on what has long been called our “moral imagination.” This
section will explain what our moral imagination is, why it is
so important, and how it can help us with gray area problems.
But, before you can use your moral imagination, you have to
take two preliminary steps. Each involves clearing your head
of a familiar, plausible, but fundamentally inadequate answer
to the second question. Both of these answers purport to tell
you what your core obligations are, and both can be seriously
misleading.
Look Past the Economics
The first piece of practical guidance says that, when you face
a gray area issue, you have to look hard at the economics of
the situation and you also have to look past the economics. In
other words, running the numbers and grasping what they
tell you is important, but not enough. You also have to put
aside a specific piece of conventional wisdom.
Chapter_03.indd 54 11/06/16 2:23 AM
What Are My Core Obligations?
55
This is the mistaken view that, if you are a business man-
ager, your central or exclusive duty is to earn profits, maxi-
mize returns, create shareholder value, or just make money.
Obviously, most companies need to earn strong profits, and
organizations of all kinds need to pay close attention to their
finances. And their managers need to be skilled at doing this.
That is why the basic guidance in this book says you should
first approach gray area issues like a manager. This means
really understanding the economic realities. If you don’t do
this, for gray area and routine decisions, you will make bad
decisions, weaken your organization, and likely limit your
career prospects.
But, when you face gray area problems, you have to resolve
them as a human being. In these situations, you have to look
beyond the economics, if you want to understand and meet
your basic human obligations.
For example, should Jim Mullen have ignored the long
tradition of serious thought about what we owe each other
as human beings and instead tried to resolve the Tysabri cri-
sis in whatever way would maximize shareholder returns?
Should he have paid attention to the benefits and risks of the
drug for MS patients only to the extent they affected Biogen’s
bottom line? By the same token, should managers responsi-
ble for layoffs look solely at the economics? Should they put
aside the hard, sometimes devastating, impact layoffs have on
employees and instead view their workers as soft-tissue assets
that should be valued, deployed, maintained, depreciated,
and sometimes scrapped, just like machinery?
From a historical perspective, the idea that managers in
organizations have a single, dominant duty—to maximize
Chapter_03.indd 55 11/06/16 2:23 AM
Managing in the Gray
56
economic returns—is a striking development. Somehow, a
theoretical assumption—widely used in one cluster of aca-
demic specialties: economics, finance, econometric modeling,
and the like—became transformed, primarily in the United
States near the end of the twentieth century, into a supreme
decision principle. From a humanist perspective, this notion
is a stunning development. No list of basic human duties,
religious or secular, has ever included an overriding require-
ment to make large amounts of money for certain groups. If
anything, the great traditions of thought strongly discourage
preoccupation with wealth and riches.
But perhaps you have no choice. Aren’t business manag-
ers, at least those working in the Anglo-American system
of capitalism, obligated by law to maximize shareholder
returns? The answer to this question is no, and this is why
it is important, when you face a gray area decision, to look
beyond the economics of the situation. Nothing in American
corporate law says that business managers have an open-
ended, always-on obligation to maximize the financial inter-
ests of shareholders.
16
What the law actually says is quite
different: the legal duty of managers is to serve the interests
of the shareholders and the corporation. That is a very broad
mandate, and the law gives managers and executives a good
deal of flexibility in pursuing it.
17
A recent exchange between Tim Cook, the CEO of Apple,
and an activist shareholder dramatized the actual legal real-
ity. The shareholder asked Cook about the company’s renew-
able energy program and told him that Apple should only
pursue these efforts if they were profitable. In a rare display
of anger, Cook replied that there were many things Apple
Chapter_03.indd 56 11/06/16 2:23 AM
What Are My Core Obligations?
57
did because they were right and just. “When we work on
making our devices accessible by the blind,” he said, “I don’t
consider the bloody ROI.” Then he added, “If you want me
to do things only for ROI reasons, you should get out of this
stock.”
18
In the United States, the business judgment rule gives
executives and boards of directors wide discretion in setting
the objectives companies pursue—as long as their motives
aren’t tainted by conflicts of interest and as long as they make
reasonable efforts to make informed decisions. In addition,
thirty states have passed laws that explicitly authorize compa-
nies to consider the interests of parties other than sharehold-
ers. The American Law Institute has stated that managers
have discretion to sacrifice profits to avoid conduct that may
“unethically” harm employees, suppliers, communities, and
other parties.
19
The rationale for profit maximization is basically prag-
matic. It is a simple, clear, and useful criterion—for routine
decisions in businesses operating in competitive markets and
with sound legal systems. In these circumstances, thinking
in terms of long-term profit and returns is an important way
of putting society’s resources to their best uses. In competitive
markets, strong profits can be critical to survival and success.
But the important obligation to earn strong returns doesn’t
override or replace your fundamental duties as a human
being. And managers have to be careful that they don’t use
their economic obligations as excuses for ignoring these
duties. This is why, when you face a gray area issue and want
to understand your basic duties, you need to look hard at the
economics and also look beyond the economics.
Chapter_03.indd 57 11/06/16 2:23 AM
..................Content has been hidden....................
You can't read the all page of ebook, please click here login for view all page.