Startups and Ethics

Robert S. Donovan

“Ethics” or “Business Ethics” can be defined as written and unwritten codes of principles and values that should govern decisions and actions within a company. In the most basic terms, I would like to describe business ethics as to knowing the difference between right and wrong and choosing to do what is ‘right’. The phrase “business ethics” applies to actions of individuals within the company, as well as the company on the whole.

I believe not only in business, but in life in general, you only win by doing what is right. When I say “win”, it’s not all about money. It also includes being able to sleep at night by knowing you did the right thing. I am sure many of us know people who are just rich but aren’t happy.

Ethics should be integrated in a startup as soon as it starts its operations. You cannot start worrying about ethics when your company reaches a certain size; they need to be sewn into the fabric of a startup. This lesson is the same for tech businesses, as for investment banks, developed economies or third-world countries.

Ideally, all of the above sounds absolutely righteous, but does it hold well in real life? Things can’t be perfect to be honest, but at least we can try doing the right thing. Your company should have a strong sense of perfect. Companies are like people, they can’t be perfect, but when the moral is high, they achieve long-term success (think of Google).

Here are a few tips to build ethics in your startups;

1. Lead by example – Ethics should flow from the top to the bottom of an organization. The authencity of the leader’s actions and character is essential.

2. Create a culture of openness – Internal criticism (constructive) and dissent should be welcomed. People just agreeing with you all the time without any feedback are not good for a startup.

3.  Learn from people or distant models – May be your technological mission or business is truly unique but the leadership values aren’t unique. Steve jobs of Apple portrays himself after the founder of Polaroid Ed Land and tries to learn from both his strengths and weaknesses. It is important to learn from everyone.

4. Remember that character of your startup once lost is not only hard but impossible to regain

5. Don’t be scared of leadership succession. Founders of all great firms have known that they can’t forever be the leaders and one day they will need to find successors.

In business you have to make tough choices every now and then. Every decision has clear consequences and outcomes but ethical decisions are always hard. Probably making the right choice won’t always bring success, but ethical lapses always lead to failure.

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