Why culture is important for business
In the business world, who you are and what you stand for is the new frontier of competitive advantage.
Business leaders all over the world are discovering that ethics and values are good for business. Who you are and what you stand for have become just as important as the quality of goods and services that you sell.
A failure to embrace values-driven or ethical leadership has led to the demise or diminishing shareholder returns of many major corporations in the past two decades. Cultural failures at Enron, WorldCom, Parmalat, Siemens, Bear Sterns, RBS, Northern Rock, and Lehman Brothers bear testimony to this fact.
In all these cases, billions of dollars of shareholder value and employee pension plans were wiped out overnight by the actions of leaders who could not see beyond their own self-interest. The leaders of these organisations were so seduced by the glamour of success or consumed by the need for achievement that it seriously impaired their judgment about what constituted good business. They could not see that their strategies for business success were based on strategies of moral failure. These leaders were operating under the old leadership paradigm where their own short-term interest was allowed to outweigh the long-term interest of the company.
Some of these leaders underestimated the reaction of civil society to their misdemeanors. The Internet-connected world is making what happens at every level of society increasingly transparent. There is nowhere to hide anymore.
Society is becoming hyper vigilant about the ethics and morals of its leaders. The masses are demanding that their leaders act with integrity and become more accountable to society. In the future, only leaders who embrace the highest levels of ethical conduct will be judged fit enough to be custodians of shareholder investments or the holders of the reins of political power.