Hi. I have some news. In addition to my Monday posts, the Fridays of this April I will be publishing interviews or housing guest bloggers. Starting this Friday, I have planned for you to read interviews with Philip Dimitrov (former Prime Minister of Bulgaria), Maria Droganova (a student who grew up in Europe’s poorest region - Transnistria), as well as blog entries from Maria Ninova (Bulgarian pro-GMO blogger, and microbiologist currently studying in Manchester, UK) and Evgeni Vassilev (managing partner of a Bulgarian-based EU project writing and consultancy agency). Hope you enjoy it! And happy Easter!
This week's out-of-text: Ayn Rand's "the hardest thing in the world--"
Aligning businesses’ self-interest with development
This Monday’s entry advocates business solutions for the developing world. While academia’s comparativism can theorize successful policies, it is businesses that are more likely to have a detrimental impact on the ground. If they follow the right model. Below are presented the cases of three companies, whose spirit, if applied to development problems, can change the world.
Google, Apple and Paypal (but there are others as well) have two major things in common. Firstly, they are revolutions in and by themselves; meaning, thanks to their innovation, they broke and totally dominated, reinvented the fields in which they operate. Secondly, more or less, but certainly deep beneath, they are ideals. HBS blogger Umair Haque sums the idea up quite concisely: “Ideals shape what we wish to achieve in the first place: freedom, peace, fairness, justice — all are ideals vastly more powerful than mere business models. That's because they are what ensure the value we are creating is authentic, deep, meaningful value — not just the shabby, threadbare illusion of value.”[1]
I argue that these three companies are ethical. First and foremost, they provide win-win products. It might not initially be obvious that this is as a moral characteristic, but the facts are that these products improve the lives of everybody unconditionally. Google’s search engine enables everybody with an Internet connection to access within fractions of a second more information that they could possibly read in their lifetime! Apple’s iPhone lets one carry this information in their pocket. Paypal’s online payment certification so drastically reduced transaction costs that it made possible the future of e-commerce.
The argument is that it cannot be anything but good if your product helps everybody achieve more. A character of influential novelist Ayn Rand says, “I'm working to improve my methods, and every hour I save is an hour added to my life.” [2] If human life is the highest and most cherished value, then it immediately follows that such companies’ products have an ethical value.
However, there are other considerations that count in deriving the ethical character of a company. The value-added of its products is a big plus, but there is more to it. Are there negative sides of the impact of the product? It is fairly difficult to ascertain the exact impact of, say, Google on individual freedom. But there is such an impact. To illustrate, the way we perceive privacy has changed: the ethical considerations behind a potential misuse of Google’s access to personal information of its users (only Gmail has 146 million users as of July 2009) are immense.[3] Laws across the world have been in demand for adjustment to keep up with the newest concerns, but it is internationally observed that they rarely do. There obviously exist ethical minuses, and that should be taken into consideration.
Google, Apple, et cetera, are achievements of great scale, but the lessons drawn from their experience are easily translatable to smaller-scale production (and why not development?). Getting into the details, take for example Google’s advertisement-profit model. Before Google widely there existed paid email service providers. Gmail drove them out of business because it provides better quality in each and every aspect of the service, and because it reinvented the payment system. With Gmail, a consumer pays with his or her miniscule attention to ads (i.e. with a small chunk of his or her comfort), while before Gmail a consumer paid in hard currency. Similarly, any smaller company can find its own competitive advantage through innovation, and drive out competitors by providing a cheaper, faster, or better in any other way, service.
Such examples can be applied to the problems of the development world. What’s more, they have been – look at Grameen bank microcredit system that was mentioned by a th!nker earlier this week. All it takes is for prospective entrepreneurs to focus their creative energy on the world of the future, because that is what above all defines the developing world.
[1] Umair Haque. “Why Ideals are the New Business Models.” http://blogs.hbr.org/haque/2009/03/ideals.html (Last accessed on March 15, 2010);
[2] Ayn Rand. “Atlas Shrugged” pg 550.
[3] Techrunch. “Bing comes to hotmail.” http://techcrunch.com/2009/07/09/bing-comes-to-hotmail/ (Last accessed on March 15, 2010);
There are plenty of examples for companies who do good. However, people might argue that Google and Apple, for instance, are not ethical companies. Everything comes with a price.
The truth is that we need a John Galt.
Great, interesting post
I don’t really agree, but it made me think a lot.
First of all, for me neither Google, Apple or Paypal are very revolutionary, even though I am aware that their presence has been revolutionary in certain markets. Paypal, for example, don’t really introduce anything new - it is not more convenient to pay online with my bank than with Paypal. What Paypal does is that it offers this convenience also for those whose bank does not offer it. For example, Epay made my life a lot easier when I was living in Bulgaria. But these services were no surprises - it was obvious that they would come once internet security was reliable enough.
As for Google - I am a huge fan. Their services are not revolutionary, but wonderfully simple. But I could just as well use Altavista, hotmail or Yahoo! A more revolutionary technology was probably the RSS feed, and twitter , who not only give me acces to a lot of information, but organises it for me.
On the other hand, I agree that Google works disruptively on business models, and has changed the way business are done online. I think we must accept te idea that people pay with their time, or with their broadband resources when they are helping to seed torrents, or by retweeting, and all kinds of actions, not only when they pay money. Maybe Google hints at an economy beyond money, if I am a little utopian? QQuite a lot utopian, I think.
And the iPhone? To me it is just the king of mobile phones, but still nothing qualitatively different than a mobile phone. In which way did it revolutionize our lives? Moreover, unlike Google and Paypal, the iPhone requires an initial investment, and has only the potential to change the lives of a restricted number of people who are willing to pay for it.
So is saving time the same time as creating life? Not necessarily… if I die to be writing, and Google helps me finish boring tasks quicker so I get time to write - then yes. But if Google makes me more efficient so that my employer can use me to fulfill more boring tasks per day - then no. Wouldn’t Rand’s statement necissarily imply that a long life is a good life? I think it is more important to look at what we do with our time, than to gather as much as possible of it.
And are these companies good? You show clearly that their actions have good (and some bad) consequenses, but still… they are doing it for themselves, obviously. Why not just accept that? What is the point in discussing it in terms of morality? After all it is very easy to be a good person if it gives you money, but more impressive if you are prepared to also give something up for it.
@Ivan you have a point… they could be considered unethical.
@Daniel wow, thanks for your ‘comment’! Many parallel conversations there. I think one of Google’s revolutionary things is their search engine, it kind-of encompassed the whole web, unlike its predecessors, didn’t it? But you can totally disagree with the details, or input better examples… The validity of my main point (Actually, Adam Smith’s??) should stay - find, revolutionize a solution, and you’ve benefited both yourself and the others around you.
I’m sure there are better experts on Paypal than myself… but from a PoV of a user who needs a payment system, it appears the simplest and easiest to use. Plus, it was the first to solve the “trust/security” issue, I think? As to iPhone, well, it was the first to drastically turn a mobile’s functions into a computers’... Tho, did Blackberry came out first? Again, the specifics should be less important than the idea. I’m certainly not into marketing or defending these 3 products:p
I think the bottom line is that the results are shattering. Imagine what could be possible, if we invented a way of governance that is copy-pastable in undeveloped countries and makes everybody happy… Or some mechanism through which aid can actually benefit only the worst-off of the intended beneficiaries, or some unrelenting way to build local capacities - in education, governance, commerce…
PS. The “ethics” perspective was just… fishing. It’s not an entirely cliche’d way of looking at these things, right? I’m glad it sparked a debate.