Peter Drucker’s pithy idea, “The purpose of a business is to create a customer,” has been drummed into the marketing psyche for as long as I can remember. But when Drucker referred to customer creation, I wonder if he had immigrant detention centers in mind. We live in a complex world. Maybe it’s time we made an important addition to the billions of PowerPoint slides carrying Drucker’s quote: “. . . as long as their purpose matches what we think is good.”
The case for that adding that thoughtful hesitation emerged again in June, when hundreds of Wayfair employees signed a petition and staged a walkout to protest Wayfair’s decision to provide furniture to migrant detention camps near the US-Mexico border. The petition read, “We believe that the current action of the United States and their contractors at the Southern border do not represent an ethical business partnership Wayfair should choose to be part of.”
The company’s choice to sell was not illegal. As far as I know, its conduct wasn’t dishonest. But given the politically charged purpose of migrant detention centers, and controversies over their operations, for many Wayfair employees this order arrived reeking with Eeeeewwwwwwwww! “The sofa I’m loading on this truck will soon hold a terrified wailing child, separated from his parent by the US Government. I love my job!”
How did Wayfair’s executives respond? According to an article, The Rise of Employee Activism: Lessons from the Wayfair Walkout, employees were told that “although their passion and commitment was appreciated, the contracts would be honored.” Meaning suck it up – just using three times as many words. Who says B-School doesn’t prepare managers for real world challenges?
The National Rifle Association (NRA), headquartered near my home in Virginia, is reported to have an annual operating budget of around $218 million – needless to say, but I’ll say it anyway, that’s a sizable chunk of spend. Like any large organization, the NRA buys building maintenance services, enterprise software, staffing services, consumable supplies and much, much more. Given the opportunity, would you sell to the NRA? Three possible responses:
1. “Sure, I’m already on it!”
2. “I’d sell to them, but I’m deeply conflicted.”
3. “I’d never sell to the NRA.”
I understand the conundrum. There are no right or wrong answers. In the 1990’s, I covered Richmond, Virginia, as an account executive, and a substantial portion of my annual quota was achieved through revenue from suppliers to the tobacco industry. Among my larger customers were the public warehouses that stored the leaf and shipped finished products domestically and abroad, the manufacturers that made cigarette filters, and the printing companies that produced the paper wrappers that surrounded them (fun fact: signage in the printing plant sternly instructed employees and vendors to refer to the unburned portion of the cigarette as ends, and not the more commonly used butts).
My former employer’s suite of auto-ID products enabled manufacturers like Westvaco and Reynolds Metals (now Alcoa) to efficiently produce decorative packaging that lured customers to buy. Through my sales efforts, tobacco brand behemoths like Philip Morris and Brown & Williamson kept tighter track of their inventories throughout the production cycle. Less-known companies like Hauni Richmond, which makes the machinery that makes cigarettes, bought my company’s technology to build better, faster equipment which they, in turn, sold to cigarette manufacturers to produce more cigarettes quicker and cheaper. Hardware and software that I earned commission on helped these companies do more with less in the massive tobacco products distribution apparatus. I got quota relief, personal income and bonuses, while the ultimate consumer got lung cancer and emphysema. That bothered me at the time, and it still bothers me. Being several steps removed from the person lighting up offers no solace.
A Wall Street Journal editorial, Wayfair’s Wayward Walkout (June 27), criticized the protesters. “How exactly would the plight of immigrants be improved by denying them furniture? You would think employees so concerned about the living conditions at the border would be eager to furnish decent products for those affected. Wayfair’s social-justice warriors fail to see the irony, and you can expect more such moral confusion from progressive millennials across corporate America.”
While I often find the Journal’s opinions circumspect and informed, this one is ignorant. There isn’t any moral confusion. Perhaps it’s the business purpose of Wayfair’s customer that’s objectionable. Perhaps it’s the fact that Wayfair’s products are being supplied to places that detain people, including children, in allegedly unsafe and unsanitary conditions. A comfy sofa that’s plopped into a common area doesn’t change that. And it’s completely naïve to believe that in this context, furniture has the capacity to diminish a person’s emotional and physical suffering. If there’s moral confusion, it’s in the mind of the Journal’s editorial writer.
Regardless, there are multiple angles to explore on this matter, and the debate expands through similar ones that have made recent headlines. The European Union’s export ban on pharmaceuticals used for lethal injections in the US, and Google’s decision not to pursue Artificial Intelligence projects with the US Military.
Questions to ask:
1. Who should ultimately decide which customers a company has – employees or employers?
2. Given that revenue is key for corporate survival, what are the ethics of declining or accepting a revenue opportunity if one stakeholder group might benefit or approve, and another might be harmed or object?
3. When employees are hired to serve in a revenue-generation role, aren’t they obligated to support the organization by growing revenue, regardless of its source (assuming the source is a legal enterprise engaging in legal activities)?
4. Which risks does a company absorb when selling to controversial clients? Which risks are absorbed when declining business?
5. Are there moral reasons for companies to refuse to engage in specific revenue opportunities? If so, under which conditions might that occur?
6. Should revenue attainment, regardless of source (again, assuming legality), be considered a central responsibility of a company’s executives?
The values that decision makers bring to the job are of paramount importance in answering these questions. In a 2019 article, Ethics as Conversation: a Process for Progress in MIT’s Sloane Management Review, authors R. Edward Freeman and Bobby L. Parmar provide seven questions to ask and answer:
1. How does this make me feel? One of the problems in business is that dilemmas are often decided based on “what the numbers say,” or what provides the “highest ROI.” In an era that champions data science and the power of predictive analytics, this can lead to trouble. It is possible to “over-intellectualize” a decision, rather than thinking “if this choice feels wrong, then maybe, it is wrong.”
2. Who is affected and how? “Organizations have a set of stakeholders with whom they are trying to create value. Knowing how a particular ethical issue affects these relationships is crucial for good decision-making. In addition, some of these stakeholders — both personal and organizational — may well have legitimate claims that must be respected.” I believe this is where Wayfair needed to do more work. As a tech company, Wayfair competes for talent. Its choice to sell furniture to detention was its prerogative, but how will that decision impact its campus recruiting efforts?
3. Who can I talk to about this issue? The process of making difficult choices is often aided when asking others for opinions, and considering potentially opposing points of view.
4. Are there alternative framings I should explore? “If an executive frames an issue only in terms of ‘what is best for shareholders,’ the answer she reaches may be fundamentally different than if she had framed it as ‘what is best for stakeholders.’”
5. What are my best options? “When decision makers rely on only a single idea, they are more likely to be blind to its weaknesses. Having multiple possibilities for addressing an issue increases learning as you compare and contrast their consequences.”
6. What would happen if my thinking and this decision became public? Behind almost every bad marketing decision, such as Heineken’s ‘Lighter is Better’ beer promotion, is a flawed, callous process that proves just as embarrassing when exposed to sunlight.
7. What would cause me to change my mind and my decision? I know. We laud decisiveness. But “we need to continuously monitor circumstances to be able to decide whether our decision needs to be modified. This is especially true with the deployment of new technologies: As the use of a particular technology emerges and we learn more about its consequences, we need to be ready to modify our course. The attitude of humility that this question fosters is essential for continued learning and adaptation.”
“The purpose of business a business is to create a customer.” Yes . . . but . . . that idea guided us in simpler times. The #wayfairwalkout demonstrates that now, things aren’t so easy.