Meet the Next Business Guru: Aristotle

In business, we should make money and be a positive force in the community. The ancient philosopher told us so.
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In business, we should make money and be a positive force in the community. The ancient philosopher told us so.

The business world has its own set of ethics. We seem to instinctively accept that fact, often shrugging off morally questionable acts with the mantra, “It’s just business.”

There’s no point in taking it personally if you’ve been laid off because of the boss’s bad decisions, if toxic sludge was discharged into the river near your home, or if the mom-and-pop store down the street couldn’t compete with the new outlet mall. People get hurt by such actions, but unless the malfeasance rises to an Enron level, there’s no point in protesting. After all, it’s just business.

Although he spent a decade or so in the business world, both as an employee and an entrepreneur, Carter Crockett never felt comfortable with that mind-set. He realized the prospect of profits is an effective motivator but questioned whether a healthy bottom line truly overrides all other moral concerns.

Looking for answers to questions that were “keeping me up at night,” he returned to school, ultimately earning a Ph.D. from the Aberdeen Business School in Scotland. Determined to come up with a new theory of business ethics, he began reading what others had said on the subject.

“Somewhere along the line,” he recalled, “I bumped into Aristotle.” That would be the ancient Greek philosopher who, among other things, laid out a series of ethical guidelines, equating moral behavior with the good life.

“I realized he said some of the things I’m passionate about better than I could say them,” Crockett said. “He also created a paradigm that ties it all together in a tidy way. So, at a very early stage, I abandoned my own theories in favor of reviving his.”

Crockett’s quest — to use Aristotle’s thoughts as a guide to ethical business practice — may be a lonely one, but it is not solitary. “I found about 10 other people in academia who are trying to do the same thing,” he said. Most will be on hand for the second international conference “Theory, Practice, and Tradition: Human Rationality in Pursuit of the Good Life,” which takes place today through Sunday at Indiana’s St. Meinrad School of Theology.

Crockett recently sat down to chat at a coffee shop in Santa Barbara, Calif., not far from the campus of Westmont College, where he works as an assistant professor of economics and business. He returned repeatedly to Aristotle’s concept of “excellence,” which he considers a more meaningful goal than maximizing profits.

“Excellence is an aspirational ideal that everybody could be striving for, in any organizational context,” he said. “There could be excellence in this coffee shop in terms of the quality of the coffee or the service.

“Profit is the main way we measure success of a company. Aristotle would try to reshape our focus so that profit is a means to an end. For this coffee shop, the end could be ‘creating a social gathering place for Santa Barbara.’ That acknowledges the role it could play in serving not just the owners and not just the customers but this larger milieu we find ourselves in.”

So if the owners’ goal was twofold — to make money and, just as importantly, be a positive force in the community — how would things change? “Lots of things would come out of that objective,” Crockett said, noting the facility could invite local musicians to perform or provide a free meeting space for support groups or other nonprofits.

“Even having this discussion, we’ve shifted things drastically regarding how business can and should be done, from (bottom-line) results to motive, purpose and intent,” he noted. “We’ve also said the results have to be good for many: the individual, the organization, the society. To me, that’s a healthy shift. It requires a little more mental discipline than we’re used to applying to business, but I don’t think you have to be a philosopher to get it.”

Crockett expanded on these ideas in a paper he co-wrote with Alistair Anderson for the International Journal of Business Excellence. They looked at five small firms that service the oil industry in the U.K., one of which was committed to serving the community and protecting the environment, as well as satisfying its clients. “They refused to hire some people they thought were too profit-minded!” Crockett noted.

Signposts identified as signaling excellence (from Crockett and Anderson's paper):
-- A clear sense of purpose, and shared motivation towards a virtuous ideal
-- An organizational culture that values and is found to reveal high morale and job satisfaction
-- Extensive screening of staff, including a concern for value and character orientations
-- Strong priority placed on the art of the consulting craft, previous experience to hone that craft and ongoing professional development
-- Low staff turnover and longer terms of employment
-- Minimal differentiation (structurally and socially) between the founder(s) and the most junior employees
-- Greater likelihood that founder(s) share company ownership with staff
-- Wider social perspective: decisions and behaviors reveal principled, other-centered rationale
-- Long-term perspective: Reasoning validated by actions in support of more than short-term gains
-- Modified or limited emphasis on consequences, efficiency and tangible "success"
-- Dominant emphasis on character, responsibility, and less tangible "excellence"

Surprisingly enough, it was the most profitable of the five firms during the five-year period they examined (1999 to 2004).

“I got to see all five companies go through the same crisis,” Crockett explained. “In 2002, the price of oil took a nosedive. Consulting firms like the ones I was talking to started to die on the vine. Contracts started going away; panic set in. Three of the companies dealt with the panic by hacking off divisions. Half of the employees were ‘invited to leave’ the next day.

“But the founder took the attitude, “We’re all in this together. Who, besides me, is willing to take a voluntary pay cut until we weather the storm?’ 100 percent of the employees were.

“At the end of the storm, which took a year to weather, they were the only organization that had a full staff to take on the business that started coming their way. Also, they were a much tighter group because they had been through hardship.”

In other words, they were well positioned to make a profit, and they did. “Aristotle, I think, would say, ‘That’s exactly what I told you would happen,’” Crockett said. “This is just one case, but I think there are others out there.”

Crockett admits that thinking beyond the short-term bottom line is easier to do with smaller companies that are still controlled by their founders.

“There are a number of companies like Ben & Jerry’s, where they started out with a social agenda but got to the stage where they felt they needed to sell out to a public company,” he said. “With growth comes a different set of demands and expectations. The bigger you get, the more you rely on publicly traded investor groups, and the more difficult it is to hold on to any social agenda — other than maximizing profits.”

Nevertheless, “I am an optimist,” Crockett concluded. “There are people within the business world who are trying to do it differently. I find that promising.

“One of the best things about capitalism is its ability to reinvent itself.”

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