Scott Monty

Truth AND Consequences

Truth AND Consequences

Hermes Ordering Calypso to Release Odysseus by Gerard de Lairesse, 1670 (public domain - Wikimedia Commons) You may be too young to ge...

The Cracks Are Beginning to Show

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<tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/--xNWrJviGLU/XYLspDMKTcI/AAAAAAABHpU/PMHRplF3Q9YcgoVirhhMATuojE4Odvt3ACLcBGAsYHQ/s1600/Johann%2BChristian%2BDahl%2B-%2BAn%2BEruption%2Bof%2BVesuvius%2B1824.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1077" data-original-width="1600" height="430" src="https://1.bp.blogspot.com/--xNWrJviGLU/XYLspDMKTcI/AAAAAAABHpU/PMHRplF3Q9YcgoVirhhMATuojE4Odvt3ACLcBGAsYHQ/s640/Johann%2BChristian%2BDahl%2B-%2BAn%2BEruption%2Bof%2BVesuvius%2B1824.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><a href="https://www.metmuseum.org/art/collection/search/438159" target="_blank">An Eruption of Vesuvius</a> by Johann Christian Dahl, 1824 (public domain - The Metropolitan Museum of Art)</td></tr>
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There's something in the air. 
 
It feels like we're at the beginning of a major inflection point. 
 
What's the driver? My personal observation is that there has been too much malfeasance, ineptitude, and misconduct—in short, hypocrisy—on the part of many leaders, companies and government officials. 
 
And the public has had enough. 
 
 
<div style="text-align: center;">
“Honesty is the first chapter in the book of wisdom.”</div>
<div style="text-align: right;">
— Thomas Jefferson</div>
 
 
Trust is the foundation of any relationship—friends, spouses, partners, employees, customers—all require trust for the relationship to work. If employees don't trust that you'll treat them well and pay them fairly, they'll walk. If a customer can't trust you to make a consistent product or to back up your claims, they'll find another entity selling something similar. 
 
More forensically, as defined by <a href="https://www.merriam-webster.com/dictionary/trust" target="_blank">Merriam-Webster</a>, trust is: “reliance on the character, ability, strength, or truth of someone or something.” 
 
Three of those words pop out to me: 
<ul>
<li>Reliance</li>
<li>Character</li>
<li>Truth</li>
</ul>
 
There's a certain sense of the old-fashioned with them. Reliance: that you can count on someone to keep their word. Character: what someone stands for. Truth: dealing in honesty. 
 
Those three traits used to be commonly held assumptions about people. I'm not sure exactly when, but such traditions seem to have escaped us.  
 
Perhaps it has something to do with the digital world, and our ability to dehumanize so many of our transactions and interactions. Or perhaps the internet has amplified the negative aspects of our human nature. 
 
 
When Business Roundtable updated its Statement on the Purpose of a Corporation, <a href="https://www.scottmonty.com/2019/08/why-businesses-need-to-prepare-for.html" target="_blank">it sent a signal</a>. While there were some cynical views as to whether businesses could effectively hew to this new line, there was something of an expression of relief—that corporations recognize the need to do more than just make money. 
 
This valiant campaign for simple doing the right thing has come at a time when we're beginning to see business-as-usual: public outcry or backlash is happening in a number of areas. 
 
 
<h2>
Where It's Happening</h2>
In the last month or so, there have been stories in the news that are related to government, business, and leadership that encapsulate the sense of frustration mentioned above. Here are a few examples. 
 
<h4>
Fall Well</h4>
Jerry Falwell, Jr., the chancellor of Liberty University, is not a minister like his father, but his institution is an evangelical Christian university. That didn't stop Falwell from accumulating power, self-dealing, and intimidation. In "<a href="https://www.politico.com/magazine/story/2019/09/09/jerry-falwell-liberty-university-loans-227914" target="_blank">Someone's Gotta Tell the Freakin' Truth</a>," one insider shared that the culture of fear is so great that people there “won’t rat him out,” but the authors of the article added: “That’s beginning to change.” 
 
<h4>
Unicorn Feces</h4>
You've heard about the WeWork prospectus and IPO (it was the topic of the essay in <a href="https://us19.campaign-archive.com/?u=4b1784f23a77243c11e9bc4b6&id=af385f95db" target="_blank">The Full Monty #278</a>). It's been the topic of multiple pundits (such as <a href="http://twitter.com/profgalloway" target="_blank">@ProfGalloway</a>, who coined the phrase "unicorn feces") and business publications, and has been under so much pressure that the valuation of the company dropped 75% over the past two weeks and now <a href="https://www.cnbc.com/2019/09/16/weworks-on-again-off-again-ipo-delayed-again.html" target="_blank">the IPO is delayed</a>. 
 
 
<h4>
An East Wind Coming</h4>
As Hurricane Dorian approached the United States, the president misstated that it would hit Alabama ("with 95 percent chance probability") and then officials at NOAA, who had original corrected him, <a href="https://www.npr.org/2019/09/09/759209532/noaa-chief-scientist-says-move-to-contradict-agency-and-back-trump-was-political" target="_blank">issued a statement to back him up</a>—a political move from as scientific organization. But then NOAA's acting chief scientist <a href="https://www.washingtonpost.com/weather/2019/09/09/noaas-chief-scientist-will-investigate-why-agency-backed-trump-over-its-experts-dorian-email-shows/" target="_blank">slammed the agency for doing so</a>. 
 
 
<h4>
Just Say No</h4>
Joi Ito resigned from M.I.T. after The New Yorker ran a piece on the <a href="https://www.newyorker.com/news/news-desk/how-an-elite-university-research-center-concealed-its-relationship-with-jeffrey-epstein" target="_blank">M.I.T. Media Lab accepting donations</a> from convicted sex offender Jeffrey Epstein. Kara Swisher <a href="https://www.nytimes.com/2019/09/08/opinion/joichi-ito.html" target="_blank">summed up</a> the supposed moral dilemma of Ito and M.I.T. this way: "If you can't manage to say a hard no to a predator of young girls, I am not sure what to say." When Harvard Law professor Lawrence Lessig asserted there was nothing wrong with it <a href="https://www.nytimes.com/2019/09/14/business/lessig-epstein-ito-mit.html" target="_blank">as long as it was done anonymously</a>, the internet came down on him. 
 
 
<h4>
Hold Up, Partner</h4>
Gun violence has been in the news in a more acute way after back-to-back shootings in Dayton and El Paso. So much so that an unprecedented <a href="https://www.npr.org/2019/09/12/760144527/145-ceos-call-on-senate-to-pass-commonsense-bipartisan-gun-laws" target="_blank">145 CEOs called on Senate to pass common-sense bipartisan gun laws</a> and <a href="https://www.nytimes.com/2019/09/04/business/dealbook/walmart-gun-sales.html" target="_blank">Walmart</a> decided to stop selling ammunition for assault-style rifles in its stores. In addition, NASCAR has gone so far as <a href="https://thehill.com/blogs/blog-briefing-room/news/461302-nascar-bans-some-firearm-ads-as-part-of-gradual-shift-on-guns" target="_blank">to turn down certain firearm ads</a> for its programs. 
 
When NASCAR and Walmart think things have gone too far, you know we're at an inflection point. 
 
 
The first step for companies and other entities to take a new approach is to be honest with themselves and with their stakeholders. 
 
Some pundits have called for brands to "take a stand" on societal and political issues, and some brands have done so. But to do so just for the sake of doing it is misguided; taking a stand has to be meaningful and have some kind of deeper significance. 
 
For example, if Walmart made this decision a few years ago, it wouldn't have seemed appropriate. But after a horrific shooting happened in their store and affected their customers and associates, they had a moral obligation to consider this differently. 
 
Ultimately, this is about standing up for what's right. We need integrity, and decent and moral leadership now more than ever, and it can come from any corner: business, religion, government, and more. 
 
The Bible (one of those classic texts) sums up what's expected of us: 
 
<div style="text-align: center;">
“admonish the unruly, encourage the fainthearted, help the weak...examine everything carefully; hold fast to that which is good.”</div>
<div style="text-align: right;">
— Thessolonians 5:14-21</div>
 
 
 Regardless of your spiritual beliefs, that kind of common sense is pure wisdom.

The Cracks Are Beginning to Show

An Eruption of Vesuvius by Johann Christian Dahl, 1824 (public domain - The Metropolitan Museum of Art) There's something in the ...

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The Lady of Shalott by John William Waterhouse (public domain - Wikimedia Commons) How much do you value the close relationships in yo...

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Resolution and Adventure with fishing craft in Matavai Bay by William Hodges (Wikipedia, public domain) Even if you've had anythin...

The Ethics of Ride-Hailing

<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/-OvHxuIyveHo/XXkqple_N8I/AAAAAAABHh8/m137U8DgJ1AlSyxq6xwOnjn1uf-z9Pb2wCLcBGAsYHQ/s1600/Jacques-Louis_David%252C_Le_Serment_des_Horaces.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1218" data-original-width="1539" height="506" src="https://1.bp.blogspot.com/-OvHxuIyveHo/XXkqple_N8I/AAAAAAABHh8/m137U8DgJ1AlSyxq6xwOnjn1uf-z9Pb2wCLcBGAsYHQ/s640/Jacques-Louis_David%252C_Le_Serment_des_Horaces.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><a href="https://en.wikipedia.org/wiki/Oath_of_the_Horatii#/media/File:Jacques-Louis_David,_Le_Serment_des_Horaces.jpg" target="_blank">The Oath of the Horatii</a> by Jacques-Louis David, 1784 (public domain - Wikipedia)</td></tr>
</tbody></table>
 
The ride-hailing industry—Uber, Lyft, and their counterparts—is the personification of the current version of the American Dream: cheap convenience. 
 
Traditionally in the service business, the offer to the client goes like this: 
 
<div style="text-align: center;">
Good. Fast. Cheap.</div>
<div style="text-align: center;">
Pick two.</div>
<div style="text-align: center;">
 </div>
What's happened with Uber (the poster-child for this movement) goes beyond that. With Uber, you get all three! 
 
And that's unsustainable. At least in the current configuration. 
 
Uber's business model is built on the notion of cheap labor. When Uber went about establishing itself, the goal was to dominate the market — don't forget that uber alles means "above all" — they offered cheap rides to customers and financial incentives to bring drivers on. 
 
 
<div style="text-align: center;">
“Ethics were not a hallmark of Uber’s first decade.”</div>
<div style="text-align: right;">
—Mike Isaac, <a href="https://amzn.to/2LpFCaC" target="_blank">Super Pumped: The Battle for Uber</a></div>
<div style="text-align: center;">
 </div>
<div style="text-align: center;">
 </div>
There are far too many ethical aspects of Uber to explore in this piece; we'll just focus on their relationship with drivers. 
 
 
<h2>
Burning Cash and Relationships</h2>
In each market, Uber spent whatever necessary to hook riders on their service. Like a drug dealer, they'd make the product cheap and irresistible. And then, once you're hooked, they change the terms of the deal. 
 
Surge fares are well known, and despite some high-profile anomalies, riders generally accept them because of the convenience. 
 
But the more impactful changes in the deal happened on the driver side. In a report from Jalopnik, they showed that <a href="https://jalopnik.com/uber-and-lyft-take-a-lot-more-from-drivers-than-they-sa-1837450373" target="_blank">Uber was keeping 35 percent of fares from drivers</a>; in <a href="https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm" target="_blank">Uber's S-1 filing</a>, they stated their take was closer to 20 percent. The Open Markets Institute wrote that the findings “support the argument that their business model is built on large scale labor exploitation.” 
 
This might be a good juncture to note that Uber's S-1 also contains this bold (and patently false) claim: 
 
<ul>
<li>We do the right thing. Period.</li>
</ul>
 
 
<a href="https://www.nytimes.com/2019/08/23/business/how-uber-got-lost.html" target="_blank">According to Isaac</a>, Uber executives 
<blockquote class="tr_bq">
“had major blind spots because of their fixation on growth, their belief in technological solutions, and a casual application of financial incentives that often inflamed existing cultural problems.”</blockquote>
In other words: profit and growth, at all costs. 
 
This is the kind of misguided prioritization that <a href="https://www.scottmonty.com/2019/08/why-businesses-need-to-prepare-for.html" target="_blank">the Business Roundtable change</a> is designed to address. The new Statement on the Purpose of the Corporation indicated that employees, customers, suppliers, communities, and shareholders should be the focus of businesses. 
 
<h2>
Drivers Are Contractors, Not Employees</h2>
Uber has made no secret that it doesn't value drivers. Early on, Uber's goal was to move to autonomous vehicles (drinking the Silicon Valley Kool-Aid that predicted driverless cars everywhere by 2018). In order to get there, Uber had to dominate the market, and one way to do that was with cheap labor. 
 
The evolving gig economy provided the perfect vehicle for gaining cheap labor. Coupled with a culture of disdain for municipal laws and regulations, Uber just went about its business with little regard for all of the above. 
 
Much of the culture of the company came from the founding CEO, Travis Kalanick, who was ousted in 2017. Dara Khosrowshahi replaced him and set a new tone for the company, attempting to make up for past sins. 
 
But one thing Uber—then and now—does not abide is drivers being recognized as employees. For years, they've fought the concept, even <a href="https://www.vox.com/recode/2019/6/27/18759387/uber-lyft-drivers-misled-companies-political-campaign" target="_blank">misleading some drivers into petitioning against their own rights</a>. 
 
In recent months, <a href="https://www.nytimes.com/2019/08/29/technology/uber-lyft-ballot-initiative.html" target="_blank">Uber, Lyft and DoorDash pledged $90 million to fight legislation</a> that would recognize their drivers as employees, not contractors. Think about that: $90 million that they could put toward employee benefits that they'd rather lobby with. I recognize that they want to save money for the money-losing enterprises they oversee, but I'm just saying "We do the right thing," am I right? 
 
 
And speaking of DoorDash — what kind of company <a href="https://www.nbcnews.com/business/business-news/why-instacart-doordash-workers-don-t-always-receive-tips-you-n965926" target="_blank">steals its employees tips</a>? NBC and then the New York Times had stories about how the company used tips given within the app to subsidize worker pay. 
 
Oh sure, they've since <a href="https://www.theverge.com/2019/7/24/20708212/doordash-delivery-tip-theft-policy-change-tony-xu-tweets" target="_blank">vowed to end the controversial practice</a>, but who needs to be told that doing that is wrong? 
 
These businesses suffer from a crippling lack of ethics and integrity. 
 
If you're following along at home, <a href="https://ctt.ac/HO5QY" target="_blank">integrity means doing the right thing, even when no one is looking</a>. (click to tweet) 
 
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<a href="https://1.bp.blogspot.com/-MS9S9pmi7kk/XXktiQR8y5I/AAAAAAABHiM/OYCRBYLMlrY5144OrzjlhBS10q_deoclQCLcBGAsYHQ/s1600/Integrity%2B-%2BOath%2Bof%2Bthe%2BHoratii.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1218" data-original-width="1539" height="506" src="https://1.bp.blogspot.com/-MS9S9pmi7kk/XXktiQR8y5I/AAAAAAABHiM/OYCRBYLMlrY5144OrzjlhBS10q_deoclQCLcBGAsYHQ/s640/Integrity%2B-%2BOath%2Bof%2Bthe%2BHoratii.png" width="640" /></a></div>
 
 
<h2>
Who Leads the Change?</h2>
While the Business Roundtable statement is high-minded and noble, we need to be completely clear-eyed about the prospect of change. Left to their own devices, CEOs are unlikely to make a shift particularly if it's a publicly-listed company. 
 
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<a href="https://amzn.to/34u0Mff" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;" target="_blank"><img border="0" data-original-height="499" data-original-width="331" height="200" src="https://1.bp.blogspot.com/-fJEukrc3ISs/XXkpVA4lclI/AAAAAAABHh0/ldAxSAwv1LMrTqsrbuFLoPcF_li6gKdeQCLcBGAsYHQ/s200/enlightened.jpg" width="132" /></a></div>
That's the main takeaway from James O'Toole's <a href="https://amzn.to/34u0Mff" target="_blank">The Enlightened Capitalists</a>. CEOs who are beholden to stockholders and shareholders will still be under their thumb. Companies that are owned outright by their executives have more leeway. 
 
Absent that arrangement, who's responsible for ensuring things change? 
 
 
<ul>
<li>Well, the New York City Taxi and Limousine Commission has already jumped into the fray, raising minimum wage for drivers to $17.22 after expenses.</li>
</ul>
<ul>
<li>The U.K. already ruled that <a href="https://www.cnbc.com/2018/10/31/uber-loses-appeal-against-landmark-uk-workers-rights-ruling.html" target="_blank">Uber drivers needed to be considered as workers</a> rather than as self-employed.</li>
</ul>
<ul>
<li>And this week, California legislators approved a landmark bill <a href="https://www.nytimes.com/2019/09/11/technology/california-gig-economy-bill.html" target="_blank">that requires companies like Uber and Lyft to treat contract workers as employees</a>.</li>
</ul>
<ul><ul>
<li>UPDATE: Uber says <a href="https://www.linkedin.com/pulse/ethics-ride-hailing-scott-monty" target="_blank">it won't comply with the new law</a>, claiming that "drivers’ work is outside the usual course of Uber’s business."</li>
</ul>
</ul>
 
 
 
But these are one-offs, and the companies aren't naturally predisposed to acting in such a magnanimous manner toward their "employees." 
 
Perhaps they should have thought of that before they structured a business model primarily <a href="https://www.scottmonty.com/2019/08/why-businesses-need-to-prepare-for.html" target="_blank">designed to benefit investors</a>. 
 
 
 
Beyond the financial bottom line for investors is this moral dilemma for consumers: We need to ask ourselves what price we're willing to pay for the goods and services we get. 
 
If we want to enjoy cheap products and transportation, then we need to accept the moral trade-offs we might have to make. If we want to live by a certain set of principles, then we may need to alter our habits or ask more out of the brands we patronize. 
 
As to the C-suite, it needs to ask itself if it's okay with the status quo and chasing growth at all costs. If not, then commit to some changes that get out ahead of regulations. If serving investors is to remain the primary purpose, then just admit it. 
 
Otherwise, stop with the lip service of "doing the right thing." 
 
It's insulting to everyone. 
 
 
Thanks, and I'll see you on the Internet. 
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The Ethics of Ride-Hailing

The Oath of the Horatii by Jacques-Louis David, 1784 (public domain - Wikipedia) The ride-hailing industry—Uber, Lyft, and their count...

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Scott Monty - Strategic Communications & Leadership Advisor