This week, while reviewing my long list of potential topics, I came across this year-old blog post regarding the “ethical grid” and business ethics in general. The author talks about three ways of doing business: immoral, amoral (insouciant), and moral. He states that the immoral business operates under purely selfish reasons. I disagree. I argue that prosperity and moral business practice almost always involve selfishness, what’s best for me and the company.
I will start with a simple example to pivot your brain. Probably in just about any line of business, people deal with difficult customers and clients. The inclination, especially among the younger and less experienced folk (I was there once), is to snap back, argue, or retaliate in some way. This is very, very unwise. Instead, consider what is best for me and the organization I represent. Selfishness. What is best for me may include biting my tongue, smiling, being nice and working with difficult/annoying personalities.
Another inclination may be finger pointing mud fights when things go to hell in the midst of a project. This is not productive, but stupid. Selfishness suggests you leave train wrecks behind and find another train and keep going. Come back and clean up lessons learned from the train wreck another day – after the project is complete.
Consider three business models / tactics that could be considered selfish but are actually self-destructive.
Performance contracting evolved before my time, probably in the 1980s. The concept: implement projects that pay for themselves through operating cost savings – primarily energy, maintenance, and associated labor cost reductions. All this is guaranteed in the contract. In the early days, there were shenanigans. In many cases they would include obscenely priced long-term maintenance contracts. Shortly after implementation, many buyers’ response was “get me out of here”.
This poisoned the well for a long time. This wasn’t selfish. It was stupid. Heavily regulated utilities can provide performance contracting, on the up and up with all cards on the table. A few years ago we were trying to sell such a concept to an investor owned utility and the message was, “We (utility) are intrigued with the concept, but don’t call it performance contracting.” What an attractive brand the pioneers of performance contracting must have developed – the two words shan’t be chained together and uttered aloud in a sentence that includes our brand.
Performance contractors never, to my knowledge, operate in the utility energy efficiency arena. Why? Likely because projects are usually huge and would certainly come under review of program evaluators. Is it any wonder that performance contractors work almost exclusively for state and federal governments – other peoples’ money?
Another example is design/build firms, as opposed to the design/bid/build process. In design/build, the owner contracts with one firm to design a facility and then build it. It’s a one-stop shop. There is no cat herding of multiple organizations. The design/bid/build process consists of an independent design team that generates documents suitable for bidding the largest cost of the project by far: construction. The competition for design/build, if there is any, occurs at the outset with hand waving, sexy renderings, and dog and pony shows. Same for design/bid/build, but the owner has an impartial advocate maintain honest bidding and management of construction, which accounts for 90% of the project cost.
With design/build, floor plans and cost caps are promised at the outset. There are unlimited ways to cut corners and cost from there. The joke, which happens to be true, goes that at the end of every design/build project, the proud new owner gets a check from the design/builder since the project came in under budget, by $17,000. Every time!
Buying new buildings is like buying professional services. To think the same deliverables can be purchased from one firm at a much lower price than another is incredibly naïve. Or the seller is naïve and misses the barn when pricing a project and gets financially clobbered. Been there, did that. But again in this case, what is best for me and my organization. Eat crow with a smile.
Lastly, while the statement, “it doesn’t hurt to ask” is almost always harmless, it does hurt sometimes to ask more than once or try an end around on the regulators. When the regulators control the livelihood of utilities, they best take no for an answer and move on. They can either be selfish, acting in their best interest and go along with energy efficiency policies, or stupid and fight them. Or they can triple down and convince their largest customers it is a waste of money and have them lobby their representatives. Not, not, not, smart.
Certainly there are service industries where “me first” is bad for everyone else. These would include organized crime and politics. Come to think of it, what’s the difference?