Reader Email: Ethics Case Study

"Donna" sent in the following email today about a business case. The email is in italics and I'll add my comments in the body as you read along:

I just read a very interesting case for my Ethic & Business class, but I'm very confused about the ethical dilemma of this case.

So you're getting outside help for your ethics course? Is this ethical? (just kidding - the whole point of case studies is to start a discussion, and more importantly to learn how to argue your case since there is typically no "right" answer - you can read everything I write and still hold the opposite opinion).

The case is called Martha McCaskey. It is about a consultant Martha McCaskey, whose company was hired to get detailed information (e.g. cost and manufacturing process) of their competitor's new chip.

First, this is what consultants are hired to do. Getting the scoop on your competitor is not unethical, it's business. But there are ethical ways get this sort of data and there are unethical ways.


McCaskey was assigned to pay a former employee of this manufacturing firm to supply her with these information.

This is the unethical way.

A typical consultant, when asked this sort of data, will come up with something close to an estimate - or educated guess - based on publicly available data, expertise of the market, and maybe even a "tear-down" of the product, bought on the open market.

I regularly pay for "tear-down reports", which come with cost estimates and guesses on how the product is made. Just this week I got a report on the iPhone. The guys who did the report are a bunch of engineers from industry who do this for a living, are public about what they do, and everything is on the up-and-up. In the past I have even bought tear-down reports on my own company's products to see how accurate the report is (they are usually in the general ballpark, but obviously miss a lot).

But asking a former employee right out for this information is crossing the ethics line. It is very likely that such information would be under the former employee's non-disclosure agreement (NDA) with the company, which stay in effect even after they leave.

To be fair, note that many people leave companies and hire themselves out as "consultants", leveraging their expertise and contacts at their former employer. This is okay. What isn't okay is taking the cost spreadsheets and process flow out of your desk and selling it on the open market. In some cases this could get you arrested and long years in jail, as happened with a secretary at Coke.


The company promised Martha's company to double the fee and offered a future project, if they were able to get them the required information.

Note that the client company didn't ask Martha's company to do anything unethical or illegal, but they are putting enough heat on this to make it worth their while. While we will never know, it is likely the client knows (or is saying over cocktails to Martha's management) exactly what they want done, but by using the consulting company they can keep their hands clean.


Also, successful completion of the project would gain McCaskey a promotion and a significant raise. McCaskey, however, cannot see a way to complete the project without compromising her values. She must decide whether to maintain the high degree of integrity that has always characterized her work or to compromise and "play the game."

To me this case is pretty cut and clear. The request doesn't pass what my ethics prof called the "smell test", which if something smells fishy, it usually is.

I was wondering what do you think McCaskey should do… give away her values and play the game everyone in her company was playing? Is Martha's business ethical? and is this business practice legal?

So my bottom line is that McCaskey shouldn't do it. What is being asked is definitely unethical, and if not illegal, could bring civil penalties (by inducing the employee to break his NDA, McCaskey and her company could be held liable for civil damages).

The best way for her to approach this is to propose to her management an ethical proposal using the ethical means I outlined above, pointing out NDA and other issues with getting the information directly from a former employee. If this doesn't fly - and my guess it won't - she should turn down the request.

At that point McCaskey would be killing her career at her employer, so she would have to start looking for another job.

This Could Be in a Textbook, Except It's Real

This chart from Nokia's earnings call (and compiled by Merrill Lynch) is just classic. Average selling price (ASP) is on the left axis, millions of units shipped on the right axis. Note the time period is in quarters:





In one glance this chart is showing:

• Fundamental connection on price versus volume demand.
  
• Moore's Law, or more broadly, how technology products become cheaper over time


• How Nokia is beating the crap out of its supply chain

Airport Run-Ins

It's a small world, and it's getting smaller. This means that I shouldn't be surprised when I randomly run into people I know it airports. It has happened to me dozens of times, most recently just last week. Most of the time the experiences aren't worth mentioning, but there were at least three that were sort of interesting:


3. The Guy I Made Rich - "WM!" The sandy hair guy looked vaguely familiar as he came and started pumping my hand. I went through my usual mental check: High school? No. College? No. Co-worker? No. But I knew it was work related.

"It's me, Peter! From CloneTech!".

"Of course, Peter, how you doing?" The memory was still a little vague, then it started coming back why he would remember me so well.

Peter was part of a two-man start-up who approached me when I was a product manager at TI. He wanted to create clones of our development tools. Knowing that our tools were expensive and seeing a way to seed the mass market, I drove through a deal to give him the intellectual property and permission he needed to make his products, with a small royalty back to TI. My goal wasn't to make money, just to get our products distributed more widely into the market.

It turns out his tools were not only less expensive, they had a better user interface and were better supported. His volume soared, his head count exploded, and in a few years TI decided to just buy his company to fold the products and trained engineers back into the mother ship.

The deal I gave him basically ended up putting several million dollars in his pocket, so it wasn't surprising he remembered me, even if I only vaguely remembered him. He offered to buy me a drink (the least he could do), but I had to catch a plane, so we exchanged pleasantries and said goodbye.



2. The Former Camper - "WM!" The kid was probably 17 years old and nearly a foot taller than me. He reached down, smiling broadly, shaking my hand. I had no clue who he was. "It's me, Duncan! Your former camper!"

The last time I saw him he was a decade younger and over two feet shorter. There was no way I would have recognized him, and I think he realized it. But he was happy to see me and we talked a few minutes about our shared experiences. It sort of hits you in times like this that you really don't realize what sort of impact you're making on a kid's life. To me he was just one of a dozen kids in my cabin, but I realized then that I was really something of a role model to him.




3. The Ex - "WM." The voice was low, nearly a whisper, right in my ear. I turned around and was looking face-to-face at the girl who in college I thought I was going to marry. In fact, if one sentence in one very long conversation/fight had gone differently, she very well might have ended up as my wife. This run-in was only a couple of years later, during which time she had married someone else. Not enough time had passed, so it was an effort to keep my face in some sort of composure. Through my tightening vocal cords I asked her how she doing, what she was doing, and other small talk, but all the time thinking "Of all the airports in all the towns in all the world, she walks into mine."

Funny How They Never Call It a "Tax Increase"

Since the government will be taking more from people's paychecks for Social Security, does this means that their benefits will go up?

The government also announced Wednesday that nearly 12 million wage earners will pay higher taxes next year because the maximum amount of Social Security earnings subject to the payroll tax will rise from $97,500 currently to $102,000. In all, an estimated 164 million workers will pay Social Security taxes in 2008.

No, their benefits will not be going up. And for my generation benefits will be non-existent since the fund will be bankrupt by the time I retire.

Sales Tip For The Day: Win Fast, Lose Fast

This is actually an old one and I think the meaning is obvious: Don't waste your time chasing an opportunity you know you aren't going to win. Spend the time and resources on new accounts or on ones that have probabilities to close.

The problem with this, however, is when the account is so large and seemingly important that top management keeps telling you to go back. I have one of these now, and it's frustrating telling management that it is a waste of time and getting told to go back in there anyway. I guess this is just one of those frustrations that comes with the job.

Finally, A Series I Like Is Renewed

This is two weeks old, but I just found out: Mad Men is being renewed for a second season.

This is just a great show. The soap opera stuff I could do without - it's the office politics and dynamics which make this show great for me.

I also like the show since I like to picture myself working in the office of 1960: offering colleagues who come into my office a cocktail at 11am, doing two martini lunches at noon, then doing more rounds of cocktails at 3pm and 5pm before chasing secretaries the rest of the evening, all the while smoking like a chimney...sigh...those were the good old days, weren't they? What the hell happened?!

Banning In-Flight Cell Calls

Here is one ban I am fully in support of:

According to Telegraph Travel, Les Dorr, of the Federal Aviation Authority (FAA), stated that "proposals to lift the ban on in-flight mobiles had caused such an outcry [that] they had been dropped." Furthermore, it was noted that aviation authorities had "ruled out the use of mobile phones on planes for the foreseeable future."

Thank God. It's bad enough that as soon as the wheels touch the ground, half a dozen people around me turn on their phones and start screaming into them "I'VE JUST LANDED. WHAT? NO I AM STILL ON THE PLANE. NO, THE PLANE. I'LL BE OUT IN A FEW MINUTES. CAN YOU HEAR ME? NO, I AM ON THE PLANE!"

And so on for the next 15 minutes, during which no information is actually exchanged. Can you imagine someone trying to do a real conversation while in flight with the engines at full throttle?

Air travel is bad enough as it is, and having the usual obnoxious people scream into their phones for two hours straight will make a bad experience even worse. Two thumbs up to the FAA and the hope they keep the ban for the foreseeable future.

Email on the other hand, I would be okay with.

Working with "Zombies"

No, I don't mean people who haven't had their first cup of coffee yet. I mean people who are "dead", but don't know they're dead. I.E. people who are being let go but haven't been told yet.

Three times in the last three years I have been working side-by-side with someone who was going to be fired, but who hadn't been told yet. In each case our shared manager told me of the situation so I could pick up some of the other person's responsibilities and accounts. In other words, "WM, find out as much about John's work and client base as possible before we tell him the bad news and he bolts."

In one case I was on a one-week road trip in Asia with the zombie. I was going out to dinner with the guy, having drinks, hearing about his family. The whole time I had to put on a nice face, smile, wonder how he was going to put his kid through college after he was fired, then ask, "So, what's going on at SuperGlobalTek? Weren't you in there last month talking to them about our Gizmo 2000?" And then mentally take notes on my new account.

Did I feel guilty about any of this? No, not really. In each case the manager asked my opinion about the guy before making a final decision, and in each case I agreed that they weren't pulling their weight. In each case they were simply in the wrong role or industry. And if someone isn't in the right job, and therefore not doing a good job, it benefits both the company and the person if they move on. In one case I was basically doing the guy's work anyway.

In each case, though, when the zombie eventually did find out they're dead, they always came back to me. "WM, when did you know about this?" I'd lie. "Wow, I just find out. I'll check my network to see if I can get any job leads for you!"

Of course it makes me wonder what the people around me know about MY job and situation. Because one of these days I may be a zombie and won't know about it.

The Origin of Arabic Numbers?

A Moroccan acquaintance of mine sat down and tried to convince me that the origin of Arabic numbers has to do with angles.

He claimed if we look at how the original numbers looked, and placing a dot on each angle, you can see how each symbol has the corresponding number of angles:

While this is interesting, I will have to file it under "apocryphal". First, the 5 has a tail and the 7 has a "base" (I conceded that people use a hash on it in many parts of the world). I also find it hard to believe that a writer of 9 had to draw an octagon (the reply being that is one of the many reasons the digits were simplified over time).

A quick web search didn't find any corroborating data, but I didn't spend a lot of time looking. It's interesting, if true, and even if it isn't true, it makes a good story to tell at a bar on a cocktail napkin.