The Benevolence of Profits

Much has been written regarding the tension between the selfishness of profits and the resulting benevolences of solid business practices. The tension reminds us that there are no easy solutions to the human problems of poverty, corruption, greed, fraud, indifference, economic pain, and financial enslavement. Will an economic policy that allows for selfish acquisition of property and accumulation of wealth result in gross negligence of the impoverished? Or will a policy of forced coercive sharing of property and communal equality result in shared wealth and a dramatic diminishing of poverty? These questions and more leave philosophers and economists perennially perplexed by the complexity of issues affecting the future of society and culture.

When looking at broad economic policies and how businesses shape communities, cultures, and connected corporate structures, it becomes imperative to study the core of human nature and how economic growth hurts or helps the overall public good. What does it mean to an individual and to a society when a business becomes profitable? Is there a breaking point when individual or collective profits exceed public good?

There are issues connected to incentive, capitalism, greed, profits, responsibility, selfishness, altruism, charity, and social expectations, not to mention interest rates, investments, and banking that all deal with economic policy. Rather than these cloudy issues becoming a philosophical burden with often murky ethical conclusions, it is probably wise and ironically inspirational to view these discussions with optimism and opportunity for clarity of social and economic thought. As in all matters that blend philosophy and utilitarianism, it would be beneficial to examine Aristotle's writings on the subject and take great consideration of Biblical teachings in the process.

Beginning with the conclusion of this essay, I must express the John Wesley belief that we are required to make all we can, save all we can, and give away all we can.[1] Adhering to these principles demonstrates a profitable outlook, a meaningful strategic plan, and a measurable ethical worldview. Acting according to these principles and with balanced equality is consistent with business growth, personal attainment, and corporate benevolence. All three support the idea of individual and collective achievement in the business world.

Greed and selfishness are two character traits that have been traditionally regarded as evil flaws in our basic human makeup that we should work diligently to squelch and ultimately defenestrate as not being worthy of virtue and ethical practice. We have watched movies, read books, and listened to many sermons ranting against the terrible vice of greed, convinced beyond question that the world has suffered greatly from the vicious selfishness of personal acquisition and unbridled corporate profit taking. We further propagate and substantiate this attitude of resentment by finding examples of unmitigated greed in personal lives as well as in the practices of many businesses. 

While there is no question that exorbitant and unrestrained profit taking by individuals and institutions have resulted in shocking abuses as well as a deplorable lack of sensitivity to those suffering from poverty, at the same time, we do need to give economic consideration to the economic benefits of monetary gain. We may be appalled at the vast wealth that many people and corporations have accumulated but it is essential to remember that accumulation usually is a long process that involves economic growth and progress. Even those rare instances of instantly acquired wealth causes further growth, albeit somewhat immediate, in the economy. 

A word of how economic principles work is order at this point. Every time a material good is exchanged for money, regardless of the amount, the economy benefits in some kind of way. A growing economy is one where trade occurs in a robust system of supply and demand. Unless a person places money under a rock and never uses it, the economy will grow from the trade itself or the event of the trade. If a serious investor purchases 10 million shares of a company and those shares go up $1 causing the investor to sell his shares at a profit, then the economy benefits. If he or she then decides to spend the $10 million dollar profit on a new yacht, the economy benefits. If he or she takes the gain and puts it in the bank, the economy benefits through interest rates and loans. But if the gain is buried in the ground, the economy stops benefiting through the inactivity of the profit. If he or she decides to give away the money to various charities or causes, the economy benefits by furthering the trading power of the money.

This becomes complicated when a closer study of charitable giving reveals situations where reinvestment of profits is paradoxically more benevolent that giving freely to those in need. In spite of the seemingly "nice" gesture, there are times when excessive and unregulated giving ultimately results in a painful recessionary economy that could bring all business to its knees, not to mention entire cultures and civilizations. "Charitable giving may not be the most effective way of solving world poverty. Indeed charitable giving may even distract from finding the best solution - which might involve a complex rethink of the way the world organises its economic relationships, and large-scale government initiatives to change people's conditions. If that is so, then the effort put into charity might be better devoted to pressuring governments to bring about needed change. And governments might be more likely to focus on dealing with poverty if they weren't being helped by charities." [2]

This is not to say that charitable giving is economically untenable in today’s world. Responsible giving and responsible causes help keep the economy moving forward as people are given the tools they need to be productive. Individually there are certainly times when a donation or an act of selfless benevolence is the right thing for the circumstance, particular when the situation is out of the hands of recipient. But it is worth thoroughly examining what charity actually means to an economy, to an individual, and the cause it is seeking to benefit. No economic act of selfishness nor selflessness goes without a cost and such is true with any form of charity or benevolence.

But what is the role and responsibility of economy if not to allow and encourage trade and growth in order to meet personal and collective needs? In a free trade economy, people have the incentive to develop ideas, to work hard, to increase their trip, and to improve their current conditions. An open economy of supply and demand without excessive manipulation by regulation and unruly restrictions allows for the system to work to the betterment of everyone. In a perfect world, supply and demand meets everyone's needs over time and keeps an economy thriving at a high and consistent rate. Yet we do not exist in a perfect world. In a free market economy, all people work according to their needs and the supply works hard to meet the demands for products and services. It makes for an ideal libertarian world apart from the constant and unwieldy burden of governmental interference in our lives at every level.

The libertarian position is certainly strong and to be respected for its love of freedom and for broad consideration of all people, but the libertarian position assumes a type of goodness that resides in human beings to make the best decisions over a period of time. It is that of an optimist unable to recognize the potential for corruption and fraud, and the potential for people to relish or at least ignore the suffering of others. Some humans have an unlimited capacity for inflicting pain on others and remaining selfishly ignorant of the plight of other people and, in some cases, entire cultures.

Examining the concept of altruism has been a common practice for philosophers since the anti-altruistic positions of Ayn Rand. She proposed an "objectivist" philosophy of selfishness and self-interest as serving the greater social needs, advocating that every person should seek to improve him or herself through entrepreneurship, diligent effort, commitment to excellence, and economic capitalism. For some who choose to stretch the concept, her approach leanes toward the modern idea of libertarianism. On the surface, objectivism makes logical sense in its personal imperialistic pursuit of individual happiness that collectively benefits culture through artistic and economic growth and improvement. But the philosophical position begins to fall apart when seriously studied in terms of the impoverished and the disabled. Turning a blind eye to the suffering is not within the social guidelines of ethical responsibility and should never be glorified as a virtue. Objectivism as a philosophical position to be studied is certainly valid but when viewed as a practicing virtue, it does not have the strength of ethical responsibility and further points to a world without social consciousness. Objectivism, however, is not without merit, and its contributions to identifying profit goals for corporations are constructive for building a strategic model for success. Profits in business are not only to be expected but are virtuous in their basic design. It is when objectivism ignores social responsibility and human sensitivities that it loses its validity. 

When vast profit-taking of a business overrides human values and then results in the pain and suffering of other people, the motive and the practice must be reassessed. The profit motive is a strong one and can be vastly and mutually beneficial to many, or, rather sadly and in some cases, terribly harmful. As in any endeavor that is inherently good, profit has the potential to govern all thought and become a god in and of itself. Our desire to worship something is real and pronounced, causing us to fill the emotional void in our lives with something. For a Christian, this gap or void is filled with God, resulting in supplication and redemption of our natural inclinations. Yet regardless of a person's religious preference or beliefs, the fact remains that we tend to fill our lives with some kind of deity. Our natural inclination is to deify those things which may not be virtuous in all situations, and to honor those ideals that fit our own personal makeup. The result is often obsessive and perhaps addictive behaviors including problems with alcoholism, drugs, sex, and even money. We read and hear each day about criminal behaviors caused from drugs or stealing or other such destructive forces. When the purpose controls the person, the person’s humanity is eroded to the point of serving the wrong deity.

To be fair, there is nothing wrong with having a strong philosophical and pragmatic purpose, and for a business that purpose is profit. The profit motive is a good one and companies that focus their core business on making profit are successful. In a grand sense, this follows the admonition to "make all you can" and to use your talents accordingly. A good company seeks to increase its profits by expanding its business and thus creating greater value. This can be done in a multitude of ways including investing profits back into the business, increasing productivity, raising prices, marketing globally, or acquiring other businesses. But a business must always be mindful of its original purpose of making profits by staying targeted on its origins and avoiding unnecessary and often debilitating expansion.[3] The point to be made is that creating a profitable business is hard work and requires energy, planning, marketing, productivity, accounting, inventory, and mostly lots of consumer or business to business demand. When a business is profitable, everyone gains, including the producer, the agency, and the consumer.

Any book, article, speaker advocating for a skewed position that says profitable businesses are not socially responsible are simply ignorant of what business means and how the economy works. It is an erroneous position to claim that the purpose of a business is to be ethical or to serve the public good. A corporation with that motive will fail in its enterprise unless, of course, it is a charitable, non-profit organization, in which case it is questionable to call it a business. The purpose of a business is to generate a product or service that makes profits for the business. To summarize the teachings of Michael Porter, Professor at the Harvard Business School, business is not about besting the competition or commanding a market share, it is, rather, simply about profits whether the company is large or small.[4]

As a business increases its earnings, the profits are often reinvested in products or, in the case of the wise CEO, in personnel. A business that values its employees works to create value in them and in their work. This is expressed in many ways with compensation being an important part of that value. When employees are duly compensated for their work, the result is often loyalty, trust, accountability, and higher expectations. Profit is a strong motivation for business owners and employees benefit from increases in the business, unless, of course, the compensation is artificially contrived. Such is the case for increases in the minimum wage requirement.

It is not within the scope of this essay to delve into the economic problems of minimum wage except to demonstrate how a false wage increase mandated by the federal government actually results in unemployment and loss of productivity. When employees are compensated for achievement and for producing beyond their initial expectation, the monetary benefit extends to the entire company as profits are increased. But when an artificial wage minimum is imposed on a business, unless the business has either had a shockingly profitable quarter or unless the business is deliberately mistreating its employees, the new wage will likely result in unemployment or reduced hours. Keep in mind that the best companies, recognizing the value of its employees, will compensate employees according to its own profit margin. When a minimum wage is required, many companies will not be able to meet that demand and will find other ways to remain solvent.

In a well-intentioned gesture, minimum wage tries to help everyone and ensure compensation that is adequate for putting food on the table and a roof over the head. In some sense, that does happen, but the contrived program of minimum wage generally does more harm than good for a society. It takes away incentive and forces a business to react to the constraints of its own financial picture. Granted there is some research arguing for minimal employment damage after a minimum wage increase, and certainly not all companies are hurt by the requirement.[5] In general, however, an ethical and responsible business suffers under the federal interference of wage minimums.

This then brings us to what it means to be an ethical and responsible business. Keeping in mind the admonition to "make all you can" and the reminder that profits are not in and of themselves problematic and, indeed, often generate the kind of economy that carries with it social responsibility, at the same time, the principle only works well with those businesses who recognize the role that businesses play in the collective gain of societal improvement. This includes supporting education, families, the legal system, social contracts, entrepreneurship, and altruism. In a subtle or not so subtle way, all businesses support these ideals through their diligent effort at turning a profit. Each time a product is produced where the trade for the product improves the value for the consumer as well as the producer, society gains in a multitude of measures.

But there is a personal and corporate line where profit without responsibility has negative social and ethical consequences. Those consequences are not necessarily economic, although argument could be made that selfish hoarding of wealth does not serve an economic gain for many people, but the consequences are likely to the heart and soul of the individual or, in the case of a business, the core of the company. Just as personal morality is potentially eroded through a series of self-destructive actions which include but are not limited to: stealing, lying, cheating, inflicting pain, and abuse, so also is a business's core eroded through similar actions. Contending that corruption and vice always result in failure is rather naive and unsupported by evidence; but there is no question that consistent and heinous corruption is damaging and usually detrimental to achievement and long-term success. This is evidenced by the immediate fame and ultimate demise of stars such as Oscar Pistorius and Lance Armstrong both of whose deplorable conduct took authority over their fame and achievements.

On the corporate level, we have watched Enron, Tyco, WorldCom, AIG, Bernie Madoff, and many others rise to the surface as dead fish destined to decay on a dry and deserted beach. These businesses suffered not just from creative and corrupt accounting practices but also from a lack of scruples, integrity, and social responsibility to shareholders and culture at large. Their infrastructure from the top down crumbled due to unrestrained greed, selfishness from leadership, poor business planning, and a shocking lack of honesty and integrity. It was not that their desire to be profitable exerted control over their actions; it was more that the leadership's lack of moral fiber and social responsibility caused the individuals to be misguided in their profit seeking decisions.

An analogous look at this could provide greater clarity on this problem of blame and historicity. I knew a former student who fell into hard times and had trouble supporting herself. She had recently lost her job and had no immediate solutions to putting food on the table. While there were many solutions to this problem including charitable organizations in town, temporary day employment, loans, family, friends, she chose instead to steal some food from a local grocery store. Had she taken a minimum of food for a meal or two, perhaps the store would have been a little more redemptive in its punishment of her action. But as she was taking the food, she began to consider the personal benefit of more. Her cart grew in volume and she left the store with nearly $200 worth of food. In visiting with her later and listening to her story, I asked her why she felt compelled to steal and why she stole that much. She could not answer very well except to say she put aside her personal scruples and decided to see how much she could steal.

Food is a natural expectation for our bodies just as profits are a natural expectation for businesses. There was nothing wrong with the young lady's desire to eat, but her methodology was seriously flawed, resulting in community service and a criminal record. She put aside her virtue, replaced it with vice, and faced the consequences of her action. On a much larger scale, the above named companies did the same thing. When leadership seeks after profit without considering how the virtuosity of their methodology, the result is potentially criminal.

The crime in stealing is the act in and of itself regardless of the amount. The crime, no matter what a criminal may claim, is not in getting caught, and the virtue is not escape from public notice; the crime is the act of stealing or lying or cheating or any number of legal and personal iniquities. When leadership or CEOs or managers accept the lack of honesty as normal or even right, the result is mass deception on a global scale, ultimately affecting thousands or millions of people and thereby defenestrating all social responsibility. The problem with such actions is not in seeking profit nor even greed by itself, and the problem is not poor planning and then getting caught, nor is the problem quantifiable by amounts of money taken, the problem rests with individual and corporate integrity and ethics.

In the marvelous book Greed and Corporate Failure, the authors examine the mistakes of several major companies already mentioned. Although the use of the word "Greed" is used in a negative light, and I maintain it is actually more of a virtue than a vice and knowing that quibbling over semantics of a word is not productive, the book does remind us of how easy it is for corporations to fall into the vicious trap of poor accounting and corrupt management. Even with strong internal controls, honest governing boards, and competent accountants, when leadership practices a philosophy of dishonesty and fraudulent reporting, the end result is corporate failure. WorldCom, for example, had several protective devices in place but still sank due to a lack of virtuous behavior by one CEO. "WorldCom did have a few excellent and experienced directors who would never have tolerated even marginal accounting practices, let alone fraud, had they known about them. But the board only met, on average, quarterly and the meetings largely involved formal presentation from management rather than detailed discussions. With weak internal controls, ineffective external auditors and a laissez-faire audit committee, outside directors had little chance of detecting the fraud."[6]

The stories of WorldCom, Tyco, and Enron are big and markedly public examples of corruption and fraud. While major loss of millions usually makes headlines, of equal or greater concern are the many levels of dishonesty and unethical practices that occur in lesser amounts or unknown corporations about which we never hear. But regardless of how much or how often or in what way these things occur, in the end we must continue to advance the cause for virtuous actions in personal behavior and in corporate practice. To do so is to act responsibly for the greater social good of how business benefits all people in a robust and exciting economy. 

In conclusion we return to John Wesley’s encouragement to make all you can, save all you can, and give away all you can. It is time for all people and businesses large and small to commit themselves to profit making, to building an inventory for the future, and to contribute to those in need. Such is the responsible role of the businessman and  in those desiring to create value in the business. Rather than finding fault in successful business, it is time to applaud them for their achievements while exhorting them with great patience and wisdom to practice a watchful and compassionate action on the impoverished, the widows, the orphans, and on the disabled. But without undue criticism, we should all be mindful that many times profits are a form of benevolence in this complex economic world.

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[1] http://www.umcmission.org/Find-Resources/Global-Worship-and-Spiritual-Growth/John-Wesley-Sermons/Sermon-50-The-Use-of-Money, accessed 2/26/13.

[2] http://www.bbc.co.uk/ethics/charity/against_1.shtml--accessed 2/24/2013.

[3] Zook, Chris and James Allen. Profit from the Core. Boston, Massachusetts: Harvard Business Press, 2010, pp. 23-62.

[4] Magretta, Joan, Understanding Michael Porter. Boston, Massachusetts: Harvard Business Review Press, 2012, pp. 19-35. 

[5] http://www.businessforafairminimumwage.org/news/00135/research-shows-minimum-wage-increases-do-not-cause-job-loss, accessed 2/25/2013.

[6] Hamilton, Stewart and Alicia Micklethwait, Greed and Corporate Failure: The Lessons from Recent Disasters. New York: Palgrave Macmillan, 2006, p. 77.

Detraction of Disordered Truths

           In an analysis of morality and an examination of ways to promote virtuous actions, Chuck Colson, Robert George, David Miller, Michael Miller, and Glenn Sunshine came together for a panel discussion on the topic. An extension of The Colson Center, the five panelists were ultimately dealing with the grand topic, “Doing the Right Thing.” Addressing the moral failure of individuals and how decisions come to be made, the panel spent some time on C.S. Lewis, the prison system, the differences between loyalty and integrity, the family, churches, and the educational system. Their discussion moved from a lofty philosophical recommendation into more practical application in today’s culture and addressed the paradox between making individual decisions while considering the collective cohesiveness that is needed. The discussion was enriching on several levels and the student questions demonstrated perceptiveness and appropriate concern for how to make ethical decisions. 

The admonition to use the head to govern the heart is a good one and is actually an extension of many of Plato’s ideas on the role and problems of the emotions in making logical decisions.[1]  Plato regarded music, laughter, sorrow, and many other emotional responses as being worthy events in many ways but not entirely beneficial to society, preferring wisdom over emotions. He recommended that artisans and people who live in emotional type disciplines be rejected from the city of leadership. Enjoying an aesthetic perception of the world, Plato continued to believe beauty was valued but not essential to great thinking and philosophical wisdom. He regarded human appetites as real but preferred the idea of leaving the artisans and those involved in emotions out of the true city. Beauty and music are respected but also dangerous in that a person, who lives within those disciplines, cannot be trusted with accurate judgment. With his recommendation we see centuries of mistrust and suspicion for anything connected to emotions, to beauty, to art, to music and, ultimately, to creativity and imagination.

But what if Plato were wrong, or at least not entirely right? What if he stepped up to the plate and instead of delivering a philosophical homerun that won the thinking game for centuries, he, instead, hit a bunt and just barely got on base? In other words, if we accept only a little of Plato’s ideas, it is possible we will find greater insight and comprehensive truth by giving emotions greater credence in shaping thought and actions. If we put in doubt Plato’s conclusions, then we inevitably begin to question C.S. Lewis’ position on the head, chest, and belly. As these theories fall apart in light of an opposing or at least enlightened and broad view, we may begin to see that emphasizing emotions are in fact beneficial and essential to proper behavior and logical thought.

In an examination of ourselves and of society on the whole, we often read and perhaps even experience a type of unhealthy giving in to our passions and our momentary lapses of judgment. When we hear about a mass shooting or an adulterous affair or larcenous actions or unbridled greed, we immediately conclude that another person has subjugated his logical thought with poor emotional reactions. We, sadly, acknowledge that Plato, C.S. Lewis, and the Colson Center are once again correct that reason was replaced by the absurd enslavement to the uncontrolled emotions of the individual. The myriad mosaics of “mistakes” that people make, particularly in the business world, are shrugged off as examples of yet another fool acting without logical reason and purpose.

To be fair, on the surface it does appear as though most actions are a result of poor emotional behavior and are not derived from logical thought. It makes sense to teach and to strengthen the mind rather than the heart in order to avoid the vicious trappings of an emotionally charged process. How many of us have wished for a personal muzzle when we find ourselves saying things in public that simply were not intended? It does seem that we deal with our own and other people’s emotional problems much more often than their mental ones, and there is little doubt that most corruption in the world is a result of heart led decisions over the mind.

But where I take issue is not necessarily in placing the mind over the emotions but, rather, in trying to diminish their importance in making proper decisions. I contend that is the heart that makes the best decisions and that great judgment comes not from cold, logical reasoning but in an application of the heart, of sensitivity, of emotional strength, of courage, and of stability. Our academic world, from the beginnings of learning through college and beyond, should not be about reducing the emotions and strengthening the reason but should be about strengthening and amalgamating the emotions with the mind. This absurd analogy of making the heart less valuable than the mind needs to be eradicated from our educational system. Both are essential and both need development. Let us look at this issue from another angle.

Is it possible that this issue is a result of a male dominated worldview that is continually propagated in our educational system at all levels? If so, it is time to consider the strength and power of a more feminine position in business and in education. A little story: when my wife and autistic son named Joel visited me in London, I spent considerable time teaching them about the London culture and the transportation system in particular. We navigated through the oft frightening intersections, took the escalators up and down, rode the tube, and took the buses all over the city. The double decker buses are fun but drivers only allow a short time to enter and to exit each bus. We enjoyed riding on the upper deck but when it was time to exit, we had to move quickly or get left behind. Each time leaving, we would hurry our autistic son so as not to get left behind. But one time in particular 2 people got between us and him and the doors closed with us on the footpath and Joel in the bus.

My self-acknowledged logical mind quickly assessed the situation, and I decided to send him a text message to get off at the next stop, wait for us, and we would meet him there. Sounding easy but aware of the many things that could go wrong with my plan, I was surprised to see my wife grab the doors of the bus and pry them open as the bus was pulling back into traffic. What she was doing made little cognitive sense in light of the impossibility of pulling open doors on a moving bus in London. Yet my shock increased when I saw the doors partially open and the bus quit moving. The driver, probably more surprised than I was, stopped the bus, opened the doors, and allowed Joel time to get off the bus and into the arms of his parents.

A heady approach to the problem, such as I proposed in my typical thinking way, may have had positive results but also had potential for serious problems such as a lost or confused Joel. My wife’s “heart-based” solution could have had consequences to her body but did provide an immediate solution. In this case, the heart was much wiser than the head. Obviously, this illustration displays the selfless power of a mother’s love for her children along with a dedicated courage that accomplished the goal; but it also shows the fallacy of always relying on the head to squelch the heart in all decision making. Plato may have concluded that my wife’s emotions did not belong in the city, but I think I will keep her in my personal city!

To reject emotions as being a vital part of the human experience is a flawed approach to correcting behavior or “fixing” the social ills of our culture. Little doubt remains that emotions have the potential to override intelligence in situations, thereby resulting in poor judgment, but so also does cognition devoid of emotions have the potential to cause poor decisions. Marketing and advertising are reliant upon the emotional reaction leading to purchase decisions by the consumer. A superficial glance at successful businesses may seem at first to be achieved by logical steps and sound financial decisions, but a closer look will often reveal a person or persons who dreamed and imagined and gave in to his or her passions and emotions in order to achieve the vision. When Benjamin Franklin curiously encountered electricity, it was his heart that got excited about the potential for harnessing the power, and it was his head that organized the steps toward devising its usage.

When Martin Luther bucked the papacy through his 95 Theses, he was driven by his passionate urge to end the corruption and represent the people. He applied cognitive reasoning in his argument but it was heart that drove him to use his reason. When Victor Hugo wrote his masterpiece Les Miserables, he focused his anger at tyranny and the corrupt justice system to transform the thinking through literary means. His desires for change came before his actual production of his work. He used the heart to govern the mind and used his mind to focus his heart. Both worked in conjunction with each other and both worked congruently to effect change. One could make the assertion that in these cases, the heart, thankfully, ruled and necessitated the activity of the head.

True that many a leader is destroyed by his or her passions, and we read nearly every day about fraud, larceny, adultery, and theft by CEO’s, by politicians, by businessmen, church leaders, and various institutional leadership. We quickly assume, and often correctly, that these people gave in to their emotions, to their passions, and their judgment was adversely affected by their lack of objective reasoning. In some ways it then makes logical sense to encourage a diminishment of the heart and a strengthening of the mind, the conclusion of many great thinkers throughout history. As we form a society of great thinkers who put aside their passions and replace them with objective reasoning, we hope to achieve a culture of…computers and robots? Is that the plan?

Obviously the other extreme is equally undesirable, to have an enculturation in the world of total emancipation of the emotions. While it could result in a nice open expression of joy and love, the result could just as likely be some kind of emotional anarchy and an opening of Pandora’s box of evil. There are several problems with each method of making decisions, problems that contribute to unethical behavior, poor management, failures, and great mistrust within organizations. Connected to these extreme issues is the balanced managerial need to encourage trust, act with integrity, and be entrepreneurial in business development. Trust is an especially valuable quality that is eroded through an excessive use of science and objective reasoning. A matter of honesty and people skills, trust can neither be clearly codified nor displaced with some other system. Trust is an essential part of a manager’s responsibility and requires a clear understanding of the role of empathy, compassion, and sensitivity to people in all their complexities. “Whereas cognition-based trust involves a calculative and instrumental assessment, affect-based trust involves empathy, rapport and self-disclosure.”[2]

Trust needs in management require a healthy balance of head and heart with more emphasis on heart in most situations. Trust and judgment, however, often work together to create situations that are untenable and mysterious. People tend to make decisions that are illogical, based on their on perceptions rather than reality, often relying solely on emotions rather than accurate cognition of a situation. In light of this information, the admonitions of Plato and C.S. Lewis seem to bear fruit in correct judgment and objective reasoning. The resistance of the “magical” or non-objective decision by applying careful cognition is supported by the head over heart people. Yet, a closer look reveals, once again, the role of the heart in most decisions. While the heart does seem to rule the day, when money is involved, the head will take over and cause judgment to be more rational. One study of the “magical” concluded that subjectivity and irrational responses caused decisions to be more objective and rational. “We report in this study that American adults and undergraduates are substantially less likely to acknowledge magical effects when the judgments involve money […] than they are when using preference or rating measures. We conclude that in “head-heart” conflicts of this type, money tips the balance towards the former, or, in other words, that money makes the mind less magical.”[3]

In this respect, it seems as though an outside and measurable influence results in greater objectivity in final decisions. But as interesting as this is, it brings to mind the problem of personal responsibility in making decisions. Our personal choices force us to bear the consequences of our decisions making us accountable for our own responsibility. Responsibility is a form of accountability meaning that irresponsible actions are our own in spite of evidence to the contrary. In many situations such as not wearing a helmet while riding a motorcycle, getting injured, and subsequently suffering the effects of the injury, our irresponsible choice is our own. And yet if being responsible has a greater societal demand, then our choices are not as self-determined. Indirectly, or in many cases directly, society bears the brunt of poor decisions regardless of whether those decisions were made from the head or the heart.[4]

When we give due acknowledgement to the greater societal good of all decisions, then the discussions of head versus heart become moot and unimportant. This does not address which is the preferred way but does give consideration to the consequences of all actions. In light of this broad approach to judgment, we must say that the head should overrule the heart as it considers all facets of all decisions. Yet, in a deeper sense, once again, the heart jumps into the mix as we give sincere credence to how decisions affect all people and provide a profound and comprehensive compassionate process to the result. In this instance, as we consider the benefits to all people, the heart ultimately wins as reason determines the final outcomes for all situations.

The problem of responsibility and how to make good decisions is an individual process with collective ramifications. When we act on principle, as suggested by Aristotle, regardless of the circumstance, we give power to the will and to the reason. But reducing the impulse to act according to the circumstance is predicated upon all events to be clearly defined by principles of right or wrong. This assumption makes decisions easy without the kind of ambiguity that unfortunately accompanies most situations.[5] When we predicate all philosophy and subsequently all decisions on the theory that principle should be the governing force behind actions, then we can clearly rule out the heart as playing any kind of role in judgment calls. Responsibility to principle is an ideal concept that is effective in determining right from wrong and in placing actions from the heart at a lower level on the decision ladder, regardless of reality or utilitarian circumstances.

We then have the question of how an advanced sense of responsibility growing out of an adherence to principle helps contribute to development in business and in entrepreneurship. Study has been made as to the motivations of entrepreneurs and most people point to a driving demand for self-fulfillment as the primary motive for achievement. But a closer look reveals yet another level, a level that is unquestionably equal in character to personal achievement. This is the desire for social transformation through compassion. The article in the Academy of Management Review titled: Venturing For Others With Heart And Head: How Compassion Encourages Social Entrepreneurship demonstrates a direction application of heart in initial imaginative thinking that leads to entrepreneurial ideas. Entrepreneurs often show a healthy concern for other people, making the previous idea of self-oriented motivations less pronounced than previously thought. [6]

In a study of the arts, we find a grand discipline that encourages and advocates for emotional strength and imagination, two defining traits that are often forgotten as necessary for entrepreneurship and personal achievement. The arts serve an indefinable role in providing for emotional stability and cathartic opportunities to deal with the complexity of the human spirit. It is through imagination that we develop the desire to make a difference in the world and to do the right thing in the right way. Decisions are rarely about objective cognition of the facts. Most decisions involve an amalgamation and blending of reason and emotions acting in concert toward goals. To denounce the role of the heart in doing the right thing comes close to eradicating the very core of what it means to be human and to make correct choices. At the risk of sounding discriminatory, this type of thinking could again be an example of male dominated application to problems of society and may require greater consideration of the arts and of feminine compassion. Yes, this statement is full of questionable theories easily refuted by evidence, but, at the same time, it is worth giving thought to how to improve our analysis of how people come to make decisions. If nothing else, it would be beneficial to seek a broader constituency, including women, in receiving a response to the question of how and why we respond the way we do and how to prevent poor decisions.

Regardless of who is questioned, all these examples and more refute the idea that the head should always rule the heart as a way of ensuring moral behavior. The theory is not entirely wrong and there is no question that many people do need to practice the discipline of applying objective reasoning over emotion-based reactions in particular circumstances. But to insist this is the only way to achieve moral behavior is a myopic and partial truth at best. Plato, C.S. Lewis, and our esteemed panel at the Colson Center are to be studied and acknowledged for their brilliant contributions to social thought and desire for change, but in this discussion of head versus heart, they may have found a few pages of the truth, but not the whole book. They spoke the truth, but it was somewhat disordered and did not tell the full story.

It is essential that we learn from and never underestimate the power of the mother who cares for her children. Maybe if we took this practice and widely distributed it throughout culture, allowing the power of the heart to multiply freely in all of society, we would then see a transformation of behavior and love never before experienced. Virtuous behavior can be achieved individually and collectively when we embrace the totality of the head and the heart rather than the erroneous theory of the head against the heart. It is time to imagine a better world and to act upon our imaginations and upon our artistic emotions in socially transforming ways. We will then learn to do the right thing.   

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[1] http://members.pioneer.net/~tkerns/waol-phi-website/platosite/3schart.html, accessed on 2/13/2013.

[2]  Chua, Roy Yong Joo, Paul Ingram, Michael W. Morris. From the head and the heart: locating cognition and affect-based trust in managers’ professional networks, Academy of Management Journal, 2008, Vol. 51, No. 3, p. 436

[3] Paul Rozin, Heidi Grant, Stephanie Weinberg, and Scott Parker. “Head versus Heart”: Effect of monetary frames on expression of sympathetic magical concerns. Judgment and Decision Making, August 2007, Vol. 2, No. 4, p. 217.

[4] Greenfield, Kent. The Myth of Choice: Personal Responsibility in a World of Limits. London: Yale University Press, 2011, p. 148.

[5] edited by Jeffrey Poland and George Graham, Addiction and Responsibility. Cambridge, Massachusetts: The MIT Press, 2008, pp. 73-76.

[6] Toyah L. Miller, Matthew G. Grimes, Jeffery S. McMullen, Timothy J. Vogus.: Venturing for Others with Heart and Head: How Compassion Encourages Social Entrepreneurship. Academy of Management Review 2012, Vol. 37, No. 4, p. 616.

Channels of Distribution and Fear

Channels of Distribution in Education and its Pervasive Fear

By Robert Tucker

The incredibly complex infrastructure found in institutions of higher education contains many sources of distribution of product. With the product being the education of a student, one might conclude that most of the distribution occurs in the classroom, and one would be correct, at least to an extent, insofar as the actual delivery of content. Yet, just as in all businesses, higher education includes many departments hopefully working congruently to provide a complete experience for students and for employees. Payroll, human resources, student life, facilities, financial aid, public safety, marketing, and several other departments play an important role in the operations of the plant. Add in the many disciplines, the styles of learning, the diversity of students, the oft paradoxical but necessary blend of academic and personal development, and we weave a web of educational joy that provides significant value to thousands of people over time.

Reducing out most of the departments and focusing primarily on the classroom, we retain the essence of education—the channel of distribution of learning or, to put it in business terms, creating value in the product. How do we improve the product [student] through better distribution, how do we price it, and what does the future hold for refinement? In this highly competitive market called higher education, it is time to examine the channel of distribution of education. There just may be a better way. It could be time to supplement all learning through a concept often called “crowd accelerated learning”. A bit of history could be in order at this point in the discussion.

Traditionally, college students and institutions have highly regarded the “expert” or the “scholar” in a given field. That scholar has mysterious gifts and insights not available to other people and offers his special knowledge while retaining a portion of his mystery. He practices restraint so as not to give away all his secret powers and he then lives on a pedestal of brilliance with an aura of intellectual mysticism that is rarely, if ever, achieved by other people. Then the world was rocked on its heels by the empowerment of the people through technology. The internet has opened up a culture of learning that is a form of demystification of specialized knowledge. No longer are we completely dependent on the expert or the scholar. The result is a vast sharing of knowledge that actually begins in the classroom. Rather than teachers imparting their secrets on an eager class of novices, teachers, instead, focus on discernment of knowledge, on application of skills, and personal targeting of students’ abilities.

The direct channel of distribution of learning is the internet with email, websites, mobile devices, and most importantly, video being the major conduit of knowledge. Daphne Koller, founder of Coursera, stated, "We're at 2.4 million students now. The biggest lesson I've learned on this is I underestimated the amount of impact this would have around the world. I really didn't envision this scale and this impact this quickly." Or watch the video on how a group of dancers set the standard for dancing by watching the best dancers on video before achieving immense success--http://ccnmtl.columbia.edu/enhanced/primers/media_channels_open_educational_resources.html. This website with video also demonstrates how science, music, engineers, and medicine benefit from broad sharing of ideas through video. There is no need for a middleman or even a wholesaler in this channel. It can now move from producer to consumer within seconds. Through video distribution, scholars can supplement and enhance all learning on a broad scale and provide great opportunity for research, specialized knowledge, and motivation for further learning. The direct channel’s potential is tremendous and those who embrace the opportunity will find themselves providing a high level of education that is energized, exciting, and unequaled in higher education. When thousands have immediate access to specific learning and use that knowledge to increase their own abilities, it is referenced as crowd accelerated learning. It is a form of a community of learners on a vast scale.

Fear, however, is the wall of prevention of progress. If colleges and universities offer free video-based education of their traditional lectures or even of their supplemental information, would they, in effect, be cannibalizing themselves by demolishing the need for face to face education? How would this effect pricing for education? Would people be willing to pay for the privilege of receiving an education? What is the true quality of the product through this method and, more importantly, how will employers regard information gleaned entire through video?

There are no simple answers to the above questions except to say that there remains great value in learning from a master teacher and video never quite captures the live experience. Furthermore, learning information is just part of the process of education. Learning with a community of students, and having direct access to a teacher create far greater value than a video can provide. People are still willing to pay a price for a comprehensive education which includes student life experiences, safety and security, tutoring, placement, a variety of learning opportunities through personal interaction. But in spite of the need for traditional type of learning experiences, there is no doubt that the internet and the wide use of video have disrupted education on many levels. These developments have made value and pricing challenging for higher education and the market will ultimately determine the role of this channel of distribution.

In the end analysis, supplemented lectures through video and web resources may separate the master teachers from the average. And it just could be that those experts and those institutions willing to share knowledge at such a high level may one day be acknowledged as the greatest institutions of our modern era. Frightening times and technological advances create opportunities. In spite of the pervasiveness of fear that permeates the future of higher education, it is paradoxically exciting.