54. Leadership and Ethics: How to Communicate Your Core Values

Matt Abrahams: We all have many decisions to make, some are easy and straightforward, while others can be tricky in terms of appropriateness, effectiveness, and ethics. Today I look forward to digging in and exploring ethics in our personal and professional lives. I’m Matt Abrahams, and I teach Strategic Communication at Stanford Graduate School of Business. Welcome to “Think Fast, Talk Smart: The podcast.”

I am super excited to be joined by Neil Malhotra and Ken Shotts. Neil is the Edith M. Cornell Professor of Political Economy at the GSB. He also serves as the Director of the Center for Social Innovation.

Ken is the David S. and Ann M. Barlow Professor of Political Economy also at the GSB. Together Neil and Ken teach a core course on business ethics, and recently they published a new book together called “Leading with Values: Strategies for Making Ethical Decisions in Business and Life.” Thanks for being here.

Ken Shotts: Thank you, Matt, so great to be here.

Neil Malhotra: Thanks so much, Matt.

Matt Abrahams: All right, let’s get going. Neil, you and Ken teach business ethics. Can you share with us how you two think about ethics and the role they play, or should play, in business?

Neil Malhotra: Sure, that’s a great question. I would say that the concept of the role in business and society has changed a lot in the last 30 years and it’s going through a sea change as we speak. And I think that probably wouldn’t be new to your audience given all of the social issues that businesses are involved in. And I would say in the 1980s there was a big emphasis on shareholder value that the primary ethical and moral responsibility of a business was to maximize value for shareholders who are the owners of the company.

And I think kind of increasingly we’ve moved to more of a stakeholder model where businesses have to be aware of various stakeholder groups in society. And this is what kind of motivated us to write the book, which is how do you actually rigorously and analytically think about your role as a business leader given all of these new challenges and responsibilities you might have where various groups sort of demand that businesses act ethically.

And we draw on a lot of intellectual traditions, ranging from psychology to normative philosophy to economics, political science, and kind of gather all those insights so the readers can have really tangible, actionable recommendations on how to lead organizations in the challenging environment we currently face.

Matt Abrahams: I really appreciated in your book how you did that, where you draw on all these different ways of thinking and ways of studying this. And then the very specific advice and guidance you give is very helpful. And I love that you have some activities for people to think through. And I can see how it would help our students as they prepare to enter the business world and act ethically.

Ken, you write that effective leaders not only know their values, but can manage the diversity of values within their organizations. How do you recommend that people identify their core values and determine those of others on their team or in their company?

Ken Shotts: I think the first thing I would say is what not to do is to look at the company’s public statements of its mission and values. I think for some companies those are very authentic to what the company is about and what motivates people within the company. But when I look at those statements there’s often a lot of similarity across companies in those statements, and I don’t think that really reflects the differences across companies and amongst individuals within companies.

So I would say the first thing, this requires, and this is implicit in the idea of managing a diversity of values, but I think it’s a mistake that some leaders make is to, don’t assume that the people in your organization share your own values. Some of the time they do, some of the time they don’t, some of the time some of them do but there’s a bunch who don’t, and those are the most difficult sorts of situations.

We have this exercise, actually the concluding chapter of the book is to have, and which we do in our MBA class, is to have people sit down and think and write up their own core values, and drawing on stuff from the book, but also religious traditions, cultural traditions, personal history often really plays an important role in driving people’s own values.

And I think as a leader that’s something that one can do for oneself. One can also, you can imagine doing this as a team exercise, but the problem with that is some of the time people feel they have to present themselves a certain way, in the work context and things like that, so it can be really tricky to figure out the points where, you know disagree with oneself, and I think that’s why one of our big important takeaways in the book is like well set up organizations allow for dissent and disagreement about values. And to make it possible, feasible, and encourage for people to do that, that can be living with some conflict though, that can be uncomfortable for people.

Matt Abrahams: I really appreciate that last point about how it can be uncomfortable but it allows for a more free organization where people can share their different opinions. We have on a number of occasions on this podcast talked about the notion of psychological safety, about self-reflection on your position and your attitudes. And to that you add this list of values, and I think that’s really important.

And taking the time to just reflect on your values and write them down I think can be very helpful. And finding ways to encourage your colleagues and others can also help you set up an environment where people really can feel that it’s okay to share their point of view and to disagree with others, so thank you for that.

Neil, you and Ken make the case that our values lead to the moral choices we make and motivate the actions we take. What thoughts do you have about how we can assess our actions? In your book you discuss different tests people can use and deploy.

Neil Malhotra: Yeah, so this kind of ties to something I think you mentioned earlier which is kind of one thing we try to do in the book is take abstract concepts and convert them into tangible tests and evaluate them. So we have one chapter where we talk about where organizations and leaders can maybe go on the wrong path. And so we kind of lay out various tests that can prevent people from veering in the wrong decision that are inconsistent with their values.

For example, we talk about bright-line rules. This is an approach many people take. An example we give is Clayton Christensen, the famous management scholar who passed away a few years ago. You know he had a Mormon upbringing with the LDS and he had these bright-line rules for example that he was going to use Sunday as a day of rest. And he tells an anecdote about how he cost his basketball team the championship because he didn’t play on that day.

But the whole point he was trying to say is that if you violate your bright-line rules then those rules become meaningless. So as we’ve kind of discussed, that’s a really valuable and very clear way to design a test. But there are many situations in a complex business environment where you can’t predict exactly what’s going to happen, so there’s not going to be bright-line rules you can list in advance.

So then we talk about other tests. So I think a very common one business leaders talk about is the New York Times test or the Wall Street Journal test, which is always think if the New York Times was writing about what you did would you do the same thing. And as we explain there are some flaws in this test, and one of the flaws is, is that the New York Times doesn’t really write about very much stuff that’s going on the world.

So most of the decisions we face are not fair in those level decisions, they are things that the media are not going to cover but actually have a lot of implications in organizations, how we lead and how people perceive our leadership. So we talk about actually a third test, which is the friends and family test. You know would you be comfortable telling your friends and family about your actions and decisions, or are you actually hiding things from your friends and family.

And this is actually something that’s very practical and realistic because it comes up all the time. You’re really not going to be on the phone with a New York Times reporter, but you will be talking to your spouse or your loved ones at night and telling them how your day went. And I think it’s actually a very telling test where you’re withholding information because you think that it’s inconsistent with your value structure.

Now we talked about limitations, and that test too, for example sometimes our friends and family aid and abet us. But nonetheless I think we try to kind of explain different tests and the strengths and limitations of each of them.

Matt Abrahams: So I was smiling as you were talking about the friends and family test because with my two teenage boys we have what we call the grandma test, what would you think if grandma found out about what you said or did, and that resonated with me.

It sounds to me though that thinking through how you will assess or test your actions is really important to do. And to have a shared agreement not just with yourself but others on your team would also help. So I encourage everybody to think about how will you assess those decisions and actions that you take.

Ken, you talk about how situational social environments and norms can also influence our moral actions. What best practices can you suggest to help us not only understand these external influences, but work to align them with our values?

Ken Shotts: So I like how you phrased that, Matt, that’s it’s not just about, it’s not treating this external situation as something that’s just kind of fixed and I’ve got to live with, recognizing that the situations we put ourselves into are a choice. And actually that’s often the most important choice we make is going to determine what we do. So I think there’s this tendency in Western cultures specific or especially, and you know the American West and Silicon Valley, to valorize the heroic individual. And the thing is what the psychologists have shown, and I’m actually not a psychology scholar, I’m a political economy scholar, but I look at the lessons of social psychology, they show pretty well that we are not heroic individuals, we just aren’t. It would be great if we were, but we aren’t.

I mean, a good thing though is that we are capable of being great if we put ourselves in the right situation. So I think the first lesson is not assuming I will do the right thing no matter the circumstances. I think planning ahead for thinking like the circumstances that I put myself into will shape what I will do, and may even shape the person I become. And I think this is one of the most important lessons and things for people to think about when thinking about jobs to take or lines of professions to go into, all sorts of career planning things. It’s like I’m going to be part of this organization in this situation, do I want to be like the people in this organization, is that what I aspire to for myself. And I think that’s a really foundational like planning thing.

And then the other part of this is no matter what situations we put ourselves into some of the time stuff is going to come up that pushes us to do things in ways that are out of step with our values. And I think the biggest lesson there is to just try to find a way to get oneself out of the situation, I mean, literally physically so you’re not in that, I mean, immediate physical context has a lot of effect on us.

But also, like emotionally, and this sort of goes back to the friends and family test, I think it’s good to bounce things off of those who we’re close to, those who we trust, those who we trust to be willing to criticize us because they value us and they love us. I think that’s a really important thing. So I think that’s kind of a long-winded answer, but I think that the question you asked is probably more important than the answer I gave.

Matt Abrahams: That question was primed by a discussion we had on a previous podcast episode where I interviewed Philip Zimbardo, one of the most famous social psychologists who has dedicated a lot of his career to studying how the situation influences people. So that was fresh in my mind as I was reading that chapter of your book.

The other thing that you mentioned, Ken, that I think is really critical is that you have to have trusted others that can give you good, clear, honest feedback, and that can be hard sometimes in the business setting because people don’t want to offend or they’re afraid that there might be political or hierarchical ramifications, so that’s important to find those trusted others.

I love that you two dedicate time in your business ethics class, and in your book, to discuss strategies for communication. I had a big smile on my face as I was reading that. Neil, can you share the pointers you provide around understanding both your audience and yourself in framing messages to align morally?

Neil Malhotra: Sure, and this kind of ties into what you just said. People are oftentimes worried in this polarized times that there’s just a lot of disagreement, conflict, it’s hard to reach resolution. So in the book we try to bridge literature on moral philosophy with communication strategies. And specifically we’re very influenced by what’s called moral foundations theory, which is the argument that everybody has sort of these deep-seated moral intuitions and foundations which drive how they see the world, their kind of senses. Just like we have touch and taste, we have kind of moral senses that guide how we see it.

And once you realize this you realize that when we disagree with someone it’s oftentimes that they are coming and using a different moral sense than we are. So an example is like debates over COVID lockdowns in the workplace or vaccine mandates. You know some people the moral sense they really are attuned to is harm, so anything they can do to reduce harm to other people would be great.

Other people are motivated by a moral sense of liberty, which is that people should have the freedom to do what they want and kind of restricting their freedom is a negative thing. So if for example you want to implement a tough COVID policy, whether it’s like a vaccine mandate or something like that, and you come from the harm perspective it’s a really ineffective strategy to convince people from the liberty perspective using language and arguments centered around harm. So that’s telling a story how you’ve been told it, not looking from their perspectives and the stories they tell.

The most effective thing you can do is to understand the other person’s story and frame the language and arguments around them. So to argue that, hey, if you really care about liberty we actually need these vaccines because this will open up a flourishing economy that will allow us to do everything we want. And I think kind of this is what framing is about, it’s fundamentally about being empathetic.

And there has been a lot of research done on perspective taking and how to change people’s minds, the results are just very clear which is the worst thing you can do is show up to someone’s house and explain to them why their morally wrong, that tends to not work very well.

Whereas when they’ve tried to change people’s minds on gay marriage or transgender rights they start by listening, by saying, “Well, tell me a story of when you felt discriminated against or you felt excluded.” And then they get people talking about themselves and they say, “Well, you know, this is what happened to this other person and they felt a lot like you did.” And so coming at it from a non-judgmental you, listening rather than lecturing, tends to be most effective.

Matt Abrahams: You took me back to our Thanksgiving table where we had lots of people being told that they were morally wrong, so I appreciate that.

This notion of moral sense is really valuable. We talk a lot about understanding your audience, taking their perspective, empathy, moral sense is yet another one of the things to consider when we talk about attitudes, resistance points, but also somebody’s moral perspective and how you can adjust and adapt your messages. So it’s not just that you have to appreciate it, you then have to frame your message in alignment with somebody’s moral sense. And thank you for that, and the examples you used were very helpful in explaining that.

Before we end I’d like to ask you the same three questions I ask everyone who joins me. Are you gentlemen up for that?

Neil Malhotra: Sure, of course.

Ken Shotts: Yeah, I guess we can’t duck it if you ask everyone.

Matt Abrahams: That’s true, you would definitely stand out. So, Ken, we’re going to start with you. If you were to capture the best communication advice you have ever received as a five- to seven-word presentation slide title, what would that be?

Ken Shotts: Your audience is not yourself.

Matt Abrahams: Nice.

Ken Shotts: And to really internalize that with communicating I think is hard because we naturally kind of talk to ourselves and play up things that we believe in.

Matt Abrahams: I like how you captured it. I often say in my strategic communication classes that the biggest mistake people make is we start from the wrong place. We start from saying here is what I want to say, and that puts us on the wrong path. Your title of your slide really emphasizes that, thank you.

Now for both of you I’d like you to answer who is a communicator that you admire and why? And, Neil, why don’t you go first.

Neil Malhotra: I would say the late Steve Jobs is someone I admired quite a bit, even though people kind of disagreed with maybe his personality or things about his decisions. One reason I think he was an effective communicator is that he knew his core values and his company’s core values really well and could motivate people based on them.

The book has a link to his YouTube video when he came back to Apple after he was originally fired. And a lot of people don’t remember because it’s the most valuable company in the US now, but it was a very crappy company for a long time. After Jobs left the company was basically going down the toilet, and this was also during the dotcom boom, kind of before it, where a lot of people had a lot of good job offers and could have left Apple.

And I really encourage people to watch this video to kind of see what great communication around values and core values is. And he explained what is the core value of Apple: We are not in the business of making boxes to help people get their work done, we are in the business of enabling disrupters to change the world. And he said basically encapsulated Apple’s core value is this, which is Martin Luther King and Amelia Earhart never had a computer, but if they had one you know they would have used a Mac.

And that’s just brilliant when you really think about it, and it really explains what Apple’s customer base likes to believe about themselves and what the employees at Apple like to believe about themselves. And so I think just to kind of sum up is that you know he wasn’t a good communicator because he was a good speaker, he was a good communicator because he understood his values and was able to explain them very clearly with like a simple phrase like that.

Matt Abrahams: I love it. And we also use that speech in the strategic communication class I teach, so I’m very familiar with it. And I do encourage everybody to look at it. So, Ken, who is a communicator that you admire and why?

Ken Shotts: Communicators who I really admire are great elementary school teachers, and it’s because they do things, I mean, they have a challenging audience to work with. Like we think we have a challenging audience teaching MBAs.

Matt Abrahams: It’s nothing, yeah.

Ken Shotts: It is nothing compared to what an elementary school teacher is dealing with. A great elementary school teacher, they know their audience. They know how to treat them respectfully, but they also know what they know and the audience doesn’t know. So they know how to simplify, and ruthlessly simplify, their core message to get across the stuff the audience really needs and to tell this as a story and make it vivid to the students. And I’m just in awe of the skill it takes to do this. I mean, this is an incredible craft. I’m just blown away.

You know I’ve spent a fair bit of time, my daughter is now 13, I spent a fair bit of time volunteering in her schools over the years and I think back on it, it’s like that’s really impressive communication.

Matt Abrahams: I wholeheartedly agree. I think anybody who teaches anyone where guilt and shame doesn’t work as a way of helping moderate behavior deserves an award. And as somebody who studies communication anxiety. and has worked a lot on my own and helped others, I have never been more nervous then when I was in one of my son’s kindergarten classes and the teacher had to step out to take a phone call and I had 24 kindergarteners. I have never been more nervous in front of an audience before.

So, Neil, let me ask you the third question. What are the first three ingredients that go into a successful communication recipe?

Neil Malhotra: So that was a really tough question, and I tried to take your metaphor a little bit literally and thought about what is the best food that has three ingredients. And I would say a peanut butter and jelly sandwich is maybe I think the best food that only had three ingredients.

Matt Abrahams: I agree.

Neil Malhotra: You know and so I thought about like the peanut butter would be like, one, knowing yourself, and that’s kind of a big theme of our book, which is to really understand your own values, not think of them vaguely but to write them down, to revisit them, to think about them, to be open to persuasion.

And to the jelly I would say is empathy, which is it’s important to both know yourself and understand others at the same time and how their values might be different from yours.

And then the bread is really what makes the peanut butter and jelly touch together, you know for the combination, which is this balance between being true to your own values, understanding others, persuading them using their stories, not yours, but also being open to persuasion yourself.

Matt Abrahams: Wow, I’ve never had anybody literally take the ask of this question and turn it into something, so the response PB&J I think is fantastic.

Well, Ken and Neil, thank you. You have provided us with so many insightful tips and guidance that will help us to be better, more ethical leaders and communicators. Thank you so much, and finally good luck with your new book, “Leading with Values: Strategies for Making Ethical Decisions in Business and Life.” I personally took a lot of value from it, and I know everybody who reads it will be better off and make better decisions in the future. Thank you both.

Neil Malhotra: Thanks for the great conversation.

Ken Shotts: Thank you, Matt, it has been great to have a chance to talk with you.

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Matt Abrahams: Thanks for joining us for another episode of Think Fast, Talk Smart, the podcast from Stanford University Graduate School of Business. This episode was produced by Jenny Luna, Michael Reilly, and me, Matt Abrahams. For more information and episodes visit GSB.Stanford.edu, or subscribe to our show wherever you get your podcasts. Finally, find us on social media @StanfordGSB.