Fake it Till You Make it? (Part 2 of 4)

Introduction

In this article, I will discuss whether it is right or wrong to "fake it till you make it" in business or profession. These are my personal views, and the intention is to explore the practical and ethical challenges faced in different areas. The article is divided into four sections: Marketing, Product Claims, Credentials, and Ethics. Each section will delve into how businesses and professionals might be tempted to stretch the truth, and the potential consequences of doing so.

Marketing

Marketing is often where businesses push the boundaries of truth. Take, for example, beauty products like fairness creams or soaps. These products are in demand because consumers aspire to the results they advertise. While consumers may not need these products, the aspirational value appeals to their desires. It’s also the consumer's responsibility to understand that these products are not magical formula. Regulations exist, but companies often make claims that, while not outright lies, are exaggerated. For example, an advertisement for an ambulance service once claimed, "Ambulance to you in 10 minutes." Upon further inquiry, it was clear that the 10 minutes referred to the time it took for the ambulance to start on its way, not to arrive. While technically not a lie, it’s easy to see how a consumer might misunderstand this claim. Marketing in business, unlike in regulated professions, is an area prone to exploitation. Companies often twist the truth, making statements that hint at more than what they can deliver.

Product Claims

Product claims present another challenge for businesses. A notable example is the Silicon Valley startup that promised a device capable of performing numerous blood tests from a tiny sample. This claim led to a multi-billion-dollar valuation before it was exposed as a hoax. Such false claims are unacceptable and damaging. Another example is the mileage claims made by automobile manufacturers. These claims are based on ARAI guidelines, tested in controlled conditions that don’t reflect real-world driving in India. While these claims comply with regulations, they don’t communicate what the customer truly needs to understand. Faking it in product claims is risky and often crosses ethical boundaries. The larger impact of such actions can be detrimental to both the business and society.

Credentials

In the professional world, credentials are another area where the temptation to exaggerate is strong. When I started the consulting service line at my firm, clients often asked, "How many clients have you done this for?" My experience came from being an observer on various engagements, such as family business succession, restructuring exercises, investment banking, transactions, ESOP advisory, Performance Management and so on. I was tempted to present these as my credentials, but I wasn’t the one driving those engagements. I realised that I needed to be honest with clients, even if it meant losing opportunities. It’s better to start with smaller, low-fee clients to build confidence and credentials honestly. In tender-based businesses, faking credentials can lead to existential risks if discovered. The temptation to lie is strong, but it’s crucial to maintain integrity in this area.

Ethics

Ethics in business and profession are non-negotiable. While values are personal, ethics are commonly accepted and often regulated by authorities. Ethics are the minimum standards that must be followed, while values are the principles you choose to live by. A few examples highlight the dangers of crossing ethical lines. A well-known chemical company in the United States knew about the toxicity of a compound used in nonstick cookware. Despite internal warnings, the company continued production and disposal of the compound, causing severe health issues in workers and communities. Another case involves a famous cruise liner from the 1920s. The ship had limited lifeboats due to outdated regulations, despite knowing that the number of passengers far exceeded lifeboat capacity. Similarly, an automobile manufacturer manipulated emissions results to pass regulatory tests, even though real-world conditions would show different outcomes. In these cases, consumers cannot be expected to know the truth, and such behaviour should be completely avoided.

In our profession, there are tax-saving opportunities that arise from court interpretations of statutory requirements. For example, claiming depreciation on goodwill created during a merger, where no real transfer of control occurs, was a creative practice. Another example is claiming deductions on the health and education cess. While these practices may be legally permissible, they often cross an invisible ethical line. Recognising this line is crucial.

Concluding Thoughts: The Invisible Line

In business and profession, the invisible line represents the boundary between what is legally acceptable and what is ethically right. Recognising and respecting this line is essential. The examples of marketing claims, product claims, credentials, and ethical breaches highlight the importance of this invisible line. It guides us to maintain integrity, even when faced with difficult choices.

Every business and professional will face decisions where they have the opportunity to lie or stretch the truth. It’s essential to respect this invisible line. Staying within it ensures not only a sustainable business but also a respected profession. Crossing it for short-term gains can lead to long-term consequences. In business and profession, this invisible line is what guides us to maintain integrity and build a legacy that endures.