Review: The CxO and Board Director's Guide to Fostering and Assessing Competence For Ethics

Book Review by: Sherri Douville, CEO and Board Member at Medigram Inc.

The full title of this new book and #1 New Release in the Business Ethics category by Mark J. Epstein and Kirk O. Hanson is Rotten: Why Corporate Misconduct Continues and What to Do about It?

The two authors bring to bear 50 years of experience teaching, researching, and advising students, startups, board directors, and titans of industry on corporate ethics including through roles at Stanford, Harvard, INSEAD, Rice, and Santa Clara University.

The book is framed to discuss why most companies’ ethics programs are not effective today in stemming misconduct, how to differentiate and help identify bad apples or individuals, bad companies, what the authors coin bad "barrels" or bad teams and rotten companies and unethical markets, what’s called "bad orchards."

To understand where I am coming from in this review personally, I offer a glimpse into my history. I learned early in my career about how to navigate various ethical dilemmas. As I worked my way through college first on the sales floor at Nordstrom, then as a manager I learned about empowering and listening to customers.

As I transitioned into BioPharma in a sales role, I had to navigate the terrain of the False Claims Act. In this context, both Biopharma and MedTech executives can be fined millions of dollars or go to jail for false claims (claiming something unproven). Further down the chain, there are significant consequences including disciplinary action for salespeople who promote the use of products for indications, which are not approved by the FDA. This is called "off-label” promotion. While physicians have authority to use drugs for "off-label" uses should the evidence that’s available and patient situation warrant it; however salespeople are prohibited from promoting products for "off-label” purposes. In a quota environment, compliance to this set of factors at times presents an "impossible paradox" that requires a combination of incredible intelligence and creativity grounded in an ethical foundation. This is specifically for the professionals that need to manage their own integrity and reputations. The difficulty is when market share and quota had frequently been calculated based on all historical use of any product.

Fast forward several years ago as an entrepreneur, I was fortunate to meet and continue to learn, albeit largely informally through discussions, talks, and conferences from Kirk O. Hanson. I couldn't wait to read this work as soon as it came out.

What I learned from how to use this book

As CEO and board member of an early stage Health IT company, Medigram, I walked away with four defining questions I will continue to seek answers to:

1) Management and employees need to have a trusting relationship that answers the question constantly "What stands in the way of my role or our ability to meet our commitments, including ethical ones." Employees will understand better the impact of policies through more robust dialogue but have to trust management to use the information responsibly or they will not share their suggestions.

2) How do I identify and develop executives to master complexity, the #1 issue that I believe causes companies to devolve into unethical practices and cultures is their inability to cognitively and managerially comprehend and lead through complexity.

3) How do I identify and develop executives with such a strong sense of self and moral compass that they can always define, face, and tackle all of the complexity for all involved disciplines quickly, and stand up to what's wrong. Ideally, they can help lead and initiate, as well as join any emerging anti corruption reform effort, for example.

4) How do I win enough stakeholders and market share to inoculate the company from bad actors including negative activist investors in the future with a short term focus? This includes the character of the organization and teams that make up this organization?

I also defined four Company Operating principles for ethics:

1) Our people will continue to be selected for their moral strength and resistance to short termism.

2) There will be tight integration of ethics and financial goals that manifest as sophisticated KPI's for every role.

3) There is a way to score a company's ethical performance, what the authors call the Sin-Dex tool; senior management and the board of directors should do this together on a regular calendar.

4) “Managing in “bad orchards” what the authors name unethical markets is a critical skill of any management team. Corporate executives need to be creative enough to find ways of getting things done in a difficult competitive environment without violating ethical norms.” In my view this requires extraordinary IQ, creativity, and character.

Every great work, including this book has things that can be addressed in future works and here are two that I suggest:

1) Don't confuse ethics with personality styles. Mind personality differences. I thought of an "action oriented" professional athlete or entrepreneur (as opposed to a bureaucratic personality as defined by Michael Maccoby author of "Strategic Intelligence") who is very ethical but by being a stylish and assertive person; he or she may be mistaken as morally vulnerable due to stylistic personality which they are definitely not. Personality differences as nuance could be addressed in a subsequent book.

2) Don't rely on performance assessments or promotion records of prospective employees when assessing capabilities and character. Many moral and ethical professionals are bullied and pushed out of organizations. According to Gary Namie of the Workplace Bullying and Trauma Institute, "The worker who is very knowledgeable, more creative, more intellectually adept, a better problem-solver, and the worker who can quickly make the best decisions needed are most often the targets of workplace bullying."

Bravo to Epstein and Hanson for this incredible contribution to corporate governance!

Order here: https://www.amazon.com/Rotten-Corporate-Misconduct-Continues-about/dp/1735336106

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Sherri Douville is CEO & Board Member at Medigram, the Mobile Medicine company.??She is honored to be recognized in 2022 on top merit based (unpaid) U.S. CEO lists for several (4) categories of technology and healthcare (iOS, Information Technology, Healthcare, Big Data) by Startups US as one of the highest ranked tech executives on Crunchbase. Ms. Douville is a best selling and repeat editor, lead author, and contributor to a 3rd forthcoming book defining advanced technology for medicine (Taylor & Francis 2022). Sherri is a sought after speaker for the Healthcare IT industry's defining, multi sector roundtables and conferences such as VIVE. She is also the co-author of several articles and technical papers. She is the editor and lead author of Mobile Medicine which launched as the #1 hottest new release on Amazon for medical technology and medical informatics. Mobile Medicine (Taylor & Francis 2021) is internationally acclaimed and was voted by business and technical leaders as the #1 book in all of healthcare for 2021 and again in 2022 by BookAuthority and is the only book to be featured by both the largest physician leadership organization, AAPL and the largest engineering technical organization, IEEE. She is also corresponding author for a chapter on engineering trust in clinical IoT (Springer 2022). Ms. Douville is the co-chair of the IEEE/UL International Joint Venture for the technical trust standard project for Clinical IoT in medicine. Ms. Douville previously won several awards while working at Johnson & Johnson in over a dozen disease states over the course of a decade and was recognized for industry thought leadership there by McGraw-Hill. Prior to her current work in the mobile medicine, privacy, security, health IT and AI industries, Sherri worked in the medical device space consulting in the areas of physician acceptance and economic feasibility for medical devices. Ms. Douville has a Bachelor of Combined Science degree from Santa Clara University and has completed certificates in electrical engineering, computer science, AI and ML through MIT. She advises and serves startups, boards, and organizations including for Santa Clara University as an advisor and cybersecurity lecturer to the Santa Clara University Leavey School of Business Corporate Board Education initiatives, the Black Corporate Board Readiness program and as an advisory council member for the Women's Corporate Board Readiness program.