Sun Taoran: Entrepreneurs Must Take the Ethical Path

Peter Peterson, cofounder of Blackstone and former chairman and CEO of Lehman Brothers: “Looking back, the opportunities I encountered ultimately came down to a choice between two things—immediate interests and long-term interests. My choice was always long-term interests.” Eric Jorgenson: “Truly smart people never take shortcuts.” ---- The previous two posts said that a company must make money and that entrepreneurship is like war: you have to give it your all. Does that mean you may use any means necessary to make money or help your company win? No. The author emphasizes that entrepreneurs must “take the ethical path.” Sun Taoran says: “Just as it is important for a person to observe basic moral standards, a business must do the same.” “Unsound business principles will inevitably harm a company’s development. The heart of running a business is still taking the ethical path.” “The 36 rules for entrepreneurs ultimately come down to one: take the ethical path. If there is a shortcut to success, then over the long run, taking the ethical path is that shortcut—and the only one.” Taking the ethical path means that entrepreneurs must uphold basic moral standards and principles of fairness. For example, food safety is the bottom line in the restaurant industry; in finance, the bottom line is the safety of funds (Robin’s note: risk management, controls, and regulatory compliance). Why should a business take the ethical path? Sun Taoran believes it is a way to survive and develop more effectively. Underhanded methods always consume energy, embroil you in disputes, and may even land you in prison. Taking the ethical path may mean earning less money immediately, but it can keep you from making mistakes. Although it cannot guarantee that you get rich overnight, it can help you avoid many risks. Ethical businesses also build reputations, which in turn improve company performance. For example, when applying for a listing, a company with a good reputation can receive approval in three months, whereas the average for other companies is 7 to 9 months. That is the advantage of accumulated reputation. When a good company issues new shares, investors are also willing to pay a higher price because it has earned the market’s trust. As the market economy matures, ethical companies and entrepreneurs will gain tangible benefits. But “taking the ethical path” is easier said than done. The difficulty arises when other people do not follow it. How can someone who wants to act ethically keep underhanded tactics from affecting them? In market competition, for example, some companies use unfounded speculation and rumors to smear competitors’ products and damage their image, manufacturing a confrontation to generate publicity. What should you do in that situation? Sun Taoran proposes responding calmly, holding your ground, and adhering to ethical principles, including the following points: First, respond to the provocateur’s attacks through action in the market rather than verbal sparring. Success and failure are determined by what you do, not what you say. If you do not join the war of words, it is difficult for the other side to build momentum. When you must speak, say as little as possible and say what you want to say. Do not engage with the other party, much less debate the attacker. Issue a statement explaining your position, then leave it there and devote your energy to competing in the market. Second, when speaking, put users’ interests front and center. At that point, no one cares whether you are directly answering the accusation, while your opponent is watching for anything in your words that can be used against you. Take the moral high ground and repeat what is right. Third, play your cards openly. The more critical the situation, the more important it is to use aboveboard methods rather than underhanded tactics. You cannot defeat unscrupulous methods by resorting to them yourself. Only by acting openly and maintaining basic ethical standards can you retain the initiative. Whatever others do, entrepreneurs must stay on the ethical path and not let themselves be led astray. There was a time when pragmatism and the belief that success alone determines who is right were fashionable in business. Many people thought that power made right: with capital behind them, they could spend without regard to cost and mislead consumers to gain market share or even control the market. But Sun Taoran argues that a problem remains a problem, and something false does not become true. Opportunistic, underhanded tactics may enjoy a moment of glory, but they can never sustain a lifetime of success. Over the long term, ethical businesses can make steady, lasting progress and renew themselves, whereas businesses with unsound operating principles will sooner or later face disaster. #DedaoAudioBooks_SunTaoran_36RulesForEntrepreneurs