The Ethical CIO

By CIOinsight  |  Posted 08-13-2002 Print Email

Recent ethical lapses by trusted leaders in public and private life have dominated the headlines this summer. Rising distrust in the integrity of business, political and religious institutions has contributed to a collapse in consumer confidence and public trust. The technology world has not been immune. New surveys by Gartner show billions were wasted on technology projects that didn't work, failed quality tests or simply weren't needed in the first place. Nike's CEO, Phil Knight, grumbling about a major tech meltdown that caused his company millions in lost profits last year, was quoted as saying, "This is all we got for our $400 million?"

To get a better idea of what the current debate over business world accountability means for CIOs, CIO Insight Executive Editor Marcia Stepanek recently convened a roundtable of seven experts—corporate IT executives who grapple with financial pressures, corporate CFOs who impose them, and IT leadership and ethics experts who see inherent conflicts in the CIO's role between doing the right thing and the push for corporate profits—to discuss the tough choices they face in their daily business lives. Corporate culture is key, they agree, but there was disagreement over how much CIOs should—or can—do to help their firms operate ethically, especially in an economic downturn and in an increasingly global marketplace. What follows is an edited transcript of their remarks.

CIO Insight: What's gone wrong with business today?

Stuart Robbins Stuart Robbins Executive director of the CIO Collective, a nonprofit association of CIOs and a managing partner of KMERA Corp.

ROBBINS: Corporations are created to make money. But if that is the No. 1 objective, and all other objectives are secondary to the goal of profit, then you have an implicit and explicit statement that everything else will be subjugated to that higher goal. Later, it's easy to criticize. But we all wanted those higher share prices. I don't think that should be the number-one goal, but that often sets everything else downstream.

Usha Sekar Usha Sekar CEO of CRIA Technologies Inc., a maker of outsourcing management software, former CIO of Fujitsu PC and former IT Director of Compaq Computer Corp.

SEKAR: Speaking as a CEO of a company, making money is the goal, but it is not making money without any constraints. The issue is, do you know those constraints, and do you live within those, or do you choose to flout them? I think the expectation is for the shareholders, the number-one focus for most companies, and that you do not cheat your shareholders. I think that is a kind of high-level expectation. Shareholder value has to be within certain guidelines and parameters, and it is important that those parameters are known. And if you choose to deviate, that must be communicated.

ROBBINS: There are rules. Revenue recognition issues have been around for many years and have been the subject of a great deal of inquiry long before WorldCom and Enron. But it's a constant battle for balance, and IT is very much in the center of things because company technologists need to automate whatever the process is.

John Burke John Burke CFO of New World Business Ventures Group, consultants and advisors for small and medium businesses.

BURKE: There are also a lot of time pressures. If you're financially desperate to make a sale, then people become blinded. Say it's a potential quality issue. You need to be loud and clear. The other issue that's out there is a balance issue; being 90 percent of the way there, is it okay to ship? Maybe being 90 percent of the way there isn't okay. You start to have quality problems with the auto industry, for example. Maybe it saves them a couple of dollars per car. Well, if they've got 15 or 20 deaths over a 10-year life cycle, I'm not sure they've made the right decision there. On the other hand, sometimes getting the products out is the right thing to do.

You always try to do full disclosure for whomever is making the decisions. If you're at a decision point, you need to tell them you have these concerns about a product or a transaction, and it needs to go all the way to the top. That's why the keeper of the ethics in an organization can't just be one person. All of the executives and managers in a company have to have an ethical point of view and be in sync with it.



 

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