On the Integrity of Nations (and Business)

I find great pleasure in discovering Market-Based Management principles in books completely unrelated to business or economics. While reading The Second World War by Sir Winston Churchill, I came across this remarkable passage in chapter 16:

Honesty is the best policy, several examples of this will be shown in these pages. Crafty men and statesmen will be shown misled by all their elaborate calculations. … If a government has no moral scruples, it often seems to gain great advantages and liberties of action. But all comes out even at the end of the day, and all will come out even more even when all the days are ended.

Churchill was speaking of Molotov-Ribbentrop Pact of 1939, in which Nazi Germany and the Soviet Union agreed to ten years of mutual non-aggression and the division of Poland (the non-aggression part ended in June 1941). Neither party to this pact possessed much in the way of scruples, and both eventually suffered horribly for short-term gains. Business is much the same (minus the death and destruction), which is why MBM stresses acting with integrity and maintaining a commitment to a vision of long-term value creation. Businesses can (and do) often make strong short-term gains by sacrificing their integrity or skirting the limits of legality, but the chickens inevitably come home to roost. As Charles Koch has said many times, “if we wanted to make a quick buck, then we would just rob banks.” No business or nation can succeed long-term without integrity, which is why integrity is MBM’s Guiding Principle Number One. Too often folks respond with more than a little cynicism to the emphasis MBM places on integrity. “We’ll, your just saying that because it sounds nice,” is a common response. However, if, as Churchill suggests, lacking integrity can lead to the demise of nations, then it can spell only doom for any business. True, preaching integrity in business does sound nice, but it is also essential for long-term success and—most importantly—survival.

Comments

[John Cooke]

Great article Alastair. I was reading the book "Think Big. Act Small" by Peter Jennings and he echoed the same thoughts about a principled organization like Koch. From his team's study of over 30,000 companies he chose Koch as one of nine other companies that are capable of sustaining long-term value and growth. Having integrity as one of our core "lived" principles is a major reason for this. I'm sure there are many companies with a written list of principles or code of conduct that simply talk about integrity, but here at Koch I have always felt that it is lived. At the end of the day the proof is in the pudding and Koch stands out among it's peers for integrity and long-term growth and value creation.