Six key principles for ethical leadership

The world hasn’t just changed, it has been dramatically reshaped. When we can do business across continents in a matter of seconds and the Dow can lose and recover $136 billion in minutes because of a Twitter hoax, it’s clear that technology does more than just connect the world.

We are more than interconnected; we are interdependent. So few can now so easily and so profoundly affect so many, so far away. Mobile-phone apps are bringing people together – in our homes (Airbnb), cars (Uber) and virtually everywhere else (TaskRabbit, Tindr, Facebook). Interdependence is connecting us to one another like never before – but it has implications, especially for leaders.

Leadership has never been in greater crisis. In its Outlook on the Global Agenda 2015, the World Economic Forum rated disaffection with leaders as the third largest challenge for the year. More than 87% of those surveyed expressed an opinion that current leaders are failing to get things done. We ask ourselves: “Where have all the great leaders gone?” If this was the same world, traditional leadership could still be an option. But current events require new models of leadership and new ways of thinking, especially when the world is changing so much faster than us.

At its Annual Meeting in Davos this year, the Forum dedicated one of its opening panels to the question of leadership in the modern world. When the moderator asked me and the three other panellists the question “What is ethical leadership?” my answer was: “Ethical leadership – is there any other kind?” I was deadly serious; in an interdependent world there can’t be any other kind.

Leaders need to act with conviction founded on core values, because only principled, ethical leadership will survive the challenges ahead. These six principles can help:

1. Stop and think

It might seem counterintuitive, but in our fast-paced world, what is more important? Pausing creates an oasis of composure amid the chaos; it sharpens our awareness. With refined focus, we can connect our consciousness with our conscience. Active pausing is the heart of ethical decision-making, because it encourages reflection and lessens the likelihood of knee-jerk reactions.

2. Extend trust

Aristotle taught us that the virtue of trust lies in giving it away. Ethical leaders should know that the best way to be trusted is to trust others. When Nelson Mandela became the president of South Africa, he trusted people with the truth: that it would take hard work to create a new, integrated nation. Being honest with people, rather than offering them sugar-coated niceties, demonstrated how much he respected and believed in them. It also allowed them to rise to the occasion.

3. Have two-way conversations

Leaders used to be able to say: “It’s my way or the highway.” Now, they need to engage with colleagues, customers and other stakeholders with mutual respect. Acting in a vacuum doesn’t work – something Netflix learned the hard way in 2012 when it split its subscription services and increased membership fees. The move drove away 800,000 subscribers, who felt betrayed because they hadn’t been consulted. CEO Reed Hastings apologized to consumers for his “lack of respect”, saying he’d been blinded by success and had “slid into arrogance”. It was a stop and think moment for Netflix: by reconnecting with its underlying values, the company embarked on a genuine journey of change. It is now a “focused passion brand”, intent on providing the best service it can.

4. Demonstrate moral authority

Ethical leaders realize their power isn’t over people, but through people. Leaders can enlist people in any cause if there is a sense of a common mission and shared values. Julia Bluhm, a 14-year-old girl from Maine, succesfully petitioned Seventeen Magazine to stop airbrushing pictures of its young models. Bluhm’s principled stance against the effect of impossible beauty standards on teenagers’ self-esteem struck a chord across the nation. By the time of its delivery, the petition had gathered more than 84,000 signatures. The movement spread, eliciting similar pledges from brands such as Aerie, Dove and ModCloth. Sarah Kavanagh, age 15, persuaded PepsiCo and Coca-Cola to stop putting the chemical BVO in sports drinks and Mia Hansen, age 10, convinced Jamba Juice to stop using Styrofoam cups. What unites these girls is what animates them: principled convictions. To achieve real impact, leaders should rely on moral authority.

5. Shape the context

Ethical leadership requires reconnecting with your deepest values and re-examining how you think, behave and make decisions. This means reminding others what you stand for and leading by example. One leader who understands this is Paul Polman, CEO of Unilever. For the past few years, Polman has devoted himself to improving the sustainability of Unilever’s supply chain, making long-term choices in spite of the short-term costs. One of his first reforms was to do away with the company’s quarterly earnings report. “I don’t think our fiduciary duty is to put shareholders first. I say the opposite,” Polman told the Guardian, adding that his vision for Unilever’s future would still benefit shareholders, suppliers and the environment in the long run. Now, because he has embedded his beliefs in the company’s structure, every employee is encouraged and free to focus on the future.

6. Lead with purpose

Now more than ever, success is a by-product of pursuing a higher purpose. Ethical leadership means doing the “next right thing” and not the “next thing right”. Last month, one-third of Chipotle Mexican Grill restaurants stopped serving pork after a supplier failed their animal welfare standards. The corporate commitment to core values transformed what could have been a disaster into positive publicity. In the new global context, choosing between what’s practical and what’s principled is a false choice; as Aristotle explained, the highest good is both practical and principled. Just as with ethical leadership, in an interdependent world principled performance is the only kind of performance, because it is the only kind that works.

Author: Dov Seidman is the Founder and Chief Executive Officer of LRN Corporation, a World Economic Forum Global Growth Company. He is the author of How: Why How We Do Anything Means Everything.

Image: City workers cross London Bridge during the evening rush-hour in the City of London October 8, 2008. REUTERS/Toby Melville