Recently in Ethics and Values Category

It is with great sadness that I share the news that my father, Robert Cornwall, passed away this past Tuesday.

Over the years Dad grew to become my mentor and my friend.  Dad helped me to shape many of my entrepreneurial values.

Dad was born near Chicago in 1921.  His family moved to Oconomowoc, Wisconsin when he was young.  After high school, America was embroiled in WWII, so Dad enlisted in the Navy.  After the War, he took a job with a company back in Oconomowoc.

Dad was a prudent risk taker.  He was never impulsive.  But, when an opportunity came his way he analyzed it carefully and then, if it had potential, he took a chance.  His first big risk came when he decided to leave his home town, move his family to Ripon, Wisconsin, and take a position in purchasing with Speed Queen, which was a popular brand of washers and dryers in the 1900s.  This decision opened a flood gate of new opportunities over the coming decades.

Dad had a strong sense of purpose.  His entrepreneurial career was not a typical one by today's standards.  The first part of his working life was spent working his way up the corporate ladder.  He knew he wanted to become successful within the corporation, so he put in the time and effort to make it happen.  Over the coming decades he methodically made his way from purchasing clerk all they way to president of the corporation. 

But he was always driven by the entrepreneurial spirit.  He used his corporate success to become what we might call today an "angel investor".  He and his partners bought, invested in, or founded a number of businesses, including a candy company, a marina, a box company, and various other ventures.  However, he never ran the day-to-day aspects of any of these businesses.

When he was in his fifties, he took his next major risk by deciding to leave the corporate world and became a full-time entrepreneur. He also decided that it was time to leave Wisconsin.  His first stop was Houston, Texas, where he owned an executive placement business.  The economy was tough at that time, so this deal did not work out as planned.

His next stop was Miami, Florida, where he joined two other partners in a plastics manufacturing business.  Over the next twenty plus years, they successfully grew this business.  When he and his partners reached their seventies they sold the operating units of the business, but kept all the real estate.  None of them were even close to being ready to retire.  They took the proceeds of the sale and used it as a base to grow their commercial real estate holdings.

Dad always had a sense of responsibility.  He told me that corporate bankruptcy was never an option for one of his deals.  When a deal went bad, he did what he had to do (including using his personal resources) to make things right. 

My commitment to bootstrapping comes from my Dad.  He always was, to put it in his own words, "cheap."  As an entrepreneur, he never wasted money on things like fancy offices or extravagant travel.  In fact, being the cheapest seemed to become a competitive event between he and his partners.

He was a child of the Great Depression, so bootstrapping came naturally to him.  I remember a conversation I had with him a few of years ago. We were talking about an investment he was considering in a potential deal.  He made the statement that he wanted "protection" in this deal. That was an interesting word to me. After all, he was not running a bank that can get a personal guarantee on debt. Any investment would be at risk.

But, he meant something else. He looked at every deal and imagined what it will look like if it went bad. What could he hope to take away from it?  He thought this way because his generation saw the ultimate worst case -- they lived through the depression. It is not that the Great Depression made him risk averse -- to the contrary. Rather, he was always soberly realistic that deals go bad, and we should understand where that will leave everyone involved. This is a perspective that we seem to be losing in our society. It is this perspective that made him the ultimate bootstrapper.

I will miss you, Dad.  I will miss our frequent phone calls.  I will miss the fun we had when we got together.  I will miss our conversations about business opportunities.  In years past we dissected and analyzed deals that each of us were looking into.  More recently, we talked about the businesses being started by my students and alumni.  We shared the love of "the deal."

Thanks, Dad, for instilling the entrepreneurial spirit in me that has shaped my life.

Entrepreneurship programs like to boast the success rates of their entrepreneurs.  Most find that five years out about 80% of the alumni businesses still operating.  Not bad when compared to the national average of about 50%.

Well, academic entrepreneurship programs have met their match -- it is the Amish.  Recent studies have found their five year success rate to be over 95%!

I am not sure if they are all sending me a challenge for our program results, but no less than six people have sent me the link to a CNN-Money article on the success rates of Amish entrepreneurs.

The Amish secrets for entrepreneurial success?  According to Erik Wesner's new book out about the Amish Entrepreneurs in the U.S, it is simple practices:

1. Hard work and long hours.
2. Strong faith and values.
3. Family commitment to the business.
4. Humble leadership.
5. Treating the customers well and offering them good value.

All good lessons for entrepreneurs anytime, but particularly in today's economy.

Here is a trailer for Wesner's book:

The Rules of Amish Business Success (Erik Wesner) from Indy Graphics on Vimeo.

Rev. Robert Sirico will be giving an address on the Belmont University campus this next week.  The title of his lecture is "A Moral Analysis of the Economic Crisis".  Father Sirico will examine some of the key cultural factors essential to a robust economy, including rule of law, trust, and a worldview that encourages rather than undermines these things.

Father Sirico is president of the Acton Institute, whose purpose is "integrating Judeo-Christian truths with free market principles."

Fr. Sirico lectures at colleges, universities, and business organizations throughout the U.S. and abroad. His writings on religious, political, economic, and social matters are published in a variety of journals, including: the New York Time, the Wall Street Journal, the London Financial Times, the Washington Times, and the National Review. Fr. Sirico is often called upon by members of the broadcast media for statements regarding economics, civil rights, and issues of religious concern, and has provided commentary for CNN, ABC, BBC, NPR and CBS' 60 minutes, among others.

This is Fr. Sirico's second visit to Belmont University. 

Date: Tuesday, April 13, 2010
Time: 5:00 PM - 6:30 PM
Location:  Maddox Grand Atrium, Belmont University, Nashville, TN
Details:  This event is free and open to the public

A post by Jonathan Ortmans, president of the Public Forum Institute, at Entrepreneurship.org led me to reflect on the changes we are seeing being ushered in America.  Ortmans made the following observation:

"We have long been aware that American education is struggling to stay competitive. We also know that the development of entrepreneurial skills, such as opportunity recognition and prudent risk taking, are not prioritized in most U.S. educational institutions. Developing tomorrow's talented, capable innovators is a challenge that will require entrepreneurially-driven improvements in education at all levels.

"Programs that introduce students to the possibilities of business creation are few, but they have proven that they can open up new horizons for talented kids and unleash an entrepreneurial drive would otherwise lay dormant."

But just where does the American entrepreneurial drive that we take for granted come from?  What is the source of the entrepreneurial flame that burns so brightly in the students who come to programs like ours at Belmont?  The answer is our culture.

Since our founding, our culture was fostered by our freedoms.  We created an economy based on economic freedom that rewarded self-reliance and ingenuity, rather than family power and birthrights as had been so common in the histories of our founding fathers and mothers. 

Ours was this economic system that shaped our values over the generations.  We celebrated those who succeeded, holding them up as icons of what was possible for all of our citizens.

We have added the likes of Hewlett and Packard starting an industrial empire out of their garage into the stories that informed our culture.  Even more recently, the stories of technology companies like Dell that started in college dormitories have become part of our folklore.

But now our public policy is moving toward the next stage of a fundamental shift that threatens this part of our culture.  We are seeing self-reliance being replaced by entitlement.  We are seeing the creation of wealth and economic success being vilified.  Property and wealth are no longer things created out of nothing by entrepreneurial individuals seeking opportunity in the market, but public goods to be doled out by government and its armies of bureaucrats.

I fear that the current generation coming into the workforce -- the so-called Entrepreneurial Generation -- may be the beginning of the end. 

The children being born today will know an America where society and government are expected to provide for them and to solve their every problem.

I truly fear that the entrepreneurial flame that has burned so brightly in this country will begin to dim.

Those of us who teach entrepreneurship cannot ever teach the entrepreneurial drive and the spirit of free enterprise.  I am only successful because those who come to our program have that drive deep in their core values.

I can teach how to evaluate opportunities in the market, but I cannot instill the drive to do so.  I can teach how to assess and manage risk, but I cannot build a class to train students to have the entrepreneurial spirit that seeks the rewards that come from risk-taking.

Entrepreneurship will not go away, but it will not be the fundamental part of our culture and our economy that it has been in the past. 

There is still time to protect the entrepreneurial flame, but it is already beginning to flicker.

The Acton Institute has been working tirelessly at the intersection of entrepreneurship, faith, free enterprise and public policy for many years.  They empower people to become more effective church and community leaders, supporting free enterprise.  We have had one of their founders, Father Robert Sirico, to the Belmont campus in the past and have him scheduled again on April 13, 2010.

For four days each June, the Acton Institute convenes an ecumenical conference of 400 pastors, seminarians, educators, non-profit managers, business people and philanthropists from more than 50 countries in Grand Rapids, MI. With this week of fellowship and discourse, participants build a theological and economic infrastructure for the work of restoring and defending hope and dignity to people around the world. This is Acton University.

Registration is now open for the 2010 Acton University (AU), which will take place on June 15-18 in Grand Rapids, Michigan. This year's distinguished international faculty will once again guide participants through an expanded curriculum, offering even greater depth of exploration into the intellectual foundations of a free society.

Space and scholarship funds are limited.  Visit www.acton.org/actonu for online registration form along with complete conference information.

A great forum to join like-minded people looking to take positive actions to support economic liberty.

Anyone who is a regular reader knows that I am a staunch advocate for free markets and individual liberty.  However, building a successful economy and society based on these principles is dependent on a common recognition of the individual moral responsibilities which hold it all together.

As an entrepreneurship professor, I try to challenge our students to understand the moral and ethical responsibilities that they will face as they start and grow their ventures. 

Unfortunately, the research of Thomas A. Wright, the Jon Wefald Leadership Chair in Business Administration at Kansas State University, shows a gap between the character traits that business students say make a good business leader and the traits they describe having themselves.

Wright suggests that there is a significant moral decline in higher education, including in schools of business. He said it is critical for students to learn about the importance of character and ethical behavior before entering the workplace.
 
And when entrepreneurs and other business leaders abdicate their responsibilities to act in ethically and morally government, particularly the more activist, socialist government now in power, will be quick to intervene and use regulatory powers to dictate the behaviors of business leaders.

"As business professors in an increasingly 'just show me the money' business school environment, we all share responsibility for this moral decline," Wright said. 
 
Wright has found that MBA students list social intelligence as being one of the top two strengths necessary to be an effective manager. However, this strength was among the least common strengths self-reported by these same students.

"Obviously, if the development of character is important, many of our students are entering the workplace woefully lacking in a number of the prerequisites necessary for success," Wright said.
 
Many students rated honesty as one of their top five strengths. However, in another study, Wright found that 88 percent of the students reported that they have cheated in school, with many students reporting they had cheated 100 or more times.

"Students report that they lack viable, positive adult role models - individuals who can walk the talk," Wright said.

Indicative of a morally relativistic perspective, the majority of students sampled said it solely depended on the situation whether a person should lie, cheat or steal, Wright said.
 
"It's a common belief that as long as our behavior is seen as being instrumental in our pursuit of personal and material success while not hindering our personal choice preferences, we are willing to accept a modicum of lying, cheating and stealing behavior from both ourselves and our leaders as a cost of doing business," Wright said. "Alternatively, a character-based leader will not lie, cheat or steal, nor will he or she tolerate those who do."
 
He said students who cheat in school are not only more likely to cheat in graduate and professional school, but they also are more likely to engage in unethical business practices. This provides all the more reason for why higher education institutions should include ethical and character development in their pedagogy, Wright said.

Wright is correct.  Virtue is a habit.  Our behaviors over time are what shape our character.  The executives at Enron did not wake up one day and say, "I'm going to lie and cheat our shareholders and employees."  As Mike Naughton and I have argued, their actions were most likely the culmination of a long series of deceitful acts.
 
"It's important to help students develop the awareness and skills necessary to make morally based choices through the development of character strengths," Wright said. "Our collective failure to practice strengths of character, such as perseverance and self control, has led us to the brink of both moral and financial ruin. Massive governmental takeovers are not the answer, but the development of individual character may well be a viable solution. As faculty members, the ethical and strength of character development of our students should be made an integral part of our stated mission in higher education."

Amen!

My column from the Tennessean this week:

So why do entrepreneurs start businesses, anyway? Certainly, a fundamental reason is to make a living and build a nest egg.

But entrepreneurs can be driven by something much more than that. They can become obsessed by the challenge and thrill of "the deal." Once they make it past the start-up period, some will try to take their businesses as far as the market will let them. To them, success is measured not by their ability to provide for their family, but by how large they can build their business.

Still others become serial entrepreneurs -- starting business after business over the course of their careers. But there is a risk for entrepreneurs who are driven to build their businesses even larger, or who can't wait to start that next deal. They can become almost addicted to the deal-making process; they can become what I call an "entre-holic."

While building businesses that provide for our families and that create good jobs for others is a noble act, some entrepreneurs can easily lose balance in their lives.

The pursuit of the deal can begin to crowd out the other things in life. Entrepreneurs need to keep in mind that we all are more than what we do in our work, more than just business owners. We are spouses, parents, friends and citizens.

Life requires balance

Entrepreneurs need to take actions that lead them to be good at all that they are called to do in their lives. That may mean that they temper their ambitions to make sure they have time for all the other things that are important.

Finding balance can be quite elusive for those of us who love to pursue opportunity. I have wrestled with "entre-holism" for much of my working life. Like many entrepreneurs, I am addicted to opportunity-seeking.

This never was clearer to me than when we sold our health-care company. After the sale, I was immediately ready to seize that next opportunity. I had the plan. I had the funding.

Luckily, I also have a very wise wife. She said to me: "You are in time out. No deals for six months." She recognized what I did not -- that I had let the pursuit of the deal consume me. It defined who I was and left no room for all of those other things that we are called to be in our lives -- a parent, a spouse, a friend.

My "time out" forced me to really spend time discerning what I should do next. And eventually I realized it was not that next deal.

Now, I need to be clear that entre-holism is a disease of relapse. Even as an academic, a professor at a university, I find myself slipping and thinking of pursuing too many opportunities rather than leading a life of moderation. Just this past year I had three book projects going all at once.

Why? Because each project seemed too good to pass up.

But once again my wife was there to rescue me. When New Year's rolled around, she gave me my resolution for 2009. "You will only read books in 2009."

Hi.  My name is Jeff.  I am an entre-holic.

As I talk to business groups about our book, Bringing Your Business to Life, I find myself spending much of my time talking about the virtue of temperance. 

In the world of entrepreneurs, temperance is an understanding that we are more than what we do in work -- more than just entrepreneurs. We are spouses, parents, friends and citizens. We need to take actions that lead us to be good in all that we do. That may mean that we temper our ambitions to make sure we have time for family and friends.

Temperance is hard for entrepreneurs.  It is finding that balance in life that is so elusive for most of us who love to pursue opportunity.

I have wrestled with temperance most of my working life.  I am addicted to opportunity seeking.  I am addicted to deals.

This never was clearer to me than the time after we sold our company. I was ready for seize that next opportunity.  I was ready to move on to the next deal right away.  I had the plan.  I had the funding. 

Luckily for me I have a very wise wife.  She said to me, "Your are in time out.  No deals for six months." 

She recognized what I did not -- that I had let the "pursuit of the deal" consume me.  It defined who I was and left no room for all of those other things that we are called to be in our lives -- a parent, a spouse, a friend.

My "time out" forced me to slow down.  It forced me really spend time to discern what I should do next.  And eventually I realized it was not that next deal.

Now I need to be clear that entre-holism is a disease of relapse.  Even as an academic I find myself slipping -- of pursuing too many opportunities rather then leading a life of moderation.  Just this past year I had three book projects going -- and all at once.  Why?  Because all of them seemed too good to pass up.

But once again my wife was there to rescue me.  When New Years rolled around she gave me my resolution for 2009  -- "You will only read books in 2009!"

Hi.  My name is Jeff.  I'm an entre-holic. 

The Hitachi Foundation and the Boston College Center for Corporate Citizenship recently released a report titled "Weathering the Storm: The State of Corporate Citizenship in 2009." The survey results show that due to the recession businesses have had to rethink - both good and bad - their approach to corporate citizenship.

The survey sample included 756 executives, 36% of whom were at small businesses (1-99 employees), 24% at medium (100-999), and 40% at large companies (1000 + employees).  The survey found that large companies are responding to the recession much differently than small companies. For example, large companies significantly increased their investments and involvement in citizenship activities - but they were also more likely to lay people off. Small firms kept true to their emphasis on treating employees well by minimizing layoffs. But they significantly decreased attention to other aspects of citizenship, such as volunteering or philanthropy.

Some additional highlights of the survey:

• Despite upheaval in the economy, a majority of U.S. companies are not making major changes in their corporate citizenship practices. Of those who made changes 38% reduced philanthropy/giving, 27% increased layoffs, and 19% reduced R&D for sustainable products.
• Most U.S. senior executives believe business should be more involved than it is today in addressing major public issues including health care, product safety, education, and climate change. Surveyed in June, just as the national debate on health care began to intensify, some 65 percent said business should increase its involvement in this issue.
• Based on current economic conditions, 15% of companies are increasing R&D for new sustainable products; 11% are increasing corporate citizenship marketing and communications; and 10% are increasing local and/or domestic sourcing or manufacturing.
• Only 34 percent of executives who responded to the survey say greater regulatory oversight by the federal government is an important part of solving the current economic crisis and creating a more stable economy.

If you have not seen the Jeff Bezos video at youtube, you need to.  He boils down what he has learned from Amazon into eight simple principles. (Thanks to MyVenturePad for passing this along).