The five questions that Badaracco identifies are:
“Am I Really Grappling with the Fundamentals?” This question discusses how understanding the fundamentals of the economic system can help individuals discern visible and emerging patterns and recognize both positive and negative consequences it yields. Furthermore, it helps a person practice humility and remain perceptive of the system and continuously grow as a person, instead of suspending themselves in a stagnant complacency. Previously, the economy was industrial and the fundamentals would have diverged from the current market driven system, which has radically changed its architecture. This question may have answered that the fundamentals of business management were to control the hierarchies of managers in their firms, dominate and influence surrounding markets and to incorporate mass production technology into their systems. However, the current market driven economy has entirely different fundamentals as Badaracco argues that the system is now divided into modules, which are subsequently bought, sold and then consolidated into new markets. In the contemporary market driven world, it appears that almost anything can be bought and then purchased. Furthermore, leaders in the contemporary and competitive business environment are placed under immense strain to invent originality and produce superior results consistently. This has given birth to a harsh culture that espouses negative values, such as an inability to create true loyalty and to be forced to consider short-term implications. The contemporary “recombination” of the system has actually inhibited leaders from ingraining values and ideologies into their employees, who simply perceive them as disposable “modules”. This question compels the audience to consider the implications of the fundamentals of the system and how this can rewire an individual’s perception of it.
“What Am I Really Accountable For?” This question investigates what a business leader is truly responsible for, which helps the individual better understand his role and functionality in the vast landscape of the company. This compels the individual to explore the complexities of their position and to better gauge the risks and actions that should be taken in order to create a strong and successful company. He argues that the leader will be better equipped to guide the company because, “Without clarity about accountability, leaders and their organization can drift or zigzag aimlessly.” During the previous century, Badaracco argues that the responsibilities within a business were explicitly defined and organized through hierarchies. Hierarchies permitted the company to function properly because this system denoted specific tasks to different tiers and positions, thus ensuring accountability and roles for all employees and executive leaders. However, when the country began transitioning into entrepreneurial capitalism that was a market driven economy, this kind of “traditional accountability” was heavily challenged and dissolving. Consequently, the system of “horizontal accountability” was developed in order to acclimate to the changes in the economic framework of society. Horizontal accountability is defined as when companies and leaders make explicitly defined and sometimes radical commitments, which are “enforced by the powerful markets that surround many companies”. Consequently, contemporary horizontal accountability has enabled leaders and organizations to establish and invent novel standards of accountability.
“How Do I Make Critical Decisions?” This question examines how an individual can successfully make the correct decisions, even when submerged in ethically compromising circumstances. Furthermore, Badaracco urges the audience to reform their conceptions of critical decisions. Critical decisions do not have to be inflexible and immutable; rather, critical decisions should be malleable and continuously evolving, which mimics the state of the changing markets. In the last century, industrial companies typically made logical, empirical and strategic decisions when confronting major adversities. Industrial companies were carefully calculated and did not rapidly make decisions that were impractical, irrational and baseless. While this kind of decision making often benefitted the companies, it could also be a taxing, tedious and bureaucratic process for all parties involved. In the contemporary world, market driven companies must function inherently differently. Leaders can only operate under finite analysis and data and should “commit to moving in a particular direction”, but should never establish a permanent and rigid position. He needs to demonstrate flexibility in his decisions, but also calculate the future steps that the company should take in order to be properly prepared and to adjust to any scenario. Leaders also need to be prepared to change their methodologies when it no longer applies to the newly materialized reality. Furthermore, a leader should also “seize opportunities”, which diverged from painfully slow decision making approaches in the industrial era. Ultimately, decision making in the entrepreneurial society needs to mirror the evolution of the markets.
“Do We Have the Right Core Values?” This question compels the audience to engage in an inner dialogue with themselves to truly understand their values and what these reflect about their characters. It is essential for one to recognize his or her value system in order to assess how to react and operate under capricious and evolving circumstances. Furthermore, markets often are guided by innate value systems, which may overshadow the values leaders want to actively ingrain into their employees, which is why leaders must understand their explicit values. The core value system is a fundamental element of any individual’s holistic identity and often acts as a motivating force that propels certain decisions. Without a strong moral compass or guidance by the right virtues, an individual may practice poor leadership and potentially compromise the company’s success. During the industrial era, companies and organizations were governed by leaders with strong societal and business values they instilled into their employees. However, the current economic climate of society has produced leaders who do not have rigid values. Instead, there are typically three different approaches a leader will have to emerging market pressures. The leader may respond by attempting to construct value systems that aim to diminish or dissolve market pressures, may attempt to expedite market pressures, or may espouse values and ideologies that “transcend” the market. The disparity in value systems is embedded in the economic systems, as the industrial era was not predicated on a highly volatile and perpetually evolving model.
“Why Have I Chosen This Life?” The final question that Badaracco explores strives to understand an individual’s purpose and role in the organization and why that should be considered significant. He acknowledges that positions of leadership often require individuals to overcome immense challenges. The industrial era offered leaders a simple answer to this complex question. By adhering to organized roles and procedures, this would direct managers and help them understand their responsibilities and tasks. Furthermore, it would better help them understand why their roles in the company were consequential because they understood they were directly contributing to its overall functionality. Furthermore, all managers participated in the business collectively, thus recognizing they were all the necessary elements that coalesced into a greater, fluid and calculated purpose. Now, as leaders operate under capricious and unforgiving circumstances, their relationship and assessment of this question has shifted. They better understand the necessity and
the purpose that struggle imbues into their lives, which is why they may have been initially attracted to the position of leadership. In the contemporary society, leaders are disconnected from the hierarchical, calculated mindset of the industrial era in order to acclimate to the evolving market which always presents novel challenges.
2-Given your discussion of Badaracco’s five questions above and your understanding of his previous book Defining Moments, how (do you think) he would analyze Aaron Feuerstein’s decision to continue paying his employees while he rebuilt his factory in Massachusetts (see The Case of Aaron Feuerstein below). You do not need to refer to all five questions in your answer. Use only material that you deem relevant to answering the question. Use no more than 600 words.
Badaracco’s book Defining Moments delves into the moments in our lives when we confront ethical dilemmas that both reveal our inner values and fundamentally change us. If Badaracco analyzed the case of Aaron Feuerstein, he would contend that his decision reveals important elements of his character, leadership style and tactics as a businessman. Aaron Feuerstein experienced a “defining moment” in the case study, as it radically altered his life’s trajectory.
Feuerstein’s decision cannot only be perceived as an ethical and professional decision, but also as a personal and social one. Badaracco believes that “a defining moment…reveals, tests and shapes,” which is Feuerstein’s predicament. Badaracco would commend Feuerstein for analyzing the situation carefully and accurately, as while his decision yielded grave consequences, this does not negate the fact that he recognized the risk involved. Instead, based on his expert knowledge of both his company and the situation itself, he made a decision that reflected his ethical values. Badaracco would contend that Feuerstein is an individual with an explicitly defined moral compass that he has always adhered to; his decision during his “defining moment” is simply a manifestation and culmination of his strong moral values. Feuerstein’s attachment to these values enables him to make the correct decision, as Badaracco argues it is impossible to choose between right and wrong when confronting an ethical quandary. Rather, these leaders are simply choosing between right and right if they do understand the implications of the situation and act according to their values. Furthermore, Badaracco understands his company’s and his employees’ values and how this decision could drastically affect them. Badaracco would commend Feuerstein for understanding the long-term implications of his decision, even when each possibility offers an extremely ugly scenario. Even though Feuerstein’s company did go bankrupt, Badaracco would not assert that Feuerstein made the wrong decision. As he writes in The Good Struggle, “Responsible leadership is a challenge that—despite its inevitable risks, frustrations, and failures—demands and merits the best efforts of talented men and women, tests their competence and their characters fully, gives purpose and intensity to their lives, and helps them lead the kind of lives they really value.” This statement illustrates why Feuerstein has practiced responsible leadership, as he adhered to his moral compass and made a decision that reflected the kind of altruistic life he always led. Feuerstein was able to successfully understand what he was accountable for, his purpose and role in the company, and knew what his core values were, which guided him in ultimately making his decision. Feuerstein felt that he was accountable for all of his employees, who were jeopardized by this travesty, which is why his core Judaic values and his ideology of social responsibility directed him to protect his employees during the crisis. However, Feuerstein’s critical decision was rigid, which contradicts the contemporary philosophy of making critical decisions. Badaracco argues that critical decisions should be flexible and evolving, but Feuerstein’s critical decision remained immutable, even in the face of trying circumstances. This is why Badaracco may argue that Feuerstein may not have successfully understand how to make a critical decision fully, but would still argue that while his decision ultimately yielded negative consequences for the entire company, this does not necessarily indicate that he made the wrong decision. Rather, Badaracco compels the audience to reconsider what it means to confront a challenging ethical dilemma when faced with a “defining moment”, just as Feuerstein valiantly did.
3-Given your beliefs and values about the purposes of business and the role of business in society, analyze Aaron Feuerstein’s decision to continue paying his employees while he rebuilt his factory in Massachusetts. Use no more than 1,000 words.
Aaron Feuerstein’s decision to continue paying his employees and to rebuild his factory it tragically burned down reflects his strong moral compass and drive for ethical and good social business practices. Feuerstein’s decision is congruent with his past behaviors and philosophies, which is why he became renowned as not only as a successful businessman, but also a benevolent one. When his factory burned down, he was provided with the option of simply cashing in the insurance for $300 million and entering into a peaceful retirement, instead of rebuilding the factory and abandoning the town of Lawrence, where it had once been erected. However, Feuerstein rejected the notion of abandoning his company and steadfast employees. While he felt ethically compelled to protect his diligent workers and to commit himself to the company, this did not prove to be a fiscally responsible decision. In fact, Feuerstein’s commitment to his company and employees actually drove him to declare bankruptcy and compromised the state of the entire company. Feuerstein was subsequently replaced as CEO and the company was only saved by concerted efforts of both the government and generous creditors.
When I digested the case study of Aaron Feuerstein, I considered whether his decision was congruent with my personal beliefs and ideologies about the role of business in society. I was immensely impressed with his decision and believe he is an unquestionably good human being because he is absolutely empowered and guided by strong ethical values. I greatly admire and adulate Feuerstein because he epitomizes the kind of business ethics and leadership skills I aspire to have in a business setting. I believe that while the role of business in society is both economic and pragmatic and needs to generate revenue in order to sustain itself, a business should also be guided by ethical and social principles. As CEO of Malden Mills, Feuerstein always felt obligated to the community and practiced social responsibility. He understood the relationship between the company and its employees and refused to abandon them, even when it would have significantly benefitted him. Had Feuerstein chosen to jeopardize his employees by either accepting the insurance money and retiring or rebuilding Malden Mills in a foreign location, it is plausible that the company would not have filed for bankruptcy. Instead, Feuerstein’s CEO ethics that maintained social responsibility compelled him to make his contentious, unpopular decision. I would argue that the vast majority of CEOs would not have made the same decision he did, which is why he became internationally acclaimed. During this period, CEOs were not only downsizing their companies, but were also frequently moving resources to locations abroads. By outsourcing to foreign countries, this could generate more revenue by hiring cheaper labor. However, Feuerstein emerged as a CEO of benevolence, who prioritized ethics and social responsibility over pragmatism.
Even though I would commend Feuerstein for his intrepid decision, which truly separated him from pragmatic CEO
s who lacked moral cores in the business realm, I grapple with whether or not I would be able to commit myself to the same decision. I do believe that a business has a primary fiscal responsibility to ensure it produces capital, which Feuerstein almost disregarded when he chose to pay the employees. He was only able to rely on the insurance money, which did not fully cover the costs of both the employees’ salaries and the erection of the factory. Consequently, he contributed to the demise of the company; as CEO, he should feel some kind of commitment to ensuring the company survives. However, Feuerstein’s plan obviously intended long-term success, but simply did not achieve it because it was an impractical plan. A business needs to combine both the pragmatic and the ethical elements in order to be wholly successful. Without pragmatism, the business will collectively fail, but without ethics, then the leader himself has failed. The business leader should assert himself as a paragon of business ethics, which Feuerstein has masterfully and courageously done, even in the most trying and harrowing circumstances. However, Feuerstein’s failure to be pragmatic compromised the company; if he wanted to both help his employees and the company long-term, he should have either invested less money into the construction of the factory or should have required employees to take pay cuts. They were not technically working, even though they were being paid full salaries. There must have been alternative options that would have protected both the longevity of the company and still aided workers. Had Feuerstein been able to better marry ethics and pragmatism, his company may not have become insolvent. This is why while I heavily commend and wish to emulate Feuerstein’s values, I am not confident I would have made the same decision as him because I do believe that one primary role of a business is to ultimately generate revenue, which was disregarded under his leadership.