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IP: Gary Chapman's L.A. Times column, 5/22/00-- Ethics
From: Dave Farber <farber () cis upenn edu>
Date: Wed, 24 May 2000 16:22:33 -0700



- Ethics

From: Gary Chapman <gary.chapman () mail utexas edu>
Subject: L.A. Times column, 5/22/00-- Ethics

Friends,

Below is my column from The Los Angeles Times that ran this past Monday, 
May 22, 2000. As always, please feel free to pass this on, but please 
retain the copyright notice.

I'm sending this from Seattle, where I've been for five days. I attended 
the conference of Computer Professionals for Social Responsibility called 
"Directions and Implications of Advanced Computing," thirteen years after 
the first one, which I also attended. It was wonderful to see so many old 
friends here and to make some new ones.

The conference included my panel discussion with Dr. Bill Joy of Sun 
Microsystems, which was very interesting and well-attended. As expected, 
we chewed over Bill's recent essay in Wired magazine for about two hours. 
I understand that someone at the University of Washington videotaped this 
event and will put it on the Internet with streaming video sometime soon. 
I'll let everyone know if and when that becomes available.

The next day I gave a talk at Microsoft and met several very interesting 
people at Microsoft Research, and then yesterday I gave the same talk at 
the university in the computer science department. A very full few days, 
but also very enjoyable.

It's been beautiful here, but 102 F (39 C) in Austin, so I'll have to 
brace myself for my return to Texas heat.

Hope everyone is doing well.

Best,

-- Gary

gary.chapman () mail utexas edu

   ------------------------------------------

DIGITAL NATION

Monday, May 22, 2000

Some "Dot-Coms" Know Value of Stock but Put No Stock in Values

By Gary Chapman

Copyright 2000, The Los Angeles Times, All Rights Reserved

Are we closing in on another era of business scandals and suspect ethics? 
Will the "new economy" wind up repeating the behavior of the notorious "Me 
Decade," the 1980s?

Fortune magazine, in a March cover story on business ethics in the new 
economy, said, "Questionable behavior is Silicon Valley's next big thing."

The money to be made in the new economy is not only creating great 
temptations, it is also creating some new ways of doing business that may 
skirt the edges of ethical behavior. The pace and novelty of the digital 
economy may prevent many businesspeople from even seeing these ethical issues.

"Let's face it: Some people think about ethics and other people think 
about money," says James Werbel, co-director of the Murray Bacon Center 
for Ethics and Business at Iowa State University. Werbel says that 
business ethics is a strong feature of nearly every business school 
curriculum, but that "training in ethics has minimal impact on people. 
What has a bigger impact on people is the leadership in organizations."

John Boatwright, executive director of the Society for Business Ethics and 
a professor of management at Loyola University Chicago, agrees. "The 
evidence is clear: It starts at the top. No course can overcome the 
culture. The key to business ethics is not getting to individuals but to 
the industry."

So what about the leadership in the new economy?

A scathing assessment has come from an unexpected source. In an article 
last month titled "My View: Hollow.com," the chief executive of Forrester 
Research, George F. Colony, said he interviewed a lot of other CEOs, 
including "dot-com" executives, and concluded that they run "vapid, 
shallow and hollow companies." (The article is at 
http://www.forrester.com/ER/Marketing/0,1503,183,FF.html.)

"Many of the dot-com CEOs," Colony wrote, "lacked depth, experience and 
common business sense. Their commitment was short term -- three years on 
the average. They talked about their highly fluid work force -- a 
constantly changing cast of characters, washing in on the promise of more 
stock options and an IPO and then washing out, post-offering, in search of 
another pre-IPO company."

Colony was describing what has come to be known in Silicon Valley as "flip 
and flee," a term of irony and derision that people both inside and 
outside the industry are beginning to view as a serious ethical flaw.

Randy Komisar, former CEO of LucasArts Entertainment and WebTV, told 
Fortune, "People walk into a VC [venture capital] presentation and their 
first line is about exit strategy. They're not talking about the investors 
-- they're talking about themselves. How will they cash out? And this 
raises a subtle point: These founders don't think of themselves as CEOs of 
operating companies. They think of themselves as investors."

The point of "flip and flee" becomes how to raise money and then bail out 
at the peak of valuation, even if you've dragged the public into risky 
exposure. Then you move on somewhere else to do it again.

Of his interviews with dot-com CEOs, Colony also wrote: "There was a 
fanatical focus on valuation -- getting public and liquid -- while value 
-- what the customer eventually gets -- was a back-seat discussion."

Werbel says, "There are obviously major financial incentives that promote 
this kind of behavior." He adds, "Some of these people will be spending 
time in jail soon."

Another sign of ethical issues in the high-tech industry, for some people, 
has been the Microsoft antitrust trial. Despite all the talk about the 
trial and its outcome so far, there has been very little discussion in the 
industry about whether Microsoft has behaved ethically.

According to Jeffrey L. Seglin, a professor of literature at Emerson 
College in Boston and author of "The Good, the Bad and Your Business: 
Choosing Right When Ethical Dilemmas Pull You Apart," "Bill Gates appeared 
in court under oath and wasn't entirely truthful in the way he answered 
questions." Microsoft's explanations for the way its operating system, 
Windows, works with its Internet browser have changed several times during 
the antitrust case, depending on who is asking the question and what 
purpose the answer is meant to serve.

Paulina Borsook, author of the new book "Cyberselfish," says, "This 
culture is now so deforming, to the kind of people it favors and requires. 
If you're trying to survive in that world, you cannot have time to 
reflect. . . . In addition, these people have no exit strategy, no 
preparedness for doing anything else.

"This thinking is so pervasive," she says. "These are the rules now -- 
what other rules are you going to play by?"

The image of the heroic frontiersman on the "electronic frontier" is how 
high-tech entrepreneurs describe and justify themselves, says Borsook. 
"This is so at odds with reality -- they're really just enmeshed in power 
and finance. While they have the rhetoric left over from the early rise of 
the Internet, the information revolution and so on, their world is really 
a lot more like the 'Liar's Poker' era of Wall Street 15 years ago."

That's when newspapers and TV last showed masters of the business world 
being led off to jail in handcuffs.

Gary Chapman is director of the 21st Century Project at the University of 
Texas at Austin. He can be reached at >Texas at Austin. He can be reached at gary.chapman () mail utexas edu 

   ------------------------------------------

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