In today’s time, business ethics meaning and importance in running a business aren’t just realized by the business owners but also by consumers. Therefore, running an ethical business is as imperative as running the business itself. With a consumer-centric approach like Design Thinking, run a business in the most ethical ways.
As a business owner, knowing the importance of business ethics is no longer optional. While you might think business ethics meaning and importance are limited to a company’s code of conduct, it’s not true. As per studies, 6 in 10 younger consumers assess a company’s ethical ideals before purchasing its items. This demonstrates the value of ethics in creating an ideal brand for your consumers.
Nowadays, customers are the new boss. Hence, it is important to build an ethical culture that makes your business desirable for your employees and customers. If you’re wondering how do ethics apply to business, let’s introduce you to Design Thinking. Design Thinking, a consumer-centric approach to problem-solving, can be helpful for businesses to run an ethical business.
“Ethics must begin at the top of an organization. It is a leadership issue and the chief executive must set an example.”—Edward Hennessy, Philanthropist, and Retired Chairman and CEO of AlliedSignal Inc.
What are Brand Ethics Meaning and Importance Amongst Consumers
Many ethical business owners, while starting off with their ventures, do ask themselves a question: How do ethics apply to business? Being an ethical person yourself is the first step towards the journey. The next step is, however, to be able to put yourself in the shoes of a consumer. That’s because what is ethical for you must also be feasible for your consumers. And how exactly consumers involved in the whole process of creating an ethical business can help your business?
Business ethics meaning and importance are something that needs to be understood in a proper way. Customers will always favor a company that upholds its ethical standards. Brand loyalty encourages people to select a specific brand over rivals and upholds trust. A significant portion of consumers choose to select a brand that has a positive influence on society and the environment. Consumers, while deciding if a brand is a good investment, take into account its reputation as compared to other brands. This in turn boosts the brands’ reliability in the local community and among investors as well.
For instance, Sundaram Finance, a company owned by TVS group in Chennai, serves all its senior citizen customers in under 10 minutes. They also provide customers with tax-related financial advice without any charges. It has about 2000 crores in fixed deposits, in which the majority comes from senior citizens. Although slightly higher than what banks offer, the deposit interest rate is not very high. But the money keeps coming in because of the reliability of the company. No customer has ever gone without receiving any interest payments at any time. This is how brand ethics help a company keep not only existing customers intact but gain new customers as well. A corporation can benefit long-term from building a foundation on the basis of ethics.
Now, to answer how ethics apply to business, let’s go through the following points where business ethics are mostly applied:
- Marketing Communication
The way in which a brand interacts with its consumers is the aspect where business ethics are majorly applied. To establish and uphold a favorable reputation among consumers, honesty and transparency are a must. Developing an ethical reputation with consumers also requires honest and open discussions in marketing communication across all channels. For instance, Ritual, an LA-based brand for women’s nutritional supplements, brags about its transparent supply chain of ingredients. Transparency is a great way to show customers how the brand uses ethical ways to run business.
- Employee Treatment
Business ethics meaning and importance also apply to how staff members are treated internally. Age, color, ethnicity, gender, sexual orientation, religion, and handicap are not factors in hiring practices while running an ethical business. Paying salaries timely, providing breaks, giving honest feedback, and listening to complaints about unethical practices, etc., are good employee ethics. Additionally, ethical businesses offer an environment that complies with ethical guidelines and also conducts open communication with employees.
- Sustainability
Given the rise of green standards in the marketplace, business ethics can also be applied to sustainability. Today, customers are keen to buy products/services that employ procedures and practices that minimize negative consequences on the environment. Recycling programs and the reuse of material during production are the two ways in which business ethics meaning and importance can address environmental concerns. Environmental concerns are addressed by ethical businesses in two ways: through recycling programs and the reuse of materials during production.
How Do Ethics Apply to Business with Design Thinking Principles
The concept of “Design Thinking” has gained popularity during the last ten or so years. Design Thinking is a problem-solving approach that helps you find solutions by taking into account the end consumers’ needs. When it comes to business ethics meaning and importance of business ethics, the concept may help organizations in creating a culture that is ethical not only from a business perspective but also from a consumers’ perspective. Hereby, finding an out-of-the-box solution to a unique problem.
Although everyone sees themselves as ethical beings, many of us don’t actively take human-oriented values into account when developing products or services or running a business. As a result, we cut corners and miss the consequences of our products/services on the consumers. With Design Thinking, you can take a human-centric approach to design the integrity and values to build a strong brand. (DT also helps in building strong brand)
With design thinking, we can combine what is both technologically and economically practical and desirable to consumers. To find a solution through design thinking, one has to go through five stages: empathizing, defining, ideating, prototyping, and testing. With these design thinking principles, you can create a strategy for defining the ideal business ethics meaning and importance. Let’s discuss the five stages of design thinking and how business ethics meaning and importance apply to business:
1. Empathizing and Gathering Insights
Empathy is the most underrated asset when it comes to running a business. The first step in creating good business ethics is getting to know whoever you are dealing with. To be your most ethical self, one must dig deeper into the code of conduct in each department to understand if they provide the customers what they deeply desire from your brand or not. The idea is to keep yourself in their place and think about what you would like to have from the brand if you were them.
Let’s understand from the example of Ritual multivitamins given earlier. As a consumer of a nutraceutical product herself, the Founder & CEO of the brand, Katerina Schneider, herself struggled with finding vitamins with the right ingredients. She decided to start her own nutraceutical brand so that no other women like hers had to struggle as she did. By having an empathetic eye, she founded the brand with the conviction to share not only where each ingredient is from but also why it’s there in the product, which is what consumers always want to know when it comes to consuming nutraceuticals.
However, it is understandable that not every founder can be the consumer of their own product or service. In such situations, you can conduct interviews with your target audience and gain some insights as to what they think would be an ethical practice from a brand like yours. To implement and understand business ethics meaning and importance, it is essential to be empathetic.
2. Defining the Problems Found
Defining is the stage where you get the first few ideas about your potential challenges that need to be solved during the entire design thinking process. At this stage, it is possible to have numerous ideas floating around in your mind that will come once you have insights from the empathy stage. Collaborate with your team and brainstorm to create various ethical guidelines that can be applied to each and every department of your business. Remember the three points that we discussed in the earlier section of this article? Communication, Employee Treatment, and Sustainability – ideate your ethical guidelines in such a way they can be uniform across these three aspects of your business.
3. Ideating About Potential Solutions to the Problems
As you further get to know what your problem statements are, you can ideate the potential solutions to those problems. But one needs to keep in mind the three essential pillars of Design Thinking while using the process to find ideal solutions to the problem. These 3 pillars are desirability, feasibility, and viability.
When you decide on developing business ethics, use the three pillars of design thinking. For instance, energy efficiency and green practices are the most desirable practices by consumers, hence firms must reduce packaging waste if they want to properly convince audiences that they are fully committed to renewable solutions. However, while choosing their packaging material, they must look for a material that’s not only biodegradable but is technologically feasible to create in their manufacturing unit. At the same time, it should make sense to your business as well. If you have a food storage product company like Milton, you can’t be using paperboard that’s used to make biodegradable tetra packs.
4. Implementing Prototype Guidelines Every Now and Then
In design thinking, prototyping is an essential stage. As you go ahead with potential solutions to the problems, you might come up with more than one solution. But you need not choose one solution right away. Instead, create prototypes, or in this case, temporary versions of your business ethics guidelines, and introduce them to the business for a temporary time period. Define business ethics meaning and importance and make your prototypes accessible to your consumers for feedback.
5. Testing the Prototype to Achieve the Final Solution
Prototyping and testing are crucial for refining business ethics. They involve creating prototypes to gather feedback from a select audience. Negative responses are possible and should be expected, as Design Thinking encourages learning from failure. Continuous prototyping and testing are essential for keeping ethics relevant and adapting them as needed.
When your business expands globally, your ethics must adapt to new changes, including recruiting local resources, aligning policies with international standards, and targeting a different audience. Initially, you’ll face challenges due to limited experience, but by prototyping and testing your ethics in the international market, you can become more agile and adaptive.
The Bottom Line
It’s more crucial than ever for businesses to create business ethics that are right for your business as well as your customers, given the increased scrutiny of business practices. With design thinking, creating business ethics for your organization becomes both enjoyable and practical!
About the author
A Haryanvi by origin, an entrepreneur at heart, and a consultant by choice, that’s how Ajay likes to introduce himself! Ajay is the Founding Partner at Humane Design and Innovation Consulting (HDI). Before starting HDI, Ajay founded the Design Thinking and Innovation practice at KPMG India. His 16+ years of professional career spans across various roles in product and service design, conducting strategy workshops, storytelling, and enabling an innovation culture. He has coached 50+ organizations and 2000+ professionals in institutionalizing design and innovation practices. He loves to blog and speak on topics related to Design Thinking, Innovation, Creativity, Storytelling, Customer Experience, and Entrepreneurship. Ajay is passionate about learning, writing poems, and visualizing future trends!
We at Humane Design strongly believe in the human ethos and draw inspiration from humans and other elements of nature to design innovative solutions for organizations of all sizes. We will be glad to be your success partner. Email us your requirements at explore@humaned.in.
