Ethics Fatigue


Here’s a story I’ve heard too many times. I spoke recently with a businessman who developed an advanced formulation for a product that beat the market leader. He invested thousands in the product and found a manufacturer that expressed interest in his work and offered to be a partner in commercializing it. The businessman invested more to finalize the product and prepare it for commercialization, only to have the company come back later and say that they decided to drop it from their plans. Can you guess what happened next? The company actually went ahead and launched the product on their own. The developer got nothing more than a “thank you” for a nice idea. Unfortunately, he didn’t have a patent in place to protect himself. Non-disclosure agreements regarding the formulation might have helped if the formulation really were a trade secret that he had shared. He trusted and got burned.

Many companies strive to be ethical and operate by high standards. Some companies are simply unethical. I don’t think that describes the company in question. Here’s an important lesson: many companies strive to be ethical but operate by low standards. How low? As low as they think the law will let them operate. The obvious ethical thing from your perspective, and what you and an individual leader at another company might naturally see as ethical and fair, may look completely different when others who don’t know you are reviewing the proposed terms. “Why should we pay this person any of our money for this product?” “Because he invented it and brought it to us.” “But now we’re developing it on our own. If he doesn’t have a patent, there’s no reason why we can’t make this ourselves. At most he could ask for a finder’s fee, but we have no obligation to pay him anything. All he’s done is give us an idea. We’re grateful, but why pay?”

Companies proud of their ethics can have shamefully low standards. Sometimes their standards in the end are those of the lowest common denominator in their legal department or leadership team. Investigate their reputation and their ethics in practice before you trust them too fully.

Poor ethics, even from companies proud of theirs, are one of the banes of this world and the cause of so much unnecessary innovation fatigue. Be cautious, maintain good records, use non-disclosure agreements, protect your intellectual property, and stay clear of people and companies that don’t maintain high ethics in practice, not just in print.

Categories : fatigue factors

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