Crisis in Economics and Ethics in Business

    Recently, at one of the forums (I will not write which one, so as not to provoke a discussion of a particular problem here), another scandal was discussed around tricky tariff policies that could lead to unexpectedly high costs for customers. The situation itself did not surprise me, this happens often, just this particular case was egregious. Rather, I was worried about the same reaction of a fairly large number of people who discussed the topic on the forum.

    This reaction boiled down to the following two points:
    • the client is to blame, you have to read the contracts and think what you are doing. The right of the one who provides the service to present it in such a way as to get the maximum benefit.
    • if the law is correct, then there can be no complaints.

    We will return to this topic now, but for now - a small digression. Many analysts believe that the crisis in the United States, and then around the world broke out, including due to the extreme efficiency of financial mechanisms in this country. Such super-efficiency allows you to instantly conclude many transactions. But to make many transactions quickly, you need to make decisions quickly. For this, most decisions must be made automatically. Automated decisions are made by computers, there is only one criterion for making decisions - maximum benefit. But these bots were written for a normal development scenario, and as soon as problems started, continuing to automatically complete transactions, they exacerbated them.

    Why did I talk about this? The United States is a country in which the market reigns, and the American authorities have always tried to regulate it minimally, believing that the market contains internal mechanisms that protect it from catastrophes. After all, the target function of all market participants is reduced to maximum benefit, which means that it is not profitable for anyone to bring down the market. So, he will not fail. However, he failed.

    Another feature of the United States: in this country, a lot is tied to the judicial system. Everything is determined by law. Everything that is by law is correct. Everyone is suing and with everyone. Perhaps there is not one more or less significant company that at any given time would not be in a state of litigation, and not one, with anyone else. But an alternative to this is a system built on mutual trust, and trust is an inefficient thing, because it implies a long-term relationship and the need to abandon the maximum benefit for reasons of maintaining this relationship.

    These two factors - the primacy of profit and the primacy of law over everything else, are the cornerstones of the American economic machine, which, as we know, is very effective when it does not fall into a crisis. If we now return to the beginning of the article, it will become clear that from the point of view of the American worldview on business, the two postulates described above are absolutely true.

    But the outbreak of the crisis forced Americans to talk about concepts such as long-term partnerships, ethical standards in business, etc. It seems to them that these categories, reducing the current efficiency of the economy, give it a certain strength and increase its stability. As it turned out, maximum efficiency is not always beneficial.

    Why did I decide to write about this? ABBYY prefers a Japanese business model focused on long-term relationships. The global benefits of such relationships are put by the Japanese above the momentary benefits, and key business decision-making processes are not going as fast as in the USA. The Japanese have been choosing partners for a long time, and they have not quickly given up on selected partners. These are the basics of Japanese business etiquette, so different from how America works, where in the morning you can be a partner of one company and in the evening its competitor. Europe is somewhere in the middle between these poles.

    Surprisingly, we were able to pursue a policy of long-term relations and honesty in relation to partners and customers, and in the USA, which during the period of crisis bore fruit. Thanks to such a policy, we also got in touch with several large Japanese companies and work with them at the level of strategic interaction, with the American office being responsible for Japan.

    There is another important result of this approach to business. When a company is focused on maximum profit due to relations with the outside world, then it gets the same situation inside: employees focus on short-term relations with the company with maximum benefit for themselves. With such a team it’s hard to do big things. If the company is honest with partners and customers, and the company employees see this, then they themselves also relate to the company itself. As a result, such a company becomes a place where people like to work, they give themselves to work with a calm soul, and work for a long time. As an example, I will cite this fact: more than 90% of ABBYY employees who had worked in the company for several years by the year 2000, work in it now.

    Let's go back to the crisis. Actually, there is no crisis anymore: a crisis is when crucial events occur. The fracture usually does not last long (anyone who has broken something knows). After this, the post-crisis syndrome begins, gradually flowing back to normal. The post-crisis syndrome, accompanied by oohs and ahahs about a happy past, has successfully passed, and present life is our norm. However, unlike previous crises, this one continues to scare us, and the feeling that he will return does not leave. Why? Yes, because nothing has changed: someone went down, and those that survived continue to live as before. And examples of stories like the one with which I started the article are good evidence of this.

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