The role of ethical leadership in business

How do ethics and leadership impact on business?

Peter Koestenbaum’s Leadership Diamond®

Peter Koestenbaum, founder and chairman of the Koestenbaum Institute and PiB, developed an effective model to help leaders understand the workings of a successful business.

This graphic representation takes the shape of a diamond, with each aspect interconnected to the others:

Peter Koestenbaum's Leadership Diamond demonstrates how the aspects of ethical business leadership work together
Peter Koestenbaum’s Leadership Diamond demonstrates how the aspects of ethical business leadership work together

Greatness lies at the centre of the diamond. The space it inhabits results from the simultaneous activation of four fundamentally different styles of thinking or ways of greatness:

  • Vision,
  • Reality,
  • Ethics, and
  • Courage.

(Interestingly, the four Jungian archetypes are based on similar values: Warrior, Magician, Lover and King. All four archetypes have to be integrated to create wholeness. More on that here.)

Ethics: Balance and Integration are Key.

Ethics cannot survive or be meaningful in an organisation unless it is part of that organisation’s mainstream activities.

Business today operates at the edge of chaos, which is compounded by personal freedom. The solution to this constant state of change is to develop the skills necessary to:

  • Be effective
  • Transform
  • Lead
  • Hold tension, polarity, uncertainty and ambiguity
  • Be intuitive
  • Be knowledgeable

The character that goes with the skills needs to:

  • Honour life
  • Devote life to what is noble and worthy
  • Stand up to evil
  • Be humble
  • Listen

Balance and integration of ethics made practical

Achieving greatness requires the harmonious integration of the four strategies:

Statement of formula Professional level Social level Psychological level Philosophical level
Vision Seeing the larger perspective. Abstract reasoning and analysis Systemic and strategic thinking Creative and intuitive Awareness of the possible, exploring inner space
Reality Responding to facts. Having no illusions. Meticulous attention to detail Extensive use of information and objectivity Survival, results-oriented, and market orientation Relationships
Ethics Sensitive to the needs of others; willing to be of service Teamwork and loyalty Meaning Communication, caring, commitment, love and loyalty Integrity, morality, principle
Courage Power to initiate, to act and to risk. To act with sustained initiative. Aggressive management of markets, and of product advocacy. Stand for something Autonomy, independence of thought Anxiety, stay with the tension. Free will and responsibility, power, centeredness

The integration and balance of these strategies needs to be achieved at both the personal and the organisational level.

Each of these strategies almost reflects divisions within the business:

  • Courage is Operations
  • Reality is the Accounts/ Financial department
  • Ethics is HR in its most positive light, and
  • Vision is the CEO, and the strategy team if there is one.

How all of these divisions integrate into a single entity that has the same mission and desire to succeed is the business challenge. Ethics creates discernment around the purpose of the business, the products or services it delivers, and the markets it serves. The role of ethics is to ensure that we service those markets in a way that sustains and enhances the reputation of the organisation. The further role of ethics in this context is to ensure that the organisation treats all its assets (people and all other planet resources) with respect and due care. At an individual level, the integration of these ‘divisions’ will ensure that there are the necessary personal skills to engage the different business and life challenges.

Ethics as a Foundation for Business Strategy

When a business’ ethical stance is clearly defined, it becomes clear what the business will do (and what it won’t) in terms of product and service creation and delivery. It also becomes much easier to determine who the business will serve and with whom it will interact – and who will not be considered.

Finally a clear ethical stance makes the use of resources more intentional and, hopefully, more sustainable and kind to the planet and all involved in the business’ success.

This kind of clarity naturally draws like-minded businesses and individuals into the business’ functional orbit, meaning that the positive intent grows and spreads. Hopefully, over time, this approach can infect the world with ethically strong, morally sound businesses that grow and nurture their teams and the world in which we operate, rather than the legacy of chaos and destruction that has commonly been associated with avaricious business growth in the past.


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