Take the Phil Knight (Founder, NIKE) Ethics Test

[This blog is Part 2 of 4 blog posts on Phil Knight’s Shoe Dog: A Memoir by The Creator of NIKE (New York, NY: Simon & Schuster, 2016)]
 
Based on Phil Knight’s own account of his actions in his memoir, a reader would ask whether is he amoral, unethical, uninterested, or all of the above? After reading this blog, ask yourself that question. Then, ponder the implications.
 
Of course, NIKE and Phil Knight have been the subject of many accusations of unethical practices due the to the so-called “sweatshop controversy.” But, for now, let’s just focus on what he says about himself.
 
Throughout Shoe Dog, when ethical issues arise, we simply see the workings of an ethical pragmatist—if we can get away with “fibbing”, then why not? On the other hand, in some cases, it might be more advantageous “to play it straight.” This calls to mind a great 1990 Harvard Business Review article titled, Why Be Honest if Honesty Doesn’t Pay?” 
 
Interestingly, he makes references to Zen Buddhism, going to Mass, having some spiritual influences—but there doesn’t seem to be any notion that his spiritual beliefs would impact his ethical decision-making framework. 
 
It starts with his view of business. Knight explains, “Someone, somewhere once said that business is war without bullets, and I tended to agree.” [90] One of the derivatives of that mantra, that Knight would surely espouse, is that “everything is fair in love and war.”
 
In 1967, Knight was dealing with his Japanese distributor and lied to them: “I explained [to a colleague] that I’d been forced to lie to Onitsuka [the manufacturer in Japan] and claim we already had an office on the East Coast [of the US]” [104]. It wasn’t true—but, hey, it all worked out!
 
He later spied on his Japanese partners. Yes, literally spied on them—he hired a spy! Knight sent out a memo to his employees saying he hired a spy to keep tabs on their Japanese partner and explained in the memo that “This spy may seem somewhat unethical to you, but the spy system is ingrained and completely accepted in Japanese business circles. They actually have schools for industrial spies, much as we have schools for typists and stenographers.” [141] Charles Dickens wrote about Fagin’s training system for pickpockets in Oliver Twist. That makes it right?
 
One ethical low point for Knight seems like a Keystone Cops routine. One of his Japanese partners, Kitami, came to the US. He was in Knight’s office for a meeting. The Japanese bladder, no match for the American one, eventually Kitami gave out and went to the bathroom. Knight then stole a file from his briefcase: “The moment he [Kitami] was out of sight I jumped from behind my desk. I opened his briefcase and rummaged through and took out what looked like the folder he was referring to. I slid it under my desk blotter, then jumped behind my desk and put my elbows on the blotter.” [169] Yes, he felt guilty. He says, “I was headed down a dark path. No telling where it might lead.” [169] The only difference between him and Ken Lay is that he sold enough shoes to prevent more bad decision-making.
 
Knight eventually decided to branch out on his own, and get NIKE shoes manufactured, and not rely on simply importing Japanese shoes. When NIKE started making its own brand, the Japanese partner [Kitami] “asked if the new NIKE was in stores. Of course not, I lied. Or fibbed. He asked when I was going to sign his papers and sell him my company. I told him my partner still hadn’t decided.” [204] Knight has no shame in admitting he lied. In fact, the unspoken point seems to be that, hey, it all worked out, and I’m doing a lot of good (in short, the ends justify the means).
 
In another instance, the financiers for NIKE were going to show up to do due diligence. Knight met with his leadership team. He recounts, “We talked about hiding the factory from them [an unauthorized investment]. But everyone around the table agreed that we needed to play this one straight. As in the Onitsuka trial, full disclosure, total transparency, was the only course. It made sense, strategically and morally.” [267] 
 
This is not exactly the reflection of an ethical person. Knight’s candor is refreshing: he’s not pretending he’s something he’s not. Hard to call him out when it’s not a case of the bar set low—rather, there is no bar. He doesn’t claim to aspire to any ethical standard. It’s basically ethical pragmatism—it’s a matter of whether I can get away with it, will it help my business and we’ll do as necessary (if there are government laws, OK, we’ll work with that—at least if it is likely that we won’t get caught.) Of course, with a net worth of $27.3 billion, what does it matter?
 
So, if Phil Knight amoral, unethical, uninterested, or all of the above? What do you think? Would Phil Knightbe viewed—even by himself—as an ethical businessperson? Likely not, but it is now important to him that NIKE does socially responsible things. Does he care about ethics? Also, likely not—well, he might care if it impacted the growth of his business. He would be likely most business people in the sense that ethics are important only if other people think they’re important. Why be honest if honest doesn’t pay?