Photo: Jeff Armstrong (left) greets Shel Horowitz following Shel’s keynote address at the Noteworthy USA convention, Las Vegas, October 5, 2007.

Shel Horowitz’s Positive Power of Principled Profit, Vol. 5, #2, October 2007

When you deal in other people’s money, you very quickly butt up against the perception that your company is likely to be crooked. Through his actions in his own business and his education of his peers, Jeff Armstrong of Armstrong Capital is doing what he can to change that. Starting with the very first line of his website: “Straightforward, Honest, Fair….The Way It Should Be.”

Armstrong, based in the Los Angeles area, deals in real estate notes—for example, buying an owner-financed mortgage from a seller who needs an immediate large infusion of cash, and selling it at a profit to a securities company that can convert it into stock and offer it to its investors.

An early supporter of the Business Ethics Pledge, Armstrong came to my attention because he consistently generates new signers of the Pledge through the link on his website. Most of the people who have generated a larger-than-average number of signatures for me have done so through a single newsletter article–but with Armstrong, it’s ongoing, year after year. It turns out he’s been buying my books since the 1990s, starting with Marketing Without Megabucks, and he told me this is because even before I wrote a book about it, he sensed my strong commitment to ethics in marketing from those earlier works.

He also happens to edit the newsletter for NoteworthyUSA, his industry association, and consistently uses this “bully pulpit” to advance an ethics agenda. And when I heard him address the 300 attenders at Noteworthy’s conference, he stressed both the practical and the moral imperatives of being ethical. He’s not ashamed to admit that he has self-interest as well as altruism as his motives; if enough honest people crowd out the crooks, it’s less likely that government regulators will choke off his industry.

If the group I met when I was hired to keynote Noteworthy’s conference is any indication, Armstrong is having a significant impact. I got a lot of thank-yous from people who said I was reinforcing what they already knew was the right way to run their business, and giving the marketing ammunition necessary to help them prosper with it. Others told me my strategies for attracting and keeping clients through ethics are already working well in their business. And I met a few who are in the business specifically to advance a social change agenda: one woman works to provide capital to women fleeing abusive relationships and starting their lives over; a retired professor couple use their note business to fund water development projects in developing countries. All in all, an impressive group.

It does not surprise me in the least that Jeff Armstrong is quite successful in his own business.

Armstrong Capital: http://www.armstrongcapital.com
NoteworthyUSA: http://www.noteworthyusa.com

The Rise of the Rogue Executive places much blame on internal procedures that jettisoned 100 years of responsible practices, and the technologies that made fraud and profiteering possible on a scale that simply wasn’t possible in generations past.

And sometimes, flat-out lies, as in WorldCom using a totally theoretical “what-if” spreadsheet looking at the opportunity if Internet use doubled every 100 days as the basis of its income projections! The result of this total lie was devastation in the telecom industry, which was frantically laying cable in order to keep up with this demand prediction.

Another key cause was the incentive structure (eliminated by Sarbanes-Oxley in the aftermath of Enron’s collapse) that turned consultants and auditors at Big Six accounting firms such as Arthur Andersen into sales staff and pressured auditors not to jeopardize the far more lucrative consulting business (the book reproduces the full text of the Anderson indictment, in fact). Can you say “conflict of interest?”

And taking it further, CEOs face pressure to cook the books or look the other way when those to whom they delegate are unethical, both because of their own ludicrous compensation structures and pressure from investors for short-term growth. (The book cites bad behavior on the part of Dick Cheney during his Halliburton days, among others.)

But ethical, involved leaders can surmount the challenge. The book discusses this, but this part is much weaker, mostly focusing once again on the wrongdoers. I’d have liked to see that part built up.

Of course, my own award-winning sixth book, Principled Profit: Marketing That Puts People First covers that part in detail, explaining how to set up and run successful ethical companies.

And one easy step companies can do is to sign the Business Ethics Pledge, so consumers know of their commitment.

Find this book at Amazon: The Rise of the Rogue Executive: How Good Companies Go Bad and How to Stop the Destruction by Leonard R. Sayles and Cynthia J. Smith (Wharton, 2005)