Introduction
Shared knowledge is a premise for moving forward, and it depends on the premise of truth-telling. If interactions depend on clear, explicit communication, then the same precondition of honesty is required. Business canvas models need open information. Writing on paper in those drawings, one looks for ‘honesty’ (that is, listing all possible suppliers of inputs or listing just the main ones).
Not being honest in listing, that is, being silent or fabricating lists, is to lie about the premises of a possible strategy and can lead the company to disaster, even if it is profitable in the short run. If I hire someone, I also need to identify the sources of deception beyond words, in facial and body expressions, such as microexpressions, and in the content of CVs. As a manager, I can open referential and market points. Moral integrity has to be evidenced by the mentor. In a moral way, one has to keep highly vigilant.
The purpose of this essay is to consider some aspects of deceptive statements: in entering business, in entering into a labor contract, in making business proposals, and even in taking the clothes off one’s back. The goal is also to challenge the readers to think about deception in economic life, either because it is a real challenge we face every now and then when we encounter the sometimes heavy hand of the state towards economic actors, or because it is an essential component of the sustainability of some business canvas models.
In a time when business scandals arise so frequently that we do not take much notice, it is important to see what really makes deception, my wallet, or my strategy a disaster.
Background of Business Canvas Models
1. Background 1.1. Business Canvas Models Business canvas models are commonly used in practice and academia and can be found in existing or new business designs. A business canvas model serves to describe the value proposition of a new or existing business in terms of its financial, customer, internal business processes, and learning and growth perspectives. A general canvas model describes the overall business design from different perspectives, and the IT or social innovation canvas models focus on IT or social innovation aspects within the overall business design of a business.
These canvas models are used by practitioners for visualization, communication with stakeholders, and strategy-setting purposes. For academics, it represents an effective and coherent way to develop a teaching case, presenting diverse theoretical concepts and realistic issues in the business world. These canvas models have been popularized via their sociological and academic origin, with the business model canvas used to describe the business model; a sketch of the business model outlines the key aspects of the enterprise, the service business model canvas, and the value proposition canvas.
These canvases are widely recognized and popular in various domains of practice, while various academic studies have utilized and discussed canvas models. Researchers have emphasized the practical use of canvas models, reporting the provision of high educational value in fostering business model innovation. Ethical implications and the design of ethical approaches in business canvas models are briefly mentioned in a few studies. However, no studies have systematically addressed the ethical dimension, the principles of transparency, honesty,
fairness, or the ethical use of canvas models. Due to this limitation, this study investigates the consequences of business canvas model deception to examine both its negative and positive impact toward designing and updating a business canvas model for a business with a legacy product in a declining market. Besides introducing the background to this ethical issue, I address a few challenges concerning ethical considerations on emerging business canvas models, which are multidisciplinary, intertemporal, and contentious.
The Role of Honesty and Transparency in Business
It is a matter of shared recognition that trust and collaboration are underlined by transparency and honesty. Communication about benefits and losses with employees and stakeholders can create a joint strategy to overcome the crisis or to improve the general situation. Some firms prefer to follow an honest way of information spreading, as they are convinced that an action based on well-human values identifies their performance. In the knowledge sector, employees can feel part of the business success.
Through the added value of participation in the final goal of the company, they can contribute mainly to a growth in performance. A good social climate and a strong corporate reputation can create a suitable environment that can be useful, mainly, for solving stressful situations. On the other hand, not telling the truth can complicate relations and decisions and could incur high management costs. Internal and external stakeholders could be dissatisfied as they believe they are not well informed about the business, strategy, human resources, and the projects.
Signs of lacking transparency can lead us to think about deceived stakeholders and can anticipate the deception effect itself. Honesty can be a primary factor of long-term success. The market and employees of leading companies follow the principles of honesty and respect. Honest communication is a key instrument and a day-to-day tool for leaders who follow the culture of honesty.
Some companies that have undergone several problems in the nineties and tried to adapt their cultures to the business environment of those years have had positive experiences during these years, but nobody believes that those behaviors will be successful for a long time in the future. Fastow leaves the company and re-enters one year later, gaining a big reputation against crises. So, Fastow buys money, not trust and credibility.
Understanding Deception in Business
The lifeblood of large corporations worldwide is marketing and trying to stay one step ahead of the competition. From the saga to the operation in Cambodia, large international companies are no stranger to using deceptive activities in the pursuit of higher profits. Whether the deception takes the form of a violent robbery, fictitious marketing campaigns, or increased Internet advertising falsely portraying a land of opportunity, the large multinational corporation and the individual actor experience little in the way of consequences. The result is that those at the bottom of these large organizations may be encouraged to take risks, bearing in mind that rewards could be substantial.
Unlike lies, deception comes in many guises. Third-party actors have a variety of weapons, such as guarantees, technologies, and regulations, at their disposal to ward off the effects of liars. The literature has shown that types of deception—i.e., misrepresentation, lying by commission and omission, lying by silence—are reconstructed by professionals in distinct conceptual terms and that such differences affect processing and decision-making. In common language, a lie by omission is still a lie, but according to professional literature, a lie by omission is not a subset of misrepresentation; there is no guarantee, and the speaker takes no active role in deceiving the receiver
. Although the number of reasons for engaging in deceptive behavior is considerable, it is suggested that cultural norms and personalities, such as worldviews, clash and power, and the perceived attitude of the receiver are important factors. When we expand this central piece of theory to consider deception within the business culture, a world based on deceptive practices, we use the canvas model as a representative of the corporate entity. Although individuals and organizations are quite different, it is likely that the forces deployed will be relatively similar. There may be several reasons why firms deceive the consumer.
Types of Deception in Business Canvas Models
Business model elements such as the value proposition or revenue model are often highly positive, but this does not guarantee their market success. Hence, deception emerges through portraying positive behavioral intentions to stakeholders, while the opposite remains true. While the business model is abundant with anecdotal evidence through which deception appears, our interest lies in taking prior research a step further: understanding undercover mechanisms. Theoretical work relating to deception has broadly sought to characterize deception as an act of exaggerating beneficial aspects or excluding negative ones.
In the business model realm, however, there are few empirical insights as overlays of the business model’s structure hinder claims relating to the basic mechanism of obfuscation. As only analysts have access to the internal structure, few academics have prided themselves on their unique insider knowledge, with emerging requests from the practitioner community expressing their suspicion towards the elements’ potentially misleading nature. We therefore propose a classification that pinpoints types of deception.
Positive deception arises when the cover-up tactics themselves are kept at present truthful. This takes necessity when obfuscation of negative elements would require claiming the opposite—a claim that might endanger the venture’s survival if falsified. Radical deception, in contrast, aims at actively distorting the truth. It becomes opportune when reverse engineering by competitors or stakeholders can be dismissed as irrelevant, unfeasible for want of resources or wherewithal.
Passive truth-telling deceives by inclusion. Energetic truth-telling, in contrast, deceives through omission, leaving relevant information unvoiced. Studies draw attention to the normative perspective. In light of the cons—embedded misinformation, the exclusions forwarded here might be readily discarded in light of associated foregone gains. Based on prior instances and allegations by users and analysts, the following typology points to the types of deception prevailing in practice.
Motivations for Deception
More and more companies employ the business model canvas to design and analyze their own business concepts. A proper conceptualization and evaluation of a business idea can only be reached if the influencing factors for a successful business are known. One factor influencing the business is the behavior of market participants. If their behavior leads to the application of deceptive strategies, a business idea is less likely to succeed. For this reason, we take a look at the motivations and reasons for using deception.
The various possible motivations for deception in the business context often share a common base. In essence, they are all based on the desire to deter potential customers, the competition, the middlemen, or investors from entering and participating in a market or from exerting influence on the company. One key reason that often tends to foster deception is competitive pressure. Some of the motivations for deception derive from the underlying attitude of an organization. A shareholder perspective often fosters the motivation to enhance the financial results, whereas business ethics often tend to take a back seat.
In general, all individuals have a conviction of their trustworthiness and rely on situational factors to interpret their behavior. A high pressure to be successful may result in a lack of perspective on the consequences of the business management decisions—especially those which may backfire in the long run due to being short-sighted or unethical. Faced with the quest for survival, business managers often tend to put business ethics in the backseat, rather than take responsibility for their own survival in a competitive environment.
The motivation to encourage deception and fraud through a fitting, company-wide culture—without the awareness of it—underlines the consequential factors of a narrow focus on success and the survival of individual employees at the expense of the requirements of other stakeholders. In summary, one could state that the ambitions to increase reputation, to surmount obstacles and deter unattractive buyers, extract additional finance, and minimize investments encourage the usage of deceptive strategies. Stand on the long-term view and always try to picture the broader consequences of your actions to prevent your involvement in a fraudulent and corrupt world.
Consequences of Deception in Business Canvas Models
Deception can have severe effects on businesses and negate business canvas models. It can attract a wide range of purchasers or clients. The consequences of such fraud can be narrowed down to monetary and financial results, as well as damages in the business field. The harm caused by deception or misrepresentation does not just affect the financial aspects of companies, but extends to business model development and the long-term sustainability of companies, and can enforce legal sanctions.
Losing stakeholder trust is one of the consequences of fraud in the field of business models. Since customers are one of the most important elements of the business model and one of the main stakeholders, they are also the most affected by fraud. The presence of a fraudulent party in a sector may have negative impacts on other businesses in the sector.
Relationship damages are likely for those losing trust as a result of declining stakeholder confidence. When news of fraud is being aired, rebellious reactions are demonstrated by stakeholder groups that are outraged that their trust has turned into treachery. Deception of the claimants’ rights causes significant reputational damage. Recent business history is replete with stories of firms that gain revenue for a period of time, then collapse, with the spotlight bringing their deception to light. One of the main consequences of the publication of fraudulent reports is changes in cash flows for managerial profit.
Changes in future cash flows immediately upon the discovery of the financial reports will have a strong impact on the valuation of stocks. A company that publishes fraudulent financial statements and then overstates its profits will have to face declines in stock prices as future cash flows to the company are reduced. One company was recently one of the most well-known due to allegations of deception. The first reaction from leading TV programs was really enormous sales figures.
However, the situation was immediately complicated by the patients’ deceptions. It came out how they had undue charge-overpricing and had hidden exorbitantly important data. This factory was aware of the potential to claim compensation, and despite this, quotes continued a little while longer.
Financial Implications
3.1.1. Misleading financial projections: A cunning business strategy to improve the appearance of cash generation is to make realistic financial projections based on conservative assumptions. At the same time, businesses should provide unrealistic additional estimates to the stakeholders. To the extent that investors value a business based on readily available information, potential value decreases because of possible buying decisions based in part on overly optimistic estimates of cash flows. In addition, the revelations from financial statements may also significantly affect the reliability of information, the key transaction costs, in terms of monitoring and subsequent transaction costs of some common steps, reducing the flow of goods, or having different costs compared to conventional contracts.
3.1.2. Increased costs due to damaged reputation: Following a deception event, a business will attempt to restore previous levels of trust and the damage that has been inflicted. However, even if the business is able to prove its justified innocence in court, dealing with the wronged suppliers and subsequent potential lost contracts is a significant and unavoidable cost. The contractor is likely to spend large sums of money on marketing and advertising in order to maintain the customer base, and staff is likely to be taken off more productive parts of their roles for sales work.
It is also likely that employees in the marketing or sales department who are working in their dedicated roles will focus more on increasing the customer base than dealing with suppliers, leading to the potential for lost competitive advantage later. Although the initial impact of the deception may result in a decrease in the income statement under cost headings such as ‘restructuring’, on lifetime business canvas model views it should be classified as an intangible cost as it does not directly have a current period financial impact on the business.
Reputation and Trust
Can trust be the victim of fraudulent and deceptive behavior? Trust relations are constructed on the basis of specific assumptions, and deception has the power to undermine these assumptions. Decisions on whether to trust others are also closely related to the parties’ reputations.
Implications of reputation for trust include that: “the development of the continuing cooperative relationships that is the bedrock of the business world is attuned to the cooperation engendered by the trust process”; consequently, “a process of fraud detection that is generally believed to be adequate by the customer population, and is widely detected and reported by the mass media, will have catastrophic results for the firm, from which recovery is almost impossible.” What happens when the media or the courts convict firms in the court of public opinion? How important is trust in an economy driven by information flows?
When attempting to defraud customers or stakeholders who engage with the firm only because they trust it, the success of the deception is directly related to the longer-term profitability of the relationship. In abusing the trust of their customers, and failing to perform as expected, firms, their shareholders, and managers risk losing both customers and their final value. Deterioration of the reputation of any firm seen to trade with Lynn demonstrates that the most serious problem with regard to bad apples may sometimes not be one of ‘organizational degeneration’,
but of a wholesale poisoning of the ‘barrel’ caused or exacerbated by damage to the reputations of networks of stakeholders. The firms involved in the horsemeat scandal paid the price as soon as the news broke, with the stock market reacting severely when the extent of the deception became apparent. The economic losses of up to £300 million incurred during the horsemeat adulteration crisis in 2013 highlighted the potential economic fallout of deception for companies.
While the exact financial impact of reputational damage following crises, if any, is very difficult to determine, the majority of research indicates that market spillovers can be negative, and will sometimes have both short- and long-term financial consequences for companies. At minimum, there is likely to have been material costs associated with recall and disposal—and with stock price. The long lead times between investment and return may make it difficult to determine the economic impacts, but certainly affect decisions on investment in the future.
A report stated that almost a third of the people surveyed had stopped eating processed meat in reaction to the crisis. Fast food restaurants even refused to serve any meat in the weeks following the scandal. The losses include the famous brands of frankfurters, each of whom was reported to pull big business in order to construct a new ‘production method’ and return to the shelves after an 85-year-old body actively trying to rebuild investors’ trust in the firm’s product.
Also hitting a 12-year lowest share price of £3.18 was the UK’s Premier Foods, which owns several well-known national brands. Reached by the crisis, consumers had begun “stockpiling cheap meat” as a consequence of loading partially easy-to-prepare foods deemed illegal to kosher Jewish people and halal Muslims. At the time, the crisis struck ‘at the worst possible time’ from a financial view, as the global beef market was already suffering from the horsemeat scandal due to overproduction that was causing a 4.8% decrease in prices as of late 2012. A group renowned mainly for household consumer items was also hit.
Strategies to Mitigate Deception
In conclusion, it is useful to specify further strategies that can help to mitigate the risk of deception with respect to value creation using business canvas models. Again, we recommend focusing on the culture of the organization and on the formalization of ethical guidelines and considerations within business processes as part of the business canvas.
It is suggested that in order to create an ethical culture, an organization has to become more transparent, recognizable, and accountable to its stakeholders. For example, by treating them with integrity and dignity. Trust among the partners involved is another critical point that is based on effective communication. In addition, regular audits and ethics assessments have to be set to minimize the opportunities for unethical behavior. This, of course, requires managers to commit to stable standards, ethics, and integrity.
Deception risks and strategies to mitigate them. For example, training programs can be beneficial: to increase trainee sensitivity to business ethics issues in general, and ambiguity about ethical behavior in particular; and to de-demonize concerns about whistle-blowing and formal protection for potential whistle-blowers. Each contribution has its own focus, but by being proactive, they can identify risky aspects within a company or society that are or are not (yet) being regulated.
In this context, we propose a bottom-up approach that has not been addressed yet: to make support for ethical issues an integral part of routine business practices, starting from the ethical components of value creation. We cater to such support by introducing ethical guidelines into an organization’s core values and business processes. Supporting employees in making sound ethical decisions and behaviors while using the Business Canvas.
Enhancing Transparency
4.1. Introducing Transparency One of the first measures to be taken to deter deception is to enhance transparency. Transparency can have a deterrent effect on deceptive behavior, enhance accountability, and improve practices of corporate governance. It can protect the business owner by making takeovers, cheap buyouts, and liquidation less attractive to single investors because of the high level of accountability behind the business.
Transparency provides several benefits for the global business owner. A transparent business has open communication channels both internally and externally. Everyone in the business knows what is happening, and there is not a culture of “policies done behind closed doors.” Policies are discussed with employees, who are encouraged to share their concerns and thoughts, and problem-solve with them for a solution.
Additionally, a transparent business provides information, knowledge, tools, and guides to the public. This information is not just limited to problems with the company but also includes feedback about a product or service. In addition, going green is an initiative that is being marketed to the public. Sustainable businesses are more attractive to consumers. Every effort should be made to expand on this and to educate our community about the benefits associated with everything ‘green’. Transparency provides consumers with in-depth information about products.
In return, it builds loyalty and trust from consumers. To maintain and reinforce trust and goodwill, and to ensure it meets best practices, the global business owner should have full accountability for its actions in the business community. A transparent company fosters trust between those for whom the company is of interest. Several businesses have implemented programs and initiatives to be transparent for their stakeholders.
A list of core fabric suppliers has been released for the first time. A list of the core fabric manufacturers has been released, which represent the most sustainable providers in consumer-friendly production. A retail giant has launched a bimonthly magazine to inform customers about its ethical standing and environmental remediation. The magazine covers a range of issues, including fair trade, climate change, product traceability, and the organization’s charity.
A report states that it will provide at least four hours of environmental training to key internal suppliers. Through the use of high technology, it is now possible to better communicate with all parties, not only managers but also the workforce, suppliers, customers, shareholders, and other financiers. It is therefore possible to leverage transparency with high technologies to implement an ethical relationship with stakeholders.
Above all, a transparent company conveys integrity, which is an added value in a global market where the majority of businesses cannot differentiate themselves from competitors. Providing reports on the company website may not be enough to reassure stakeholders about the company’s integrity, but it certainly is a step in the direction of establishing a trustworthy relationship with potential investors or future employees.
There is always the potential to reinforce an ethical values chain through the innovative use of high technologies. This reinforces the view that transparency should be a routine consequence of a company’s integrity culture.
Implementing Ethical Guidelines
Ethical guidelines can assist in creating ethical thinking and actions among decision-makers within organizations. The underlying idea is that ethical guidelines provide a frame of reference that reduces uncertainty in decision situations and advises managers when and how to act in a way that is justifiable from an ethical point of view. A large number of organizations have therefore initiated efforts in the development and implementation of ethical guidelines.
In this cross-analysis, different pharmaceutical ethics programs are compared, and the effects are analyzed. It was found that working with these guidelines had brought many positive effects for the organizations, such as increasing communicative networks both inside and outside the organization. Since many such programs encourage top-level managers to function as role models in their ethical actions, it boosts an ethical image of the organization and authority.
Both internal and external stakeholders, such as employees, healthcare professionals, consumers, and investors, equally appreciate the availability and clear nature of these guidelines. Ethical guidelines can therefore be perceived as a deliberate function to secure and protect the overall corporate reputation via full compliance. This contributes to a level of corporate integrity.
However, a formal implementation of ethical guidelines does not in itself guarantee a lack of internal misbehavior. Building a climate of compliance with ethical guidelines is reported as difficult in the interviews mentioned. Training programs in ethical leadership and programs with immediate benefits for the employees and the company are necessary to secure compliance. Guidelines need to be carefully structured and prudently employed, or they may have the unintended adverse impact of harming organizational effectiveness.
In order to make such guidelines effective, top management plays a central commitment role in the implementation. This states that the ethical stance, although available in guidelines, has to be implemented by the managers in behavior as well.
Conclusion and Future Directions
It is safe to conclude that the strategic deception process is imperative in the construction of business model canvases and has a quantum effect, as the undisciplined entrepreneur is prone to gradually developing ethical fatigue and evoking the macroeconomic challenges as a descriptive basis for the consequences of the deception they could create through their work. This underlines the effect of ethical lightness, defeatism, and the overall normalization of imposture in the e-business ecosystem.
Whichever way one looks at the act of deception, therefore, a body of practical evidence shows that it could compound insider trading, tarnish the reputation of organizations, cause significant firm value loss, and bring about bankruptcies. In the above, we have painted a rather bleak picture of the consequences of the emergence of deception impacts on business activities. Results were depicted from a no-limit point of view, even though it is highly probable that by exercising clever forecasts and proper compliance rules, the effects of misconduct in strategy crafting could be mitigated.
Even though this text might have focused as much as possible on the consequences of the misdemeanors, continuous work could push the boundaries further by trying to forecast such events and suggest methods of avoiding the outcome more effectively. New areas of interest might be finding out where the ‘game of value’ might actually finish and thus provide a closing mindset for the deception process in the strategic design.
Businesses of integrity, seeking ‘sustainable value’, would certainly seek to avoid questionable or deceptive practices as a method of design template, in the hope that future discussion may go beyond and dwell upon such problems for a better understanding. Furthermore, due to the encompassing and rapidly changing nature of the IT-driven business scenario, the business models base may need to be adjusted in order to integrate the new tries and habits developed in search of a central ethical maturity.
In terms of future investigation, this would call for creating second-level models based on an ideal integrated networking of businesses and societal systems undergoing continuous changes, where the establishment of new ethical norms is highly demanded. In order to harmonically and ethically evolve, business systems will have to find common bases of collaboration and partnership, with ‘good practice’ leading the way beyond mere ‘best’ ones.
