What is the concept of Ethical Fading as discussed in The Infinite Game?

Ethical fading is a common issue in many organizations. One example is the Wells Fargo scandal in 2016, where employees created millions of unauthorized bank accounts to meet sales targets. This was a result of a high-pressure sales culture that prioritized goals over ethics. The implications were severe, including a damaged reputation, loss of customer trust, and hefty fines. Another example is the Volkswagen emissions scandal, where the company installed software in vehicles to cheat emissions tests. This unethical behavior led to significant financial and reputational damage. These examples highlight the long-term costs of ethical fading, which can far outweigh any short-term benefits.

Ethical fading challenges traditional business practices by highlighting the potential long-term costs of prioritizing short-term goals over ethical considerations. In traditional business practices, the focus is often on achieving targets, sometimes at the expense of ethical standards. Ethical fading occurs when this becomes normalized within an organization, leading employees to commit unethical acts under the false belief that they are not compromising any principles. This can lead to significant long-term damage to the organization and its customers, challenging the short-term focus of traditional business practices.