In the last few weeks, the reports of sexual harassment and inappropriate behavior have been coming out fast and furious from some of Silicon Valley's most celebrated firms, from ride-sharing service Uber to investment firm Binary Capital.

The commonality? Men with access to power and wealth and a well-known brand have used their status to take advantage of those who are lower on the food chain.

Effective business leaders need more than vision and grit

In the start-up ecosystem, we've gotten into the habit of revering particular characteristics. Brilliance and innovation, to be sure, as well as perseverance and grit, focus, and vision. And it's true: these qualities can successfully expand the horizons of what's possible and jumpstart a new business or industry.

But recent events have shown us that that alone may not be enough. In order for entrepreneurs and their creations to reach their full potential, they must also have integrity.

Integrity is defined as "the quality of being honest and having strong moral principles." It encompasses being a person of good character, being fair and sincere, and having a strong sense of ethics.

Not operating with integrity brings its own risks

A lack of integrity alienates employees, partners, and customers, who are all vital to the growth and longevity of a business. It could push you toward cutting corners and taking shortcuts, which usually result in short-term gains but are harmful in the long run.

It may even put you on the wrong side of the law, adding unnecessary risk to an already high-risk venture. And all of this can force a major reallocation of precious resources--whether it be human, financial, or otherwise--toward managing the inevitable fallout.

This is particularly relevant today, when whistleblowers, disgruntled former employees, and others who feel wronged have countless forums through which to publicize their complaints. Uber's string of bad publicity that ultimately led to founder Travis Kalanick's ouster began with a blog post on a personal website. A bad review of a company, its culture, or its leadership on Owler or GlassDoor could very well affect future recruitment and operations.

But the foundational reason for operating as a leader of integrity is not because you may get caught. Guiding your team and business with principles, ethics, and honesty is a sound business practice.

Integrity is essential for effectiveness and success

According to a study by the Center for Creative Leadership, integrity is crucial for top executive leaders, and the key determinant of their success. The challenge is that, as leaders become more powerful, they have more trouble with self-awareness and are more insulated from accountability and honest feedback.

The study suggests a simple way to evaluate your behavior: "A quick test of integrity is to ask yourself if the behavior you are about to engage in would be approved by your mother, grandmother, or primary school teacher."

Being a CEO or company founder of integrity isn't always easy. You may find yourself passing up deals that would have been great for the bottom line but didn't pass the above smell test. You may have to swallow your own pride, taking less credit while allowing others to shine.

The good news is that, in a start-up environment in which there are far too many things that a company founder can't control, behavior and character are actually things he or she can control. And for the long-term sake of the business and his or her well-being, such an investment is completely worth it.

Published on: Jul 20, 2017