Something Greatly Determines What You Do, Your Values: Recommended Reading

Bertini, M. and O. Koenigsberg (2020). The Ends Game: How Smart Companies Stop Selling Products and Start Delivering Value. Cambridge, MA, The MIT Press. [more about the authors]

Carney, M. (2021). Value(s): Building a Better World For All. New York, PublicAffairs. [excerpt]

Guillén, M. (2021). Motivation in Organisations: Searching for a Meaningful Work-life Balance. New York, Routledge. [open-access version]

Polman, P. and A. S. Winston (2021). Net Positive: How Courageous Companies Thrive by Giving More Than They Take. Boston, MA, Harvard Business Review Press. [booksite]

Most everything we do, if not everything, is guided by some principle. Whether we know what that guiding principle is or not, doesn’t stop it from guiding our actions. On a street, we have guardrails to help us stay on the road or lines to stay in our lane. We have incentives at work to guide us toward specific activities. We say nice things to someone because it is part of our culture. These are all values.

The task of identifying your values is an ever-present task, in all cultures, at all times. Because they can be different for each of us, and they can change. I recommend a few recent books exploring this topic.

Professor Manuel Guillén develops a robust map for motivations, providing a matrix of extrinsic, intrinsic, transcendent, and religious motivations, each with forms that address the useful, pleasant, moral, and spiritual good. This roadmap guides how you can explore your set of values, in different contexts. For example, which values most influence thinking about a meaningful job versus a meaningful career or a meaningful calling? Motivations in Organizations connects each of these values to a history of where people have developed their understanding of that specific value, as well as exercises for applying this to your life today.

Economist Mark Carney explores different ways of looking at values, from the political to the economic, from finance to philosophy, disentangling what we mean when we say something has value or our values. “Values represent the principles or standards of behaviour; they are judgements of what is important in lfe…Value is the regard that something is held to deserve–the importance, worth or usefulness of something. Both value and values are judgements. And therein lies the rub” (p4). He applies his exploration of value(s) to three major, current crises: credit; COVID; and climate, seeing them as crises of values. How people respond to these crises “could begin to recast the relationship between values and value.” Having served as the governor of the Bank of England, Carney brings depth and precision to his assessment of the values driving the value(s) crises.

Professors Bertini and Koenigsberg look at value and values from the business perspective, exploring the importance of understanding another’s values to know how to generate value for them, which ultimately generates value for the business. Instead of focusing mainly on the outputs of the activities you do in an organization–the means–they argue for also focusing on the actual outcomes generated for the customer–the ends. Customers want nutrition, not groceries. They want better health, not more medical care. This book highlights advances in technology that let you know how and where your customers are using your products and services, and how well they are performing. With this information, you can turn your “means” products into “ends” services. The key added element here is actively getting the other’s feedback, to understand what they actually value, and not just what you think they should value. For many groups, this is a radically different approach. The books shows how some organizations have implemented structures and processes that allow them to make this shift.

Paul Polman and Andrew Winston ask a broader question. How would one need to understand their ecosystem to be able to inquire into the values of many different stakeholders? Is it possible to develop a strategy that creates value for multiple stakeholders at the same time? Leaving them better off than they started? They argue that “five core principles that center on responsibility will take company performance to a new level…(which when) fully embraced separate the net positive companies from the merely well-run and well-meaning businesses. (1) Ownership of all impacts and consequences, intended or not. (2) Operating for the long-term benefit of business and society. (3) Creating positive returns for all stakeholders. (4) Driving shareholder value as a result, not a goal. (5) Partnering to drive systemic change. Five guiding principles, with plenty of examples of how Polman tried to implement them while CEO of Unilever.

Four recent books on values that generate value, for individuals and for organizations today. Well written, clear, and relevant today.

Not Being Human-centered Destroys Value, for Everyone: Recommended Reading

Hamel, G. and M. Zanini (2020). Humanocracy: Creating Organizations As Amazing As The People Inside Them. Boston, Harvard Business Review Press. [Read chapter 1 for free here.]

The logic is simple. And so is the math. Treat people as less than what they are, and they produce less. Treat people like the creative beings they are, and they creatively generate. Start with a No! towards people, and your results will be net-negative: the system is worse off, with more energy extracted than added. Start with a Yes! towards people, and your results will be net-positive: the system is better off, with more energy added than extracted. Always.

The numbers are now showing this. Everywhere. On the leading edge of showing this, Hamel and Zanini provide the numbers with the whats and the hows to do it. What drives the numbers towards net-negative or towards net-positive. Most of the findings aren’t surprising: it is more surprising that they are findings. And, the findings are very timely, as leaders everywhere struggle to figure out how to manage big changes from a human-centered approach.

In Humanocracy, Hamel and Zanini start by busting the myth that people are resistant to change. “Fact is, we’re change addicts. We have an insatiable appetite for the new. All those changes that are roiling in the work, they’re our doing. We are the agents of upheaval” (p.8). It is not the people who are resistant to change, it is the organizations. Throughout their book, they describe why they think institutional inertia keeps organizations resistant to change and the huge costs that come with that resistance. At the core of their findings, “our organizations are less than fully human, because they were designed to be so” (p.17). “In bureaucracy, human beings are instruments, employed by an organization to create products and services. In a humanocracy, the organization is the instrument–it’s the vehicle human beings use to better their lives and the lives of those they serve. The question at the core of bureaucracy is , ‘How do we get human beings to better serve the organization?’ The question at the heart of humanocracy is, ‘What sort of organization elicits and merits the best that human beings can give?'” (p.20).

Numbers from their book. “We estimate there are 13.45 million managers and the equivalent of 9.5 million employees in the US economy who are producing little to no economic value…Excising bureaucratic deadweight would raise US GDP per employed person from $127,000 (the figure for 2018) to $148,000…If each of these individuals contributed $148,000 to the economy, rather than zero, GDP would increase by roughly $3.4 trillion” (p.59). A big number. Independent of whether GDP is a good measure of human creativity, the point is that treating people as creative beings would unlock huge potential.

In ecosynomic terms, humanocracy shows how to move an organization FROM focusing only on extracting value from others to achieve its own outcomes TO an organization that recognizes the capacities its people contribute and focuses on unlocking their learning and connection to generate far greater value, for everyone. While this blog describes many examples of organizations that are highly developed in engaging the best of humanity towards deep systems transformation, evolving mission-driven impacts, Humanocracy goes for the jugular of the vast majority of organizations that still disengage most of their people, showing how to take the critical and necessary first steps, with lots of examples of practices, with the numbers to back it up. This is a huge first step. I highly recommend this book.

Lopsided Value Generation: Who Is Better Off?

Look, she’s doing well. She made lots of money. Look, they are doing well. We helped them. Are they better off? How do you know?

One way to assess whether someone is better off is to see how much is flowing into their lives. These are inflows. Another way is by looking at what they are able to do, which you can assess through how much is flowing out of their accounts for products and services, for experiences. These are outflows. Whether they are better off can also be looked at by the wealth they accumulate, how much is in the stock of money, things, or experiences they have. This stock goes up when the net flow (inflows minus outflows) is positive–more inflows than outflows–and goes down when the net flow is negative–more outflows than inflows.

While the three ways of looking at better off might all be valid, they tell different stories. Based on what story you want to tell, you would use a different one of these three. They are better off because we gave them inflows. Inflows sound good. More is better. And, to know if someone is better off from the inflow, you need to know their outflow as well. For example, we helped them get 1,000 calories of food. Good. More is better than none. We can also see that these 1,000 calories are to feed 4 people for a day. They need to consume 8,000 calories (4 people times 2,000 calories/day/person). The net flow is still very negative–1,000 in and 8,000 out. They are better off with the inflow, but not enough to cover the outflow. Likewise, we can focus on the outflow narrative. They purchased 8,000 calories of food. Good. Did they have the inflows to cover that, or did they deplete their reserves to do that?

While both the inflow and outflow narratives seem powerful, they are usually partial narratives, often to the benefit of the storyteller. A fuller narrative looks at the stock with the inflows and outflows. They are better off when the stock stabilizes or increases, improving their resiliency, their reserves for a future day, and when their access to inflows is greater than their outflows. To summarize, the stock increases when the net flow increases. You are worse off, now and going forward, when that stock decreases. You are better off, now and going forward, when that stock stabilizes or increases.

That is a focus on the individual. Expanding the view to include multiple individuals, a different question arises. When these individuals interact, who is better off? We can look at their stocks, their accumulations of inflows and outflows.

Most better-off narratives focus on the inflows, outflows, or stocks of one of the individuals in the mix. Rarely do they focus on the net effect of the interaction on all of the individuals in the mix. They avoid telling the fuller story. Look at the massive amount of press on the accumulated wealth of the rich. Or how they helped the poor. All of these narratives focus on one of the inflows or outflows or stocks, not on the whole mix.

To know if people are better off because of someone’s actions, a simple thing to ask is whether all of the individuals in the mix are better off. At time zero, this was what was in each person’s stock. After the action taken, at time one, this is what is in each person’s stock. If all of the stocks have increased, everyone is better off. If one or more of the stocks have increased, and others have decreased, then that value was taken from one and given to another. It was redistributed. The total amount of value in all of the stocks stayed the same, moving some from one person to another. This is extraction. People don’t like extractive narratives, so they tell the story of how one person’s stock increased. They don’t tell you where it came from. Did it come from an overall increase in everyone’s stock or by extracting it from one person’s stock?

A straightforward calculation of the total amount in everyone’s stock is to look at the Total Value Generated for those involved in the ecosystem of the interaction. Sum up the stocks of all those involved at time zero. Sum up all of the stocks at time one. Is the value generated in each person’s greater? Is the total sum of the value generated greater? If yes, then everyone involved in the interaction is better off. If no, then someone gained at the other’s expense.

It is often challenging to know which scenario is playing out in a story you are being told. More value generated for all or extracted from some for others. Often this is because they are telling you about specific inflows or outflows or stocks, and not about the net effect on all involved. An easy way to do this is to talk about outputs instead of outcomes or impacts. This is what we did, our output. It hides what happened, the outcome, what that did, the impact of the net effect on everyone involved in the interaction.

Northwestern professor Gillespie and Harvard professor Bazerman formulate this as parasitic integration, where a win-win agreement contains losers. The net effect of the interaction is lopsided. Someone gains from the others. It might be a win-win for some, but not for all.

By asking the question of the Total Value Generated, you are providing a principle that suggests that a person’s actions within any ecosystem can leave the whole ecosystem better off. Instead of accepting the narrative of how someone is better off because she made lots of money, you can ask the question of whether she is better off because what she did increased the value for everyone involved.

This could change your understanding of what actually happened. Did you buy the food because it was cheap, or was the food cheap because the people doing the work were underpaid and the quality of the food was very low? Or was the food cheap because the company figured out how to profitably pay the workers well for high quality food, in a way that was less expensive to you. Were you and the company lopsidedly better off, while the workers were not, or was everyone better off?

By measuring the Total Value Generated, you can look at the Value Generated for each person (the net effect on their stock of their inflows and outflows) and for the whole of those people involved in the ecosystem. If the Value Generated for each increases, they are all better off because of what you did. A more efficient interaction.