This is the final part of a four-part series of blogs by our January Guest Blogger, Paul Barnett, that will be followed by a live event to further explore and discuss the issues raised. Part One explored the problems associated with how we think, define, measure and account for value, plus some of the consequences. In Part Two he explained in more detail the impact of Valueism in relation to innovation. Part Three focused on the question of Value for Who? This part explores the concept of Value-focused Leadership
In the first blog post in this series which focused on defining value, which I suggested needed to be considered in broad terms, not only monetary value. And, in the third blog post I suggested in this way we can better deal with the issue of ‘value for whom’? In other words, value as it is seen through the eyes of each stakeholder group.
Defining value in broad terms is, of course, more complex than that adopted by traditional economics which tries to define everything in terms of price, and suggests we are simply motivated by selfish interests which result in a competitive play for power which can only be resolved by trade-offs. But the consequence, as Oscar Wilde said, is that we understand the price of everything and the value of nothing”. And, more recently, Martin Wolf, chief economics correspondent for the Financial Times observed, and Robert Kennedy famously said, it means we account for all “except that which we value most”.
Valueism has been the topic of this series of blogs, and along with it I introduced the concept of the Value Scheme – as a tool that can be used to make the value sought by each stakeholder group, but only if we define value in broad terms. This, in turn, facilitates a new approach to leadership. It means design thinking, or integrative thinking, can be applied to create value in ways that integrate the interest of all stakeholders. I prefer to call them all investors, to make explicit the idea they all have a vested interest in the future of the firm and seek a return on that investment.
In this view of the way leaders should lead, competition is replaced by collaboration in the continuous endeavour of cocreating the value that benefits all those invested in a positive-sum Win : Win : Win : Win approach.
The potential conflicts of interest are addressed head on in what Mary Parker Follett called ‘Constructive Conflict’ – different interests being articulated, understood and addressed on the design of better solutions for all. Not by trade-offs based on the simpler idea of utility maximisation which is a much less nuanced approach that can create big winner and big losers.
Valueism is based on the principle that “good ends can only be achieved by good means” as the philosopher Aldus Huxley said. The ‘ends’ do not justify the ‘means’ in many situations. Those good means do not only mean doing no harm. I suggest they mean searching for solutions that maximise the value created to as many stakeholder groups as possible. This is the means by which so much human progress has been made.
In a similar vein, the Financial Times Columnist John Kay in a recent article says, “The ability to engage in large-scale cooperative activity is what makes humans as a species unique. It is the secret of our success as a species. It is certainly the secret of the productivity of modern developed economies”. And he cites as evidence the scale of collaboration in the supply chain of Airbus. It is a particularly relevant observation to anyone involved in complex major projects, I suggest.
Whilst Valueism and the perspectives and approaches it advocates may be more complex than that of the economists, they are the only way to prevent recurring conflict, achieve sustainable, widely shared prosperity and a Civil Economy (a concept I introduced in the third blog).
The Value Scheme approach helps simplify the complex process to some degree. But let me now introduce the long-established rule of thumb that has existed in philosophy since ancient times. It is the concept of dignity. I believe it can guide all decisions towards better outcomes.
Dignity refers to the “inherent worth” of a person or thing, and even of the natural world. Valueism argues that value must take account of, and have respect for, the inherent self-worth of all stakeholders. Of people, the Universal Declaration of Human Rights says they have a right to dignity. It is the first of the thirty articles in the declaration, now seventy years old and ratified by almost every nation on earth. But we can extend the concept to decisions we make regarding the dignity of the environment, future generations, animals and so on.
In relationships with stakeholders, the concept of dignity can also be coupled with the long-established principle of reciprocity, so that we might also expect others to treat us with dignity. If both, dignity and reciprocity, were widely adopted by leaders, to guide their decisions and behaviours, I suggest we might get better decisions. This would also help restore trust in business and in our institutions. It would also enhance social cohesion, a key component in prosperous societies and of human flourishing.
Recently I referred to the Dignity Dividend that business might enjoy. But I recognised that current dominant approaches to leadership means we are far from realising these benefits, so I called for New Order Leadership as a way to reframe our thinking and approaches, and this will be the theme of a future Strategic Management Forum conference.
In conclusion, Valueism requires a new approach to leadership that measures value in broad terms, including an appreciation of, and respect for, the dignity, or ‘inherent worth’, of all stakeholders, and that includes the natural world and future generations. Only in this way will we achieve sustainable widely shared prosperity and human flourishing, which should be the measure we use, of the value creation capacity of all businesses and organisations and be the novel cause of strategic management. Perhaps it should also define the way in which the success of major projects is measured?
Interestingly Keith Waller, programme director for the Transforming Construction Alliance (the organisation delivering the Core Innovation Hub for construction), makes a very similar leadership call for a review of what value means in a recent article. He also argues value needs to be assessed based on a broad definition of value and viewed through the eyes of many stakeholder groups. They are already engaging government departments in this discussion and plan events to explain how industry can engage to help us kick start this transformation. This sounds like great progress, but the “what” needs to change discussion needs to be accompanied by the “how” to change discussion. And I hope Valueism and the Value Scheme might contribute to that thinking.
Paul Barnett is Founder & CEO of the Strategic Management Forum and will be delivering a series of Value Creation Masterclasses during 2019. The Strategic Management Forum is also hosting Scenario-based Strategy Masterclasses by Paul de Ruijters.
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