Smith notes that the meaning of the plural values is something very different from the singular value: “Values are estimations not of worth but of worthwhileness. Unlike value, talk of values ignores money; it opines on timeless appraisals instead of transient ones. There is a deep backward- and forward-looking quality to values. If value is what makes us wealthy, values, we assume and regularly assert, are what make us human.”4
Distinguish the Different Types of Values
When Smith argues that society has lost sight of values, he is talking of ethical values. However, even people or firms whose conduct doesn't appear to reflect ethical values have values of some kind. Four kinds of values are at play in organizations today:
The values of the robber barons
The values of the hardball strategists
The values of the pragmatists
Genuinely ethical values
The Values of the Robber Barons
At one end of the spectrum are organizations run by robber barons—firms whose only value is to crush the competition by whatever means. For robber barons, nothing is too precious to be set aside for the sake of winning—even legality. This might include Andrew Carnegie sending armed Pinkertons and gunboats into mill towns to fight the unions, or the predators at Enron creating phony partnerships to bolster the stock price. The robber barons have no values other than bare-faced greed. They practice a kind of storytelling—lying and cheating in breach of the law—that has a long and regrettable history.
The Values of the Hardball Strategists
Only half a step away from the robber barons are the hardball strategists celebrated by George Stalk Jr. and Rob Lachenauer in their Harvard Business Review article, “Five Killer Strategies for Trouncing the Competition.” Stalk and Lachenauer provide a remarkably clear statement of hardball values.5 Hardball strategists avoid illegality, but in all other respects they pursue a single-minded focus on winning.
According to Stalk and Lachenauer, in the dog-eat-dog world of business, hardball strategists disdain “squishy issues—leadership, corporate culture, customer care, knowledge management, talent management, employee empowerment and the like.”6 These strategists play rough and don't apologize for it. They stay just within the lines of legality, but venture closer to the boundary than others dare. Where feasible, they don't hesitate to bend the law to their advantage.
Hardball strategists take pride in being lean and mean. They are not willing to just hurt their rivals: they enjoy hurting them and watching them squirm. Hardball strategists may on occasion refrain from taking action that overtly hurts competitors, even if it is strictly speaking legal—not because it is wrong but rather because it might elicit the wrath of regulators or special interest groups and so get in the way of winning. In the end, for hardball strategists as for robber barons, winning is everything. It is not what is right that matters; it's what you can get away with.
For the hardball strategist, values are not something to be lived on a day-to-day basis but rather some kind of management gadget to be introduced like new accounting software or a new business process—the sort of thing to be continued if it adds to the bottom line or discarded if it doesn't. Hardball strategists are the heirs of Machiavelli: they live in an amoral world and, like the robber barons, have no worthwhile values to transmit.
According to Henry Mintzberg, hardball strategists represent a greater threat to society than robber barons do: “Criminality is the tip of the iceberg, easy enough to address in courts of law once exposed. The real problem is the legal corruption—the antisocial behavior below the surface of public awareness yet above the letter of the law. That is far more insidious, not only because it is more difficult to identify and correct but also because we are now so inundated by it.”7
The Values of the Pragmatists
Then there are organizations that are pursuing instrumental values, that is, values that are a central part of the organization's business strategy. These organizations practice their values year in and year out. They live them on a day-to-day basis. Often the organization has been like this from the outset. Take, for example, the discount supermarket chain Costco Wholesale Corporation:
Costco pays its workers more than Wal-Mart's minimum wage and gives them health insurance. It passes on cost savings to its customers, even when it has a chance to make windfall profits. That, coupled with a business strategy that includes a mix of higher-margin products, enables Costco to keep its labor costs lower than Wal-Mart's as a percentage of sales. The fact that the CEO, James Sinegal, the founder of the company, takes only a modest salary, and sticks to his course despite criticism from Wall Street suggests that he really does believe in the values of the firm as a way of life.8
The Costco values constitute central elements of its successful enterprise. They are instrumental to the success of the business model. Thus, if Sinegal—or his successors—were to stop valuing employees and start introducing the penny-pinching, downsizing, outsourcing, pension-threatening practices of some other companies, the business model itself would be undermined.9
Jim Collins and Jerry Porras in Built to Last argue that a key step in building a visionary company entails having a set of core values—enduring tenets that go beyond operating practices and are not compromised for financial gain or short-term expediency. According to Collins and Porras, the content of those tenets—which might include, in the case of Philip Morris, freedom of choice to smoke cigarettes—is less important than the fact of having any values at all. Their research indicates that being a hardball strategist isn't enough: instrumental values are a key element of long-term organizational survival.10
The range of issues on which it may be necessary for a successful corporation to have instrumental values has tended to grow over the past several decades. Thus, the movement known as corporate and social responsibility has been successful in getting some organizations to take a look at the implications of corporate responsibility. The public outcry led by Greenpeace at Shell's proposal to sink the Brent Spar oil rig in the deep waters of the North Sea when it was no longer needed led to major inroads into Shell's business in Europe and major changes in the way Shell subsequently approached environmental issues.11
Nike was arguably no different from a thousand other firms that market high-end consumer products through cost-efficient global supply chains, but the sweatshop labor practices of its contractors presented an attractive target to nongovernmental organizations (NGOs), which were able to generate significant adverse publicity. Nike went through a sequence of positions, going from initial defensiveness to legal compliance to embedding the issue in managerial processes, then integrating the issue into the company's strategy as an element of competitive advantage, and finally moving to a position of leadership in promoting broad industry participation in universal labor standards.12
NGO campaigns like these have led to increased reporting on nonfinancial issues.13 Although it may not be clear whether good environmental and social practices always create value for shareholders, it is now evident that bad ones can destroy it.14 Since the brand is often the most valuable asset on the balance sheet, firms are particularly vulnerable to bad news about their values. British Telecom, for instance, calculates that its social and environmental performance accounts for more than a quarter of its overall business and reputation, which is the second biggest factor driving change in its customer satisfaction rates.15
Genuinely Ethical Values
It is also possible to envisage a kind of organization that is driven by explicitly ethical values as a principal motivating force, values that go beyond what is necessary for the business strategy (such as winning in the marketplace, innovation, and customer focus). Ethical values imply viewing the staff of the organization not simply as a shifting population of individuals that haphazardly come and go as the result of unpredictable market forces that bear on the organization, but rather as a community of human beings to whose welfare they are reciprocally committed. They imp
ly treating their stakeholders as ends in themselves, not merely as a means to make money.16 They entail treating the environment not merely as something to be exploited for profit but as a heritage to be protected.17 Being socially and environmentally responsible isn't simply a trick of predicting which issues are going to be politically significant; it involves acting on something that is lived year in and year out—something worthwhile in itself. Such companies could lay claim to having values that go beyond what is instrumental for winning in the marketplace—values that possess a genuine moral basis.
Are there examples of organizations pursuing genuinely ethical values? Some suggest that Southwest Airlines represents such a company. Its values are embedded in the organization—part of its fabric, its very strategy. The values are employee-centric and focus on providing value to customers while also having fun. Over several decades, chairman Herb Kelleher has won the trust and loyalty of his staff through consistently effective and caring behavior.18
Starbucks is another organization that has styled itself as socially responsible. It purchases and roasts coffee and sells coffees and other beverages in a network of some forty-five hundred retail stores around the world. From the outset, it has committed itself to providing a good work environment for a diverse workforce and to contributing positively to the community and the environment. It has extended health benefits to both staff members and their partners, and it provides financial aid to staff for extraordinary needs not covered by insurance, as well as stock options for staff who work more than twenty hours a week.19
Google set out to “do no evil,” a principle that is more easily articulated than implemented. Should Google agree to censor its search capabilities to users in China? Should Google take advantage of the massive data that it possesses on the habits and inclinations of its users and use them as a marketing tool? Google continues to agonize about these issues.20
Southwest, Starbucks, and Google have their critics. Some would say that Southwest Airlines isn't consistently caring toward all its staff. NGOs have urged Starbucks to do more to contribute to a sustainable environment. Others argue that Google is losing its moral compass. But these three companies do appear to have an explicit commitment to doing the right thing and to be delivering in some areas on that commitment. They represent a contrast to many other companies where no explicit effort to pursue an ethical approach is evident.
What's the difference between ethical values and instrumental values? One simple litmus test for distinguishing whether an organization's values are moral or merely instrumental, that is, essentially amoral, is to observe the language in use in the organization, which can shed light on whether the organization views its own staff merely as means to its ends or also as ends in themselves. If, for instance, people employed by the organization are referred to as “human resources” rather than “people,” or “staff,” this can indicate that they are being viewed within the organization as elements to be measured, developed, mined, exploited, and ultimately disposed of, without any sense of reciprocity. Other indicative language includes describing laid-off staffers as “fat” that has been trimmed or “deadwood” that has been cut.
Ethics in Action
A genuinely ethical community has three basic components. The first is trust: the general expectation among members that their fellows will behave ethically toward them. The second is loyalty: acceptance of the obligation to refrain from breaching one another's trust and to fulfill the duties entailed by accepting that trust. The third is solidarity: caring for other people's interests and being ready to take action on behalf of others, even if it conflicts with personal interests.21
Can organizations stick to ethical values and still survive in the marketplace? One entrepreneur who set out on such a path was Anita Roddick, the founder of The Body Shop. She grew up in a large Italian immigrant family in a small town in blue-collar England, where she was inculcated with an intense work ethic and an irreverent, entrepreneurial spirit. Though she admitted to having opened her first Body Shop as a way to make ends meet, Roddick developed the company around her belief that it is more important than ever before for business to assume a moral leadership in society. Her concern for protecting the environment and indigenous people's cultures, and her vision of all of life as interconnected, for many years inspired the growth of the company. Roddick exhibited passionate activism in building community in her determination to make it as a woman and succeed in business.22 Roddick died in 2007; time will tell how consistently the firm continues to pursue her philosophy.
Ben & Jerry's was another organization that many saw as following an ethical approach to business issues. But now that the firm has been taken over by Unilever, some, including the founders of the company, wonder whether it is still pursuing genuinely ethical values or whether it has been engulfed by the instrumental values of its parent company.23
Privately owned organizations like Tom's of Maine may find it easier than publicly held organizations to stick to ethical values.24 In 1974 Tom Chappell and his wife, Kate, used a $5,000 loan to found Tom's of Maine, a company that makes products using only natural ingredients. By 1981 the company was registering $1.5 million in sales. Despite this success, Chappell was unhappy; he decided to recreate his company in a way that would encourage respect for the individual, the community, and the environment. Tom's of Maine became the leading producer of environment-friendly personal care products in the United States, and Chappell used his personal quest for meaning as the basis for a new management style that aspires to combine spiritual values with commercial success.25
Companies with an explicit commitment to implementing genuinely ethical values are rare today. Their very rarity corroborates the concerns mentioned at the outset of this chapter: it's possible that a whole generation has all but forgotten what having ethical values might entail.
To the hardball strategists of Wall Street, an organization consistently committed to implementing ethical values is acting stupidly and exhibits an insufficient commitment to enhancing shareholder value. Any publicly owned company that overtly pursues such a strategy risks being assessed as underperforming, and thus becoming a target for either removal of the management team or a takeover so that new leadership can be inserted to focus more sharply on maximizing shareholder return.26
Writing in the Harvard Business Review,27 Roger Martin suggests that the era in which the purpose of every firm is to maximize shareholders' value is coming to a close. Martin notes that pursuing the maximization of shareholder value as a goal suffers from inherent internal contradictions. The harder the firm pushes to increase shareholder value, the more likely it will make moves that actually hurt the shareholders. Martin argues we are now entering an era of customer capitalism. In this new era, the purpose of a firm is to serve clients. If firms do that well, Martin argues, benefits for shareholders will follow.
Leaders thus need to think clearly about what kinds of values they are talking about before they start to use storytelling as a tool to transmit them. Declaring values that are not consistently acted on may be worse than not declaring any values at all.
Distinguish Personal from Corporate Values
People have their personal values and organizations have their corporate values. Sometimes they are the same, say, accountability or equality. Sometimes they are different, as with creativity or forgiveness. Sometimes personal and corporate values have a substantial overlap, and the overlap is mutually reinforcing. Sometimes there is not much overlap at all. The discrepancy may arise because employees have not yet understood or accepted the values the corporation is pursuing. It may also arise because of a mismatch between the limited instrumental values that the corporation has adopted and the more extensive ethical values that often drive individuals. Whatever the cause, lack of overlap between corporate and individual values may generate dissonance. In the end, each person must find a personal relationship to the organizational values that are important to the company, whether those values are s
imilar to or different from his or her own.28
Clarifying values, for instance in a workshop on the subject, can lead people to understand how they are personally connected with the organization's values—or not. This can help clear the air and enable individuals to decide what to do. Some individuals may, on becoming aware of the lack of overlap between personal and corporate values, decide to devote themselves to the company and its goals, adjusting their personal values to coincide with those of the company. Others may opt to move on. The dissonance between their personal and the corporate values may be such that they realize why they cannot stay with the company. They knew they were unhappy but didn't know the reason. Now it is clear to them. This can be a win for both the individual and the corporation, because the employees who are not aligned with the company's values leave, while the ones who stay may have a deeply felt connection to the company.
The Leader's Guide to Storytelling Page 15
