One of my bread and butter is to help organisations develop their strategy, design an implementation roadmap to execute it and run the project until they can carry on by themselves. Along the way, I have accumulated a vast trove of real life experience not found in text books, and with enough time to reflect on them, I have been able to understand the principles and dynamics of what i observed. This series is to share what I have learned in my career about strategy setting with you. This is the second article in the series; the first one was on the intent for the strategy.
Understanding the values of a company or, more accurately a leadership team (it is an interesting argument whether a non-human entity like a company is capable of having values which survives its human members), often provides the framework for the the way decisions are made in the organisation and sometimes is even indicative of the decision itself.
Based on the same set of facts, I find that people tend to make decisions differently because of two factors: different priorities and different risk adversity. I will cover the role risk-adversity plays in a person's decision-making in a later article in this series.
Let's look at different priorities first. Priorities in itself may differ for two reasons. First there is a person's role in the decision-making: a sales manager would look at a decision with a view to increase sales, whereas an accountant will look at a decision from the profitability point of view. At the CEO or the leadership level where all corporate interests converge, however, there will be no differentiation in the role as it is meant to be all encompassing, unless specifically delegated.
The other reason for differing priorities is the value system that shapes what the person think is important to their sense of right and wrong. The current Russian invasion of Ukraine for instance have left some small businesses refusing to do business with Russia to protest the invasion (not using Russian vodka, for instance), even if they have little fear of boycotts from consumers angry at an unpopular invasion. People are often willing to endure financial loss in order to pursue their values, whether by suffering a higher cost or by restriction of their markets.
Economists would have us believe in a homo economicus, who makes decisions for their own self-interest, in a rational manner and based on all available facts . While I accept that humans make decisions using a simple cost-benefit analysis model, the limitations of economists' tools somewhat weakens their model. Economists' tools of the trade are largely based on calculations, mathematics and formulas, all of which uses numerical inputs to derive a conclusion. Unfortunately not all factors are quantifiable, some of which we just don't have the means to do so and some of which are unlikely that we will find a way to quantify accurately. Factors which cannot be quantified are often left out of economists' formulas. For instance, a person may place great value on his value system, where neither the value of the value system or the output of the value system can be quantified in monetary terms. However it is definitely of value to the person's self-esteem, which cannot be quantified. The value of this increased self-esteem brought about by a furtherance of a person's value system never finds its way into economists' calculations.
Values therefore has a value to be input into your cost benefit analysis; it is just not a number.
Gleaning values
Values are born out of our cultural background, our upbringing, our education and our experiences. Values can be received or inferred, meaning that they could be passively accepted or absorbed from our environment, or arrived at from one's own education or experience. How much about our values are received or inferred could be due to a persons' intellectual willingness, introspective nature, and learning environment. As such, it is often necessary to understand a person's factors of background, upbringing, education and experiences to understand what make a person tick, what drives them, and what their values are.
This is not to say that we can work out a person's values without any direct observation of the valley system in action. Understanding the factors that affect a person's values really serves to place them in context and to a certain extent, validate our understanding of their value system. We have to ensure that we do not get carried away with an intellectual exercise to ascertain a person's values from his background factors, forgetting that it is a real life person with real life experiences that is being analysed.
Ultimately, we know a person's value system by listening to them talk, listening to what they have to say about what is interesting or important to them, whether it be related to work or not. As a person is an integral person, their values with regarding work cannot be divorced from their values in the life that they choose to lead. We should always be open to additional information that informs our views on the value system of the person we seek to understand.
Value are often aspirational and listening to a person sometimes tells us more about what a person think of themselves than what they would actually do. We can ascertain the difference between the values and the reality of the person by discussing actual plans of what they would be doing in specific circumstances rather than ask about the guiding principles behind those plans. Nevertheless, whatever the divergence between values and reality, values come first as they often are the measures by which a person measures for success in their own life.
Interpersonal dynamics
Once you introduce a second person into mix, the interpersonal dynamics could create an interesting collection of value sets based on the dynamics between the persons involved. And you could end up with more than one value sets. For instance, you could have a stated one that the team intends to showcase to the world, and an implied one that the team intends to execute in a practical sense, both these in addition to their own personal value set.
Most people in the team are aware that they may need to subsume their personal values to develop the values set of the group as a whole. This process may be explicit or implicit. It may be explicit in that the team comes together to discuss what the value set acceptable to everyone or it could be implicit when certain actions gets accepted through repetitions until it becomes the norm. If a particular value of an individual is not within the accepted norm of the group the individual tends to suppress the expression of that value in order to support the group value set as long as it remains within acceptable parameters to the individual. This is a trait that humans have evolved to build group cohesion which has served the species well. In the right hands, the tension arising from the differences between an individual's values and that of the group can be creative.
Most people understand, at least implicitly, that values are aspirational and sometimes may not be practical in certain circumstances. We make compromises with our values sometimes on a daily basis. It could be something as simple as a white lie (which contravenes our self image of being truthful and honest all the time), or occasionally, something as complicated as whether to make career-threatening move to defend a colleague who is in the right. We make these compromises, often on the fly, weighing out between the value to us of that particular value being tested and the value of 'living to fight another day'. As individuals, such considerations are slightly easier to make (even if still difficult) as there is more clarity of what is more valuable to us. As a team however, imperfect communication often render this decision-making process much more complicated. Smart teams (or realistic teams) would seek to debate these trigger points early so as to develop the never-cross red lines that they would have as a team. It is not about being two-faced, but rather being realistic of human limitations and being prepared as a team.
So, do you think you are clear on what your values are and how you would respond in specific situations? Have your organisation values been tested against real-life situations rather than aspirational statements? Are you aware of where the tension points are between the personal values of individuals in your leadership team and the group values as whole?
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