General: The Business of Values and the Values of Business

From Adam Smith to Milton Friedman, there has been a narrative that business is the by-product of individuals and corporations, voluntarily exchanging goods, services, and monetary devices of value. Milton Friedman’s classic “Lesson of the Pencil” is a great example of this:

https://www.youtube.com/watch?v=R5Gppi-O3a8[1]

“Literally thousands of people cooperated to make this pencil. People who don’t speak the same language, who practice different religions, who might hate one another if they ever met.” [1] A beautiful thing when you think about it, all because of what Friedman characterized as the impersonal price system. That’s perhaps an example of people putting aside their values to achieve something that makes everyone better off.

While people and corporations may put aside their values in producing goods and services, consumers are increasingly not. Whether it is the purchase of organic foods, chocolate that does not use child labor, free-range eggs, electric cars, or the refusal to watch a television show centered on a celebrity that has offended broadly held values. In the wake of capitalism having won the philosophical debate of the 20th century, the imperfect outcomes of regulation, and the scaring failures of the banking system, consumers are more active than ever, in voting their values, manifest in what they purchase and whom they purchase it from. This is the opposite of putting values aside.

In the NY Times article “Would You Go To a Republican Doctor”, by Tali Sharot (a cognitive neuroscientist) and Cass R. Sunstein (a law professor), they found “that knowing about people’s political beliefs did interfere with the ability to assess those people’s expertise in other, unrelated domains.”

https://www.nytimes.com/2018/05/24/opinion/sunday/politics-distorts-judgment.html[2]

“In short, people sought and then followed the advice of those who shared their political opinions on issues that had nothing to do with politics, even when they had all the information they needed to understand that this was a bad strategy…Suppose that they distrust those with different political opinions on nonpolitical issues where they have real expertise. If so, the conditions are ripe for a host of mistakes…” [2]

Against the backdrop of a commonly held view that populations of people become more self-similar over time, as they self-select, is a diversity movement that seeks to buck that trend (at least in the dimensions of gender and race). Programmed with a powerful evolutionary instinct to fit in, as a means of increasing survival chances, humans have to work quite deliberately to both not care so much about what other people think of them, but to also objectively assess information, and guard against their own biases, their own tribalism, with “obvious implications for the spread of false news, for political polarization and for social divisions more generally.” [2]

So what makes for better business, Friedman’s impersonal price system, or a system ripe with values-driven decision making? The two ideas are likely complimentary. No reason why the voluntary forces of a value chain cannot be influenced by the values of consumers. No reason why businesses cannot reinforce values as a way to promote the best business outcomes (what business sense does it make to discriminate against resources that could benefit the business), and when a business does this, they are in a sense explicitly saying to their workers, park some of your values at the door, or more explicitly, adopt these values or work somewhere else; which of course is the backdrop for the NFL kneeling scandal, the NFL being a business that is very much impacted by broad public sentiment (majority and minority).

What makes us human, is our values, we should embrace those values. It is perhaps the only thing in the coming years that will separate us from machines. At the same time, if we want the best business outcomes, and perhaps even the best personal outcomes, we have to guard carefully against weighting our choices in favor of other members of our tribe – yes there are strong evolutionary reasons we do so, but like all our preprogrammed behaviors, we have to be mindful of them, and learn to master them where needed. Nothing could be more important for business than to get to the approximately right answers, regardless of where the ideas come from; where outcomes are not based on survival of the fittest, but survival of the fittest ideas.

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