Value(s) and the Power of Teams

Drawing attention to values that are necessary for effective teams to help countries and companies build a better, equal and fairer world.

REVIEWED BY PAULA ALEXANDER, Ph.D., J.D., and STEPHEN WOOD, M.S.

DOES A BOOK about global topics such as the financial crisis, climate change, the COVID-19 pandemic and environmental, social and governance (ESG) investing offer any insights on the narrow sphere of managing teams?

Mark Carney’s book Value(s): Building a Better World for All uses these global issues to explore the nature of core values and identify those worth nurturing in any organization. For those of us in business who devote most of our energy analyzing how to measure, quantify and price what we manage, Carney does a terrific job of drawing attention to the foundational values that are necessary for effective teams and companies. Carney pinpoints these values and argues that countries and companies can build a better world by embedding these values in our business and regulatory institutions.

While our purpose is to benefit from Carney’s insights on core values, we also recognize the vision he offers for ESG is likely to invite spirited debate between liberals and conservatives, as illustrated by Philip Cross’ critique in The National Review (discussed more below).

What are these values? Carney differentiates the concepts of objective vs. subjective value, the foundations of monetary value and the workings of the global financial system. While we think of money as a fairly basic thing — a dollar bill in our wallet poses no mystery to us — the total system of global finance is a bit more cryptic. Carney writes: Modern money is all about confidence. Confidence that:

➤ The bank notes that people use are real and not counterfeit;

➤ Money will hold its value and not be eroded by inflation;

➤ The burden of debt won’t skyrocket because prices and wages fall in a deflation;

➤ Money will be safe in banks and insurance companies, and won’t disappear even if there’s a depression, a financial crisis or a pandemic.

… Maintaining that confidence requires both sound institutions and broad public acceptance. (p. 89)

And, of course, in recent years, we have faced challenges to every point above.

This notion of broad public acceptance — that the efficient functioning of the market is dependent upon an elusive, unseen (and perhaps fragile) thing called “trust” — is a key lesson found in Value(s). So much of our business and managerial focus is on things we can measure — sales, web site hits, number of accounts, etc. — that we lose sight of the core foundation of the enterprise: trust. Applied to traditional business strategy, trust is the value that underpins brand recognition and loyalty, repeat business, employee retention, and investor confidence.

To build trust, to foster trust, to deserve trust, our organizations need both embedded values and moral leadership. Oxford scholar Ed Brooks identifies virtues supporting moral leadership:

➤ “Humility, which points to our intellectual limits … and uncertainty in which we live;

➤ Humanity, which aspires to a feeling of solidarity…; and

➤ Hope, which raises our ambitions for the future.” (p. 381)

Carney lays the foundation for identifying and embracing value(s) in having purpose. “Purpose is what an organization stands for, why it does what it does and what it should be trusted to deliver. … Companies exist to improve our lives, expand our horizons and solve societies problems, both large and small.”

Carney endorses Sir John Kay’s view: “Profit is no more the purpose of business than breathing is the purpose of living.” (pp. 382-383)

Carney dares to ask, “To what extent does stakeholder value maximization ultimately lead to the maximization of returns to shareholders — a divine coincidence of cake and eating? Or should it be recognized (and celebrated) that by honoring society’s values some of a company’s contributions will accrue to stakeholders other than shareholders and

Value(s): Building A Better World for All

by Mark Carney 1 Hachette Book Group, New York, 2021

to broader society?” (p. 383)

Having put the question on the table about purpose beyond profit, Carney returns to the necessity of profits: “But just as breathing is essential to living, profit is essential to the delivery of purpose over time. Purpose therefore requires balancing the core values of dynamism, responsibility, fairness, solidarity and sustainability.” (p. 383) From Carney’s extensive analysis of the pandemic, the virtue of resiliency emerges as well. It is natural for a central banker to cast a wary eye on the functioning of markets, (especially a central banker who was on the frontlines of the financial crisis). Carney identifies some of the elements of the market “playing field.” He zeroes in on several institutions that are critical to market economies:

Most fundamentally, property rights allow people to own and generate capital without undue fear of theft … The prospect of owning the fruits of their labours incentivizes people to strive and innovate. Recorded ownership allows people to secure credit … Without protection of contract rights, commercial business would be limited to instantaneous transactions … Other key institutions determine the ease of establishing, running and winding down a business. They set the terms for obtaining permits, accessing finance, paying taxes, trading across borders and managing insolvency. Such economic institutions make possible the ‘gale of creative destruction’ of new ideas and new firms.”

Although institutions provide the framework for how markets should function, they are meaningless if citizens don’t comply. … the informal constraints that guide our behavior, such as customs, conventions and taboos – what (Adam) Smith would have termed ‘moral sentiments.’ When complementary to formal structures, these norms ensure compliance and fill in legal cracks. … In these regards, values are not just fundamental to the health of institutions, they are the institutions themselves. (p. 469)

Carney urges collaboration between business and the regulatory institutions of government to pursue climate action, impact investing and building value for all.

Counterpoint

No one would argue that we should promote the opposite of Carney’s values, or strive to undermine the goals of human flourishing or building a better world. But there is a battleground for debate on two fronts. First, are these the only values, or the highest-priority values?

Second, once embraced, what is the best way to achieve the manifestation of these values in our society?

Philip Cross in his review of Value(s) for The National Review2 raises the concern that Carney’s espoused values are arbitrary and contrived to support a “liberal” agenda. Cross advocates a different battery of values identified by Nobel Prize recipient Edmond Phelps: innovation, independence, initiative, achievement and acceptance of competition. Cross argues that Carney “ignores the way that capitalism encourages independence, self-reliance, accountability, competition and originality that create both better people and better products.”

Cross thinks that Carney goes too far by blaming “a crisis of values.” Therein lie grounds for debate.

Those who trust markets to solve societal problems argue Smith’s invisible hand will discipline managers who fail to grasp the importance of unseen values. Other market participants will capitalize on these failures. The virtue of this construct is we need not agree on value(s): The invisible hand will resolve the debate for us. Optimality is found via the simple expedient of individuals trading on their own (or their firm’s) self-interest.

Does the “invisible hand” really work? Carney identifies three big myths about markets: “This time will be different;” “markets always clear;” and “markets are moral.” In addition to these myths, he adds the insight, “if it doesn’t make sense, it doesn’t make sense.” The landscape is littered with examples of the latter — Bernie Madoff, Enron, the FTX cryptocurrency exchange. While we might argue that those failures are examples of proper market function (because the failures were eventually found out), when failures turn into financial contagion, as seen in the financial crisis, or if our economy is beset by literal contagion, as found in the pandemic, what emerges is a deeper understanding of value.

So, the battle lines are drawn. Do we heed Carney’s critique of markets? Do we heed his call, attending to the values of resiliency, sustainability, solidarity and humanity? Or do we extol independence, competition, initiative and independence? Is Carney’s advice doomed to the trash heap of do-gooders’ ideas, or is there something to “build a better world,” as Carney’s title suggests?

Implication On Teams

High-performing teams are known to have strong cultures and high cohesiveness. While it may be difficult to pinpoint a single set of characteristic values found in all high-performing teams, the “glue” for binding the group together and the basis for strong culture are core values that are widely shared.3 Additionally, the team members should have a high level of trust, not only in their understanding of the values, but in their mutual commitment to them. Teams must ultimately choose values appropriate for the mission; identifying, nurturing, sharing these values, as well as building trust among members are important tasks for leaders.

Our hope is for our readers to see through the false dichotomy posed by Cross’ critique of Carney and to resist the urge to cast a book about values as a

“advancing a liberal narrative.” Both sets of values as posited by Cross and Carney are important and not mutually exclusive. Carney is arguing for the health of the market platform, the arena in which markets are to function efficiently. The playing field must be level, the officials unbiased, the rules of the game clear, the equipment safe for players, and on and on. The game being played, of course, needs strategy, exertion, originality and all the qualities we seek in high (and virtuous) performance.

The insights Carney provides on the notion of value and the revelation of value are valuable to all regardless of the reader’s proclivity to embrace or oppose his recommendations for building value in our societal institutions.

Questions For Discussion And Debate

Does a business leader have a purpose? As we advance in leadership roles throughout our careers, do we also advance in our own sense of self-worth? Do we look to have a life of purpose? Is how we lead our business integral to discovering and manifesting our personal purpose?

Philip Cross, in his book review, argues that the values identified by Carney are arbitrary. He raises a fair question: How do we identify what is virtuous and fundamental to organizational and economic health? L

2 See Philip Cross, “Value(s) without Value,” National Review, April 23, 2021.

“In the case of all things which have several parts and in which the totality is not, as it were, a mere heap, but the whole is something besides the parts, there is a cause; for even in bodies contact is the cause of unity in some cases and in others viscosity or some other such quality.”

– Aristotle, Book VIII, 1045a.8-10.

1908 translation by W.D. Ross