Abstract
In addressing creating value in a novel and creative book, Max Bazerman has provided an academically satisfying contribution with multifaceted contributions to the domains of management practice, policymaking and the life of many citizens. The book takes a novel approach with the unsuspecting reader, perhaps anticipating yet another variation on a jaded business theme, jolted from such anticipation with the realization that value creation is essentially a social and ecological process.
According to the Journal of Creating Value, a working definition of value creation is as follows: ‘executing pro-active, conscious, inspired or imaginative and even normal actions that increase the overall good and well-being, and the worth of ideas, goods, services, people or institutions including society, and all stakeholders (like employees, customers, partners, shareholders and society) and value waiting to happen’. Now, creating value is a fundamentally human capability, emerging in the day-to-day activities of ordinary human beings. Business executives, by virtue of their capability and power, are highly influential in creating value both internally, in an organizational context, and externally in relation to stakeholders. It is to the executive audience that much of the book is addressed.
Critically, much of executive decision-making is unconscious in nature, implying that we do not fully understand the executive processes that shape value creation and further that unconscious decision-making may as easily be damaging or inhibiting of creating value. Further, citing Herbert Simon, the author notes that our bounded rationality enters how we create value, with the promise of facing our cognitive barriers to being a first step in overcoming them. The case for the better understanding of both conscious and unconscious aspects of executive decision-making is well made; yet, in the area of creating value, there remain deficits in our understanding. The present book is a remarkably lucid and stylistically available account of how such deficits might be overcome. Imagine the benefits of better understanding how executive value creation might be better taught and become a fully conscious human endeavour.
Perhaps we are naturally benevolent value creators, as our parents teach us to be good children and do good things. However, it seems that as we age, we are forced or we decide to erode the good, opposed by the goal of making a living, or simply being ‘successful’. The book pivots on this understanding of value creation, and Bazerman does a great job in highlighting how value is created and destroyed. Rather, shocking challenges of value deprivation, value starvation and value dilution add strength to his case. Andrew Carnegie, the great philanthropist, bathes in a negative light based on his ruthlessness as a businessman. Our negotiation strategies are wholeheartedly confrontational, blind to wider opportunities. As humans, we emotionally connect to the fate of those closest to us; yet, we fail to activate our moral imagination in connecting to humanity’s wider problems. Corruption of the human mind and even psyche is an unintended consequence of plenitude of information in a connected world, due to misinformation.
Yet the book does not flinch in the sight of such challenges, and a number of seminal chapters give weight to the benefits of what the author understands as a modified form of utilitarian ethics, applied to contemporary social and economic problems. Fundamental to such a mindset is the appreciation that value creation is a long-term process which requires the sacrifice of short-term ‘value-claiming’. This term resonates with the contemporary debate around value creation versus value grabbing. Academics concerned with the growing inequality in many societies and externalities of value creation activities of firms coined value grabbing as a conceptual tool for the analysis of contemporary and future socio-ecological conflicts (Andreucci et al., 2017).
The author goes to some length to avoid what he sees is many being entertained by his ideas and talks and failing to become inspired. Herein he places a great challenge before him, for the book is a genuinely entertaining tome. Reflecting Sallust’s commentary on Cato the younger, he advocates activating our moral obligations, seeking the good rather than wishing to be called good. The classical reference, one of many, activates the interest of those with a sense of history, and places contemporary executives, and all humans, in the position of not being able to avoid moral decisions. Here there is a reminiscence of how Charles Handy had business executives on his management courses face the moral crises of the great tragic heroes of Greek and English literature. Executive decision-making is ethical at the core.
Drawing on parallels with new understandings of the psychological and social foundations of human limitations in both decision-making and wider development, Bazerman draws on the work of mathematician John Allen Paulos to argue that ethical limitations may emerge from similar systematic biases. In framing ethical challenges in this way, the book takes a novel approach to overcoming more rigid approaches to decrying lack of pre-determined ethical behaviour. Here, ethical improvement is possible not simply by improving the individual but by encouraging the improvement of both the system and individual. Of course, for executives, the challenge is not only to become ethically improved at an individual level, but also to develop a strategic capability to make systematic change to improve organisational decision-making.
Recent events across the globe, highlighting the challenges and divisions created around race and diversity, find the reader searching for sections such as the one on tribalism. Although perhaps initially repeating tired rhetoric against the opposition, the author is again genuinely creative in building on encouraging systematic ethical behaviour. Maturity in ethics seeks to bridge relationships with the ‘other’ rather than seeking division, and here taking a systematic approach is a key enabler. The common ground between divided parties is value creation.
On the basis of a lifetime as a teacher of negotiation, the author suggests one way in which a teacher can create value to wean students away from mythical conceptions of value creation as a fixed size pie, towards the generation of a mindset where creative and innovative multi-stakeholder value creation is liberated. In doing so, we move towards the North Star of creating positive value for all, across ‘all sentient beings’. Again, on the basis of the modern adaptation of utilitarian ethics, the author suggests our common human ground in negotiation rests on value creation.
The chapter on corruption, though informative and certainly topical as it rails against the President Trump, is perhaps a little tired and reminiscent of overly simplistic media theatre. The criticisms of corruption in the financial and governance system similarly offer little that one would not have found in the increasingly long history of corruption dating to the late 1990s with the British corporate scandals given rise to the Cadbury and Hampel codes. Furthermore, one senses the criticisms of much of human behaviour at the day-to-day level, almost spirals into fatalism. Value creation certainly has potential here as a potential solution; yet, the challenges in enabling such value creation may be greater than simply changing the incumbent of the White House and associates.
Topical issues such as climate change are similarly addressed, and value creation as an approach certainly has a great potential in reducing waste while simultaneously aiding the goals of the climate change movement. The author finds the reader particularly alerted when he notes how his theory of ‘predictable surprise’, originally part of a 2004 book with Michael Watkins, suggests that executives must find both individual and systematic approaches to spot and then leverage stakeholder resources towards anticipating and working to prevent negative predictable surprises, with climate change being one. Sections of the book, such as this short one, are deserving of executive reflection on both the corporate and individual limits which presently constrain improving value creation and perhaps challenging to each individual to work to overcoming such limits. Very recent work by Marc Goedhart and Tim Koller in the McKinsey Quarterly supports a long-term value creation where such reflection is possible to activate and support the needs of all stakeholders (Goedhart & Koller, 2020).
Overall, there are some major questions which might critique the book’s approach, as is the case with any book attempting to break new ground. Julian Savulescu at the University of Oxford, while acknowledging the advantages of a utilitarian approach to ethics, finds both practical and psychological challenges which suggest Bazerman’s book is rather optimistic. Similarly, though Bazerman acknowledges the dilemma faced by humans and specifically executives in not being able to arrive at a perfect solution, he neglects at times to engage more fully with the case that duty/deontological ethics provides at least a worthwhile shortcut in these cases. David Leigh reflecting on Dostoevsky presents the deep dilemma of who would kill a child, even to save the lives of many (Leigh, 2010). Readers are encouraged to contemplate such perspectives to reflect more fruitfully on the book.
The book is recommended to a variety of audiences. Bazerman’s professorial career indicates a bountiful reception in courses on business ethics; yet, the interest should be to widen to areas such as strategy and perhaps be a primer for business school deans aspiring towards future challenges. Policymakers and politicians are provided with a deceptively simple book which is bound to challenge and yet enlighten their dilemma-filled journeys. Practical value creators such as entrepreneurs and business executives may find much to take from the book, inhabiting as they do the very praxis which Bazerman’ hopes will render some readers carriers of the mission into actuality in the world.