In today’s complex VUCA world, businesses are like ships charting and navigating through the rough sea waters of modern commerce. The tides of climate change, consumer expectations, and global trends like AI or populism constantly reshape the sea. Daniel Aronson’s book, “The Value of Values: How Leaders Can Grow Their Businesses and Enhance Their Careers by Doing the Right Thing”, proposes that values act as the compass for businesses, helping them stay afloat, steer with intention, and reach prosperous shores. This blog explores critical insights from Aronson’s work, illustrating how integrating values into business practices is ethical and essential for long-term success.
Imagine trying to navigate a ship through a storm without a compass. That’s what running a business without clear values feels like in today’s world. Values are the foundation of a house—without them, the structure is shaky. The interconnected challenges we face—climate change, social unrest, and evolving consumer expectations—demand businesses anchor themselves to solid values. Ignoring these realities is like sailing blind; values guide decision-making and help organisations adapt to external pressures.
Many executives dismiss values-driven initiatives as fluff, like putting sprinkles on a cake without considering the flavour underneath. However, Aronson argues that these initiatives can yield substantial returns—often four to ten times higher than traditional approaches. For instance, a clothing drive organised by a professional services firm provided business attire for job seekers. It can promote community ties that ultimately attract new clients. This “submerged value” is often overlooked but can be the secret ingredient in a successful business strategy. Just like an iceberg where most of its mass is underwater, values such as environmental commitment or community support can provide hidden benefits far greater than what’s visible on the surface.
Aronson introduces “CORE” as a roadmap for companies seeking to align their values: Customers, Operations, Risk, and Employees. These four pillars are crucial to building a successful and value-centred business.
CUSTOMERS Demand Commitment
Today’s consumers are like discerning chefs who won’t settle for bland ingredients; they seek companies that blend profit with purpose. Research shows that customers are likelier to remember brands that align with their values, particularly those committed to social and environmental issues. In fact, by 2025, assets under management focusing on ecological, social, and governance (ESG) criteria are projected to exceed $50 trillion. This shift indicates that consumers are putting their money where their values lie.
Enhancing Efficiency and Innovation in OPERATIONS
Aligning business strategies with core values can lead to greater efficiency and innovation. Picture a factory that reduces waste for compliance and, as part of its commitment to sustainability, saves costs while enhancing its brand image. Similarly, when companies prioritise ethical practices—like eliminating slavery from their supply chains—they encourage creative problem-solving among employees motivated by shared values. Think of it like a filter: When a company refuses to compromise its values—whether in sourcing materials ethically or reducing carbon footprints—it often forces creative, resourceful solutions.
Navigating RISKS with a Values Lens
Aronson introduces the ‘Threat, Vulnerability, and Magnitude’ (TVM) framework to assess risks through a values lens. This framework helps businesses anticipate potential threats and vulnerabilities and understand the possible consequences if the event does occur. By applying this framework, companies can prepare and reduce vulnerability, respond more effectively during crises, and ensure they emerge stronger rather than battered.
- Threat: represents the likelihood of a specific adverse event occurring. This involves identifying potential risks that could harm your business, such as cyberattacks, natural disasters, or supply chain disruptions. For example, if your company stores sensitive data online, the threat might be the possibility of a cyberattack. Imagine a retail company operating in an area prone to flooding. The danger in this case is the chance that a severe flood could occur and disrupt operations. Based on historical data and environmental conditions, businesses must estimate how likely this event will happen.
- Vulnerability: Refers to how exposed your business is to the identified threat—essentially, how likely this event will cause harm. This step involves analysing how prepared your business is for the danger. Are your defences or safeguards strong enough to handle it? Vulnerability depends on factors like systems in place, infrastructure, or contingency plans. For instance, If the same retail company has no flood prevention measures, its vulnerability is high. This could mean the flood would damage inventory or cause extended downtime, increasing the negative impact. However, if the company has invested in flood barriers or drainage systems, its vulnerability is reduced.
- Magnitude: Measures the potential consequences or costs if the event does occur. It looks at the scale of damage or disruption that could be caused. The magnitude involves assessing direct impacts, such as financial loss or damaged assets, and indirect impacts, such as reputational damage or operational delays. In the retail example, if the store were to flood, the magnitude could include repairing the building, replacing lost inventory, and compensating for lost sales during the closure. Businesses estimate these impacts to understand the severity of the risk.
Businesses must pay attention to environmental risks, which may lead to higher costs later. For example, workers may be unable to perform tasks due to extreme weather. But by seeing risks through the lens of values, a company can prepare and reduce vulnerability, responding more effectively during crises and ensuring it emerges stronger rather than battered.
Attracting and Retaining Talented EMPLOYEES
What’s a company without its people? Today’s Workers are increasingly purpose-driven, searching for jobs that reflect their values. Think of it like gardening: If you want the best flowers, plant them in fertile soil. Similarly, businesses that foster values-based environments attract and retain the best talent. When employees feel valued and know they contribute to a greater purpose, job satisfaction skyrockets, leading to higher retention and productivity. For instance, Aronson highlights the link between offering benefits like fair pay and demonstrating a commitment to diversity, which promotes trust and loyalty.
Avoiding Values Washing
But beware of what Aronson terms as “values washing.” This is when businesses claim to support noble causes without putting those values into practice. It’s like selling a product in a shiny, empty package. Aronson emphasises the need to align words with action: hiring people who share your values, integrating these beliefs into every level of your business, and being transparent about challenges and successes. This is not just a cautionary tale; it’s a call to action to ensure your business practices what it preaches.
Leading by Example
Leadership in today’s world requires more than strategic thinking; it demands authenticity. Leaders who embody their company’s values inspire others to do the same. Reflecting on personal values and aligning them with organisational goals creates a culture where employees feel valued and engaged—much like a garden flourishing under the right conditions.
In conclusion, “The Value of Values” highlights that integrating strong ethical principles into business operations is not merely an option; it’s a necessity for survival. In an unpredictable, competitive marketplace, values can be the key differentiator. It reminds businesses, like individuals, that they must live by their values to succeed. In a world where consumers are more mindful, risks are higher, and there is fierce competition, a transparent, values-driven approach offers survival and a way to flourish. Just as a compass points the way through uncharted waters, values guide businesses through today’s uncertainties, helping them make the right choices and succeed sustainably and impactfully. Just as a lighthouse guides ships safely to shore amidst turbulent seas, strong values illuminate the path forward for businesses striving for success.
Ultimately, Aronson’s message is clear: Values don’t just cost less—they add more. They are not distractions from financial goals but a pathway to achieving them. As the world changes, it is the companies leading with values that will stand out and thrive. Aronson’s work serves as both a guide and an inspiration for leaders who aim to cultivate environments where ethical practices flourish alongside profitability. As we move forward in this complex world, let us remember that values are not just words—they are the foundation upon which successful businesses are built.
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