Articles from Integral Leadership ReviewThe Role of Values in Leadership: How Leaders’Values Shape Value Creation2012-01-08 10:01:16 Scott Lichtenstein

Scott Lichtenstein

Scott Lichtenstein

Introduction: We’ve Been Practicing Leadership for Over 6,000Years; What Else Do We Need to Know?

The Pharaohs leading the cadres managing the work teams that built the pyramidsunderstood leadership (Dade 2008). The Imperial Emperors knew how to lead theChinese civil service that held China together for thousands of years. The Moguls ofIndia and their administrators understood how to lead. The Holy Roman Empireneeded no leadership books or journal articles. Leadership as practised by theEgyptian Pharaohs and Chinese emperors still lives with us in our language today:“stepping out of line” and “getting the chop” referring to the soldier of the emperorand Pharaohs with a sabre on horseback that would chop off the head of anyonewho literally stepped out of the single file line of workers.

More recently, the rise of professional management in Western economies hasperpetuated a plethora of lessons in leadership. From Al “Chainsaw” Dunlop to“Neutron Jack” Welch, CEO of General Electric, one of the most successfulcorporations in the world, they all knew about leadership. Voted by Fortunemagazine as Manager of the Century, “Neutron” Jack gained the nickname of themythical bomb that killed people but left buildings standing by shedding 112,000people in the beginning of his tenure, but left the factories they worked in stillstanding.

From the Egyptian Pharaohs in their temples to the glass palaces of the Masters(Bastards?) of the Universe on Wall Street, they all had the same approach toleadership. Dade (2008, p. 1) summed up this sentiment by stating, “It’s my way orthe highway”. Further, “The use of hierarchical top-down power structures thatinstitute a system of policies, procedures and programmes to ensure delivery ofproducts and processes in a manner consistent with stated objectives. By anymeasure of success this works and in so doing has created the basis of ourmodern world”.

If the “my way or the highway” school of leadership has been working for thousandsof years, why is the subject of leadership under such scrutiny? If we know the triedand tested “my way or the highway” approach to leadership works, why are thereapproximately 3,000 books a year written on the topic? One major reason is due tochanging employees’ values, and in the aggregate, societal values. Societal values

have changed and individuals with developmentally leading edge values have gotteninto leadership positions and have changed policies and procedures. Without toomuch difficulty I’m sure you can think of at least one organisational policy that existstoday that would have been unthinkable 40 years ago. Equally important, the valuesof followers have changed.

This article focuses on the role of values in leadership and how this unconsciousand invisible force creates or stymies visible results. First, the impact of values onleaders is outlined and is followed by an examination of the link between leaders’values and value creation. The concept of the values dynamic is introduced andillustrated by two mini-cases of leaders from Hewlett-Packard and 3M to show howthe dynamic between the values of a leader and the culture impact sustainableperformance. Next, why leaders and followers do what they do, based on researchexamining managers’ and leaders’ needs and values is discussed, and the mappingof an executive team’s values provided to offer a practical example of how thesewoolly concepts can be measured and used for deep dialogue to facilitateleadership and team development.

If societal and employees’ values have changed, in what ways do values impactleadership?

1. The Impact of Values on Leaders

Personal values impact leaders in at least two ways: 1) as a perceptual filter thatshapes decisions and behaviour, and 2) as a driver of their methods of creatingvalue.

1.1 Values as Perceptual Filters

Hambrick and Mason’s (1984) Upper Echelon Theory and Finkelstein & Hambrick’s(1996, p. 54) extension to it (as seen in figure 1) provide a theoretical model thatillustrates that personal values act as a perceptual filter for how leaders perceive theexternal environment and shape strategic choice, behaviour, and ultimatelyorganisational performance.

Figure 1. How leaders’ values impact performance

In a study of 163 owners, senior and middle managers, Lichtenstein (2005)empirically operationalized the Values, Observable characteristics, Strategic choice& behaviour, and Performance elements of the Upper Echelon Theory. He found

that executive values had a direct and significant impact on organisational

performance, whereas age, tenure, functional experience, and level of education did not. This finding indicates thatpersonal values are a more fundamental leadership attribute than the age, tenure,functional experience, and level of education in the process of how leaders influenceorganisations. Executive selection based on age, experience, tenure, and educationto the neglect of their values ignores the invisible force that drives visible results.

Moreover, in a study of 75 in-work MBA managers, Higgs and Lichtenstein (2010)found no relationship between psychological traits based on the leadership “Big 5”five-factor model of personality (McCrae and Costa 1997) and personal values. Thisresult highlights that “psychological characteristics” and “values” suffer from the“jingle fallacy” (Kelley 1927): “psychological characteristics” and “values” soundsimilar so they are lumped together. Values and personality traits arecomplementary but separate and distinct attributes of leaders and must be treatedas such.

1.2 Values as a Key Element of Strategy

Leadership is not solely about making people feel good, but includes profit and lossresponsibility, achieving operational and financial performance, and developingstrategy. The personal values and aspirations of senior management have beenidentified by Porter (1980) as a key component of competitive strategy (see figure 2)but have been neglected by the field. Finkelstein and Hambrick (1996, p. 48)recognised the research void that exists in the examination of strategic leaders’values and their relationship with strategy, noting, “Even though values areundoubtedly important factors in executive choice, they have not been the focus ofmuch systemic study.”

Figure 2. Key Determinants of Strategy

Why has so little research been done in the area of values and its relationship tostrategy despite values being identified as critical to strategy formulation andimplementation? In part because there was no theory to understand this until

Hambrick and Mason’s Upper Echelontheory arrived four years after Porter’s work. Also, the tools and techniques tomeasure values didn’t exist until relatively recently. This will be illustrated in the lastsection of this article. A lack of access to leaders allegedly not willing to have theirvalues examined is also cited as another reason. In short, the field has focused onthe difficult elements of strategy rather than the more challenging elements, andvalues are a more challenging element. Effective leaders know they need to focuson the difficult and the challenging elements of strategic leadership.

1.3 Values, Vision and Value Creation

Business now almost universally accepts that the primary leadership task is valuecreation for shareholders and stakeholders. This is especially true in the midst of anera when we’ve seen leaders’ and directors’ remuneration, stock options, andpayoffs disconnected from company performance, and in some cases, valuedestruction. Since the bubble burst in 2007, one leadership lesson we’ve learned isthat motive matters, which surely is at the heart of the current zeitgeist. The spotlighthas been turned on leaders by their organisation’s stakeholders who are asking,“leadership for whose benefit?” and “value created for whom?”

The needs and values of strategic leaders shape their vision to create (or destroy)

value. By uncovering these drives, leaders can motivate the workplace culture toimplement strategies further and faster in the organisation. The conceptualframework in figure 3 illustrates that a leader’s values are antecedents of vision inservice of creating value for shareholders and stakeholders.

Figure 3. Shareholder and Stakeholder Value Chain Model of Contingency Relationships

Lichtenstein and Dade (2007) refer to a chief executive’s motives for action andvalues as Reality 1.1. This is because it is the lynchpin of aligning the existingculture. that we refer to as “Reality 1.0” with the vision – the future state of theorganisation – that we refer to as “Reality 2.0”[i]. Sustainable above averageperformance and value creation is achieved through aligning Reality 1.0, i.e., theorganisation’s mission, goals, objectives, strategies, and tactics to Reality 2.0, thevision.

The values dynamic is the exchange process between the values of the CEO andthe rest of the organisation, i.e., the culture. Leaders create or destroy value to theextent that they align Reality 1.0 with Reality 2.0 by implementing their methods ofcreating value (missions, goals, and strategies) further and faster throughout theorganisation. But individual leaders can’t create and sustain the leadership requiredto align and shift an organisation: a vision that isn’t shared is an unrealised dream; astrategy without organisational commitment is a delusion.

Examples of values dynamic misalignment and alignment are briefly illustrated in themini-cases of ex-CEO Carly Fiorina’s alignment of her vision for creating value atHewett Packard (HP) in comparison with her successor Ex-CEO Mark Hurd, andJames McNerney ex-CEO of 3M versus his successor CEO George Buckley.These cases contrast the dynamic between the leaders’ values and that of theorganisations and the impact on aligning or misaligning their methods of creatingvalue with the culture.

Hewlett-Packard

Fiorina served as chief executive officer and chairman of Hewlett-Packard from1999 to 2005. In 2005, she was forced to resign following differences with the boardof directors about how to execute HP’s strategy. Ex-CEO Mark Hurd was CEO fromMarch 2005 and resigned in August 2010. The company is renowned for its

egalitarian, decentralized culture that came to be known as “the HP Way.”[ii] Thisinvolved one of the first all-company profit-sharing plans that gave shares to allemployees, and offered tuition assistance, flex time, and job sharing.

Research carried out by Waters (2008) into how leaders’ values impact decision-making compared managers’ perceptions of ex-CEO Carly Fiorina and ex-CEOMarc Hurd. Regarding Fiorina, a common perception amongst managers was thatthere was a values mismatch with the culture:

“People talked about the HP Way a lot and Carly came along andbrushed that under the carpet a bit and people didn’t like her for that.”(Manager 1)

“I was never at all sure, other than her desire to be showbiz, quite whather values were.” (Manager 2)

“With Carly Fiorina there were corporate values articulated andexamples of things done by Carly which were disconnected and I thinkthat is what made a lot of people feel uncomfortable.” (Manager 3)

In contrast, managers felt Mark Hurd did a far better job at aligning his method forcreating value to the culture summarised by one manager:

“I do feel he (Mark Hurd) is more mapped to the basic core values of HPthan Fiorina was; his wishes for operational tightness, profitability, andcost control are pretty much the same as the values fifty years ago”.

3M

Prior to joining 3M in 2001, James McNerney competed with Bob Nardelli and JeffImmelt to succeed the retiring Jack Welch as chairman and CEO of GeneralElectric. When Immelt won the three-way succession race, McNerney left GE andjoined 3M from 2001 to 2005, holding the position as chairman of the board andCEO. Sir George William Buckley was named chairman and CEO of 3M inDecember 2005 following the departure of McNerney who left abruptly to join Boeing.

3M’s creative culture that once gave rise to the “Post It Note” phenomenon prideditself on drawing at least one-third of sales from products released in the past fiveyears, and was underpinned by the “3M Way” that includes:

(i) Workers can seek out funding from a number of company sources toget their pet projects off the ground,

(ii) Official company policy allowing employees to use 15% of their timeto pursue independent projects,

(iii) Ideas like the Post It Note are allowed to be fiddled with for severalyears before the product goes into full production, and

(iv) The company explicitly encouraged risk and tolerated failure (Hind,2007).

Sound like Google?

The paper by Hind (2007) “At 3M, A struggle between Efficiency and Creativity”explains in-depth the changes wrought by McNerney and contrasts them with thosemade later by Buckley. When McNerney joined, “he had barely stepped off the planebefore he announced he would change the DNA of the place” (Hind 2007, p. 1).McNerney began by implementing the GE playbook; axing 8,000 workers (about 11percent of the workforce), intensifying the performance-review process, cuttingspending and importing GE’s Six Sigma program – a series of management

techniques designed to decrease production defects and increase efficiency.Thousands of staffers became trained as Six Sigma “black belts”.

The focus on efficiency began driving out the innovation culture. Remembering ameeting at which technical employees were briefed on the new Six Sigma process,Michael Mucci, a 27 year veteran at 3M recalls, “We all came to the conclusion thatthere was no way in the world that anything like a Post It Note would ever emergefrom this new system” (Hind, 2007, p. 2). The Post It Note inventor, 3M scientist ArtFry, reflecting on McNerney’s culture change programme observed, “What’sremarkable is how fast a culture can be torn apart. [McNerney] didn’t kill it, becausehe wasn’t here long enough. But if he had been here much longer, I think he couldhave” (Hind, 2007, p. 3).

Upon McNerney’s departure, new CEO Buckley reinvigorated the workforce byreversing McNerney’s legacy and getting back to the “3M Way” by scaling back onSix Sigma, boosting R&D spending, and rewarding risk taking. Reflecting on theprocess-focused approach of the past, Buckley remarked, “Perhaps one of themistakes that we made as a company – it’s one of the dangers of Six Sigma – isthat when you value sameness more than you value creativity, I think you potentiallyundermine the heart and soul of a company like 3M” (Hind, 2007; p. 3). TimHammond, the director of strategic business development, states, “[Buckley] hasbrought back a spark around creativity.” Bob Anderson, a business director in 3M’sradio frequency identification division adds, “We feel like we can dream again” (Hind,2007, p. 3). A contrast of the two leaders is found in figure 4.

Figure 4. A Tale of Two Leaders. Source: Hind (2007)

What are the leadership lessons of these two mini-cases? One relates to leadersand the other to boards of directors.

Leaders need to recognise that their values shape their strategy preferences, whichinfluence the organisation’s culture that is termed the “values dynamic”: the dynamicbetween the leaders’ values and those of the employees. Leaders need tounderstand the dynamics of their underlying needs and values (Reality 1.1), and thatof the culture (Reality 1.0). Managers manage from their own values, but leadershave to lead a whole culture. Therefore, they need to be aware of the diversity ofvalues in organisations if they want their visions to become reality and their value

creation methods to be implemented. Leaders like Fiorina and McNerney who try tobend cultures to satisfy their own needs and values without understanding thevalues embedded in the organisation will struggle to align the company to their visionand to create long-term value for shareholders and stakeholders

Regarding corporate governance,boards that become budget-driven rather than strategy-led are liable to appointCEO’s to boost short-term performance who may not understand the culture orvalues dynamic, which is bound to stymie their attempts to create value in the longterm. The ultimate strategic decision is appointing the right chairman and chiefexecutive whose methods of creating shareholder and stakeholder value will supportthe culture (Taylor, 2010).

1.4 Effective Leadership that Creates Value

Boards would do well to remind themselves of the lessons of leadership andsustainable value creation. The only longitudinal study of the link between leadershipteams and corporate performance is Collins’ (2001) “Good to Great”. He tracked1,435 Fortune 500 listed companies from 1965 and found:

• 11 made the transition from good to great (outperforming companiesin their sector), and

• High profile larger-than-life CEOs, correlate negatively with theprogression from good to great.

The study of successful CEOs shows two vital qualities (Collins, 2001):

1. HUMILITY – being self-effacing and arrogance free, and

2. WILL – persistence in the pursuit of business goals.

“Quiet leadership” was the norm:leaders that created value over the long term dedicated themselves to building theorganisation rather than their CVs, with an emphasis on starting with the RIGHTTEAM rather than the right project, product, or even industry.

Having examined the ways in which leaders’ needs and values impact organisationsand the relationship between culture and methods of creating value, the next sectionexamines what is directing the thoughts and emotions, and shapes the behaviour ofleaders and others.

So what moves leaders and others to action?

2. Why Do Leaders (and Followers) Do What They Do?

Understanding why people do what they do necessitates investigating the forcesthat drive behaviour, because people engage in the same behaviour but for verydifferent reasons.

Clearly, if we want to influence the behaviourof others, we need to understand what is already influencing them. By the end of thissection, you should be able to identify the different drivers expressed in the threestatements regarding hitting stretch targets. As leaders, we can’t change whatdrives people – their values – but we can change their behaviour by understandingthose forces and tapping and harnessing them through policies, strategies, andcommunication.

As long ago as 1961, Gordon Allport suggested that value priorities are the“dominating force” in life as they direct all of an individual’s activity towards theachievement of his or her needs. Values can be considered emotional states weeither go towards or away from, which are directed towards individuals’ underlyingneeds.

From Values to Value Systems

The understanding of, and previous research into values has suffered from a focuson individual values that:

(i) result in low reliability (Bilsky & Schwartz, 1987; Schwartz, 1996);

(ii) ignore equally or more meaningful values (Bilsky & Schwartz, 1987,Schwartz, 1996); and

(iii) ignore the premise that individuals make trade-offs amongcompeting values according to their values priorities (Allport, 1955;Hambrick & Brandon, 1988; Maslow, 1970; Rokeach, 1979; Schwartz,1996).

Individuals’ values priorities underscore a critical characteristic of values: they areorganised in a hierarchical system ordered by relative importance to one another(Bilsky & Schwartz, 1987; Maslow, 1970; Schwartz, 1992; Rokeach, 1979).Although there are universally held values, an individual, and in the aggregate,groups, will espouse a dominant set of values. “At the top of each person’s systemare a small handful of dominant values of paramount importance” (Brandon &Hambrick, 1988, p. 6). Therefore, a dominant value system exists for each personthat is more important to understand than single values (Brandon & Hambrick, 1988;Rokeach, 1979; Schwartz, 1996).

2.1 Needs, Values, or Levels of Consciousness?

Editor’s note – Readers of the Integral Leadership Review will mostlikely be familiar with Beck and Cowan’s “Spiral Dynamics” model of“levels of consciousness” based on the work of Clare Graves. Thispaper presents, as an alternative, research centred on the work ofAbraham Maslow, whose hierarchy of needs model has receivedbroader academic interest. Maslow and Graves were contemporarieswhose theories have both similarities and differences. Of the two,Graves’ theory is perhaps the more complex, focusing on the dynamicinteraction between the individual and his or her environment andtherefore placing more emphasis on the context in which a personcomes to value certain things. It might be considered, for example, thatGraves saw the possibility that a personal hierarchy of needs can exist

at, and within, different levels of consciousness and that the means bywhich a person chooses to satisfy those needs will be different atdifferent levels. However, for the purpose of research within a particularsociety and culture, arguably it is more straightforward andparsimonious to apply Maslow’s model, which can be operationalizedwith greater simplicity and reliability.

From a research perspective, Maslow’s theory can be empiricallytested using statistically reliable instruments, such as Rokeach’s ValueSurvey, Kahle’s List of Values and the proprietary instruments ofStanford Research International’s Values and Lifestyles (VALS) andCSDM’s Values Modes (Baker 1996), whereas the Spiral Dynamicsmodel is considerably harder to test and has consequently receivedmuch less academic interest. In particular the higher levels (yellow andturquoise) of the Spiral Dynamics model present difficulties whendefining parameters with which to test for their presence. Readers willno doubt however notice some similarity and overlap between thecategories of needs found in this research and descriptions of the blue,orange, and green levels in the Spiral Dynamics model.

Maslow (1943) presents a model of human psychological development thatfacilitates understanding of the basis of human values and the way they can changeover time from birth to death. His observations and qualitative research led him tothe insight that human beings are all born with a set of needs that drive ourperception of reality and behaviors. These needs are complex and form our “valuesystem”. He proposed that it is these value sets that form the basis of differingindividual needs. The changes are hierarchical in nature (i.e., some needs to meetbefore other needs become important as a determinant of attitudes and behaviours).A need satisfied is no longer a dominant need; as a need is satisfied, new needsemerge. We all have these needs, but each one of us has one or two dominantones. There is no “better” or “worse” need, there just ‘”is”.

Maslow’s Hierarchy of Needs is usually portrayed as a triangle with different needsfrom bottom to top, including Security, Belonging, Esteem and Self-Actualization. Inan attempt to make it more accessible to business people, Maslow’s framework hasbeen adapted to make it more amendable to be used as a tool to understandleaders’ and employees’ motive for action as seen in figure 5. The bull’s-eyerepresents needs as the target of our behaviour and attempts to overcome themisconception created by the triangle that needs at the top are somehow “better”than the needs at the bottom.

As represented in figure 5, all human beings are driven by the same fundamentalneeds as popularized by Maslow: Certainty; Connection & Love; Significance &Achievement; Variety/Novelty; Growth and Contribution (adapted from Maslow,1970 and Robbins, 2008).

Figure 5. The 8 Human Needs

The figure represented is generic, but is most powerful when used as a tool todetermine how these different needs are satisfied at work. Additionally, it isimportant to reflect about what is at the centre of your bull’s-eye that is driving you,and similarly, your clients, employees, and leaders[iii].

Maslow (1970) proposed three core motivational domains, which were: (i)Sustenance Driven needs: physiological, survival, security, and a sense ofbelonging; (ii) Outer-Directed needs: recognition, significance, and self-esteem; and(iii) Inner-Directed needs: self-actualization, personal growth, and transcendence.

In the first operationalization of Maslow in a management context, over 50 yearsafter it was first proposed, Lichtenstein (2005) tested Maslow’s assertion thatexecutives’ personal value systems are related to Maslovian Sustenance Driven,Outer- and Inner Directed needs. In a study of 163 Owner-, Senior- and Middlemanagers, Kotey and Meredith’s (1997) List of Values (LoV) 28-item personal valuesscale was used to measure executives’ personal values. Drawing on Maslow’s(1970) theory of Inner Directed, Outer Directed, and Sustenance Driven valuegroups, a three-factor solution was extracted that revealed theoretically predictedresults that were statistically reliable:

(i) the Sustenance Driven value system espoused the traditional valuesof Loyalty, Trust, Compassion, and Affection,

(ii) the Outer Directed value system espoused the core esteem-seekingvalues of Power, Prestige, Ambition, and Aggression, and

(iii) the Inner Directed value system espoused the entrepreneurialvalues of Innovation, Risk, and Creativity.

The results provided strong support for Maslow’s (1970) assertion that valuesystems correspond to the underlying needs that drive them, and for the threemotivational domains or “worlds” of our leaders, employees, teams, companies, andsocieties.

Do you think your motivationaldomain would affect your leadership? The nature of the relationships you have?Your communication? What you wear? You bet. The consequences of our drivingforce and those of others are at the crux of leadership. Leadership and followershipvary by one’s values.

How well do you understand the forces that drive employees and leaders to action?What percentage of each motivational group above would you except to find in anorganisation or business function? Allocate to each group above, totaling 100percent, your best guess concerning the top drives of an executive population. Seefigure 5 for the results, which have been replicated in two other studies of in-workmanagers with similar results.

Figure 6: Executive Motivation

2.2 The Values Dynamic

Do the numbers surprise you? Most executive groups are surprised by the smallnumber of managers with Sustenance Driven needs and values and the largeproportion of managers with Inner Directed needs and values. The results show asmall percentage of managers categorised as Sustenance Driven, which supportspublished (e.g., Wilkinson & Howard, 1997) and unpublished reports (CDSM Ltd) onthe decline of the working-age population in Western society who espousetraditional values.

This values dynamic shift, adecrease in the amount of managers with Sustenance Driven values, and anincrease in the proportion of managers with Outer and Inner Directed values in ourorganisations, helps explain the nature of change in leadership and followership.

Based on measurement and observation, the top levels of organisations are heavilyover-represented by Inner Directed executives whose dominant need for novelty andvalues of Innovation, Risk, and Creativity is likely to be perceived as a threat bythose with different values. The innovation-based “further and faster” orientation ofthe Inner Directed may be lauded at Board level, but perceived by the Outer Directed– who are the organisation’s operators – to be too radical and to frustrate their abilityto hit their targets. The Sustenance Driven, who prize safety and continuity oftraditional methods, may just consider the orientation of their leaders to bemadness.

Dis-ease in the culture is caused by leaders who fail to understand that what is “theideal solution” and “logical” in the Boardroom and executive suite is perceived as“too much too soon” or not being “a safe pair of hands” by those with other values.The nature of this opposition is often not open to rational discussion. Many peoplewill not even know why they are opposing the offered solution/strategy they aretasked with implementing – it just feels wrong. This is an indication that theopposition is based in the value system rather than in a straightforward examinationof the facts. Thus, even more rational analysis will not convince them that thedecision is right.

3. What can leaders do?

Leaders need to understand how to use the insight concerning how their needs andvalues shape the creation of goals and strategies that motivate their staff and cultureto create more shareholder value. They also need to accommodate their leadershipstyle to lead a culture with directors, executives, and managers with needs andvalues other than their own, if they are to optimise value for shareholders,stakeholders, and society.

New methods to create shareholder value are unlikely to reach their full potential ifBoard members and leaders are creating dis-ease. To create more value, both atthe level of the corporate and business strategies, leaders need to ask themselves arange of questions based on the insights discussed in this paper if they are todeliver superior performance.

How do I determine the values, beliefs, and motivations of my Board?How can I improve my effectiveness by making sure I am appealing to thosevalues at the basic level (i.e., gaining acceptance for policies at the level thatfeels right)?How can I determine the values, beliefs, and motivations of my mainstakeholder groups (e.g., staff, suppliers, communities where we are located,customers, market analysts)?How can I alter my style but keep my policies, to ensure that I bring on boardthese other stakeholders, even when they have different values from theBoard?How can I use this information and knowledge to develop better policies andstrategies to increase shareholder value in the future?

The values of the top team can and do create “dis-ease” with employees with

The values of the top team can and do create “dis-ease” with employees withdifferent values at an unconscious level, which gives rise to beliefs such as “toomuch too soon” or “they (leaders) have lost the plot” that can lead to activeresistance to policies and strategies, and in some cases sabotage, thus stymyingstrategy implementation.

EVS Consulting (www.evsconsulting.co.uk) has developed a survey and reportingtool to help leaders gain insight to help answer these questions. The motivationalmap in figure 7 represents the values of a leadership team using a value systemthat has been tested for cross-culture reliability and validity, but is only just beginningto be used for business purposes. Going clockwise starting from 12 o’clock, themap below illustrates the Maslovian dynamic from the Sustenance Driven traditionalvalue system of Conformity, Tradition, Security, and Power, to the Outer Directedvalue system of Achievement, Hedonism, and Stimulation, to the Inner Directedvalue system of Self Direction, Universalism, and Benevolence. Team members’top two values are represented by stars with their unique letter and number.

Figure 7. Values Map of Top Team

The values dynamic of this team is hereby measured, which elucidates where theycome together and pull apart.

One immediate observation is that the diversity of values in this team represents thediversity of values in organisational cultures. What makes this team particularlydiverse is the unusually high proportion of managers with values in the SustenanceDriven motivational domain, as compared to the hundreds of other managers’values we’ve measured. In the workshop when we presented our findings, the teamcouldn’t figure out why this was so, until it was pointed out to them that theSustenance Driven managers came from India and Pakistan, as opposed toEurope, where the other members were from. Their knowing smiles immediatelyacknowledged the cultural dynamic affecting the team. This type of diversity is alsofound in cultures integrated by M&A.

With team members working in pairs, the results were used as a catalyst for a deepdialogue about the consequences of their needs and values for themselves and theirleadership. This was authentic talk – a powerful antidote to the surfaceconversations they normally had. Participants were buzzing with excitement by theend of the session. They not only understood more about themselves, but also theircolleagues. Implicitly, they developed empathy for colleagues who possesseddifferent values from their own by understanding why they were different andappreciating their needs. Having a framework in which to understand needs andvalues, and data showing how these were distributed amongst the team, enabledthem to connect to that part of themselves that others’ needs and valuesrepresented.

For leaders, this values mapping exercise provides data to benchmark and track thevalues dynamic underpinning their methods for creating value.

4. Conclusions

Values and motives for action are the crux of leadership and followership. Leadersneed to understand how to use the insight of how their needs and values drive thecreation of goals and strategies that motivate their staff and shape the culture tocreate more shareholder value. Leaders need to translate their missions, goals, andstrategies into the operative values of their direct reports and employees to createtomorrow’s company today, as illustrated in figure 8.

Figure 8:Reality and the Corporatio

Leaders also need to accommodate their leadership style to lead a culture withdirectors, executives, and managers who have needs and values different from theirown, to optimise value for shareholders and stakeholders. New methods to create

shareholder value are unlikely to reach their full potential if Board members andleaders are creating dis-ease.

What this paper hasn’t addressed, amongst other things, is how values maymanifest themselves in predictable patterns of strategic decisions and behaviour,which may be the subject for a subsequent paper. New focus group researchfindings are emerging regarding how the leadership style, seen through the eyes offollowers, varies between Inner and Outer Directed managers, challenging historicassumptions that leadership is solely about the characteristics of the leader.

We call on leaders to create more shareholder and stakeholder value bydetermining sustainable visions for their organisations and by translating thosevisions, goals, and strategies into the operative values of their employees. Byunderstanding the invisible forces of values, leaders can implement value creationstrategies further and faster throughout their organisations, harnessing andunleashing the strongest force in business today: the motivational driving forcewithin each and every employee.

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Endnotes

[i] Reality 2.0 is an allusion to Web 2.0, a new version of the World Wide Web thatallows users to interact and collaborate with each other in contrast to Web 1.0where users are limited to the passive viewing of content that is created for them.

[ii] The HP Way was defined by co-founder Bill Hewlett as “a core ideology … whichincludes a deep respect for the individual, a dedication to affordable quality andreliability, a commitment to community responsibility, and a view that the company

exists to make technical contributions for the advancement and welfare ofhumanity.” (Wikipedia) The following are the tenets of The HP Way:

We have trust and respect for individuals.

We focus on a high level of achievement and contribution.

We conduct our business with uncompromising integrity.

We achieve our common objectives through teamwork.

We encourage flexibility and innovation.

[iii] Exercises based on this model can be found in Lichtenstein, Higgs, and Martin-Fagg’s (2009) From Recession to Recovery: A Leadership guide for Good and BadTimes, Osney Media.: http://www.troubador.co.uk/book_info.asp?bookid=920

About the Author

Dr. Scott Lichtenstein is a founding Director of EVS Consulting, Visiting Faculty atHenley Business School and will be Senior Lecturer in Strategy at Birmingham CityUniversity from January 2012. Scott lectures, researches and publishes in the areasof Strategic Leadership and Corporate Governance as well as coaches. Hespecialises in leaders’ and executives’ personal values and their impact on strategicchoice and organisational performance. His consulting is mainly focused around aleadership values instrument and reporting tool he has developed.

Scott has worked at Henley Management College and Warwick Business School.Prior to that he was a consultant with a market research-based brand strategyconsultancy and worked in Belgium as a consultant for Hill & Knowlton InternationalBrussels, a Public Relation/Public Affairs company, and in the EuropeanCommission’s Enterprise Policy directorate.

Scott was born and raised in Oakland, California. Along with his DBA and MBA fromHenley Management College, he has a BA in Political Science with an InternationalRelations emphasis from the University of California at Santa Cruz. He hascompleted certificate courses in facilitation and coaching.

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