If we create good institutions, then we can live up to our good intentions.
Knowing and articulating our values is essential. But when the metaphorical Siren’s song fills the air, is knowing our values enough to ensure that we live by them?
According to Ken Shotts, a professor of political economy at Stanford Graduate School of Business, having stated values is just expressing aims not necessarily actualizing them through concrete policies and practices. “We need those binding institutions to help us live up to those intentions,” Shotts says.
From incentive structures within organizations to regulatory bodies, laws, and civic organizations in society at large, Shotts explains how carefully designed institutions can ensure that we don’t just espouse good intentions, but that we actually live up to them.
Key Takeaways:
- Good intentions aren’t enough: While defining our values is essential, we need binding institutions to ensure those values are upheld at the personal level, organizational level, and in society at large.
- Keeping businesses on track: At an organizational level, key "institutions" include tangible incentive structures like compensation, promotion criteria, monitoring processes, and cultural norms around praiseworthy and unacceptable behavior.
- Keeping society on track: On a broader scale, societal institutions like regulations, laws, and civic groups provide crucial checks and balances to channel business activities toward positive societal impact beyond just profits.
More Resources:
If/Then is a podcast from Stanford Graduate School of Business that examines research findings that can help us navigate the complex issues we face in business, leadership, and society. Each episode features an interview with a Stanford GSB faculty member.
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