The Golden Rule of Value

Who holds the gold makes the rules

Great fleas have little fleas upon their backs to bite 'em,

And little fleas have lesser fleas, and so ad infinitum.

And the great fleas themselves in turn have greater fleas to go on;

While these again have greater still, and greater still, and so on.

- Jonathan Swift, Siphonaptera

Layoffs are top of mind for many in the data profession these days. Also, over the last few weeks, there have been a lot of layoffs with no end in sight¹. Layoffs suck. I’ve been there, and it isn’t fun. Layoffs also have a tremendous human toll. 

Alongside the news of layoffs, people are starting to talk about delivering value, with data professionals wondering how they can add more value. Value is a discussion that oscillates. When times are good, the discussion of value is out of vogue. In downtimes like this, value is top of mind. It got me thinking that not all value is created equal. It’s hard for me to imagine people in their jobs trying not to add value. I like to believe people bring their best versions of themselves to work and give their job the best they can. Sometimes this makes a considerable difference and delivers real value. Other times, these honest efforts go unrecognized or underappreciated. And as we’ve seen recently at some big companies doing layoffs, ultimately, the shareholders and the board of directors are the ones who determine value. The recent layoffs are a reminder of the Golden Rule - whoever holds the gold makes the rules.

In my article, Groundhog Days, I discuss a recurring question I've seen throughout my career - “if data is believable, how is it adding value?”. After publishing the article, I realized I had given the topic of value a superficial treatment. Since value is front and center, I think it deserves deeper consideration.

How I defined value in the Groundhog Days article focused on how the book Lean Thinking defines it. To paraphrase the text, “Value can only be defined by the ultimate customer.” To wit, the customer defines what’s valuable, and you produce that value for the customer. This definition is great but limited to customers and what’s produced for them. This is nice but incomplete. It doesn’t consider that value is transitive, hierarchical, or dynamic. You may think you’re adding value in your small circle of influence but not adding value in the bigger picture. Again, not all value is created equal. Value is transitive. Let’s look at value from top to bottom.

For simplicity, here’s the hierarchy of value within a company. Of course, the external customer (those who buy things and keep the company in business) should theoretically be the ultimate judge of value. I’ll take for granted that’s the case here and list the decision-makers who impact those who work at a company. Notice the value chain is transitive, from most important to…well, you get the idea.

Shareholders/Board of Directors > Executives > Management > Individual contributors.

At the top of the value food chain is the shareholder, often represented by a board of directors. The main goal of a business is to maximize shareholder value. No matter who you think you’re serving, a company ultimately serves its shareholders (who may serve a higher power, but that’s beside the point here). In nearly every case, shareholders own and control the business, and the board of directors represents the shareholder’s interest. This is a layer of control to ensure executives - and those reporting them - deliver value².

Here’s a massive crux with value. Value is subjective and dynamic. What’s valuable today might not be valuable in the future. With a sudden change of priorities at most tech companies, shareholders wanted growth before, and now want cash flow and profitability.

Your customer determines value, and you need to know who your customer is. This is where things get nuanced. Value is fractal and transitive. It depends on the context of the customer who wants something valuable and the producer who can create something of value. Who are these people? There’s shareholder value at the top, then bottomless rungs of stakeholders below, each with something they value. Sometimes shareholder and stakeholder value is aligned; other times, they’re not. Although the shareholder is at the top of the food chain for your company, your immediate boss might value different things. Who are you to serve? The obvious answer is your boss should value what the shareholders value, with this alignment extending across the organization. In theory, this is how the world should work, but things are often different and far more complicated in practice.

There is a catch to making this all work. Are you empowered to align your work with what shareholders find valuable? The crux of this assumption is whether you have the responsibility and authority to add value. It’s common to see data professionals granted a lot of responsibility but little to no power to take action on the insights from the data they produce. This often leads to frustration because you’re fighting an uphill battle with no weapons. The flip side is the business is frustrated because you’re not delivering on what it finds valuable. I’m sure there’s a name for this paradox, but it escapes me. 

If the value is identified, you will still find value elusive if you are granted responsibility without authority. You and your team need to be in violent agreement with the business about what value means, how it is measured, and who is responsible for delivering it. Again, this is situation-dependent and socio-political, so I cannot provide a single solution that will magically solve your problems. This is also why value has been a hotly debated topic for ages. It’s easy to talk about value and get worked up about it. It’s far harder to know what it is, how it’s delivered, and by whom.

So what can data professionals do to add value right now? First, understand the highest-order mission of the company and what it finds valuable. If your company is public, read annual reports and watch interviews with your company’s investors and executives. Do your homework and ask, “does this align with what I’m working on?” Assuming the answer is yes, keep doing what you’re doing and make sure those who control your destiny know it and agree that what you’re doing is aligned with what’s most valuable. If the answer is no, it might be time to have some serious conversations with your peers and boss about the misalignment of values and the work you’re doing. 

Your true north is knowing your ultimate customer and what they value.

1. Google, Amazon, Microsoft, and many other companies.

2. In Google CEO Sundar Pichai’s letter to employees announcing layoffs, it’s clear what Google values - AI. “I am confident about the huge opportunity in front of us thanks to the strength of our mission, the value of our products and services, and our early investments in AI. To fully capture it, we’ll need to make tough choices. So, we’ve undertaken a rigorous review across product areas and functions to ensure that our people and roles are aligned with our highest priorities as a company. The roles we’re eliminating reflect the outcome of that review.” https://blog.google/inside-google/message-ceo/january-update/