Thinking about value

Last Friday, during my first weekend residency at the Presidio Graduate School’s executive MBA program, I went for a walk with Peter Warshall. We walked in a small group through the Presidio, stopping every few minutes to look at the land, the trees, the animals. We started in a spot I have passed literally hundreds of times – an intersection near my former gym, down from my (green) dry cleaner and on the way to the swimming pool where my kids have lessons every Saturday afternoon. Peter began to explain watersheds, indicating how the slope of hills and divide of trees are created by an original stream of water flowing to the ocean. In his 1994 article “Streaming Wisdom,” Peter describes a watershed as “a gathering – a living place that draws the sun and the rain together.”

Peter’s 3-hour “lecture,” delivered informally and adapted based on the plants he found along the way, was intended to be a lesson in systems thinking. And he did explain various systems – Greek, Structural, Human and Native American (the only one that recognizes the importance of humor as a core component of any system). But he also did so much more. Peter literally effuses knowledge; you can’t be near him without learning something that’s never occurred to you before, especially if you spend your days sitting in front of a computer. It was like drinking from a fire hose, but one that wakes you up instead of knocking you down.

Among the many ideas Peter presented, I found the discussion around types of value to be highly relevant. He described Existential Value, which is generally not overly appreciated in corporate America because it’s non-monetary. The value comes from doing something just because it’s good. Many CSR programs are rooted in Existential Value but typically that alone is not enough to make them strategic to a company. Then there’s Production Value, aka, money. And, finally, Option Value, which Peter described as “keeping something around for future use,” basically keeping your options open.

It was relatively obvious to apply this thinking to San Francisco’s Crissy Field, which was originally an airfield and is now a waterfront recreation area restored to its natural system through a tremendous community volunteer effort and money from the Haas family fund. The Existential Value is obvious – to restore this neglected piece of the city was the right thing to do. The Production Value is also clear – the real estate around Crissy Field has made many people very rich since the renovation. And when you look closely at how the restoration was completed, you can also see the Option Value in what elements of nature were kept intact and will be needed over time as the tides and other forces continue to evolve the habitat. 

Now the challenge is to apply the same thinking to business, teaching ourselves to consider the value options and appreciating that as each value has a unique price, each also has a unique reward. The afternoon with Peter gave me too much to think about, including his recognition that knowledge can be debilitating if you’re not prepared for it.