Who Is in Charge of Value?

The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed, or applied, seem to have been the effects of the division of labour.

—Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776

My VeraSage Institute colleagues and I have had the privilege of posing the question “Who’s in charge of value in your firm?” to thousands of professionals around the world. We are usually met with a momentary staring ovation, and then someone will inevitably shout out, “Everyone!”

Really? I live in California, where I’m told everyone “owns” the Golden Gate Bridge. I would like to sell my portion; unfortunately I encounter what economists call the tragedy of the commons. If everyone owns something, no one does. No one has an incentive to protect and maintain the value of the asset in question. Think public toilet. Species become extinct because no one owns them, such as the American Buffalo; species thrive—such as dogs, cats, cattle, and even elephants—because they are privately owned.

Not everyone can be good at everything. Nonetheless, it is rare to encounter a partner who does not believe he is quite competent at pricing, even though the empirical evidence is overwhelming that this is not the case. Furthermore, everyone in the firm already knows who the best and weakest pricers are, and in many firms there exist no clear lines of authority ...

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