Why values-based leadership is losing market share.

Rorisang Tshabalala

In 2017 Chapter One Innovation celebrated its 10th year anniversary. Its Chief Executive, Rori Tshabalala was requested by African Leadership Initiative, of which he is a Fellow, to reflect on the 10-year journey of the firm through a values-based leadership lens. This article originally appeared on their website.

10 years ago I established Chapter One Innovation, a business model research and development firm with the vision of being the platform off which market-winners, industry-leaders and world-changers are launched. Our vision is pursued by building and launching high-impact, listable organisational systems at scale and helping others to do the same.

On the occasion of our 10th-year anniversary celebrating a decade in which we have proactively or been called upon to build new organisational systems across different sectors around the world, I was asked to reflect on some of the lessons learnt during that period through the lens of seeing values-based leadership as a product that we would want to build and launch into a market-winner, industry-leader and world-changer in its own right.

What follows are some of these reflections as, perhaps, provocations and the basis of further discussion on how we as ALI and YALI fellows might think about how we ensure that values-based leadership gains dominant market share in our society as a way of leading and being:

It is near impossible to turn organisational systems around from the inside

It has become the common refrain of many values-based leaders who choose to be and remain embedded within systems that are patently not values-based, to argue that the systems that those systems can be turned around from the inside, that such systems can self-correct or discover their consciences from within, helped along by their presence.

Many a time over the past 10-years I have watched well-intentioned, values-based leaders (me amongst those individuals) enter such systems with a view to turning them around from the inside only to realise that the decades and centuries-old networks of incentives that have and continue to sustain those systems are far greater and more resilient than the good intentions of yet another values-based leader moved to throwing his or her hat into the arena so as to induce within these systems a self-correction.

The second law of thermodynamics states that the entropy of any isolated system always increases. To attempt to counter such entropy is to attempt to counter natural laws, not just of how natural systems operate but also of how human systems operate as well. Such entropy can be countered but this is often from an external source of heat rather than an internal stimulus.

As such, at best, those values-based leaders that enter such systems are typically unceremoniously spat out by those systems or they eject themselves from such systems as crestfallen cynics who have written off all and any attempts to change the status quo as futile. At worst, it is them who are turned before they are able to turn those systems around; leaving in their wake a disillusionment with the brand that is values-based leadership.

This is not a defeatist perspective though because it does not conclude that such systems cannot be changed; instead, my experience is that the surest way of turning organisational systems around is to develop competing systems that render the old way of doing things obsolete, forcing the incumbent system to either collapse under the weight of its own inertia or to quickly adapt and self-organise towards the new way of doing things lest they suffer a Darwinian fate.

Our best hope of making values-based leadership and values-based being mainstream is to establish organisational systems, be they families, communities, religious and civil society organisations, political formations and corporations that represent meaningfully differentiated, sustainable and competitive alternatives to the dominant status-quo.

Those ideas, people and communities that society invests its capital into are ultimately those that flourish

The biggest and most significant organisational systems in existence today are not necessarily an indication of the best ideas, they are only an indication of the best capitalised ideas; this is as true in politics or civil society as it is in business or sports. I spent some time in politics; one of the charts that I will never forget was one that showed the almost perfect correlation that existed at that time between the funding that South African political parties were able to raise and their eventual performance in the national elections.

By most objective accounts the current political league tables in South Africa more strongly reflect access to resources than they do the substance of prevailing ideology and efficacy of leadership. More recently, to this point, the question has been raised whether wealthy philanthropy (“the elite charade of changing the world”) is doing more harm than good; once again reflecting through the words of authors like Rob Reich on the question of whether access to relatively greater resources makes the wealthy best suited to be leading efforts to fundamentally change the world.

Values-based leadership is one such idea; it is an argument put forward by some of us on the type of leadership required to bring about the fundamental change and impact on society that we long to see. The strength of the argument rests not only on its substantive merits but also on how well we capitalise it. Values-based leadership as an argument is losing, for now, not because it is a weak argument but because it is a weakly capitalised argument.

For every corporate that stands a monument to all other ideas of leadership and corporate stewardship; if we do not invest in building organisational systems in the image of a values-based paradigm then we cannot expect that such a philosophy could ever become mainstream. As a matter of course, most economically active and thus socially powerful people spend most of their waking hours punching away in the organisational systems that they refer to as their work.

These organisational systems have, by far, the greatest and most disproportionate impact on the values and norms that these people embrace and ultimately express out in the world by virtue of the amount of time that gets spent in them. The workplace is thus a dominant driver of societal values and norms.

If we are to transform our societal values, then we have to capitalise organisational systems that reflect that difference and can imbue those that work within them with such values.  The change we long to see in our society must be preceded by a change in the ways in which we allocate our capital; be it financial, intellectual, political or otherwise.

Innovation is a force-multiplier to capital

While it is relatively easy enough to start a small venture or initiative; ideas and organisations do not grow into organisational systems at scale by accident. There is a certain deliberate art and science to bringing “born-big” ideas to life and the critical ingredient in that respect is innovation – no organisational system of any significance ever legitimately became that way without deliberate effort being applied towards doing something different.

The Obama campaign of 2009, for instance, was not the best capitalised in terms of financial resources but through innovative ways of organising and mobilising voters, innovation became a force-multiplier that turned the two fish and five loaves of bread that ordinary voters could offer to the campaign into the groundswell and movement that catapulted the relative outsider to the Oval Office.

Values-based leadership is a challenger brand of leadership to the dominant forms of being and leadership that exist in society today. For those of us who have reflected on the merits of such values-based leadership for a long time, it seems the obvious and most sustainable choice; for the vast majority, however, it seems the path of greatest resistance.

If we are to drive greater market-share for values-based leadership then we have to take innovation up as a critical enabler of that drive; we have to remove those barriers that make values-based leadership an unrelatable and inaccessible brand; we have to become values-entrepreneurs who are constantly innovating on how to gain greater market share for values-based leadership.

Scale matters

Ideologies and arguments are like spirits or even parasites; they can only be as strong and as dominant as the bodies and the systems that they occupy. Values-based leadership is an ideology, it is an argument, a technology; it can only be as dominant as the bodies and systems that it occupies – both the size of the individual bodies and systems that it occupies and the quantity of the bodies and systems that it occupies.

It is thus important that we not only build values-based organisational systems but that we build them at scale so that this brand of being and of leading touches and influences more lives. It is perhaps a result of our well-intentioned and justified veneration of individuals such as Nelson Mandela as values-based that has led the values-based leadership brand down a path of being a niche and inaccessible brand that few could ever hope to live up to, though many admire it.

Yet, there are values-based leaders all around us and beyond that, there are even more moments of values-based leadership all around us. Every chance we take to celebrate those individuals and those moments and the people within them is a chance we take to grow the scale of this values-based leadership brand.

It is thus not enough for us to enjoy the accolades and recognition that many of us receive for our values-based leadership; we have to be actively nurturing those that will compete against us for those awards and titles because the more of us that there are, the less market share that competing ideologies and arguments have.

It is okay to be contrarian, as long as you are right– Diversity, like values-based leadership, is an argument, an ideology and a “behavioural technology” that is a challenger brand to the incumbent ways of putting teams and organisational systems together. At the firm, we spend a long time thinking about the issue of diversity and what we have come upon is the notion that diversity is losing the ideological battle because though it is said that it produces better business outcomes; there is scant evidence around to prove that more diverse teams produce better business outcomes than un-diverse ones.

Corporate South Africa continues to fail at diversity but its business outcomes continue to improve. If diversity is going to win the battle of ideologies then it has to show real, tangible, meaningful results that go beyond it simply being the right thing to do. Similarly, values-based leadership has to demonstrate real, tangible, meaningful results that go beyond just the fact that it is the right thing to do.

The values-based organisational systems that we build must show superior results for the notion of values-based leadership to gain mass credibility. The question to us, I suppose, is: who must it show those results for? A favourite quote of ours at the firm is: “It is okay to be contrarian, as long as you are right”. Values-based leadership is a contrarian notion in the world that we live in today and it is fine for us to hold onto it, as long as we are right.

It is far easier to fight for principles than it is to live up to them– Alfred Adler expressed it best that principles are far easier to fight for than they are to live up to. Values-based leadership is itself, a principle – one that we mostly fight for in our politics only to betray in our business dealings and our homes. If the brand of values-based leadership is going to become a market-winner, industry-leader and world-changer, then it is critical that we, those who fight for it, live up to it to as best our ability as our mortal existences allow.

This brand gains more based on who wears it; just as much as it loses most when those who wear it fail to live up to what it represents. The greatest damage to this brand, in this respect, is often done in our families where we are more inclined to unencumber ourselves of the weight of pretence and to reflect to our partners and children the truest version of ourselves in all of its splendid glory.

Values-based leadership begins in the home where the next generation of brand-loyalists are created. Just like any other segment of customers, the market segment at home is more discerning than we often give it credit for and that which we do thinking they cannot see, is that which most influences what they believe about that which we do and say when we know that they are watching us. 

Provocations by Chapter One Innovation

The under-appreciated superpowers of synchronicity and harmony. 


The Myth of Organisational Self-Correction.


Why values-based leadership is losing market share.