Esko Kilpi on Interactive Value Creation

We have assumed that if we each looked after our own interests, an “invisible hand” would arrange things so that everything worked out for the best for everyone. Game theory has also made it clear to us that in the short run, those who take an I win – you lose approach, will always win out over those who try to employ an I win – you win strategy.

Before Adam Smith wrote “The wealth of nations” and came out with the idea of the invisible hand, he had already written something perhaps even more interesting for our time. In “The theory of moral sentiments” he argued that a stable society was based on sympathy. He underlined the importance of a moral duty – to have regard for your fellow human beings. Those who developed a win – win culture would always do better in the long run.

What defines most problems today is that they are not isolated and independent but connected and systemic. To solve them, a person has to think not only about what he believes the right answer is, but also about what other people think the right answers might be. Following the rhetoric of game theory: what each person does affects and depends on what everyone else will do and vice versa.

When it comes to understanding the organizations in which we work, most of us best understand our own jobs and the work groups of which we are part, our strong ties. When problems arise, this disconnectedness and unawareness of how things work in the larger system often leads to shortsighted and suboptimal solutions. A person or a group is essentially looking after their own interests. As a result, problems are solved in a way that easily leads to more problems. These behaviors often mean that I count and you don’t, resulting in people being pushed away from one another instead of coming together.

The word communication means to make something common. To make things common, we shared ideas and information. But a social business is not about senders and receivers of information. It is not about content that is conveyed from one person who acts as an authority to the others who act as instruments of this authority.

A social business arises as a result of self-organizing interaction within the always developing, jointly constructed reality.

Our experience is that when one person says something, the other person does not respond to exactly the same meaning. Thus when the second person responds, the first sees a difference between what he meant to say and what the other understood. On considering this difference, he may be able to see something new, which is relevant both to his own views and those of the other person. Thus people coming together in conversation are always creating something new.

Connected people are able to create value and solve problems together on a totally new scale and with unprecedented ease. The challenge, however, is still the same as it was in the time of Adam Smith. We need to have regard for fellow human beings beyond our strong ties. We need to value how they think!

Perhaps stable social businesses are based on social value and sympathy?

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More on the subject: Mark S Granovetter on The Strength of Weak Ties. The Washington Post on the Economics of Cooperation. Luis Suarez blogging about Louis Richardson “A Copernican revolution to become a social business “