The “most modern man” in Dickens, John Wemmick from Great Expectations, makes much of the importance of separating what Deirdre McCloskey calls the P-values of prudence from the S-values of sociability. “The office is one thing, and private life is another. When I go into the office, I leave the Castle [his home] behind me, and when I come into the Castle, I leave the office behind me. If it’s not in any way disagreeable to you, you’ll oblige me by doing the same.” As McCloskey’s work suggests, such a division is not only disagreeable, it is deleterious. P values and S values must be mingled in order for our business lives and our social lives to function well.
A fine example of the good results that arise from this kind of mingling is offered in Charles Duhigg’s new book The Power of Habit. The most frequently excerpted chapter of the book seems to be the chapter on Pepsodent that explains how those sneaky advertisers manipulate us to make us think that we have a nasty film on our teeth that requires frequent brushing with Pepsodent to make us socially acceptable. The most McCloskeyan chapter, is the chapter about Alcoa.
Alcoa is an aluminum manufacturing company that has “manufactured everything from the foil that wraps Hershey’s Kisses and the metal in Coca-Cola cans, to the bolts that hold satellites together.” There’s a lot of molten metal involved in what they do, and a lot of heavy machinery, and for a long time, there was a lot of worker injury.
In 1987 Alcoa hired a new CEO named Paul O’Neill who set Alcoa a single goal–No worker injuries. Zero. None. According to Duhigg, everyone thought he was nuts. Alcoa was beleaguered by all kinds of problems with profits and processes, and O’Neill wanted them to ignore all that and focus on worker safety to the exclusion of all else? This was sacrificing all kind of apparent P value stuff on the altar of S values. It was madness. But O’Neill held firm.
Duhigg writes, “In 2010, 82% of Alcoa locations didn’t lose one employee day due to injury…On average, workers are more likely to get injured at a software company, animating cartoons for movie studios, or doing taxes as an accountant than handling molten aluminum at Alcoa.”
Heck, I got a wicked bad paper cut looking for the Dickens quote at the top of this post.
And a funny thing happened on the way to satisfying O’Neill’s S values. A lot of P values got satisfied as well. Aloca’s safety obsession required a way to share real time safety data between offices, so O’Neill had the offices linked up in a computer network. It seemed natural to employees to use that network to share other useful business information, so Alcoa was faster to respond to market demands and price information. Alcoa doubled their profit from aluminum siding because a worker suddenly felt important and “listened to” enough to make a suggestion about the way Alcoa set up the machines that painted the siding. Machines were redesigned to protect worker safety, and their new reliability meant more reliable aluminum and better products. Alcoa’s costs went down. Their stock price went up by 200%.
That’s what happens when you bring your virtues, or your S values, or your good home-training, or whatever you’d like to call it, to the market. That’s what happens when the market is free enough to respond to those virtues. Virtue is its own reward, but when you bring it into the market with you, everybody wins.