The Crucial Interplay of Intrinsic vs. Extrinsic Values in Modern Leadership

In rapidly evolving business environments, leaders face unprecedented challenges in balancing multiple competing priorities. A multifaceted question that leaders grapple with is which aspect holds the greatest significance - reconciling the immediate environmental and health consequences of their products or services with effective marketing strategies or enabling a robust decision-making culture within the internal operating environment that the firm produces or sells it?

The answer lies not in choosing one aspect over the other, but in understanding the delicate interplay between them. At the heart of this challenge is a fundamental question of values—both extrinsic and intrinsic—and how they shape decision-making processes and our interaction with the world.

Understanding Values in the Modern Context

Values, as defined by Schwartz (1992), are "concepts or beliefs about desirable end states or behaviours that transcend specific situations, guide selection or evaluation of behaviour and events, and are ordered by relative importance." Essentially values are the core principles or standards of behaviour that we deem essential in life. They act as our moral compass, guide decision-making, shape our perceptions and influence how we interact with the world.

In the business context, values serve as the foundation for corporate culture, inform strategic decisions and serve as the magnetic force that shape stakeholder relationships for collective impact.

Moreover the question arises if growing up in a culture radically different from that of parents and grandparents in the 1950s, 60s and 70s have any effect to self-views, attitudes and behaviours of today's emerging adults? Evidence overwhelmingly supports this. Essentially, generational differences reflect cultural shifts: as cultures evolve, the youngest members are socialised with new and distinct values.

Recent studies on contemporary mainstream cultural trends have identified a significant shift in societal values towards extrinsic motivators. Twenge et al. (2012) found that younger generations place higher importance on money, image, status, fame and material success compared to previous generations. This shift is significantly influenced by several societal forces, shaping thoughts, influencing behaviours, and values that include:

• Government Policies: Often prioritises economic growth over other measures of societal well-being (Stiglitz et al., 2009).
• Social Media: Viral platforms where surface-level achievements on status, number of followers & likes are celebrated and amplified (Verduyn et al., 2017).
• Advertising: Perpetuating the notion that the path to happiness is achievable through material consumption (Kasser, 2002)

This cultural emphasis on extrinsic values has led to a rise in narcissistic personality traits. Combined with the spread of information manipulation and disinformation, this fosters quick, often false perceptions of success, self-entitlement and fulfilment. Consequently, a zero-sum mentality has driven to view success as a finite resource, resulting in either win-lose or lose-lose outcomes in problem-solving efforts.

The Pitfalls of Extrinsic Value Dominance

When extrinsic values dominate, several detrimental effects are observed:

• Short-term thinking: Excessive focus on immediate gains is proven to be at the expense of long-term sustainability. Laverty (1996)
• Erosion of trust: Studies by Pirson and Malhotra (2011) indicate that prioritising appearances over authenticity significantly reduces stakeholder trust.
• Decreased innovation: environments valuing conformity over creativity stifle innovation. Amabile (1996)
• Environmental degradation: the link of increased consumption to environmental challenges, arguing for a shift in perspective from "saving the planet" as restorative caretakers to recognising our interconnectedness as balanced co-habitants with Earth and its natural resources. Jackson (2009)

These effects create a cycle of unsustainable practices, both in business and in broader society, leading to increased inequality, environmental challenges, and social discord.

The Power of Intrinsic Values

Intrinsic values are those that are inherently rewarding to pursue such as personal growth. community contribution, environmental stewardship, meaningful relationships and more. Leaders who prioritise intrinsic values foster environments where:

• Long-term sustainability is valued over short-term gains. Collins and Porras (1994) found that companies guided by core values outperformed the general market by a factor of 12 over a 60-year period.
• Collaboration trumps competition – i.e. enabling 1+1=3 environments for collective ‘win-win’. Tjosvold (1998) demonstrated that cooperative goal structures lead to more productive outcomes than competitive ones.
• Democratised innovation flourishes through diverse perspectives, driven from the grassroots. Von Hippel (2005) showed that user-driven innovation, motivated by intrinsic factors, can result in significant product and service improvements.
• Stakeholder well-being is considered alongside shareholder value. Freeman et al. (2010) argued that considering all stakeholders' interests leads to more sustainable business practices and outcomes.

Emotional Intelligence: The Bridge to Balance

Achieving a balance between extrinsic and intrinsic values hinges on attaining high degree of emotional intelligence (EI) that encompasses:

• Self-awareness: Understanding one's own values, motivations, and biases.
• Self-regulation: Managing impulses and adapting to changing circumstances.
• Social awareness: Recognising and understanding others' emotions and perspectives, through empathic and servant leadership.
• Relationship management: Inspiring and influencing others towards positive outcomes.

By developing high emotional intelligence, leaders are able to:

1. Recognise when extrinsic values are dominating decision-making processes.
2. Regulate their responses to external pressures for short-term gains.
3. Empathise with stakeholders' diverse needs and perspectives.
4. Inspire collective action towards more balanced, sustainable outcomes.

In essence, emotional intelligence acts as the bridge that connects extrinsic desires with intrinsic values, fostering a more holistic, sustainable approach to success and fulfilment.

From Zero-Sum to Win-Win

As leaders cultivate emotional intelligence and restore balance to their value systems, they unlock the potential for win-win solutions to address complex challenges. This shift occurs through:

• Enhanced Perspective-Taking: Leaders with high EI demonstrate increased ability to consider diverse viewpoints when making decisions to result in identifying solutions that benefit multiple stakeholders.
• Long-Term Thinking: Organisations with balanced value systems are able to attain higher likelihood of implementing sustainable practices in balancing immediate impacts with long-term consequences.
• Collaborative Problem-Solving: Organisations prioritising both intrinsic and extrinsic values creates an environment where collective intelligence can flourish through increased cross functional collaboration.
• Systemic Approach: Leaders with high EI are more likely to consider second-order and third-order effects of decisions, by recognising the interconnectedness of issues to advance for more comprehensive, effective solutions.

The Path Forward for Leaders – From Passion to Purpose

To navigate the complex landscape of modern business while maintaining a balance between extrinsic and intrinsic values, leaders should:

• Cultivate Self-Awareness: Regularly reflect on personal and organisational values. Implement regular reflection practices and 360-degree feedback mechanisms.
• Prioritise Emotional Intelligence: Invest in EI development programs for all levels of the organisation.
• Foster a Culture of Critical Thinking: Establish formal processes to encourage questioning of assumptions and exploring diverse perspectives.
• Emphasise Collaboration: Redesign reward systems to recognise collective achievements alongside individual contributions
• Communicate Purpose: Develop and regularly reinforce a clear narrative linking organisational goals to broader societal benefits.
• Model Balance: Ensure leadership actions and decisions visibly demonstrate commitment to both extrinsic and intrinsic value creation.

The planet and people challenges facing modern leaders—from climate change to forced displacement to social inequality—demand a new paradigm of leadership that recognises the interconnectedness of all stakeholders and strives for truly sustainable success. By embracing these practices, leaders can create organisations that not only succeed in traditional metrics but also contribute positively to society and the environment.

By cultivating this balance, then can we move beyond the current zero-sum and myopic thinking to create a win-win future, where business success and societal well-being are not just compatible, but mutually reinforcing for the betterment for all.