Value, Trust, Quality: Some Thoughts

Value; What is It? and Why is it Important?

Silicon Valley has emerged as a source of profit for many of those who are affiliated with it. But what is it really worth? What value does Silicon Valley types and their products provide? This is the question as to what do we mean by value in our society. An adjunct of value is the concept of trust. I was introduced to this concept as a critical element in a stable society by the late Dave Staelin, a former teacher and colleague. I thought that value was a sine qua non, but Dave convinced me that trust was equally if not more so an element in what we see as a productive element in a stable society.

Now what do we mean by value, and in turn what do we mean by trust. Value means potentially many things to many people. There is the concept of personal values. Namely what does a person hold dear to them, what are their metrics of judgement of themselves and their surroundings. One may hold altruism as a value, humility as a value, cleanliness as a value. Then there is the construct of values of a society. Namely such things as the right of free speech and the right to practice a faith. Then there may be the value of one's individualism, the sanctity of individual rights. Then too is the value inherent in some artifact. An auto has value in that it takes us from one place to another quickly, reliably, and with less human exertion. We can assign a simple measure to that value by how much it costs us and what we get in return for that cost.

Our interest is in that latter definition, a concept of economic or societal value. Thus we may ask what value some new technology brings forth. Let us take a computer, a personal computer, as an example. We may ask; what value does it have to a person? to me? to society? Obviously it may allow me to type better, write faster, calculate more accurately. However, there may be externalities that reduce the value. It may allow me to do more, but then I no longer need a typist, thus I have increased its value to me and reduced it to them. Thus how does one ascertain value; to the person or to the group. If I were a Marxist I would be focusing on the value of the labor as a input to the building of the computer rather that what it does for the user of the computer.

Thus to simplify the analysis I will use value as what added benefit accrues to the individual who employs the entity which purportedly conveys the value. Thus the value of a personal computer, the value of Goggle search, the value of Uber, will all be judged in the context of the user first and then society second. It would seem to be easier to perform such a task.

Before continuing let me address the issue of trust, and its adjunct, quality. Something, an instrument of some type, has value to a person because the individual can use it the instrument to perform some task for which the instrument was designed and for which the representation one relied upon at the time of its acquisition would be correct. Namely it does what is was supposed to do. One relies upon a representation by a purveyor, not only that the instrument functions as it was supposed to but that if it does not there will be a remedy. The combination of value with trust, namely its concatenation, results in the concept of quality. Namely if one obtains something that adds value and one can trust its delivering value, trust, then one has a quality experience, and quality adheres to this overall process. Value adheres to the instrument and trust to the purveyor. Quality adheres to the concatenation of both.

Let me give a current example and counter example. Let us assume I purchase a product from Amazon, say a chain saw. I need the item to remove trees. Thus it must cut wood while providing reasonable safety. The instrument must start, function as specified, and not wear out in an untimely manner. It must also have a modicum of safety. Now if I were to purchase from Amazon and they represent that they sell it to me, then I have value and I have trust, namely if it does not work Amazon will remediate the purchase. On the other hand if Amazon just presents the product and a third party actually is the purveyor, I do not know then and there is no trust. The transaction has no quality. You see one needs both value and trust. This is the Staelin construct again. Let me give another example. This time Google. I am seeking information about some health related matter, say a physician who can care for a certain ailment. Does Google provide value? Yes, it may give me a list from which I could then address and seek what I am looking for. Do I trust Google? That is a good question. Trust in this case means if I ask for a physician expert in dealing with the specific ailment, then I assume that Google will present all the options, the alternatives. I assume or trust that Google will not filter out physicians whom the do not like, are not acceptable to Google. How do I know this? As with the Amazon case it is by experience. I am pragmatic, I rely upon experience, mine and others. This works until it does not work. Then pragmatically trust is lost, and near impossible to get back.

Thus, if Amazon fronts for a poor third party vendor and as a consumer I am scammed, then I am wary of everything on Amazon. I move to Walmart. If I find out Google refuses to, for example, list any physician who is a registered Republican, then I become wary of Google across the board. Trust is lost and a key part of the quality equation is vitiated. The instrument no longer has quality and thus I seek an alternative.

Let is leave trust aside for a moment and focus on value. Value has a philosophical as well as economic understanding. We somehow wish to address the amalgam of the two. We want to do this for the development of technological implements. Thus the instrument may be a new cancer immunotherapy, a new computer processor, a new water desalination technique, a new way to remove carbon dioxide from an exhaust, or a new app. What is the value we would ascribe? Economically we would project cash flows from an anticipated market. But there is also societal value as well. A new app may generate cash but would have minimal societal value. In fact it may be a value destroyer. Namely a person would defer a productive action while expending time on the useless app.

Thus we look at value as both economic and societal. Yet can we monetize this? Namely can we make a pari passu comparison? Let me defer that for a moment. The above simple example does show we have value creating, healthcare, and value destroying, apps, instruments. We also have value transferring instrument, which is fundamentally what bankers and VCs do. They take money from one source and reallocate it to another. Value transfer agents do not create value themselves. The seek those who do. Yet value transfer agents look at value solely as an economic return. Thus if they invest in a value destroying instrument, such as an app, they then also become a party to that action.

One way to determine the societal effects on value is the concept of externalities. Namely the effect that may be secondary or a result of the primary action. There is a well established body of work on quantifying externalities. The problem often is, however, that externalities are unanticipated consequences.

The problem we see today is twofold. First, value is often measured solely in short term financial returns devoid on the unintended consequences of the externalities. Second, trust is oftentimes never a factor in the delivery of instruments. I again use the example of Amazon. As it seeks to continually expand, it does so outside the scope of its ability to maintain trust. Its use of third parties and its separation of control on these parties has led to loss of trust. Similarly, for an entity like Google, its burgeoning political bent, for better or worse, can irreparably taint it reputation as a trustworthy source of information. This of course is orders of magnitude for entities like Facebook and Twitter.

Thus when we seek quality, the amalgam of value and trust, we will have the conundrum of Pirsig in Zen and the Art of Motorcycle Maintenance (ZMM). Pirsig says:

"The definition was: "Quality is a characteristic of thought and statement that is recognized by a nonthinking process. Because definitions are a product of rigid, formal thinking, quality cannot be defined." The fact that this "definition" was actually a refusal to define did not draw comment. The students had no formal training that would have told them his statement was, in a formal sense, completely irrational. If you can’t define something you have no formal rational way of knowing that it exists. Neither can you really tell anyone else what it is. There is, in fact, no formal difference between inability to define and stupidity. When I say, "Quality cannot be defined," I’m really saying formally, "I’m stupid about Quality.""

Pirsig goes on:

"He singled out aspects of Quality such as unity, vividness, authority, economy, sensitivity, clarity, emphasis, flow, suspense, brilliance, precision, proportion, depth and so on; kept each of these as poorly defined as Quality itself, but demonstrated them by the same class reading techniques. He showed how the aspect of Quality called unity, the hanging-togetherness of a story, could be improved with a technique called an outline. The authority of an argument could be jacked up with a technique called footnotes, which gives authoritative reference."

"There’s an entire branch of philosophy concerned with the definition of Quality, known as esthetics. Its question, What is meant by beautiful?...he saw that when Quality is kept undefined by definition, the entire field called esthetics is wiped out—completely disenfranchised—kaput. By refusing to define Quality he had placed it entirely outside the analytic process. If you can’t define Quality, there’s no way you can subordinate it to any intellectual rule. The estheticians can have nothing more to say. Their whole field, definition of Quality, is gone."

Indeed esthetics, and aesthetics does read onto to what quality is, it is a perception, not a measurable quantity.

Thus, we should look at value as the amalgam, seek out trust, and then quality, as elusive as Pirsig notes, should be self-evident.