Is Market Value enough? A proposed method for measuring an organization’s “Real Value”

Is Market Value enough? A proposed method for measuring an organization’s “Real Value”

Monsanto, the global biotech agricultural company is “valued” at USD 49.6 Billion. That is a lot of money, clearly. But is that a real indication of the value that Monsanto has delivered to society?

Coming in at number 16 on USA Today’s list of America’s top 20 most hated companies, Monsanto has undeniably contributed negatively to the world in a number of ways, including the creation and production of very harmful chemical products such as Dichlorodiphenyltrichloroethane (DDT), polychlorinated biphenyls (PCBs), Nutrasweet, Roundup (allegedly a carcinogen), Agent Orange (considered responsible for 400,000 deaths and approximately 500,000 birth defects in Vietnam, according to the above USA Today article). With that being said, Monsanto has also contributed positively to society. According to the Monsanto website, the company employs 20,800 people around the world. That is 20,800 people who, hopefully, are more economically secure due to the presence of Monsanto in the world.

The issue here is not at all about whether Monsanto is a "good" or a "bad" company. The issue is whether market value, as measured in dollars, is an accurate, useful, or responsible way of measuring a company’s “worth” to society. Is the profitability of a company the only appropriate method of determining if an organization is adding a net positive value to society?

As a species, we humans have progressed immensely over the years - progress that seems to have accelerated in the last few decades. According to anthropologists, we started out as hunter-gatherers, and over time, have been able to create social structures, governments, corporations, and other entities to organize ourselves. We have created rules and policies to structure our lives and to try to maintain an orderly civilization. We have created police forces and armies to enforce these rules and judiciaries to punish people who don’t follow the rules. We have gone through this trouble over thousands of years for one main reason - to foster the welfare of the greatest number of people possible around the world.

When it comes down to it, isn’t that (creating welfare/positive value) the objective of most organizations? If it’s not, shouldn’t it be? It is difficult to think highly of selfish corporations that seem to only care about their bottom line.

As such, one of the key indicators of organizational success should be the net positive value that they contribute to society. At Konsälidön, we are undertaking a study on whether such an indicator would make sense.

We would like to create a standard measure that indicates value creation so that governments, consumers, and other entities can support companies that improve this measure over time.

How might one develop such an indicator?

The first step would be to get clear on what defines positive and negative value. This would be murky territory, as people have very different ideas of what is right and wrong, good and bad, etc.

However, there may be ways of doing this that could be considered relatively impartial. One way could be to determine what our common needs are as humans, and measure the level at which organizations are able to satisfy those needs.

Many people have tried to codify common human needs into a standard framework.

One of these people is Chilean Economist Manfred Max Neef. He has developed a matrix of human needs that could serve as a skeleton for a value creation indicator. He classifies human needs into two categories: existential and axiological:

Figure 1: Types of human needs

In turn, he uses these two categories of needs to make a needs matrix that looks something like this:

Figure 2: Fundamental Human Needs Matrix

Image Source:

The items contained within the cells of the matrix themselves are not to be considered needs. They are thought of as satisfiers of those needs. For example, food, in and of itself, is not a need. It is a satisfier for the needs of Having and Subsistence.

There are categories of satisfiers as well. Max Neef summarizes them very aptly so I will offer his definitions:

  1. Violators/Destructors: “elements of a paradoxical effect. Applied under the pretext of satisfying a given need, they not only annihilate the possibility of its satisfaction, but they also render the adequate satisfaction of the other need impossible. They seem to be especially related to the need for protection.” This could include ‘satisfiers’ such as an Arms Race (supposedly satisfies the need for protection, but inhibits subsistence, affection, participation, and freedom) or censorship (supposedly satisfies protection, but inhibits understanding, participation, leisure, creation, identity and freedom).
  2. Pseudosatisfiers: “elements which stimulate a false sensation of satisfying a given need. Though they lack the aggressiveness of violators, they may, on occasion, annul, in the medium term, the possibility of satisfying the need they were originally aimed at.” This can include “satisfiers” such as prostitution (affection), over-exploitation of natural resources (subsistence), chauvinistic nationalism (identity), status symbols (identity), and many others.
  3. Inhibitory satisfiers: “are those which, by the way in which they satisfy (generally over-satisfy) a given need, seriously impair the possibility of satisfying other needs.” Examples include paternalism (satisfies protection, but inhibits understanding, participation, freedom, and identity) and overprotective families (satisfies protection, but inhibits affection, understanding, participation, leisure, identity, and freedom).
  4. Singular satisfiers: “Those which aim at the satisfaction of a single need and are, therefore, neutral as regards the satisfaction of other needs. They are very characteristic of development and cooperation schemes/programs”. This can include programs to provide food (subsistence), welfare programs to provide dwelling (subsistence), insurance systems (protection), and others.
  5. Synergistic satisfiers: “are those which by the way in which they satisfy a given need, stimulate and contribute to the simultaneous satisfaction of other needs.” This can include activities such as breastfeeding (subsistence, but also protection, affection, and identity), educational games (leisure, but also understanding and creation), and meditation (understanding, but also leisure, creation, and identity).

Measuring value

Here is how we imagine using a model like the one above to measure the value that an organization is contributing to or detracting from society:

When measuring an organization’s impact, all of the organization’s various activities should be audited and then classified as satisfiers. In other words, what need is that activity aiming to satisfy? Large universities, for example, are some of the largest employers of people in the world. So in this case, employment is a satisfier of the needs for having, doing, subsistence and protection. Another activity that universities engage in is, of course, providing education. By providing education, a university is satisfying the needs for Interacting and understanding. One could argue that providing education also contributes to the satisfaction of the needs for subsistence and protection, by making people more employable.

Once we determine the activities that an organization is involved in, and which needs those activities satisfy (positive value), are neutral towards, or detract from (negative value), there would need to be some way of assigning a numerical value to the organization’s ability to satisfy or detract from each of the 36 need combinations, in order to ultimately assign an overall value score to an organization.

Determining a way of quantifying impact will certainly be tricky, especially when there are multiple satisfiers or detractors in the same cell. One way we propose this could be done is by accounting for:

  1. Quantity of Impact (Q)
  2. Magnitude of Impact (M)
  3. Positivity (or negativity) of Impact (P)

Quantity of impact would be the number of people who are affected by the organization’s activities. For example, if a university provides employment to 20,000 people, the quantity of impact of that activity would be 20,000. Magnitude of impact is the relative severity of the impact of the activity on the stakeholders affected by the activity. The number could range from 1 (no impact to very little impact) to 100 (very high impact).

In the university employment example above, let’s say for some reason the average wage the university pays is only slightly above minimum wage. In this case, though 20,000 people are employed by the university, they are receiving a barely livable wage, so the Magnitude of Impact of this activity may only be 1. However, if the university is somehow paying all of its employees USD 500,000, then that is clearly a huge impact, and the activity could receive a score of M = 100.

Positivity or negativity of impact is to denote whether this activity is helpful or harmful to society. In the case of providing employment, this is most likely a positive activity, so a (+1) will be associated with the activity. Going back to the Monsanto example, the production of carcinogenic chemicals that boost crop growth may receive a positive value when it comes to satisfying the need for having subsistence, but should receive a negative value when it is reevaluated in the context of the Being/Subsistence cell, because it is clearly harming people’s health, and therefore has a value of (-1)

Once the Quantity, Magnitude, and Positivity/Negativity of impact are determined for each activity in each cell, there needs to be a way to compare the scores sensibly. One way to do this could be in using the formula,



After calculating the value for each activity in each cell, these numbers could be summed to receive a total value score for each cell, and then an overall value score for the entire organization could be tabulated by summing the scores in each of the 36 cells.

We would need to determine a scale to determine what a value score “means” in relation to other organizations. This would require creating a sizable set of value scores from across organizations to understand the distribution of the value scores to help determine what is a “good” score and what is a “bad” score.

Once this is done, we could begin to compare organizations and their activities to see which are contributing positively to society and support positive activities at organizations in various ways, while penalizing activities that are harming society.

Every method of measurement will have its flaws, shortcomings and challenges, including the one I proposed here. For example, how do you determine which, and how many different cells of the matrix a “satisfier” falls in? Do we measure value only in relation to direct impact of the organization? For example if an organization is satisfying a need of subsistence by employing people, what about the people who have jobs at the organization’s suppliers, or buyers, that may in some part be attributable to the existence of the organization? When a university provides education to people, those students gain value by becoming more employable, empowered, and intelligent. But what about the people who are positively affected by those students as a result of the university’s education efforts? Is there any way to measure that?

As I said, we’re just starting this study and I am sure we will get deep into all of these concerns and issues and many other ones. It certainly won’t be easy to come up with an overall value measurement, but considering that the world is at a critical point in its development where things can shift towards either the positive or negative side more quickly than ever before, I believe it is very important that we find a standardized, useful way of comparing organizations based on the value they add (or don’t add) to society.

I’d like to hear from you. Do you agree or disagree with this proposed method? How would you measure overall value? How would you overcome some of the challenges I’ve listed above?

I look forward to your comments!

Back to blog

Leave a comment

Please note, comments need to be approved before they are published.