The Stabilizing Foundation of Values

We’re living through some crazy times and dealing with issues that were not anticipated during planning sessions.  Every day we’re confronted with new information, new analyses of facts and opinions, creating new decisions that need to be made that can dramatically impact our lives.  The organizations, and individuals, that are handling the chaos (or opportunity!) the best are those with a strong foundation of values.

What are values and why are they important?

Values are the fundamental beliefs of an organization or a person.  In many cases they are so fundamental that you’ll sacrifice sales, or even the organization itself, in order to continue to adhere to them.  Values both create and require courage and selflessness.  Think of heroes on the battlefield or martyrs for injustice.  Values are the guardrails and guideposts that define interaction, strategies, and decisions within and outside for the organization and its people.

When I work with organizations to develop hoshin plans or traditional strategic plans, I first spend a lot of time helping them define their principles and values.  This becomes a critical input into analyzing the current state, the desired future state, and the plans and experiments that will be run to bridge the gap.  A similar initial introspection is used by many psychologists when providing therapy to individuals, or consultants when advising business leaders – perhaps not coincidentally a nearly identical process.

Real vs. hollow values

Values can be real and meaningful, or simply hollow.  Real values can be tough, but that’s often an indicator of their strength. As Patrick Lencioni wrote back in 2002,

Values can set a company apart from the competition by clarifying its identity and serving as a rallying point for employees. But coming up with strong values—and sticking to them—requires real guts. Indeed, an organization considering a values initiative must first come to terms with the fact that, when properly practiced, values inflict pain. They make some employees feel like outcasts. They limit an organization’s strategic and operational freedom and constrain the behavior of its people. They leave executives open to heavy criticism for even minor violations. And they demand constant vigilance.

After Collins and Porras wrote Built to Last in 1994, companies rushed to create statements of values, but very few put the work into truly adhering to them.  In many cases they simply became art on the wall or paper in a dusty binder. Many companies that we admire have values that guide their actions, but we all know of other companies that may claim positive values that are really hollow – creating, in effect, a negative value.  Consider Enron as just one example.

Values may start off strong, providing a positive guide for leaders and the organization, but then devolve over time.  A key reason for this is when choices are made to infringe or even disregard a value, often in pursuit of what may seem like a worthy end goal – perhaps even one that would actually align with the original values.

“The ends justify the means” is almost never an effective strategy.  Ryan Nicodemus, one of The Minimalists duo, recently said, “The road to misery is paved with compromised values.”  When we excuse, or rationalize, a degradation in values, especially character, integrity, and ethics, we may achieve a short term result but we’ve most likely created more harm than good.  Supporting or accepting a degradation of values is also a reflection of our own values, especially in the eyes of others.

How to use and reinforce values

Leaders can demonstrate the importance of values by intentionally and overtly using them to guide decisions and action.  Reference them when discussing issues in meetings, ask how a particular path or strategy would align with values, and positively encourage pushback or questions from people at all levels of the organization when they feel values are being infringed upon.  It is particularly powerful when decisions are made that negatively impact key metrics but support values.

As one example, at a previous company the owners actively promoted a value that we would not produce products for a specific market that could make employees morally uncomfortable.  We turned down several lucrative contracts in that space, and although that created lower profits and profit sharing, employees respected the decision.

Values should also be reinforced by formally reviewing them periodically.  At my previous company, we reviewed the values at the beginning of our quarterly planning sessions, asking ourselves if they were still appropriate and were we still aligned with them.  We challenged ourselves to identify areas where we may be infringing on the values, and defined areas where there may be some ambiguity.  After this we then launched into the review and planning activities with the strong context of our values fresh in our mind.

What is an example of good organizational values?

One of my favorite examples of organizational values comes from Netflix.  Their values have been stable for over a decade and their leaders, including CEO Reed Hastings, demonstrate and reinforce the values every day.  The key values of Netflix are the following, and you can read more about how the define each of these values here.

• Judgment, Communication, Curiosity
• Courage, Passion, Selflessness
• Innovation, Inclusion, Integrity
• Impact

I recently came across a photo of the first set of Nike’s values.  Click  on the image for a larger version, and number three might cause some lean folks to raise an eyebrow: “Perfect results count, not a perfect process.  Break the rules, fight the law.”  Maybe it’s a realization that a process is never perfect, but the cynic in me believes otherwise.  Note that there aren’t any “respect for people” values, and although Nike has been very successful, perhaps that says something about why some of the darker criticisms of the company exist.

Gemba Academy’s values

Several years ago, soon after we hired our first team member, we set about to develop our own defined set of values.  We used several inputs, including our own personal values as well as aspects of lean and continuous improvement, and apparently did a pretty good job as the values have changed very little since then.

Our values govern how we interact with our employees, customers, suppliers, competitors, and community.  They are reviewed periodically, and are a critical component of the planning, hiring, and onboarding process.  Our key values are:

• Respect for people: fostering independence, a learning environment, transparency, and being open and honest in all of our interactions.  One key outcome from this is that we have very few policies, instead asking people in our organization to “use good judgment.”  We also have no set amount of vacation days or even work hours, but define the expectations of a position and use that to measure performance.
• Leadership: competence, character, compassion, teaching, and catalyst.  Doing the right thing, even when it’s not convenient.
• Humility: being self-aware and respectful, open to better ideas, quiet confidence without arrogance.
• Aptitude to learn: embracing change and adaptability, valuing curiosity and experimentation even when it leads to failure, asking questions.
• Continuous improvement: creating value through engaged employees by continually analyzing and improving, being evolutionary rather than revolutionary.  Defining our purpose as a value that we provide to our customers.
• Creating value for the customer: value from the perspective of the customer, high value content, efficient access, and support.

Download a short presentation on the Gemba Academy Culture Code to learn more.

What are your values as a leader and as an organization?  Do they include a human element, such as “respect for people?” Are you actively using those values to define your actions and strategy?  Do you reinforce them within your organization?

---