Creating Advantage From Your Company Values
Of all cultural elements, organizational values are the most visible, and most important to get right. Here’s how.
By all standards, Tony Hsieh, the former CEO of Zappos, built a phenomenal business. His vision for building a great online shoe retailer defined the Internet convention. He prioritized customer service, turning it into a clear advantage. And in just four years from inception, he helped scale the company to over $100 million in revenue.
Notably, Hsieh was masterful at building an organizational culture that was exceptional, unique, and demanding, which became part of the company’s persona and differentiation. Their culture of extreme customer service was notable and developed profitable repeat customers and a business model that enabled Zappos to sell shoes at full retail price. They were perennially a great place to work and notably received thousands of job applications for every open position.
Zappos was eventually bought by Amazon in 2009 for an estimated $1.2 billion. There were certainly mistakes along the way, but Hsieh only expressed one regret as he looked back.
In his book Delivering Happiness, Hsieh reflected, “If I could go back and do Zappos all over again, I would actually come up with our [company] values from day one.”
Are values really that important? Absolutely.
Out of all the elements of culture, values may be the one that we are most familiar with. We see them all the time, declared on company websites and posters in conference rooms.
Values are the summary of the most important and agreed upon behaviors, practices, beliefs, and norms of the organization. In theory they are the standards of what we commit to, and what we hold others to, in prioritizing for company success.
You may remember that we talked about the first recorded instance of culture of organizational culture from 1951 by Elliott Jaques in his book The Changing Culture of the Factory.
Jaques said that culture in the factory was “its customary and traditional way of thinking and doing of things, which is shared to a greater or lesser degree by all its members, and which new members must learn, and at least partially accept, in order to be accepted into service in the firm.”[1]
Applying this, your values are the stated elements of thinking and doing things that you and your team are committing to. And because of that, they can be very powerful in creating alignment, guiding behavior, and acting as a cultural compass of what you prioritize for success.
There are tangible benefits of values. Research into values and performance of Fortune 500 companies has shown a direct correlation between company values, specifically unique values, and the financial success of organizations.
The study concluded that, “When companies did differentiate themselves from their industry peers, it had a positive effect on their firm’s performance. The implication being that when actively seeking some uniqueness from the industry norm, even in how they shape their cultures, the firms in question outperformed others in their industry.”[2]
Values are also evidenced in high performing organizations like Amazon, which holds to 16 values, known as leadership principles.
Example what Amazon’s value statement says, “We use our Leadership Principles every day, whether we’re discussing ideas for new projects or deciding on the best way to solve a problem. It’s just one of the things that makes Amazon peculiar.”
You can glean from this Amazon leaderships expectations for these principles:
We use them every day
We use them as a group
We follow them as individuals
These principles are what make us uniquely successful
You can read into this Amazon’s approach that their leadership principle is a way to give the company an advantage.
The problem is that for many companies, values are a trite set of statements that are written down somewhere, and summarily forgotten.
In some ways, that is more damaging than not having any written at all. It’s a license to do your own thing.
Patrick Lencioni, the author of The Five Dysfunctions of a Team (and an expert on dysfunctional organizations) identified this common problem, stating, “If you’re not willing to accept the pain real values incur, don’t bother going to the trouble of formulating a values statement.”
Tough words, but it’s true: high-performing companies hold to, and team members hold each other to their values.
I often talk about practices of high-functioning organizations and when it comes to value-driven organization, there are several important practices that stand out:
They collectively create them. Values are not handed down from leadership. They are created with team input. More on this in my next post.
They create both descriptive and aspirational values. A set of values is not descriptive of what you do today. They are aspirational as well, causing you to stretch and change behavior. You’re seeking to create behaviors, norms, and beliefs that are unique and differentiated and in doing so you’re challenging your organization.
They publish and explain them. Values in these organizations are out in the open, and they are Visit Amazon’s leadership principles webpage you’ll see that CEO Andy Jaffey has created a two- to four-minute video explaining each.
They encourage, reinforce, and incentivize following them. They are frequently referenced company-wide, in macro and micro settings. Leaders will often reward following those values. And you if you’re not following one of the principles, someone is sure to let you know.
They are willing to change them. Although it is probably rare, circumstances and conditions change, so do the needs of the organization. Amazon has modified theirs three times in the last decade. The underlying concept is that this is a living organizational commitment to principles of success.
How well does your organization follow these four practices? Whether you currently have a set of organizational values or not, there is plenty you can do to enhance this core element of culture.
Attempting to create a set of values can seem daunting when you are starting tabula rasa, without any conception of what you should have. So, it’s helpful to look at some frameworks for values.
One of the most helpful is the Competing Values Framework (CVF), which is simple, based on the idea that every organization has four basic competing values: Collaborate, Create, Compete, and Control.[3]
Collaborate: These are clan values which focus on internal maintenance, collaboration, teamwork, and employee well-being.
Create: These are meritocracy value which emphasize innovation, adaptability, ad hoc leadership, creativity, and dynamic entrepreneurship
Compete: market-focused values which prioritizes productivity, competition, achievement, and goal attainment
Control: These focus on hierarchical control, including stability, reporting, exactness, efficiency, and formal procedures
The most transformative company values emerge from genuine, vulnerable conversations about what truly matters to people. Organizations often treat values as a technical exercise—a checkbox to be completed—when in reality, they should be a living, breathing narrative of collective aspiration and commitment.
Next week I am going to explore how to approach creating or reworking your values in a way that creates a shared commitment at an emotional level, inspiring people to create an organization that they believe is authentic. I’ll provide you with my own framework for categorizing your values and some ideas on creating a process to build them from scratch or evaluate and change existing values. This is one of the most energizing processes for companies so stay tuned.
In the meantime, here are some questions to facilitate discussion with your team.
Things to consider:
What do you believe are the core principles that currently drive our organization's behavior?
If you could define three values that represent the best of who we are and who we want to become, what would they be?
When have you felt most proud to be part of our team, and what values were at play in that moment?
How well do our current stated values (if we have them) align with our day-to-day actions?
What unique qualities set our team apart from others in our industry?
If we could create a culture that becomes our competitive advantage, what would it look like?
Which of the four value types, collaborate, create, compete, and control, do you think is most conducive to our organization?
How can our values help us innovate and stay ahead of our competitors?
What personal values do you bring to work that you believe make you successful?
What value would you be most excited to champion within our team?
Until next time, lead with purpose.
Will
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[1] The Changing Culture of the Factory, Elliot Jaques, The Dryden Press, 1951
[2] Karsten Jonsen, Charles Galunic, John Weeks and Tania Braga, “Evaluating Espoused Values: Does Articulating Values Pay Off?” European Management Journal (October 2015).
[3] Tianyuan Yu, A Review of Study on the Competing Values Framework, International Journal of Business Management, July 2009