The importance of values

As we’ve discussed in similar articles on both mission and vision statements, organisational values are an often used concept, but rarely well executed. Many organisations have developed a set of values, but very few have applied them in a way that truly and uniquely defines the way they work in practice.

If you look up the values of any organisation, you will usually see a list of concepts that are much the same as everyone else. You will likely see the usual suspects, such as honesty, respect and integrity. Are these wrong? Of course not – these are all essential building blocks of how any organisation should behave. But that’s the problem.

Using the same basic values as everyone else fails to define the unique personality of an organisation. It is unquestionable that members of any successful organisation must be honest, treat others with respect and act with integrity. However, every organisation has its own character that its leaders need to deliberately cultivate to ensure its continued success.

In their classic 1996 Harvard Business Review article, Jim Collins (author of Good to Great, Built to Last etc.) and co-author Jerry Porras describe core values as the “essential and enduring tenets of an organisation… [a] small set of timeless guiding principles… [with] intrinsic value and importance to those inside the organisation”.

Collins and Porras then go on to quote former CEO of Johnson & Johnson, Ralph Larsen, who said that “the core values embodied in our credo might be competitive advantage, but that is not why we have them. We have them because they define… what we stand for, and we should hold them even if they become a competitive disadvantage in certain situations”.

The core values embodied in our credo might be competitive advantage, but that is not why we have them. We have them because they define… what we stand for, and we should hold them even if they become a competitive disadvantage in certain situations”

Ralph Larsen, CEO of Johnson & Johnson

Defining values

Defining values is an essential element of organisational strategy. ‘How will we behave?’ is one of the six questions that Patrick Lencioni advises that every organisation must answer to succeed. In his book The Advantage, he identifies four types of values:

• Core values – Those few values that lie at the heart of an organisation’s identity and are in place already
• Aspirational values – Values that an organisation aspires to have (but doesn’t yet have), because it believes that they’re essential to its future success
• Permission to play values – Minimum behavioural standards that are expected of everyone (e.g. honesty, integrity, respect etc.), but which don’t uniquely define the organisation
• Accidental values – Traits that are evident in an organisation, but which haven’t come about deliberately and don’t necessarily serve the good of an organisation

We recommend adopting at least the first three categories of values when you define your organisation’s values. Core and aspirational values are important to define for a high performing team or organisation, and listing the permission to play values is important when you’re managing people who might otherwise have difficulty omitting the usual suspects (e.g. honesty, respect, integrity etc.).

If you want to define your organisation or team’s values, but don’t know where to start, we’ve developed a Strategic Planning Guide, which provides tools and techniques for developing a set of values with your team.

Putting values into action

Once an organisation’s leadership team has developed a set of core values, the next challenge is to define them in a way that translates what are often abstract concepts into the concrete context of day to day organisational life. Taking inspiration from the concepts presented by Ray Dalio in his book, Principles, we think the best way to do this is to develop a set of guiding principles beneath each value. These guiding principles make it easier for team members to put them into practice.

For example, in one business we’ve worked with, a team has adopted a value to ‘move quickly’. On its own, this value could be interpreted very differently by different people. To overcome this, the team has has further defined the value with the following guiding principles:

• Be decisive, despite ambiguity: make wise decisions without excessive agonising
• Have a bias for action: don’t wait for the perfect moment, just get started
• Move fast: focus on momentum, not perfection
• Take calculated risks: scratching the car is ok, writing it off is not
• Don’t be a bottleneck: empower others by delegating responsibility as low as you reasonably can

These principles add colour and texture to the value, and provide a reference point for coaching conversations between managers and their team members.

Examples of values

Atlassian’s values are one of the best examples we’ve observed, because they are both unique and clear, and each value includes a brief supporting statement to further define it. They also don’t take up space noting the obvious values (e.g. honesty, respect, integrity etc.), which should be taken for granted in any contemporary organisation.

Other great examples come from Patagonia, Netflix, which uses the principles-based technique described above to define each of its values, and Amazon.

Each of these examples focusses on what makes each organisation unique (hence each set of values is very different), provides supporting explanatory descriptions to help people understand exactly what each value means in practice and spends little time focussed on the obvious values that every successful organisation must adhere to.

Want to define your values?

Our Strategic Planning Toolkit steps you through how to run a one day planning worksop with your team, and gives you all the templates you need. The planning workshop covers off on the six critical questions, including ‘How will we behave?’, which determines your values.

Where to next?

• Read our article on the six questions that every high performing organisation needs to answer
• Watch the Patrick Lencioni video on core vs aspirational values
• Watch the Ray Dalio video on principles