I recently facilitated a workshop with several CEOs where we worked on the dramatic business growth model components. One of the questions that I had asked them beforehand was, "What is Your Profit/X?" The results showed that there this concept is not clear to many....
I have often repeated Peter Drucker’s quote that “Culture eats strategy for breakfast.” This week someone said they thought is statement wrong as, without a strategy, you cannot achieve anything. I believe this is a misunderstanding of Drucker’s point. You need a plan, but if the culture is wrong, the strategy will fail because the culture is more important.
Like many things, COVID is accelerating the importance of corporate core values. During COVID and, more recently, BLM, many companies have not lived their core values. For example, if your core values are:
- Do the right thing: What do you do when no one else is looking? Our teams act with integrity and honesty and focus on putting ourselves in the shoes of others; or
- Make something better, today: We’re hungry, we’re passionate, and we love tough problems and new challenges. You don’t hear a lot of “I don’t know how” or “I can’t.” When faced with a hurdle, we jump.
Then how do you respond to the COVID crisis and BLM? I believe that doing nothing is not in keeping with your core values. Therefore, you must react and in a way that reinforces your values. Many companies are stuck not knowing how to respond to the BLM protests, to which I think the best answer is to look to your core values, they should guide you and will not allow you to make meanless statements, but do something that reflects the values.
Again, many companies that have their core values posted all around the office and on corporate stationery, but most employees couldn’t tell you what they are. One CEO I know went around such an office and offered any employee who could state the core values without looking at it $50. Out of 30+ employees, only one succeeded. In such an environment, you are not living them and using them to define your organization. Remember Enron had its core values – Integrity, Communication, Respect, Excellence engraved in its lobby. Then it collapsed and its many of its leadership team went to jail, so obviously its core values were not something it lived. If you want to see a great presentation of core values and culture, visit “Netflix Culture: Freedom and Responsibility.” Netflix says that its success and growth are down to its culture and it lives it.
As Jim Collins says, “Core values and purpose define the eternal character of a great organization, the character that endures beyond the presence of any set of people or individual leaders. In the long run, individual leaders do not hold an organization together; core values and purpose do. In the best organizations, leaders are subservient to the core principles, not the other way around. … core values and purpose as a defining boundary will become even more important. Given the obvious trends in organizations—greater decentralization and autonomy, wider geographic dispersion, increased diversity, more knowledge workers, technology and travel that make going into the office a less relevant activity—the bonding glue that holds organizations together will increasingly be in the form of shared values and common purpose. No matter how much the world and its organizing structures change, people still have a fundamental need to belong to something they can feel proud of.”
Tyler Cowen further emphasized what Collins said if you don’t have core values in a recent Bloomberg post, “In essence, without a local workplace ethos, it is easier to commoditize labor, view workers as interchangeable and fire people. The distinction between protected full-time employees and outsourced, freelance, and contract workers weakens. A company can make the offer of, ‘If you hand in your project, we pay you,’ to virtually any worker around the world, many of whom might accept lower wages for remote roles.”
If, as I suggested above, the organization pushes decision making down, then if its employees know the core values, they will make decisions that in the best interests of the organization, increasing its agility. Right now, agility is critical as we try to learn the “new normal” in a world were we don’t have clarity on what is happening. However, if they don’t know them or believe they are just pretty words, you will get conflicting decisions and confusion.
Again, as Jim Collins notes, the first of five things to look for when hiring people is, “The whole task is to find people who already have a predisposition to your core values…They must share the core values … those who do not have a predisposition to sharing the core values get ejected like a virus. Get escorted out the door by the organizational antibodies.” As companies pivot and adjust their human capital to reflect a new normal, this must be a vital part of the hiring process. It is more likely now that unlike prior generations, Millenials will self select those companies that reflect their core values. However, a good check of a prospect’s core values is to look at their prior employment, did those companies share your core values?
Finally, use this time of COVID, BLM, and other events to ensure your employees know your core values and culture. Build your organization folklore around how you live your core values, because as humans, we identify better with stories. If there many stories of how the organization lives its culture, the easier it will be for employees to learn and know the culture.
If you want to see a great example of the effect of core values, find a copy of Eco-Challenge – Borneo (a summary is here, but the 4-hour show is hard to find). Eco-challenge was a Mark Burnett production before Survivor, which involved co-ed foursomes competing non-stop for 11 days with almost no sleep through some of the most outrageous obstacle courses anyone could imagine. It’s not all about the specific feats of strength, the devastating effects on the body are many, including head wounds, spinal injuries, and malaria cases are plentiful. Teams from New Zealand and Australia were annual favorites and winners because one of their core values was – “They never argue.” An American squad comprising Armed Forces members could not agree on leadership and values leading to many arguments and disqualification early because two of their players forgot a map and end up swimming away from one of the many checkpoints.
So as you chart a new direction, ensure your core values are correctly identified, shared by all, and reflected in your decisions.
Copyright (c) 2020, Marc A. Borrelli