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A Leader’s Guide To Building A Values-Driven Company

By December 14, 2016 No Comments
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“We’re not serving any damn chicken salad!”

Herb Kelleher, the founder and long-time CEO of Southwest Airlines was trying to make a point.

As described in the book, Made To Stick, Kelleher once told a new member of his team:

“I can teach you the secret to running this airline in thirty seconds. This is it: We are THE low-cost airline. Once you understand that, you can make any decision about this company that I can.

herb-kelleher-southwest

Kelleher: A values-driven leader

“Here’s an example,” he said. “Tracy from marketing comes into your office. She says her surveys indicate that the passengers might enjoy a light entree on [a flight]. All we offer is peanuts, and she thinks a nice chicken Caesar salad would be popular. What do you say? 

The person hesitated, so Kelleher responded: “You say, ‘Tracy, will adding that chicken Caesar salad make us THE low-fare airline… Because if it doesn’t help us become the unchallenged low-fare airline, we’re not serving any damn chicken salad!”

I love this story and reference it often as a great example of how a values-driven leader, and values-driven, company, work.

This approach, what the organization now calls “The Southwest Way,” has helped the airline outperform not only every other company in its industry, but nearly every other company in the world, over the last few decades.

It can be similarly impactful to you, and your organization.

What Is A “Values-Driven” Company?

us_navy_seals

Navy SEALs: A values-driven organization

Southwest is not the only company who takes their values seriously, just one of the most well-known.

In fact, values-driven decision-making is a characteristic of many of the most successful organizations in the world — from Walt Disney, to the Navy SEALs, to the global hedge fund Bridgewater.

A Values-Driven Company (“VDC”) is one that consistently and predictably makes decisions that align to a small set of values and guiding principles that are most important to the long-term success of the organization.

In a world full of both opportunity and uncertainty, VDCs create a unique advantage: speed. They can make choices (on people, operations, strategy) with greater clarity and confidence compared to those companies prefer circumstantial evidence, or gut instinct, to guide their decision-making.

To be clear, decisions made by VDCs aren’t always successful, or right (who knows how much money Southwest left on the table because they wouldn’t offer chicken salads?). That said, they rarely experience the second-guessing, regret and anxiety that plague less well-aligned organizations.

The more clarity you have, as a leader, about the values and behaviors most important to your success, and that of your team / organization, the more likely it is that you will be able to navigate that these conditions of uncertainty and get where you really want to go.

What Is A “Value”?

Your values act as a compass in a world full of uncertainty.

Your values act as a compass in a world full of uncertainty.

My favorite definition of the term also happens to be the most straight-forward: A “value” is something that you value.

“Core” values are the small (3-5) subset of values that you prioritize above all others.

Practically speaking, our core values are made manifest through our behavior.

As CEO of Netflix, Reed Hastings, puts it: “[At Netflix] our values are shown by who gets rewarded, promoted and let go.”

In many ways, when describing a value, you are really describing a “recipe” — a combination of expected behaviors that result in the feeling we associate with each value.

Take “trust,” for example.

Do you value trust? (Of course you do.)

But what, specifically, does that word (trust) mean to you? What has to happen in order for you to trust someone else…or feel trusted by them?

Perhaps, at work, you trust a team member who is quick to admit mistakes (“I know I can trust her to admit when she’s wrong”).

Or maybe, you only trust those on your team who never make mistakes (“He’s an expert on this stuff, I trust he’ll make the right decision”).

While there’s no right or wrong answer, but if you aspire to create a Values-Driven Company, then you must know both what your company core values are, as well as what they mean, in practice.

Why “Values-Driven” Matters

Every organization has values but very few are “driven” by them; very few have defined and clarified their values at a level where they can effectively inform decision-making.

Netflix culture valuesThis matters because, in a world full of both opportunity and uncertainty, values are your organization’s “safety net;” preventing leaders at all levels of making choices that threaten the business’ long-term success.

A great example of a values-driven company: Netflix.

For each of their nine core values, the leadership team has articulated, explicitly, what each means in terms of employee behavior, performance and attitude.

For example, here’s how Netflix defines “Curiosity”: 

  • “You learn rapidly and eagerly”
  • “You seek to understand our strategy, market, customers and suppliers”
  • “You are broadly knowledgable about business, technology and entertainment”
  • “You contribute effectively outside of your specialty”

These are not “nice-to-have” characteristics. At Netflix, it’s clear: hiring and promotion decisions hinge on one’s ability to exhibit these behaviors.

With some notable exceptions (e.g. Wikipedia) companies with explicit linkage between values and behavior out-perform their less disciplined peers, over time.

In addition, in my experience, a lack clear and compelling values also enacts an emotional toll on leaders. Regret, second-guessing and other forms of anxiety are common in businesses where there is no clear understanding of what is most important. If you’ve ever felt “stuck” or “paralyzed” by a tough decision, you likely know the feeling that these executives experience on a regular basis.

Values Are Personal

smart-guy-thinkingIn Good To Great author Jim Collins writes that company core values “require no external justification; they have intrinsic value and importance to those inside the organization.”

In other words, values are personal.

Values require no justification because they are formed through experience.

I value courage because, in my experience, when I am “courageous” good things happen.

My friend, on the other hand, values “security” more than courage, because he is responsible for a large (and growing) family.

When it comes to values, there is no “right” or “wrong,” there is only true. Values are a choice, but we choose to value that which we believe (based upon experience) is in our best interest.

Too often leaders make the mistake of trying to pull values from a long list of nice-sounding words (integrity, trust, honor, etc) failing to recognize that if they don’t personally value these things they will struggle to act accordingly.

Therefore, if you hope to create, and lead, a values-driven organization, you must start by first identifying the your personal core values and going from there.

Five-Steps: Personal Core Values “Discovery”

Here’s the approach to personal core values “discovery” that I have found most effective…

Step 1: “Data” Collection

slide1Your life is a record of your values. Looking back, what are the key moments, decisions, highlights (and low) that have defined your life, to-date?

Whether you realize it or not, your values are the guide our decisions and influence our choices, both big and small. By asking a few specific questions about your life, we can identify the values that form the basis for who, and how, you are.

Here are a few of my favorite “values discovery” questions:

  • What have been the “peak” experiences of your life? 
    • e. the “best day of my life;” “it doesn’t get any better;” “I was born for this” moments
  • Of what are you most proud?
    • e. personal growth; professional achievement; relationships; etc
  • What makes you angry?
    • The big things or just little annoyances…
  • Who are your role models? 
    • “Role models”: Individuals, living or dead, who have achieved something in their life that you hope to achieve in yours
  • What companies do you most admire? 
    • What organizations do work that you respect? in a way that you admire? or make products that you value?
  • What are your obsessions? 
    • What do you love? What do you always do?  What can’t you live without?
  • What is your favorite quote?
    • Something famous or not. A saying that you love (and likely repeat, often).

Step 2: Identify The Values “Implicit” In The Data

slide17

The second step in this process is to uncover the values implicit in your answers to the questions above.

For each of your answers, ask yourself “why?” Why did you enjoy that moment? Why did that behavior make you angry? Why do you love that quote? The answers to these questions: values. What are they?

This step in the process should result in a list of anywhere from 15-30 unique values.

Step 3: Identify and Prioritize Your “Core” Values

This is the hardest part of the process, but also the most important. The fact is, if you value everything, you value nothing.

The good news is that it is through the prioritization process that real clarity emerges.

For example, I once worked with a talented executive struggling to decide on whether to accept a prestigious promotion. The opportunity represented both tremendous professional achievement as well as a new opportunity to grow. Through the values discovery process (described above), both achievement and growth emerged as important to him.

Values discoveryThe problem was that the promotion would require him to relocate his family (including two teenage daughters) and they didn’t want to go. He was torn for in the same values discovery process he also identified a very strong “family” value.

He had to prioritize and, when he did, the decision became clear. While achievement and growth are critically important to him, they were not more important than family (his #1 core value).

He decided to pass on the promotion opportunity and remains very satisfied with the decision today.

In my experience, there is no “perfect” when it comes to decision-making. Every choice has trade-offs. The secret to peace-of-mind: being aware of the trade-offs and making your choices intentionally.

Step 4: Translate Your Values Into Guiding Principles 

Core values

Critically, words alone are not enough. To truly understand what you value you must understand the underlying implications of each word in your list.

For each value on your list, ask yourself, “what does this value mean?” “What is that I do because I hold this value?” “What is that I expect of others?”

For each of your core values, create 1-3 guiding principles that bring it to life.

Good rule of thumb: Write the guiding principle in a way that would make it easy for you to explain the value to son or daughter.

Step 5: Learn

This is perhaps the most important step in this process.

Now that you’ve identified your personal core values take some time to reflect on how these values are working in your life.

1. How have your values helped you? In other words, why do you continue to value these things? How have they value contributed to your success, personally or professionally?

For example, my #1 core value is Freedom. I have always valued Freedom and it has led me to create a unique, high-growth, high-excitement professional career. If I didn’t value Freedom so much I would have likely had a more traditional professional career in law, medicine or finance.

2. How have your values made your life harder? When we choose to value one thing, we necessarily de-value something else. When or where have these trade-offs hurt you?

For example, my value of “Efficiency” occasionally undermines my efforts to be a patient and loving father. When my two year-old son refuses to eat (or, even better, tosses the food all over the kitchen) I find myself getting frustrated by the perceived “waste” of time. In addition to feeding my son, my prioritization of efficiency sometimes leads me to rush things that deserve more time, attention and patience.

3. Where is there conflict between/among your core values? How might this conflict explain a decision or action that you have resisted taking?

For example, I know a very successful corporate lawyer who dreams of being a children’s book author…but has yet to begin writing. Her list of core values includes “growth” and “family” (values she sees reflected in the writing of children’s stories) but also “security.” Through this exercise she came to realize that despite all of her professional success/achievement to-date, she was wondered whether she could afford to spend time on anything but billable hours.

These types of conflicts are common. Bringing awareness to them will help you to make choices and move forward where you’ve previously felt “stuck.”

Core values change

My core values changed forever when my wife and I had our first child, Jack.

4. How have your values changed? 

Values can change.

When I was 25 years old I valued adventure. In fact, I lived by a very simple mantra: “I want to live an interesting life” and made most of my decisions accordingly. That led me to teach skiing in Aspen, tend bar in Nantucket and even appear on a reality TV show.

Today, however, I am a different person. Most importantly, my marriage and birth of my children have changed my values. I still value the “Freedom” to choose my own adventure, but I value, just as much, the “Love” I feel as put my wife and family first.

How have your values changed? Have they changed for the better? Or worse? Why?

From Personal Values To A Values-Driven Company

Now that you’ve defined, and reflected upon, your personal core values you’re ready to begin the process of creating a compelling set of company core values.

The process: find the overlap. What principles and behaviors are most commonly valued by your leadership team? What are the most consistent themes or trends?

Business team put hands together

The core values discovery process is a chance to connect and align your leadership team

For most teams, 6-8 common values or themes will emerge after the initial sorting process.

I like to use the following list of questions, also by Jim Collins, to help you narrow the list down to items that are truly “core:”

  • If you were to start a new organization, would you build it around this core value regardless of the industry?
  • Would you want your organization to continue to stand for this core value 100 years into the future, no matter what changes occur in the outside world?
  • Would you want your organization to hold this core value, even if at some point in time it became a competitive dis advantage—even if in some instances the environment penalized the organization for living this core value?
  • Do you believe that those who do not share this core value—those who breach it consistently—simply do not belong in your organization?
  • Would you personally continue to hold this core value even if you were not rewarded for holding it?
  • Would you change jobs before giving up this core value?
  • If you awoke tomorrow with more than enough money to retire comfortably for the rest of your life, would you continue to apply this core value to your productive activities?

Your company core values are those to which a majority of your leadership team can answer “yes” to all of the questions above.

Of course, there will be instances where a value that is “core” to you, won’t be core to many others in your team or organization. That’s OK (and is to be expected).

The good news is that you now know where there may be tension between what you are asked to do by the organization, and what you want to do.

Work Made Easier, Life Made Better

This process of discovering, sharing and discussing values is one of the most important steps you can take towards building a more engaged, high-performing team.

Absent a values-based decision-making framework, the options, strategies and choices you face as a leader, every day, threaten to overwhelm both you and your team.

Without values it’s hard to say “heck yeah!” to a great idea and just as hard to say “hell no!” to a bad one.

The secret to high performance: alignment

The secret to long-term success: values-based decision-making.

Values-driven companies don’t always “win” in their industry or market (there will always be some circumstances or factors outside of our control), but they do give themselves the best chance to win.

As is the case with Southwest Airlines, among others, values enable leaders to more easily identify the trade-offs in any given decision and move forward with confidence and clarity.

Furthermore, in my experience, knowing your values just makes life easier.

We have all been given extraordinary gifts — intelligence, drive and access to resources that others around the world would kill to have access to. In order to best leverage those gifts, are values can guide us. Our values act as an intelligent filter — allowing us to differentiate between a variety of compelling personal and professional options to find the path forward that is best for us.

In my early twenties a mentor once told me that values “are our only safety net.” No doubt about it. What I didn’t fully appreciate then, but do now, is that our values are not just a source of security, they are also a catalyst — a wellspring of energy, engagement and enthusiasm that can change the world.

I hope that this article will give you the guidance you need to discover your core values, make better decisions and turn your team, company or family into a values-driven organization.

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sands-leadership-site-iconA Core Values “Discovery” Workshop is a great activity for an executive retreats, strategic planning off-site and/or other team-building activity. Click here to email Ben to discuss creating a workshop for your team.

Sands Leadership

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