Values are critical for a company to achieve greatness and, much like individual character values, there are business values that stand the test of time.
11 Four Values
I mentioned that great businesses, great companies, are unique in how they achieved greatness. Values, however, are one very consistent area of all great companies. And, it’s been my observation, that great companies have the same values even if called by different names. This chapter will outline the values and then we’ll see how values are viewed firsthand in the experiences of Dan, Beth, Steve, and Cathy.
Before going into organizational values it bears noting that there’s a difference between personal values and organizational values. A big difference. John F. Kennedy summarized the four timeless personal values in his 1961 City on a Hill speech as: courage, integrity, judgement, and dedication. I’ll discuss those, but not in this book. There is one thing worth remarking about personal values. It is a big red flag when a company waves a personal value as an organizational value. If a company has to wave an integrity or ethics banner as a value and not a base rule, it likely has an ethics problem. But that’s not what this book is about.
The values of great companies support their overarching business purpose: solving humanity’s problems. That’s why, regardless of how they’re named, they all have these four elements: 1. customer first, 2. mutual trust and respect, 3. excellence in execution, and 4. profitability focus.
Customer first means that the customer’s needs are paramount. Those needs could be the customer’s business results or the customer’s simple enjoyment of a product. Customer first also means anticipating the future need, sometimes several years forward. The specific nature of the needs doesn’t matter so long as those needs are the fixation of the business serving them.
Mutual trust and respect means a few things. It means civility in discourse, whether that be in meetings or hallway conversations. It means genuine respect that prevents small group cliquish gossip. It means employees are on the great teams that we talked about earlier. It also, as Jack Welch points out in Winning and Jim Collins in Good to Great, means candor. Organizations with candor confront the facts, brutal facts in Collins’s vernacular, without blame or dismay. The political ‘feel good’ meetings that obscure truth don’t happen in companies with candor. Instead, constructive confrontation, even with lower levels challenging executives, is cherished as necessary to meet the company’s why, its core purpose.
Excellence in execution is often listed as an operations value but it is much broader. Excellence in execution means each functional group understands and delivers superior results. Marketing knows the direction and size of their served market better than anyone. Sales know their global customers, their customer’s budgets, and how their goods and services uniquely serve their needs. Human resources partner with all functions to recruit, hire, develop, and fire personnel consistent with the company’s vision. Finance knows the ‘rule of thumb’ for how a dollar of profit is generated and has lined up quick closes and real time tracking. R&D – research and development – understands how to evolve current products and, following a cross-functional market driven product development process, how to innovate for the future. Operations knows how to execute based on James Womack and Daniel Jones Lean Thinking principles. Quality guards both the customer and company reputation; it knows world class benchmarks and any regulatory need. And all these groups take their knowledge and inspired teams and plan, do, check, and act in a never-ending learning cycle. As execution is so broad, I’m going to cover the details of excellence in execution in a forthcoming book: Functions of Excellence.
The final value is profitability focus. The measure of how well a business solves its specific problem of humanity is profit. Some reading this may think it obscene to talk about profit as a value. But profit, real generated profit, is a measure of value added, wealth created, and of how much the economic pie that drives all of civilization grew. Profit measures the most precious thing we humans do. Profit measures how well we’ve applied our creative god-like minds to base materials and trenchant problems.
The reverence for these four values: 1. customer first, 2. mutual trust and respect, 3. excellence in execution, and 4. profitability focus is seen in great companies and the disregard is seen in the suboptimal.