How to define Corporate Values and Principles that enhance Decision-Making and Leadership Trust

There are four elements required to enable high quality decisions: Values and Principles, Strategic Context, Skills and Experience. In this post we will focus on Values and Principles.

Different companies value different actions and behaviours. If teams act in ways that are inconsistent with the company's values and principles, it can lead to confusion, conflict and a loss of trust in the abilities of the team. This is compounded by the fact that most companies either have no published values and principles or they are too high level to actually influence product decisions.

But how do you go about defining your values and principles? You start by identifying the unwritten rules that already exist.

Identify the core values

Interview founders and key leaders

We could ask the founders what they value - but that won’t tell us how they really behave. Like all good research, you should focus on specific examples, rather than the intentions of the interviewees. Choose high stakes situations like a crisis, a period of growth or other significant events because these are where people's true colours appear.

Ask the leaders to describe the situation and the decisions that were made. Dig into the behaviours they deemed important. Ask about their red lines, the things that they would never compromise on, even in these make-or-break situations.

Your goal is to distill the values that were important in those high stakes situations. But we also need to validate what the leaders are saying with how the people on the ground are behaving.

Identify stories and symbols

What the leaders say they want and how people in the company behave are often quite separate so the next task is to uncover the stories and symbols that are important in the company. These are the things that people continue to bring up such as past successes, challenges overcome or failures.

Symbols refer more to the awards and traditions that take place. These events subtly reinforce behaviours that are important to the company.

Again, you need to convert these stories and symbols into coherent values.

Verifying your values

It's crucial to confirm that the values you've identified truly represent the company's ethos, rather than just being superficial or aspirational 'vanity values'. You can use the following three tests to weed out the vanity values:

1. Longevity Test: Would this value be valid 100 years from now, even if the organization’s mission changes?

2. Universality Test: Would this value still be relevant if the company was in a different line of business?

3. Sacrifice Test: Would you be willing to make significant sacrifices to uphold this value, such as losing business or revenue?

Identify your operating principles

Product development is called a 'wicked' problem because there are so many variables that it is impossible to solve with the 'one right way'. There are infinite ways to solve a problem and a lot of them work so there is no right answer. This ambiguity can slow down decision making and lead to conflict.

Principles are how we solve this problem. Unlike values, which are broad and universal, principles are more targeted and help teams navigate the nuances of product development. They help people identify the tradeoffs during product development that are most important for a company, which leads to more coherent and consistent decision making. But since product development is so complex, we can't have a single set of principles - it would be too large to be useful. We need to split up the principles into different functional areas, such as product, engineering, marketing, sales, etc.

Identify the principles

Identifying principles is similar to identifying values. You need to look at the decisions that have been made in the past and identify the tradeoffs that were made. You can do this by interviewing the key leaders in each functional area and asking them to describe their models for making tradeoffs and, more importantly, how they have behaved in high stress situations.

Distilling principles from actions can be difficult, and time consuming. Luckily there is a way to shortcut this process. You can use the work that others have done as a starting point for your own principles. We've collated some of the principles that other companies have used in the past to help you get started.

• Process Principles (ZeroBlockers)

• Product Principles (Slack, SVPG, Shopify)

• Research Principles (Gov.uk, Arnold Clark)

• Design Principles (BBC, Airbnb, NHS)

• Engineering Principles (Tesla, SpaceX, Intercom)

Embedding your values and principles

Once you have identified your values and principles, the last thing you want after going through this process is for the values to be printed on fancy posters around the office but ignored by everyone. People are busy and will prioritise getting the job done over living the values and principles. However, unless teams follow through on living the values and principles it will lead to confusion, conflict and a loss of trust in the abilities of the team.

To ensure that people actually embody the values and principles we need to update the KPIs used in both hiring and performance management. Performance is a mix of Ability X Effort X Attitude, and we can use our principles to measure Ability and our values to measure Effort and Attitude.Performance is a mix of and luckily we can use our principles to measure the Ability performance and our values to measure the Effort and Attitude performance.

For values, we can have a single set of levels that can be used for all staff.

To embed the principles, you can use the role-specific levels for the expected behaviour with each principle, as well as other more role-specific criteria.

By aligning how people are rewarded in the company with the values and principles it ensures alignment. Amazon famously do this well by using their leadership values both as a way of assessing potential candidates as well as in performance reviews.

Conclusion

Every company, knowingly or unknowingly, operates with a set of values and principles. Making these explicit and actionable not only fosters trust and clarity within your teams but also paves the way for consistent, high-quality decision-making. By integrating these core elements into your KPIs and everyday operations, you ensure that your organisation's actions align with its core beliefs and ultimately lead to better products and business outcomes.