When we think about a company’s brand, we often think about its mission, vision, and values. But there is another element that is important to the culture of the company. Have you defined your company’s principles? As retained search recruiters, we are constantly asked by candidates about our client’s culture, values, and principles.
Principles often flow out of the company’s mission, vision, and values. Company principles help guide decision-making, tend to be actionable in nature, and can provide rules everyone can follow. They are foundational to a company’s culture and influence the strategy. In particular, they help during difficult times, and decisions must be made without specific direction from the executive team.
A new article from Harvard Business Review looks at the issue and provides examples from Twitter (X), Meta (Facebook), and others of how company principles influence decisions. They also point out that the continued complexity of the business landscape will only increase the number of difficult decisions companies will face, and having principles defined will support better decision-making.
Principles are different from values. Values are broader and indicate the company’s approach to doing business. They are more aspirational in nature and include things like “customer focus” or “acting with integrity.” However, they don’t aid in making specific decisions. This is especially true when making a decision with competing priorities. So, as you think about your company’s principles, what do the authors recommend to create good principles?
Distinctive
Principles should be specific to your company and your culture. A great example of a financial services company, Robinhood, illustrates how their principles guide their decision-making and implementation.
Debatable
Not everyone is going to agree with your principles, and that’s okay. Tableau Software follows a principle that guides its product development roadmap and is not overly influenced by customers. This keeps them focused on the features that provide the highest value to their customers.
Transferable
Principles can be developed that work across departments and situations. One of Google’s principles, focusing on the end user and all else that will follow, guides their decision-making in a number of different areas.
Integral & Company Defining
As mentioned earlier, principles are foundational to the company. They are a key element of the culture and can provide guideposts when facing a difficult decision. Examples include Bloom Energy and Apple. Bloom faced such a decision when awarded a $10 million federal grant that didn’t align with their principles. Apple fought a court order from the FBI over privacy rights.
Another area to consider when creating your company principles is communication strategies. According to the article, “principles help management communicate the rationale behind difficult choices to customers, employees, investors, and other stakeholders.”
The article also breaks down the three types of principles that can help you better categorize them as you consider what makes sense for the company.
- Stakeholder – These principles relate to customers, investors, and employees and help clarify an approach when there are conflicting interests.
- Operational – These principles relate to day-to-day operations and tactics and enable employees to make decisions on their own without the worry of being misaligned with the company mission and vision.
- Organizational – These principles are the most closely associated with the culture of the company. A well-known example of this type of principle was made popular by Amazon, “disagree and commit”. It promotes discourse and alignment to the solution.
Defining your company’s principles is a thought-provoking exercise. It requires a deep examination of the mission, vision, and values. It helps to consider your unique selling proposition(s) that differentiate you from your competition and your history. Were there times when decisions defined who the company is today? These “folklore” stories can become part of the company’s fabric.
Per the article, “Principles may initially require explanation and examples to help team members appreciate their nuances. But as organizations ingrain their principles more deeply, employees will internalize their meaning for the company.” It also mentions, “Employees often emulate an organization’s senior leaders, so leaders who articulate the why as well as the what effectively instill principles in their teams, leading to more-consistent decision-making throughout the organization.”
Principles are an important element of a strong organizational culture and help employees at every level with their decisions and communications. It also helps us headhunters when sharing details about our clients, which will help them decide if they are willing to learn more about an employment opportunity. To learn more about developing a strong culture, send us a note.