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“Culture eats strategy for breakfast” is a quote made famous by the late, great management guru Peter Drucker. What Drucker intended with this saying is not that strategy is unimportant, but that without a defined and healthy culture, you won’t execute your strategy properly. Core Values set clear expectations for desired behaviors and those that you won’t tolerate. On our signature One Page Strategic Plan (OPSP) tool in the Scaling Up Growth Platform, Core Values hold a foundational place of honor on the left side of the plan, with Purpose adjacent at the top and Core Competencies anchored at the bottom. Together, these components form what we call the CORE, and they actually resemble the letter “C” when highlighted on the plan. These are the “forever” elements that constitute your firm’s DNA. They’re elements you want to consistently test and apply, adjusting them only sparingly and with deliberation. They serve as your company’s North Star and timbre. Changing these strategic elements haphazardly would be a surefire recipe for losing your way, both internally and in the marketplace.

For many executives, Core Values may sound “soft” and evoke images of trust-fall exercises and existential questions like, “Who am I?” and “Why do I exist?” This perception stems from past experiences with Core Values development exercises that were poorly constructed, misguided, or misunderstood. In such cases, leaders (and consultants) tend to strive for political correctness, resulting in generalized, pleasing-sounding platitudes and word salads such as “everybody matters,” “family,” “communication,” “do what is right,” “openness,” and “respect.” For instance, integrity is a very common core value, often making up a significant portion of companies’ core values. Please don’t misunderstand; integrity is a crucial value to pursue — it deserves a permanent place on the United Nations Security Council of Core Values for any organization. Integrity is also on our list of Core Values! The key is to precisely define what integrity means within your organization. Otherwise, it becomes nebulous. For us, the behaviors driven by integrity include:

  • Do what you say you will do
  • Meet commitments
  • Tell the whole truth — no deception

We live integrity and we use it to evaluate our success with clients and within our team.

Many companies encounter an issue when they attempt to engage in corporate virtue signaling. They try to portray themselves as excessively moral. This leads them to adopt Core Values that are generic, ineffective, lacking believability and buy-in, and challenging to implement. This happens because they make the mistake of creating aspirational Core Values rather than discovering authentic ones. Consequently, these wimpy Core Values remain vague notions and principles to live by, seemingly suitable for any company. In reality, this broad applicability makes Core Values lackluster and unhelpful.

In this age of artificial intelligence and tools like ChatGPT, some misguided business leaders and consultants even delegate the development of these crucial strategic tools to a machine! This is the job of Real Intelligence (RI). In our +15 years of experience in executive business coaching, we can confidently assert that teams with poorly defined and poorly understood Core Values tend to struggle.

Part of the reason for this struggle is that weak Core Values often appeal to B Players and the B Player leaders who devised them. These individuals tend to embrace ambiguity and shy away from clear distinctions. Weak Core Values attract affable underachievers who thrive amidst the vagueness of values like “empathy,” “care for others,” and “save the planet.” While these values may sound admirable if you want to showcase your virtues and channel your inner Gandhi, they don’t serve as effective Core Values.

As mentioned at the outset, Core Values need to serve as “bright lines” to encode the types of behaviors you want in your business. You’re delineating the operational DNA for your team. They should be used as the acid test to determine if someone is successful or not.

I have long said that Core Values are the true operating system of your business. Specifically, they need to act as decision filters. Well-constructed Core Values serve to guide you in determining which business opportunities to pursue or pass on. They inform you about which operating behaviors are appropriate and should filter who fits and doesn’t fit into your culture. Ultimately, they guide your decisions regarding relationships with employees, customers, and suppliers, determining which relationships to initiate and which to terminate.

Core Values are discovered, not invented. You can’t become something that you’re not. Again, that zen-like existential process that many hack consultants advocate or asking ChatGPT to generate a list (from who knows where) won’t yield Core Values that can effectively drive the operating system of your business. Natalie Dawson, the author of TeamWork, provides one of the most valuable and practical processes for generating Core Values:

  1. Identify people from your past with whom you genuinely enjoyed working. Scaling Up calls this the Mission to Mars exercise — who would you want to take with you? What were the outstanding qualities of those team members? Did they consistently deliver results? Were they adept at planning and executing their strategies? Were they consistently punctual and ahead of schedule? List ten to fifteen characteristics that stood out in those team members.
  2. Now, think about colleagues you found challenging to work with. What were the characteristics that rubbed you the wrong way? Did they take credit for others’ work? Were they evasive when it came to quarterly plans and accountability? Reflect on their less desirable traits and jot down ten to fifteen characteristics you would prefer not to encounter in your business.

Dawson’s process can help generate a great initial list. We’d also encourage you to expand the definition to include work experiences (beyond individual people) where you’ve thrived and those that you’ve loathed. Moreover, we are open to an exploration of your true personal Core Values. Discover what you, as the founder or owner, genuinely hold dear. As the founder, this is your opportunity to create something truly distinct and unique. What do you genuinely value? How do you feel about results, debt, investments, compensation, continual learning, or entitlements? Many of the same values that apply to your personal relationships also apply to your business.

For instance, one of our favorite Core Values is “Results” because it provides such a clear measure of someone’s success or lack thereof (a strong candidate for permanent UN Security Council Status). This value is expressed as Results & Winning in our One Page Strategic Plan:

  • Results are the name of the game
  • Our clients pay our paychecks
  • Nothing exists without results
  • We enjoy the joy of achievement

As you define your Core Values, it’s appropriate to use language that’s unique to you and your company. I recently helped an elite client, a defense contractor who supports special operations, discover their Core Values. The question arose: “Shouldn’t Core Values be immediately understood by a new person without explanation?” My response was that Core Values should be authentic and deeply held by employees and that it’s more crucial for a new person to buy into and comprehend these explained values. This led to the development of these highly relevant Core Values:

  • Make the Customer The Hero
  • Make [our company] their secret weapon
  • We ensure people keep their fingernails
  • Listen carefully to the signals and deliver shock and awe

Ensuring our warfighters keep their fingernails intact is at the core of what this client does. It’s an exceptionally robust Core Value because it communicates to their employees the behaviors that underpin the mission at hand. Additionally, it paints a vivid and memorable word picture. It also functions as an immediate litmus test for identifying candidates who are the right fit to join their team.

Another pushback I sometimes hear from clients when developing Core Values is their reluctance to use negative (“no” or “don’t”) phrasing in Core Values. A few years ago, I taught Professional Ethics to CPAs and attorneys as a requirement for them to maintain their professional certifications. It’s worth noting that much of ethics is influenced by the teachings of the five major religions (Christianity, Judaism, Buddhism, Hinduism, and Islam). During the course, I emphasized that 8 of the 10 Commandments in Judaism and Christianity are framed in negative structures. Talk about bright and distinct guidelines!

  1. You shall have no other gods before Me.
  2. You shall make no idols.
  3. You shall not take the name of the Lord your God in vain.
  4. Keep the Sabbath day holy.
  5. Honor your father and your mother.
  6. You shall not murder.
  7. You shall not commit adultery.
  8. You shall not steal.
  9. You shall not bear false witness against your neighbor.
  10. You shall not covet.

Here is an example of how to effectively use negative bright lines in your Core Values:

  • Great Attitude
  • Positivity, no whining
  • Glass half full
  • Our attitude is our ultimate freedom and is under our control
  • No job is too small
  • No cynicism

The idea of Core Values is to borrow a page from parenting — a few simple, well-defined rules. Of course, for those rules to be effective, they may include some negative boundaries: “Don’t play ball in the house,” “Don’t return the car without fuel,” and “Don’t do drugs.” Just like in a company, families with strong values that are consistently reinforced tend to thrive.

What is the optimal number of Core Values? Values need to be clear and easy to remember, so for many companies, less is more. A good rule of thumb is six to seven to keep them manageable; however, it’s worth noting that Moses successfully led the Israelites with ten. Our business A Player Advantage has eleven, and Amazon has fourteen. Amazon boasts some outstanding and distinctive Core Values, including “hire and develop the best,” “frugality,” “disagree and commit,” and “deliver results.” Their fourteen values are concise, meaningful, and memorable, which is why they drive the paradigm-breaking culture that Amazon is known for. Many of our highly successful clients have more than ten Core Values, though none have more than fourteen.

The key to knowing if your Core Values are effective is when you hear your employees using them in their decision-making on a daily basis and when you can determine if people are successfully living up to them. When your Core Values become a living part of your organization like this, you’ve built a true operating system for your company to run and abide by.

There is no time for amateur hour when discovering the intrinsic Core Values that will drive a successful culture in your business. Many companies get them wrong because they attempt to write down what they think they want to be and what people want to hear, rather than putting in the harder work of discovering what they truly and authentically value. Schedule a conversation with us today to learn how to get them right. We will show you how we have helped businesses worldwide achieve stronger net margins and happier teams through A Players developing and executing better strategies.

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