At the end of Way We Do’s daily emails, you’ll find something important: “People. Principles. Process.” Among these, the concept of “Principles” demands a special focus. These aren’t corporate policies, mission statements, vision declarations, and value propositions. Instead, principles are like clear signs or rules that help everyone at work make good choices, especially when things get tough.
Principles are critical because they help us decide what to do when we face challenges, like hyper-competition or disruptive changes in technology. They’re like a compass that helps us stay on course even when things around us are constantly changing.
Build a Strong Foundation: A Principles Framework
Let’s explore a game-changing approach tailored for businesses like yours, inspired by Stanford University’s entrepreneurship hub, STVP. They’ve introduced a course, “Principled Entrepreneurial Decisions,” based on the wisdom from Ray Dalio‘s influential “Principles.” This isn’t just about big corporate success stories; it’s about the power of foundational principles that can drive any business, including yours, to new heights.
What sets the STVP framework apart is its relevance and applicability to businesses of all sizes. This isn’t just another business theory. It’s a practical, step-by-step guide designed to help you carve out your own set of principles that resonate with your business’s unique ethos and goals. With this framework, you’ll have a clear roadmap to make decisions that not only drive growth but also align with the values at the heart of your business.
Crafting Principles That Resonate
Designing principles that embody the essence of your organization is akin to laying the cornerstone for a building; it’s the foundation upon which everything else stands. The first step in this process is to look inward, identifying the unique traits and strengths that set your business apart from the rest. Reflect on the decisions that have defined your journey so far — those moments of truth that shaped your path. These insights are invaluable in formulating principles that truly reflect your organizational identity.
Involvement is key. Engage your team in this endeavor, for a principle crafted in isolation is like a tree that falls in an empty forest. By incorporating the perspectives and wisdom of your employees, the principles you develop will not only be richer but also more representative of your collective vision. Ensure these principles are in harmony with your organizational goals, key performance indicators, and financial strategies, making them practical and actionable.
Consider the examples set by notable companies:
- Box empowers its team with the principle of ensuring “access to all the files and information our users need to get work done from anywhere,” underlining the importance of accessibility and efficiency.
- Tableau Software, with its commitment to excellence, pledges not to release any product unless it’s something they would use themselves, showcasing a dedication to quality.
- Patagonia‘s principle of “Protect our home planet” is manifested through its rejection of permanent third-party branding on gear, emphasizing sustainability and environmental stewardship.
- Facebook‘s once hallmark motto, “Move fast and break things,” reflects a culture of innovation and rapid progress, albeit with its own set of challenges and learnings.
It’s crucial to distinguish between values and principles in this journey. While Tableau Software’s values like “Product excellence” outline what you aspire to achieve, principles such as “We won’t release a product until we would use it ourselves” provide clear, actionable guidance on how to live those values in daily operations. This distinction is vital, as it ensures that your principles are not lofty ideals but practical, lived experiences that guide your team’s actions and decisions every day.
Five Critical Attributes
For principles to truly serve their purpose within an organization, they must embody five critical attributes that set them apart, making them not only guiding lights but also markers of a company’s unique identity and approach to navigating business challenges.
- Distinctiveness
Principles must encapsulate what is unique about an organization, distinguishing it from its competitors. This distinctiveness ensures that principles are not generic platitudes but reflections of the organization’s unique character and strategic approach. For instance, Tableau Software’s dedication to advanced data analysis and visualization, steering clear of old-school practices like static PDF exports, highlights principles such as prioritizing innovation over conventional customer demands. This commitment shapes the company’s identity and drives its success, even when faced with the temptation of easy growth through diverging from these core principles. - Debatable Nature
A principle’s strength is partly in its capacity to inspire debate, indicating that it is substantive enough to warrant discussion. Tableau Software’s bold stance that “the customer is not always right” and “abandon sales leads that want a different product” challenges conventional wisdom and invites dialogue on the importance of staying true to one’s product vision and capabilities, even when faced with lucrative opportunities that may lead astray from core competencies. The cofounder, Christian Chabot, rolled out an education program for employees and customers, aligning the sales strategy with their principles. - Transferability
Effective principles are versatile, applicable across various scenarios, roles, and departments within an organization. Google exemplifies this with its principle “Focus on the user and all else will follow,” underpinning initiatives like Gmail, Search, and Maps. This principle transcends individual product lines, guiding decision-making with a consistent focus on user value, anticipating that it will ultimately drive the company’s success (and advertising revenue) across the board. - Integrality
Principles must be deeply ingrained in the very fabric of what the company does and the challenges it faces. Bloom Energy’s steadfast principle “We must control our technical innovation as our core competence,” in the face of a tempting $10 million government energy grant, showcases the integral role principles play in decision-making, especially when opportunities may lead to compromises that conflict with the company’s core mission and values. Bloom walked away from the grant because the Department of Energy’s terms dictated that the product would need to be tailored to DoE’s use only. - Company-Defining Moments
In times of crisis or pivotal decision-making, an organization’s true principles come to the fore, defining its stance and actions in the face of challenges. Apple’s unwavering commitment to “Privacy is a fundamental human right”, even in the face of legal pressures from the FBI in 2015, underscores how principles can define a company’s actions and its relationship with customers and the broader public.
Together, these five attributes form the backbone of effective principles, guiding organizations through the complexities of modern business landscapes while staying true to their unique identities and strategic visions.
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Three Distinct Types
Principles serve as guiding stars, categorized into three distinct types, each serving a unique purpose within the corporate cosmos. These categories – Stakeholder, Operational, and Organizational principles – provide a comprehensive framework for businesses to navigate their internal and external environments with clarity and purpose.
- Stakeholder Principles: Balancing the Scales
Stakeholder principles are pivotal in outlining how a business engages with its critical constituents – customers, employees, and investors. These principles offer a blueprint for best practices in stakeholder relationships, ensuring that their needs are addressed, especially when conflicts arise. Alphabet‘s steadfast commitment to its principle maintaining a “long-term focus,” as highlighted in its transition from Google, exemplifies this type. By emphasizing the importance of investing in visionary projects with potential long-term benefits, Alphabet underscores its priority towards stakeholders’ enduring interests, even at the expense of immediate gains or market understanding. - Operational Principles: The Daily Compass
Operational principles come into play in the day-to-day activities within an organization, offering employees a framework to make decisions that are in sync with the company’s overarching mission. Playdom’s principle of “A/B-test everything” is a prime example, showcasing a commitment to empirical testing and data-driven decision-making. This approach ensures that every modification, no matter how minor, contributes to the company’s key metrics like user engagement and revenue, thereby embedding a culture of continuous improvement and alignment with strategic goals. - Organizational Principles: Shaping the Corporate Culture
Lastly, organizational principles are the bedrock of a company’s culture, influencing its processes, structures, and the very manner in which decisions are made. A notable principle in this category is “Disagree and commit,” popularized by Sun Microsystems and adopted by Amazon. This principle acknowledges the inevitability of disagreements among intelligent individuals but emphasizes the importance of unity and commitment to decisions once made. It fosters an environment where diverse opinions are valued, yet once a decision is reached, collective support is expected, streamlining decision-making and reinforcing a cohesive corporate culture.
Crafting and Adopting Principles for Enduring Success
The creation and implementation of principles within an organization is a deliberate and thoughtful process, integral to establishing a strong, principled foundation for decision-making and strategic direction. Here’s a guide to developing and ingraining these essential tenets into the very fabric of your business:
- Identify Your Unique Edge
Begin by articulating what distinguishes your organization from the competition. This differentiation will form the bedrock of your principles, ensuring they are tailored to reflect your unique strengths, approach, and market position. It’s about understanding and embracing what makes your company stand out and weaving that uniqueness into your principles. - Reflect on Pivotal Moments
Consider the key inflection points in your company’s history — those moments that tested your resolve, shaped your path, or defined your identity. These instances offer invaluable insights into the principles that have implicitly guided your decisions and can help formalize them into explicit guidelines for the future. - Engage Your Team
The most resonant and effective principles are those co-created with input from across your organization. Engaging employees in the drafting and refinement of these principles ensures they are representative of and resonate with the entire team. This collaborative approach not only enhances buy-in but also leverages the diverse perspectives within your company to craft more comprehensive and meaningful principles. - Document and Distribute
Once formulated, codify your principles and values in writing and ensure they are shared with every member of your organization, from the leadership to the newest hires. Importantly, the Principles document can be centralized in Way We Do, making it readily accessible for all organizational teams. This approach ensures that everyone has constant access to this vital reference, embedding the principles into the organizational consciousness and daily practice. To further embed these principles, training can be provided to the team through Way We Do, ensuring that when onboarding new employees and all team members understands and can apply these principles in their daily work. - Align with Objectives and Measures
Ensure that your company’s goals, key performance indicators (KPIs), and budgets are in harmony with your established principles. This alignment is crucial for maintaining consistency between what you stand for and how you operate, ensuring that your principles are not just words on a page but are reflected in every aspect of your business strategy and operations. - Principle-Driven Decision-Making
Make it a standard practice to reference your principles in the decision-making process. This reinforces their importance and ensures that every decision, big or small, aligns with the core tenets of your organization. It’s about making principles the lens through which all decisions are viewed and evaluated. - Communicate with Principle
When announcing decisions, especially significant or strategic ones, explicitly tie them back to your company’s principles. This not only reinforces the principles themselves but also demonstrates to your team, customers, and stakeholders that these are not mere platitudes but active drivers of every action and decision your company takes.
Principles are the compass that guides an organization through the complexities of the business landscape. Crafting and embedding these principles is a dynamic and ongoing process, one that requires thoughtful reflection, inclusive participation, and consistent application. By following these steps and utilizing tools like Way We Do for centralization and training, your organization can ensure that its principles are not only well-defined but deeply ingrained, guiding your path to success and distinguishing your company in a competitive market.
