If a company is in business to make money, to bring a return for its shareholders, then why do things like purpose, vision and values matter? Why isn’t it simply a case of products, markets and customers?
And what are these things, anyway?
Two definitions used by Jim Collins and Jerry Porras in Built to Last are helpful. Collins and Porras define “values” as a small set of principles by which a company operates; things that are never compromised in the interests of expediency. They consider “purpose” to be the fundamental reason for a company’s existence – its perpetual ‘guiding star’ that is never fully achieved – beyond just making money.
“Vision” is a concept that they do not define quite so explicitly. A vision, in this context, is a statement (usually oriented to the longer term) of the desired future state of an organization. A vision statement might begin with something like: “When our vision is achieved….” and then go on to talk about how the company, its customers, its products/services and stakeholders will look in the future.
Purpose, vision and values constitute the corporate ideology of a company. They are the skeletal system of an organization around which the muscle of daily business moves. They form the intrinsic superstructure of a company. If established and maintained correctly, these things become part of a company’s DNA and a company’s employees embrace them unquestionably, obsessively. And when times get tough, they remain true to these things. Purpose, vision and values are important because they provide clarity and focus when it’s really needed.
But, to go further, if purpose, vision and values are especially well defined and established, their benefits can be immensely greater. A company’s purpose can provide inspiration to its stakeholders and a real sense that what they are doing is part of a greater scheme. A good purpose answers the “so what” or “what’s it all for”-type question. An effective corporate vision brings the purpose to life by making it concrete and measurable against a depiction of a future state. This aspirational effect can motivate employees and transform their performance from mediocre into stellar. And values provide the engine that propels the machine. If an organization has well-shaped values and embraces them thoroughly, effective pursuit of its purpose and achievement of its vision should, in time, ensue.
Collins and Porras use companies such as Sony and Boeing as examples of how corporate ideology, more so than the pursuit of profits, propelled organizations to achieve long term sustained success. A more contemporary example of this would be Amazon.com, a company that is known and well-regarded for the clarity of its vision and the importance of its values. When these guiding principles emerge and take root naturally, the impact on long term performance is great.
But it’s a delicate balance. These guiding stars must be organic, real and appropriate. Since corporate ideology began to achieve popularity in the 1980s, some companies have become adept at manipulating these elements for short-term fixes. Values statements are the ones most often tinkered with, and the results can be alarming. One organization we’ve worked with was experiencing a problem with people being late to meetings. The next time the values statement was amended, a new value was inserted, as if from nowhere, exhorting employees to behave respectfully towards others in meetings. Amongst many other problems, this is too specific to be properly considered a corporate value. It also, in this case, brought the number of specific values at the company up to 64. This is far too many for any organization. It caused dilution of the core ideology and damaged the integrity of the values system at the company.
The work of Collins and Porras is a few years old now, but the principles remain current today. Even if the platforms are digital, the markets virtual and the customers faceless and remote, a company is still a set of resources organized around an idea. Those resources always need to include a clear, candid and powerful corporate ideology if long term success is to ensue.