This post consists of three sections: the first is a synthesis of other people’s great ideas about what makes core principles particularly strong and effective. The second are lessons learned from looking at the core principles of other companies, looking for common patterns. The third is a disciplined top-down and bottoms-up method for creating/updating core principles. Primarily suitable for organizations where a more emergent or fully top-down exercise will not work given the organization’s size.
1. Theory: A Framework for Strong Organizational DNA
prin·ci·ple – ˈprinsəpəl/ – noun
A fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.
A vision-based, mission-driven organizational framework (adopted from Moz)
Consists of the following:
- Core Principles: the architecture behind our decisions, infusing all our efforts – the intrinsic principles we believe in ahead of financial or strategic success. They are the framework by which we make decisions, hire/evaluate/reward people, and create culture.
- Core Purpose: The reason we exist – (aka mission) This is how we want to contribute to the world professionally, and how we want to make our living. We will forever pursue this purpose, though it can never be fully achieved.
- Strategic Vision: How we accomplish our purpose – How best to execute our core purpose (based on our abilities and market conditions) over the next 10 years
- BHAG (big, hairy audacious goal): Our accountability to results – an easily measurable representation of whether we’re achieving our strategic vision
- Strategic Initiatives: near-term methodology that we pursue – Key items we want to accomplish in order to see our strategic vision realized, and give us the best chance to hit our BHAG
- Tactics – everything anyone in the company works on should be mapped to 1+ strategic initiative
There are no good or bad principles, only weak or strong principles.
A principle is strong to the degree that it’s honest, clear, and reinforced:
- Honest principles are born of self-assessment and embrace the virtues and faults of leaders and their organizations. This honesty is the prerequisite of clarity.
- Clear principles are defined. They make hard decisions to precisely describe who/what is and isn’t a culture fit in a way that deliberately excludes huge chunks of the population and their beliefs
- Reinforced principles are practiced. They have well-worn pathways, and decisions can be made reflexively because of the clarity of the culture and obvious prioritization of principles.
Strong principles come at a cost
Strong principles require tough decisions to be made in order for the principles to be upheld. If you establish principles that are never challenged, these principles aren’t serving any real purpose.
Strong principles may empower an employee to say NO to a decision from a superior on the grounds that it violates a core principle.
An organization considering defining its principles must first come to terms with the fact that, when properly practiced, principles inflict pain. They make some employees feel like outcasts. They limit an organization’s strategic and operational freedom and constrain the behavior of its people. They leave executives open to heavy criticism for even minor violations. And they demand constant vigilance. If you’re not willing to accept the pain real principles incur, don’t bother going to the trouble of formulating them.
There’s a fine line between strong principles and dogma. Principles should be thought of as “bounded ideals”, constrained by the messiness and complexity of reality. We should try as hard as we can to live up to them, and everyone should feel empowered to speak up when we violate them.
REMEMBER: Your core principles are not what you think they are, they’re what the team thinks they are.
Types of Principles
A comprehensive principle system incorporates people, product and process:
- People Principles. This is the category that startups tend to focus on when they consider principles. In this category, your principles should help you decide who you should hire, who you should fire and how you treat each other while you work together.
- Process Principles. principles associated with process link to how decisions are made in a company. This includes how you report progress, hold people accountable and trust each other. For example, most startups will say that trust is vital, but won’t construct a process that reflects and protects that priority.
- Product Principles. In most cases, it’s less instinctual to associate your product with your principles. Your type of product, its features, how you treat your customers and how you respond to threats and opportunities around your product are built into your principle system.
A more dynamic view of principles categorizes them to the following categories:
- Core principles are the deeply ingrained principles that guide all of a company’s actions; they serve as its cultural cornerstones. Collins and Porras succinctly define core principles as being inherent and sacrosanct; they can never be compromised, either for convenience or short-term economic gain.
- Aspirational principles are those that a company needs to succeed in the future but currently lacks. A company may need to develop a new principle to support a new strategy, for example, or to meet the requirements of a changing market or industry.
- Permission-to-play principles simply reflect the minimum behavioral and social standards required of any employee. They tend not to vary much across companies, particularly those working in the same region or industry, which means that, by definition, they never really help distinguish a company from its competitors. (integrity, ethics, quality)
- Accidental principles arise spontaneously without being cultivated by leadership and take hold over time. They usually reflect the common interests or personalities of the organization’s employees. Accidental principles can be good for a company, such as when they create an atmosphere of inclusivity. But they can also be negative forces, foreclosing new opportunities.
Ongoing work is needed to transition aspirational principles into core, and eliminating accidental ones.
Fit should be defined by:
- Shared beliefs – the things that you collectively hold to be true about the world (e.g. good people tend to have traits like X, the right way to treat others is Y, what’s appropriate/inappropriate at work is Z).
- Shared priorities – what matters in terms of big, overarching things like work/life balance, short vs. long term commitment, how decisions are made, etc.
- Stylistic cohesion – some people don’t work well together, others find themselves able and inspired to do more when surrounded by a certain type. Cohesion isn’t about finding lots of people who are the same, but about making sure there’s no one on the team that detracts from others and that many get more enjoyment and progress from the diverse perspectives their co-workers bring.
Certain kinds of diversity are excellent in creating a better culture – gender, background, experience, education, etc, when diverse, tend to produce interesting, productive, and fun work environments. But, diversity on beliefs (around morality or on what work should be like) or priorities (minimum viable effort vs. “there’s little else I’d rather be doing,” or “we should sell this business as soon as there’s an opportunity” vs. “let’s build for the long term”) tends to produce a lot of ugly strife.
Vibe, Amenities and Events
Culture (and specifically, principles) is not vibe. Vibe represents the emotional side of the company. Like all emotions, vibe can be fairly volatile and is highly influenced by outside factors. The biggest influence on vibe is typically success. Most companies that are doing well tend to have an overall positive vibe.
Amenities and events (Secret Santa gift exchanges, Karaoke nights, Bean bag chairs, Nerf gun fights, Catered lunches, Team events) tend to have a positive impact on vibe, but require thoughtful design in order to proactively advance your core principles.
2. Practice: Observations from looking at other companies’s Core Principles
I’ve looked at the Core Principles of 10 leading companies, searching for common traits and patterns. Here are our key lessons learned:
- Core principles should be a set of principles, which if hired against and acted against, creates a true north which defines good day to day work habits and decisions — and reduces the need for cumbersome micromanagement and processes
- The fewer the better. Especially in light of the the following point below, having more than 5 core principles become meaningless, because that means that “everything” is important
- When we strip away the creative wordsmithing, core principles become a lot less company-specific. They tend to fall into 10 broad categories. Each company essentially picks the ones that matter the most to it:
- Mission/value orientation – “focus on impact”, “champion the mission”, “we commit maniacally to both the mission and our metrics”
- Customer focus – “focus on the customer and all else will follow”, “our members come first”, ‘we look at the long term and solve for the customer” , “we put our patients first”
- Risk taking/creativity – “be bold”, “take intelligent risks”, “we dare to be different and challenge the status quo”, “we challenge conventional thinking”
- Ownership – “act like and owner”, “we favor autonomy and take ownership”, “take ownership” , “be a cereal entrepreneur”
- Transparency – “be open” x2, “we share openly and are remarkably transparent”,”we are transparent until it hurts”
- Excellence – “it’s best to do one thing really really well”, “great just isn’t good enough”, “demand excellence”, “every frame matters”
- Humility/Learning – “learn from failure”, “turn friction into learning”, “be humble”, “make others successful”, “
- Simplicity – “simplify”, “we build simple”, “refactor”
- Tenacity, grit – “live the spirit of challenge”, “embrace ambiguity”, “we embrace challenge with grit”, “embrace the adventure”
3. Method: Developing Your Core Principles
Part I-A: Founder self-reflection:
- Answer the following questions (first things that come to mind, don’t over-think it):
- What are my strengths?
- What am I outstanding at?
- What sets me apart from the people around me?
- What do I value about the people around me?
- When I look at my friends, what are the characteristics they have in common?
- What qualities drive me crazy about people?
- How do I make my best decisions? (Think of a recent decision you made that had a good outcome. What process led to that?)
- What am I bad at?
- Using the Reinventing Orgs framework – what kind of organization is your company right now? (Impulsive, conformist, achiever, pluralistic, evolutionary)
- What kind of organization would you want your company to be? (Impulsive, conformist, achiever, pluralistic, evolutionary)
- Given the kind of organization you want your company to be, how would you define your role as CEO?
- Allow all employees to contribute their input to Session I (of Part II) by filling in an online “self-reflection” form with similar questions
Part II: All-day group offsite
- Share this doc in advance
- Share Reinventing Org deck in advance
- Process and workshop overview
- Q&A/ short discussion on materials (clarification, not a debate)
- Session I – divergence/exploration
- Goal is to avoid bias from CEO’s self-reflection at this stage
- Company Self-reflection (brainstorm-style, each person puts their answer on a sticky note on a flip chart with the relevant question):
- What are our strengths?
- What are we outstanding at?
- What sets us apart from the companies around us?
- How do we make our best decisions? (Think of a recent decision we made that had a good outcome. What process led to that?)
- What are we bad at?
- What do you value about the people around you?
- When you look at your friends, what are the characteristics they have in common?
- What qualities drive you crazy about people?
- Add CEO’s answers (different color)
- Break (+silent/individual review)
- Session II – convergence/consolidation
- Plannary: 3-4 people share observations from/reactions to first session
- In groups, each group tackles 1-2 of the company self-reflection questions:
- Find meaningful cluster/themes for the responses
- Formulate into suggested core principles. Formulate as commandments (start the sentence with a verb: “think at scale”, “draw the owl”). Bonus points: add an “even over” section articulating the main trade-off (“build working software even over creating comprehensive documentation”). Don’t fret over word-smithing too much.
- Test for applicability – is the core principle you identified can help inform:
- The way we should treat each other
- The way we should build our products/deliver our services
- The way we should run our processes
Not every principle should inform all three, but if a principle doesn’t inform any – it’s not a useful principle
- Plannary: each group presents their principles for 3-5 mins followed by 3-5 mins of questions
- Lunch break
- Session III – pressure-testing and selection
- Dot-vote on following attributes:
- The people who are successful at our companyembody this principle
- The long term success of our company will be harder without this principle
- This principle sets us apart from other companies
- This principle helps informing the way we should treat each other
- This principle helps informing the way we should build our products/deliver our services
- This principle helps informing the way we should run our processes
- Select winners (do another round of dot-voting if there are no clear winners)
- Group Session IV – action planning
- Each group is assigned a small set of processes and articulates gaps/ divergence from core principles + plan to close them.
- Present back to plannary
- Group Session V – next steps
- Polish session – identify 2-3 additional participants
- Present to rest of company – 3-5 people + wrangler.
- Work on closing the gaps – assign people to individual process action plans. Opt-in, not mandatory. This team did all the heavy lifting so they get first dibs.
Part III: Polish session
- CEO as Editor in Chief – final refinements. Compare against self-reflection.
- Marketing support / someone with good copy-writing skills?
- 2-3 other people
Part IV: Roll-out
- Presented at a company all-hands meeting by non-execs
- Process we followed
- Core Principles we came up with
- Action Plan – current participants + calls for additional people. No more than 5 per process.