Guiding Principles Or Dogma
An exploration of thoughts on how organizational principles (values) fuel lasting organizational success
Ever wondered why some organizations create such a wonderful culture to work in! How do they achieve financial success year after year, while some organizations shine brightly for some time, only to fade away or die off like a supernova! Why is it so much fun and joy working in some organizations compared to others?
The key success factor is the “religion” which organizations adopt to shape their culture. “Religion” of an organization comes from the “values” and “principles” embraced by the organization.
Recently, I read an interesting book, “Principles” by Ray Dalio, the immensely successful hedge fund manager and Co-Chairman of Bridgewater Associates. The book chronicles in meticulous detail, the principles by which Bridgewater Associates is run, examples of how they manifest themselves in the running of the organization, and the expected behaviors from employees. Adherence to those principles is an integral part of working, growing and even surviving at Bridgewater. It was impressive to read how Ray had put the same amount of thought, science and rigor in developing his principles, as he had in developing his investing or economic models.
The book reminds us that values and principles to be real, must become a part of the ethos of an organization. In the absence of clear principles, organizations can fall into Uber-esque type of scenarios, where the organization is seemingly successful from the outside, but hollow, and brittle from inside as employees adopt self-destructive behaviors.
Leaders who really care about creating the right culture put in a lot of thought and debate in formulating the values for their firms, and the systems to make the values come alive in the organization.
Successful organizations treat their organizational principles like gravity. Organizational principles are timeless. Like gravity, organizational principles are non-negotiable. Just as we all live on this planet in accordance with the principles of gravity, successful organizations make their principles the fulcrum around which all their actions revolve. Organizational policies and systems are designed around their principles. They have constancy of purpose.
Netflix had shared a 128-page presentation explaining their values and culture. Such is the importance that the organization places on their values.
Organizations that care for values are deliberate and thoughtful of the values they select and also how they create and convey them. When faced with an option to deviate from their values, successful organizations chose to stick to their values in a visible and open way to further strengthen their commitment to their values.
There are numerous examples of employees at Southwest Airlines who have gone the extra mile, left work and driven customers for hours or taken a passenger’s dog to the vet — only to be supported and praised by their managers. Most airlines would have told their employees to stay on the job and not leave work. But Southwest Airlines encourages such pro-active, pro-customer behavior. It’s part of their values.
Recently, Patagonia donated $10 million saved from Trump tax cuts to environmental groups. Patagonia had several choices — they could have increased their employees’ compensation (like many organizations did) or shored up their profits; but they stayed committed to their value of helping the environment.
Successful organizations build and strengthen their values at the crossroads of conflict.
Organizations principles are not empty slogans, or posters placed on office walls, but rather clear markers on the ground that guide the journey of the organization. Actions & decisions made by the organization, ultimately re-draw the real adoption of the principles
Organizations with a strong culture, emphasize their values consistently year on year. Toyota has been doing that for 75 years. Southwest Airlines for 51 years; Netflix for 21 years. Consistency is paramount.
But, the biggest success factor in creating a great culture is pursuing organizational principles with a sense of balance. The pursuit of values can have unintended consequences and could hurt an organization. Too much rigor, too much intensity in embedding the values in the organizational DNA can heighten the uniqueness of the organization to such a great extent, that it can diminish diversity in the employee pool. The methods and the tone used to instill the values in an organization will define the impact the values will create in the organization.
Too hard a push on values can lead the organization to new heights of excellence but it can straight jacket the employees, robbing employees of a sense of freedom. It could instill a culture of caution and fear, where employees are overly concerned about living by the values rather than being themselves.
If we turn to history, Singapore is a classic example of a country that is successful and is built on the foundational principles of meritocracy and multiculturalism. But, the implementation of those principles has come at the cost of individual freedom. An article in the Wall Street Journal titled “At Netflix, Radical Transparency and Blunt Firings Unsettle the Ranks” (Oct 25, 2018) makes interesting reading.
Organizational values must accentuate the uniqueness of the organization; while at the same time facilitate creative thought and debate.
Like the sun, that brings life to earth, principles provide fuel for an organizations’ growth. But just as a sun that shines too brightly, principles that are too restrictive, can gradually flame out the organization.
Let’s go beyond the corporate world to understand this better. The Catholic church is a great case study. Through decades & centuries, the church has followed a strict code of values and conduct. This has helped the organization grow into a well-knit, tightly run organization. But the bind was so tight that it did not give room for church members to have open debates on policies, practices and behaviors that were outdated or simply incorrect. The organization was so homogenous that it did not offer room for diversity, and that in turn, is leading to its steady decline over the years, as it struggles to morph to changing times.
Organizational principles must inspire and motivate. Principles are not dogma. If the values seem oppressive, they need a refresh, or the systems deployed to implement them need a change.
Successful organizations allow open, honest soul searching and a shift in principles if needed. The church, for instance, needs an open debate on their values. Not a cloistered discussion with a few cardinals close to the pope. The church needs to re-evaluate what it stands for and allow a transparent debate on its core values. The church needs to abandon its dogmatic pursuit of its principles and in favor of values that are inclusive and in keeping with the times.
In the book, Hit Refresh, Satya Nadella talks about his focus on culture change as a key element of his strategy to drive growth in Microsoft. When Nadella, wanted to shift Microsoft’s strategy from Windows dominance to Cloud, Mobile and deeper engagement with customers, Nadella focused on values such as “empathy”, “collaboration”, and a learner mindset. He re-wrote Microsoft’s mission to be “empowering every person and every organization on the planet to achieve more”. He created an environment where Microsoft employees could connect their life experiences and personal values with the work they do at Microsoft. It’s this collaborative, learning and fulfilling culture that facilitated a radical shift in strategy at Microsoft, resulting in almost tripling of shareholder returns since Nadella took over.
Employees do not need principles alone. They need real markers in the sand, created by visible adoption of these principles. They need to be allowed to raise their voices if the markers drift too far from the principles.
Toyota adopts a tool knows as an “andon” chord, to raise an alarm if anything is going wrong in their assembly lines. Employees need an andon chord to pull when they feel that the principles need change or are not being adopted. When Google employees walk out of their offices to protest the handling of sexual harassment complaints, they are indicating the absence of an andon chord. There are protesting the absence of safety valves.
While creating or driving principles or values in an organization, look for three key aspects:
1) Are the principles valued by the employees? In other words, do they reflect the voice of the employees?
2) How visible are your markers in the sand, and how aligned are they to the principles?
3) How effective are the “andon” chords?
Successful organizations understand that the right values and principles are critical to the long-term growth and sustainability of the business. Their principles are pillars that are inspirational and fortified by action that align with the principles. Most importantly, these pillars are not structures of beauty, or pillars of dogma. Rather they are dynamic structures of truth, that sometimes need change to keep with the times, or strengthened to keep the inspiration flowing. Their employees are the custodians of these pillars, empowered to follow them and raise alarm bells if the pillars are losing their strength.
