Founding Principles – Do You Have Them?

As you’re getting started with your new company, possibly the last thing on your mind will be defining the principles you want to run your company by.  You don’t even know if your product will work or if customers will pay money for it.  So why waste time on company principles?  The answer is because the moment you start hiring your first few employees, the culture of your company will start to get defined.  Many people think a culture is something that just naturally develops from the collection of personalities and actions taken by the employees.  And for sure there is a lot of truth to that.  But what can you do as a founder to set a foundation upon which the culture develops?  The answer lies in founding company principles.  These are things you declare and are almost never willing to deviate from.  They serve as the litmus test for critical decisions.  And they serve as the mantras employees will voice later and the bar they will try to always reach for personal recognition.

I’ve had the privilege to work for a company and to advise another company that are pure demonstrations of this.  One company had a half-dozen or so core principles that were set in the very early days and became so ingrained in the company that they were the culture.  If you asked any employee what the company stood for, they could all recite at least three or four of the founding principles.  These included the following mantras that were my favorites and the ones most remembered by employees:

  • We under-promise and over-deliver
  • We are easy to do business with
  • We attract, cultivate and retain exceptional talent

Do you think this company had a set of litmus tests for critical decisions?  Do you think every employee understood the co-founders’ position on how to treat customers?  Do you think commitments were virtually always achieved?  The answers are absolutely, positively.

The other company derived a founding principle early in their venture when faced with a critical decision on whether to release a new version of the product.  They had a version that tested stable and was ready to go but at the last minute the team decided to delay another week to add in a quick feature that would give some really nice pizzazz.  Unfortunately, before going into the final regression tests that took multiple days due to the extreme high availability requirements of their target market, the new feature was still a little glitchy.  The developer of the new feature and the head of sales were aggressively pushing to include the new feature.  During a final decision meeting, the founder declared the answer:  “running code wins”.  And so the pizzazz feature was deferred to a future release and a founding principle was set.  From that point forward “running code wins” was the litmus test and a critical element of the company’s culture forever.

As I mentioned above, founding principles are different than culture.  The management team is able to influence and enforce the principles the company runs on but barely participates in the culture.  That’s because the culture is “owned” by the employees and is often somewhat vague or even invisible to the management team.  Culture consultant Stan Slap preaches this mantra (http://www.slapcompany.com/).

To a very large degree, the most the management team can do regarding culture is to try and influence it through founding principles and day-to-day decisions and actions that hopefully support and reinforce these principles.  For example, if a founding principle is “We trust our employees”, then a supporting action might be to allow employees to work from home a couple of days per week or to not have an entitled number of vacation days but rather let the employees work out appropriate vacation arrangements with their manager.  Just realize that if the management team collectively violates a founding principle or doesn’t support employee-led ideas to foster it, then it pretty much renders it useless.

What core principles are you willing to run your business on?  Think about it carefully, declare it and then live it every day and with every critical decision.

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Wait, there’s much more!!!

The information in this article is just a very small piece of what I cover in my Founders Academy Video Library, which includes more than 35 topic-specific modules and 6 themed compilations.

I’m talking about more than 13 hours of educational and advisory content to help you grow a great company.  Click Here to Learn More

“The way you convey the material is great and the examples you give makes things clear.” (startup founder)

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Author: Gordon Daugherty

Over the past 15 years Gordon has seen nearly 1,000 startup pitches, advised more than 200 entrepreneurs and been involved with raising over $45M in growth and venture capital. Throughout his 28 year career in high tech, serving twice as President and three times as CMO, Gordon has both an IPO and a $200M acquisition exit under his belt. Now his emphasis is purely focused on helping startups and early stage tech companies. Through his Shockwave Innovations advisory practice and as Managing Director for Austin’s Capital Factory startup accelerator, Gordon is an active angel investor, VC and startup advisor.

7 thoughts on “Founding Principles – Do You Have Them?”

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