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 for years to come. 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 and you want some influence on that.
A Foundation for Culture
Many people think a company’s culture is something that just naturally develops from the collection of personalities and actions taken by the founders and employees. And for sure there is a lot of truth to that. But what can you do as a founder or founding team to set a foundation upon which the company culture develops and evolves? The answer lies in what are referred to as “core values” or “founding principles“. What they’re called is less important than what they represent. In fact, they might be called founding principles in the beginning and later be referred to as core values as the company evolves from the founding stage.
These are mantras you declare and are almost never willing to deviate from. They serve as the litmus test for critical decisions. They serve as guideposts during times of crisis. They serve as the mottos or slogans employees will voice later and will set the bar they will strive to achieve for professional recognition.
Said a different way, you’re trying to cause the company’s eventual culture to be the implementation of, and evidence of, your founding principles.
I’ve had the privilege to work for, or advise, a few companies that are ideal demonstrations of this. One had a half-dozen or so principles that were set in the very early days that 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 two or three principles from the list. These included the following mantras, which were my personal favorites and the ones most remembered by employees:
- We Under-Promise and Over-Deliver
- We are Easy to do Business With
- We Attract, Retain and Cultivate 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’ and executives’ position on how to treat customers? Do you think commitments were virtually always achieved? The answers are absolutely, positively.
Another company derived a founding principle early in their venture when faced with a critical decision on whether to release a new version of their software product. They had a version that tested stable and was seemingly ready to go, but at the last minute the team decided to delay another week to add in a quick feature that would add some really nice pizzazz.
Unfortunately, before going into the final regression tests that took multiple days, 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.
A final example I’ll give comes from a Fortune 500 company I worked for right after college. To this day I still remember one of the company’s three “basic beliefs” (the term they used). It is “Respect for the Individual”. I have no clue what the other two basic beliefs were but, decades after working for the company, I still remember one that most resonated with me. That’s because the company really lived by that basic belief, at least while I worked for them.
Identifying the Right Phrases
You might come across some great examples of founding principles other companies used. If they really resonate with you, selfishly adopt them or tweak them to your beliefs.
If you’ve already started the company and would like to memorialize some founding principles, think about some examples of things that have happened in the past that best exemplify the culture you want to foster. Capture the essence of those stories in a short phrase and possibly 1-2 supporting sentences or examples.
Some companies try to standardize the format for the principle statements. An example is to start each with the word “We” (see the bulleted list above for examples). I know another company that finishes most of their statements with the word “matter” or “matters” (ie – “Authenticity matters”). It’s absolutely not required to have standard formats for the statements, but if you like that idea, give it a try.
To my way of thinking, here is what is important regarding the actual phrases that are selected:
- Are they clear and understandable?
- Are they interesting, exciting or motivational?
- Do they truly represent the motivations, passions and interests of the founding team?
- Will they provide guidance for important decisions or during times of crisis?
Are Core Values Different?
You’ll likely see the phrase “core values” used more often than “founding principles”. The difference to me is that founding principles are set in the earliest of days by the founding team whereas core values often enter the picture later, when the company is larger and there’s a built-out management team. How much larger is very company dependent, but I see core values taking over for founding principles around the time the company’s culture evolves from the founder’s culture to the employee-owned culture. You’ll read more about that next.
I don’t actually get too hung up on what phrase is used to describe these important mantras. But I do typically like to see at least some of the founding principles remain preserved as the company grows and adopts a set of core values. It’s especially valuable and important if the founders remain in leadership positions as the company grows. I say this not based on any research, but rather personal preference and out of respect for the founding team. I’m also assuming some of the founding principles enabled the growth and success the company experienced.
Culture Takes Over
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 ends up becoming “owned” by the employees and is often somewhat vague or even invisible to the management team. Culture consultant Stan Slap preaches this mantra (https://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 those principles. For example, if a founding principle is “We trust each other”, then a supporting action might be to allow employees to work from home some or all of the time. Just realize that if the management team collectively goes against a founding principle or core value, then it pretty much renders it useless forever.
I’ll give you an example of this from the company that had “We Are Easy to Do Business With” as a founding principle. The employees took the mantra so seriously that they formed what they called an ETDBW committee that had cross-functional representation. They met on a quarterly basis to discuss ways in which the company wasn’t as easy to do business with as it should. They prioritized the issues, came up with suggested actions, and presented them to the executive management team. Can you imagine the culture violation that would have occurred if the executives didn’t take the suggestions extremely seriously and support most or all of them?
What founding principles and/or core values 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.