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Built to Last, by Jim Collins
and Jerry I. Porras
Core Values
Chapter 11, pages 222–224
Core values are the organization’s essential and enduring
tenets—a small set of timeless guiding principles that require
no external justification; they have intrinsic value and
importance to those inside the organization. Disney’s core
values of imagination and wholesomeness stem not from a market
requirement, but from an inner belief that imagination and wholesomeness
should be nurtured for their own sake. . . . Ralph Larson, CEO
of Johnson & Johnson, put it this way: “The core values
embodied in our Credo might be a competitive advantage, but that
is not why we have them. We have them because they define
for us what we stand for, and we would hold them even if they
became a competitive disadvantage in certain situations.”
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The key point is that an enduring great company decides for
itself what values it holds to be core, largely independent
of the current environment, competitive requirements, or management
fads. Clearly, then, there is no universally “right”
set of core values. A company need not have customer service as
a core value (Sony doesn’t), or respect for the individual
(Disney doesn’t), or quality (Wal-Mart doesn’t), or
market responsiveness (HP doesn’t), or teamwork (Nordstrom
doesn’t). …The key is not what core values an
organization has, but that it has core values.
In identifying the core values of your own organization, push
with relentless self-honesty for truly core values. If
you articulate more than five or six, there’s a good chance
you’re not getting down to the essentials, and probably confusing
core values (which do not change) with operating practices, business
strategies, and cultural norms (which should be open for change).
Remember, these values must stand the test of time. After you've
drafted a preliminary list of the core values, ask about each
one: "If the circumstances changed and penalized us
for holding this core value, would we still keep it?" If
you can’t honestly answer yes, then it’s not core
and should be dropped.
For example, a high technology company we worked with wondered
whether it should put “quality” on its list of core
values. The CEO asked: “Suppose in ten years quality doesn’t
make a hoot of difference in our markets. Suppose the only thing
that matters is sheer speed and horsepower, but not quality. Would
we still want to put quality on our list of core values?”
The members of the management team looked around at each other
and finally said “To be honest, no.” Quality stayed
off the list as a core value. Quality stayed in the current
strategy of the company—and quality improvement programs
remained in place as a mechanism for stimulating progress—but
it did not make the list of core values. Remember, strategies
change as market conditions change, but core values remain intact
in a visionary company. This same group of executives then wrestled
with whether it should put “leading-edge innovation”
on its list of core values. The CEO asked the same question: “Would
we keep it on the list as a core value, no matter how the world
around us changes?” This time, the management team gave a
resounding “Yes! We always want to do leading-edge innovation.
That’s who we are. It’s really important to us, and
always will be. No matter what. And if our current markets don’t
value it, we will find markets that value it.” Leading-edge
innovation went on the list of core values, and will stay
there forever. A company should not change its core values in
response to market changes; rather, it should change markets—if
necessary—in order to remain true to its core values.
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