Can business values drive better decisions?

by 15 Nov 2011

Most business leaders, and most boards, think that values are important to success in business. Most would also acknowledge that, in reality, their carefully crafted values statements have little force; their use extends mainly to dressing up entrance foyers and annual reports. We shake our heads in disbelief at the behaviour of businesses such as News Corporation and Enron but many high profile businesses have toxic or dysfunctional cultures despite an expressed commitment to ideas such as openness, integrity, trust, truthfulness, transparency, mutual respect, caring, best practice, teamwork, and so on.

Can we make our business values come to life and genuinely drive better decisions and superior performance? The answer to this question is no, and yes. No if you want to keep on setting abstract values as goals; you might as well throw them in the bin. Yes if you are prepared to view values as outcomes that result from an explicit focus on capability. Let me explain.

 To have any force in our lives, ideas must have meaning and meaning seldom arises in the absence of context. We understand and make sense of things through their application. This is why, in the field of education, so much attention is paid today to contextual learning; the context in which the learning occurs is central to the learning itself, as concepts are internalised through the process of discovering, reinforcing, and relating. Business people generally understand this – it is how most learning within the company occurs – so it is strange that we would expect our business values, expressed as abstract ideas, to be internalised and acted on.

For business values to have meaning we must therefore create a context for them and I suggest that the best way to do this is to relate values to the types of decisions that we make, or intend to make. This is, in the first instance, a strategic matter. We execute strategy effectively by defining how to win. When we have gone through the process of asking ‘what must we excel at to win? ‘what does it mean to excel at this?’, and ‘what are we going to do?’ then we can also ask ‘what high level decision rules, or principles, would enable us to make good decisions in each of the defined arenas?’

If you were News Corporation and you knew that you had to excel at ‘getting the news first but getting it honestly’ you could develop quite specific principles that would help journalists understand what this means. This would create the context they need to learn ‘how we go about gathering news around here’.  This context is not expressed as values, it is expressed as decision rules, but the outcome will be integrity in newsgathering.

Let me give you another example from recent client work. An environmental NGO placed great emphasis on courage as one of its values, although the organisation generally behaved cautiously rather than courageously. But walking across the road can be an act of courage for some and climbing Everest would be not present a challenge to others.

As an abstract idea, courage has little meaning.

Now, let us say that, as a campaigning organisation, our NGO should decide to excel at taking calculated risks. Doing this over a period of time as a matter of strategy, and in accordance with some clear principles or rules, would result in the organisation becoming courageous. Courage is an outcome.

Seeing values as outcomes of an effective organisation rather than as abstract goals is a critical switch in thinking that enables us to bring values into our decision making processes as decision rules, or principles. This switch recognises that the pathway to creating values is a strategic pathway and values are a result of taking the journey. It is considered choices in relation to both strategic intent and capability (the two halves of strategy) that create the things that matter to us.

Now, more than ever, Australian businesses need their management teams to make much higher quality decisions. Values can help you do this but only if you reframe them quite radically.

About the author

Christopher Tipler is a Melbourne-based management advisor and author of ‘Corpus RIOS – The how and what of business strategy’. His web site contains more material on this and related topics.