DEEP VALUES are surprisingly hard to nail down.
This is because you see wonderful statements masquerading all the time as deep values, the foundation of the company.
An interesting example came up recently: Walmart. I remember back in the 1970s when they had a strong statement about “Made in the USA.” Proud of this fact, they made it a central point of their advertising for several years. You would have been forgiven if you assumed that this was a core belief of a company home-grown in Bentonville, Arkansas.
Clearly it wasn’t the core of the company, because now it’s hard to find American-made products in the stores. “Made in USA” disappeared from their advertising many years ago. Their current mission statement is: “We save people money so they can live better.” Does it now capture their core beliefs? Well, it’s been true for many many years, but that doesn’t mean they won’t change it in the future.
If you’re looking at a company now, or building one, how will you know which values are TRULY guiding the company, and whether they’re deep and lasting? I suppose you could wait around for a couple of decades, but let’s assume that you’re not that patient.
I propose that the test is simple: When your back’s up against the wall and you’re faced with a truly tough choice, do you choose in favor of your values, or in favor of money?
For this reason, it can be difficult to answer for the media darlings such as Google or New Belgium. They haven’t necessarily been tested very deeply yet. I’ve heard a few stories which might be showing cracks in Google’s foundation, but I hesitate to take them too seriously – they could just be due to competitors being jealous of the company’s success.
It’s better to look at companies which have experienced true crises, so let’s go back to a well-known example: The Tylenol Scare. Back in 1982, somebody was tampering with the product, injecting cyanide, and it ultimately ended up killing seven people. Johnson & Johnson faced an immediate crisis, potentially of company-killing magnitude. It was hard to treat traditional wisdom as a guide, because that was all over the map, but many would expect the company to attempt to repair its brand image with an advertising blitz.
Instead, the CEO James Burke went back to founding principles, and immediately issued the largest-ever recall of 31 million units, or $100M. Stock immediately dropped 7 points, and market share plummeted from 35% to 8%. But the executive team remained resolute with the knowledge that they couldn’t live with themselves if they did anything which could endanger customers’ lives.
Today, this is a shining business school case study which highlights the true values of a company.
In your own company, how would you know BEFORE you experience a crisis like this? Well, the recent collapse of the financial industry gives us a useful tool: The Stress Test. You simulate a change of assumptions – even just on paper – and see what decisions come out as a result. If you don’t like those decisions, then you have to put systems in place to change how people would behave. You change the way people are measured and rewarded.
You have to work on the internal things – NOT putting out a new marketing campaign to convince customers and investors that you’ve changed your stripes.