Despite their widespread use, corporate core values are probably one of the most underrated factors for competitive advantage.
Rise of Corporate Values After the Dot-com Bubble
All major companies nowadays have defined corporate values for themselves. See for example the results of a study conducted by Booz Allen Hamilton and the Aspen Institute already in 2004, in which 89 percent of respondents said that their companies have written values statements. The use of explicit corporate values had soared after the bursting of the dot-com bubble in 2001, when financial scandals involving Enron, WorldCom, Tyco, and others seriously undermined the customers’ trust in large corporations.
The defensive nature of the development of explicit corporate values led in some cases only to a rather superficial introduction of such values, without sustained efforts to deeply ingrain these values into corporate culture as guiding posts for strategic and operational decisions.
The most recent example of a company with praiseworthy corporate values which seriously violated exactly those same values is Volkswagen. Until recently, the German car maker seemed to have been a textbook example of a company that lives up to its values. They claimed that “we conduct our business activities on a responsible and long-term basis and do not seek short-term success at the expense of others” , and people believed them.
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Benefits of Corporate Core Values
Many companies consider corporate values mainly of strategic importance for building their corporate reputation and keeping the customers’ trust and loyalty. That, however, is only a small share of the strategic benefits which corporate values could offer.
Further benefits include:
- guidance for decision-making on all levels
- selection criterion for new employees
- driver for individual and corporate behavior on all levels supporting the vision, mission, and goals of the company
- effective definition and implementation of core values.
In order to achieve a widespread adoption of core values in a company, it is important to define values that are more than just a few words that sound nice. Effective core values need to be emotionally appealing and workable.
Example of Core Values: Zappos
One of the current role models for definition and implementation of corporate values is Zappos.com, a US-based online shoe and clothing shop affiliated to Amazon.com.
Zappos has the following ten core values:
- Deliver WOW Through Service
- Embrace and Drive Change
- Create Fun and A Little Weirdness
- Be Adventurous, Creative, and Open-Minded
- Pursue Growth and Learning
- Build Open and Honest Relationships With Communication
- Build a Positive Team and Family Spirit
- Do More With Less
- Be Passionate and Determined
- Be Humble
Under CEO Tony Hsieh, Zappos has been very successful with its a loyalty-based business model and relationship marketing. The performance of the company is closely related to its corporate culture, which is based on the ten core values. The leadership challenge is to sustain a corporate culture, in which the individual values of employees is to a large extent congruent with the corporate core values. Zappos and a few other companies seem to have achieved this, while for other companies, like Volkswagen, the gap is wider than it should be.
Free Corporate Core Values Check-list
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Subscribers of Strategic Business Insights (SBI) can directly download the free check-list “Corporate Core Values – How to Identify, Develop and Implement Them in Five Steps” (password-protected PDF, the password was sent to subscribers in SBI 40/2015).
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