Guiding principles are essential for steering your team and organization’s decisions. They align with your company’s core values and overall growth strategy. Furthermore, they define the expected behavior within your team as you navigate the path toward your vision. In essence, guiding principles serve as a decision-making compass, ensuring everyone is on the same page and moving in the right direction.
Guiding principles find their foundation in your organization’s core values. Think of them as guidelines that support your team’s decision-making process, offering a clear framework for navigating complex choices.
Core Values vs. Guiding Principles: Understanding the Difference
While both core values and guiding principles are non-negotiable elements that shape an organization’s behavior, culture, and decision-making, they serve different purposes. Successful companies leverage both in conjunction to articulate their expectations for organizational conduct and decision-making approaches.
Core Values Explained
Core values represent the fundamental beliefs and ethical standards that define what an organization holds dear. They embody the organization’s highest priorities and deeply ingrained driving forces. Key characteristics of core values include:
- Timelessness: They remain consistent over time, irrespective of shifts in the organization’s goals, strategies, or external environment. Adaptations may only be necessary every decade or so.
- Deeply Held Beliefs: Core values reflect the foundational principles that govern an organization’s behavior and decision-making processes.
- Cultural Foundation: They shape the organization’s culture and influence interactions among employees and with external stakeholders.
- Identity: Core values contribute to defining the organization’s identity and purpose, often mirroring the personal values of its founders or key leaders.
Examples of Core Values:
- Integrity
- Innovation
- Customer Focus
- Respect for Our Team
- Excellence
Guiding Principles Defined
Guiding principles are broad, strategic guidelines that dictate how an organization operates and makes decisions. They provide a framework for action and behavior, aligning with the organization’s mission, vision, and values. Important characteristics include:
- Action-Oriented: They provide practical guidance on how to behave and make decisions that impact your organization’s growth and future.
- Strategic Alignment: They help align actions and decisions with the organization’s strategic goals and objectives.
- Flexibility: Guiding principles can evolve as the organization grows and circumstances change, ensuring adaptability and responsiveness.
- Contextual Relevance: They are specific to the organization’s context, mission, and vision, providing tailored guidance that helps achieve long-term success.
Examples of Guiding Principles:
- Prioritize customer satisfaction in every decision.
- We make decisions that focus on continuous improvement.
- Embrace innovation and change with AI.
- Maintain transparency and accountability.
- Follow the golden rule in all interactions – is this the best decision for the business?
Key Differences Summarized
- Nature: Core values are deeply rooted beliefs impacting culture, while guiding principles are non-negotiable guidelines for decision-making.
- Stability: Core values rarely change, whereas guiding principles can be adapted to meet evolving market needs, business objectives, or team dynamics.
- Purpose: Core values define what an organization stands for; guiding principles define how it operates and makes decisions.
A clear understanding and definition of both core values and guiding principles are crucial for cultivating a cohesive and effective organizational culture that drives success and aligns with the organization’s mission and vision.
Maintaining Focus with Guiding Principles
Strategic plans often face disruption from unforeseen opportunities, dynamics, or external factors. How do you address this challenge and maintain focus?
Extracting Guidelines from Strategic Planning
One effective approach is to establish an agreed-upon set of guiding principles that keep your strategy agile and relevant. Remember that guiding principles differ from values (which are behaviors) and actions. They are guidelines that facilitate effective decision-making.
Rather than dictating guiding principles, listen for them to emerge organically from your strategic planning process. Pay attention and maintain a running list of potential guiding principles.
The “We Will…” Statement
To identify a true guiding principle (as opposed to a value or action), use the “We will…” stem completion. Start by defining your problem or challenge.
Every strong strategic plan tackles a significant challenge, problem, or opportunity. For instance: “How do we maintain profitable growth?” The subsequent “We will…” statement should address this challenge.
Limit your guiding principles to less than half a dozen statements specifically targeting the problem at hand.
Examples of Guiding Principles in Action
Here are some examples to consider:
- Focus: Only pursue one opportunity or field of play at a time.
- Intent: Define your primary intent – is it growth over profitability, or profitability over growth?
- Return: Set a timeframe for your minimum expectation for cash flow (e.g., three or five years).
- Impact: Consider a guiding principle for impact, where a specific element is co-equal to profit (e.g., employee satisfaction). In this case, avoid actions that negatively impact employee satisfaction.
- Core: Define the “core” of your business. For example: “We will always choose our core business over new business ventures.”
These examples illustrate how to keep your strategy alive and adaptable in the face of new challenges. By establishing guidelines, you equip your team to make informed decisions while maintaining strategic agility.
For further insights, explore Richard Rumelt’s “Good Strategy Bad Strategy,” which offers a comprehensive exploration of this topic.
