According to Jim Collins, author of business best sellers Built to Last, Good to Great, and How the Mighty Fall, clearly understanding what a company’s core values and core purpose are is a key to selecting new growth options from the cloud of possibilities. Conversely, when companies are not clear on these many times growth choices simply are not as successful.
Why is understanding core values and core purpose so important to guide business growth? Let’s explore the question more.
What are core values and core purpose?
Core values
Core values are an organization’s deepest beliefs and commitments, what the company stands for beyond just making money and is truly passionate about. Core values are discovered by digging deep into what makes any organization tick, they are not developed during an off-site planning session.
Here are some questions from Jim Collins that help define what core values really are:
- If you were to start a new organization, would you build it around this core value regardless of the industry?
- Would you want your organization to continue to stand for this core value one hundred years into the future, no matter what changes occur in the outside world?
- Would you want your organization to hold this core value, even if at some point in time it became a competitive disadvantage—even if in some instances the environment penalized the organization for living this core value?
- Do you believe that those who do not share this core value—those who breach it consistently—simply do not belong in your organization?
Core purpose
Core purpose is an organization's reason for being, what an organization truly does the best—and better than its competitors, and has the potential to be the best in the industry at doing.
Some questions to define core purpose are:
- Do you find this purpose personally inspiring?
- Can you envision this purpose being as valid one hundred years from now as it is today?
- Does the purpose help you think expansively about the long-term possibilities and range of activities the organization can consider over the next one hundred years, beyond its current products, services, markets, industries, and strategies?
- Does the purpose help you to decide what activities to not pursue, to eliminate from consideration?
- Is this purpose authentic—something true to what the organization is all about—not merely words on paper that “sound nice”?
- Would this purpose be greeted with enthusiasm, rather than cynicism, by a broad base of people in the organization?
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Connecting core values and core purpose to growth options
If a company takes the time to be clear about its core values and core purpose, and also understands what drives the economic engine of the company—specifically its most valuable markets, products and services—it can use this knowledge as a filter to make decisions about growth opportunities.
All of the companies profiled in Good to Great used this technique (whether they knew it or not at the time) to select and act on growth options. Collins calls this the "hedgehog model."
To understand the hedgehog, envision three intersecting circles that represent: core values (passion), core purpose (best) and economic drivers ($).
If a company or an organization can be clear on the three circles of the hedgehog: core values, core purpose and economic drivers, making strategic decisions about growth can be much clearer than a more typical seat-of-the-pants approach. It can also be of significant value in terms of deciding what not to do, which in some cases is just as important as deciding what to do.
RELATED: Finding and Keeping Your Core Values in Business
About the Author
Charlie Alter owns Bentbrook Advisors LLC based in Sylvania, Ohio. He specializes in growth strategy, innovation and coaching.
