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Values in Action

by Richard McGourty on

The single most time-honored piece of advice ever given to a person is probably Plato’s “Know thyself”. If we apply it to organizations it would be “Know thy values”.

What is a value? A value is a belief in the importance of certain behaviors. Values are what an organization takes pride in, what an organization stands for, and what an organization prizes.  In a practical sense, values drive behavior and help leaders make decisions.

Two quick examples, one historic and one more mundane.

Some years ago, 1982 to be exact, an event occurred which is commonly referred to as “the Tylenol scare”. Seven people in the Chicago area died of poisoning from potassium cyanide which was linked to Extra Strength Tylenol. Johnson & Johnson quickly recalled all 31 million bottles of its product, even though all seven cases were in the Chicago area. They were not going to take any chances with the safety of their customers no matter what the cost. In addition, Johnson & Johnson developed new product protection methods and ironclad pledges to do better in protecting their consumers in the future. Working with FDA officials, they introduced a new tamper-proof packaging, which included foil seals and other features that made it obvious to a consumer if foul play had transpired. These packaging protections soon became the industry standard for all over-the-counter medications. The company also introduced price reductions and a new version of their pills — called the “caplet” — a tablet coated with slick, easy-to-swallow gelatin but far harder to tamper with than the older capsules which could be easily opened, laced with a contaminant, and then placed back in the older non-tamper-proof bottle.

Within a year, and after an investment of more than $100 million, Tylenol’s sales rebounded to its healthy past and it became, once again, the nation’s favorite over-the-counter pain reliever. Critics who had prematurely announced the death of the brand Tylenol were now praising the company’s handling of the matter. Indeed, the Johnson & Johnson recall became a classic case study in business schools across the nation.

They were able to make quick decisions in the face of a puzzling event because their values came in to play. The first line of the Johnson and Johnson Credo reads: “We believe our first responsibility is to the doctors, nurses and patients, and to mothers and fathers and all others who use our products and services.” That is their first responsibility. As a business they have a responsibility to their shareholders but not at the expense of those mentioned in their first responsibility. (Read the full Johnson & Johnson Credo.)

The more mundane example is drawn from a trip to Disney World. Disney World wants every family who visits to have a wonderful experience. How far are they willing to go? They spend considerable money to have a fleet of radio-dispatched vans with lock smiths ready to help visitors who lock themselves out of their cars. Walt Disney Locksmiths are only minutes away and there is no charge for their service. I was told they unlock about ten thousand vehicles a year.

The fact of the matter is that a business’s values are always on display, if one knows where to look. I am not referring to the framed statement of mission, vision and values. Rather, I refer to the decisions they make at key moments; in the stories they tell about who they are; and, how they spend their money.

This leads to a key notion – every company has “espoused values” and “values in action”. The espoused values are important to have as in the Tylenol case. But, a value is not real until it is put in action. For example, a company may say that “our most important resource is our people” but expend little money to recruit, select and develop their people. In that case their espoused value is not a value in action.

Another key distinction is the difference between universal values which mark most if not all good companies and business/operational values which define how the company functions in the market.

Here are a few universal values which one encounters in many companies – dedication to high quality products and services, customer focus, mutual respect, cost efficiency, inclusion and diversity, innovation, transparency. Fair enough. These are foundational values.

A different set of values which we can call “business values” or “operational values” marks the way the company approaches the market place. For example, there are some air carriers who are low-cost, no frills operations with one class of service and there are others who offer high-end food, first class and business class seating and member lounges to relax in while waiting for your flight. The same can be said of hotel chains (think Super 8 and Ritz Carlton) and retail (Walmart and Nieman Marcus). This is not about good or bad; rather, it is a values-based consideration based on who you are as a company (mission); who you aspire to be (vision) and what you believe is important to success (values).

Here are four questions to ask about values in an organization:

  1. To what extent do we have a coherent statement of mission, vision and values which permeate and guide our work?
  1. How clear is that statement to all who work here?
  2. How clear is it to our customers and suppliers?
  3. To what degree are our espoused values consistent with our values in action?

If the focus is on an individual leader, the questions shift just a bit.

  1. To what extent does this leader understand the company’s values?
  2. How effectively does this leader communicate the company’s values?
  3. Is this leader’s decision-making and behavior consistent with the company’s values?
  4. When this leader learns of a discrepancy between the company’s espoused values and the values in action, including his own behavior, does this leader act decisively to support the espoused values of the company?

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