Chapter 18 - Forming Your Company’s Values
To read:
Market morality: The marketplace is now our core moral experience, and we need to design new ways to accommodate this reality within the limits of the planet, argues philosopher Achille Mbembe.
Digital power: We live in a “technopolar moment” when technology companies are reshaping the global order, writes Ian Bremmer, geopolitical theorist and founder of the Eurasia Group.
A new business ideology: A new ideology for our new digital economy is nigh and only the institutions of commerce themselves can lead this, argues Brett Hurt in this TechCrunch essay.
New realities: The assumptions many businesses were built on no longer fit with the way they need to be run, wrote the doyen of business theory Peter Drucker in this seminal essay.
Organizing Genius: In a shrinking world demanding more collaboration, the “hero CEO” is obsolete argues the late Warren Bennis is his seminal book reviewed in the New York Times.
Play Bigger: If you have a game-changing idea, make it a reality along with a new category of business that you create and dominate, write the authors of this foundational book.
The principles of data.world: The top five were Determination, Passion, Community, Integrity, and Curiosity, in this exercise mapped here.
Policing in America: Supported by data.world, this ongoing survey seeks to build reliable statistics about behaviors and attitudes towards policing at the local level in cities across America.
Build a better world: Capitalism must help individuals achieve better futures, drive innovation, build resilient economies, and solve some of our most intractable challenges, argues BlackRock CEO Larry Fink.
Public benefit corporation: The “B Corp: movement seeks to address society's critical challenges by shifting the behavior, structure, and culture of capitalism.
The commitment of data.world: See what data.world means when it declares that social and public purpose is behind its decision to operate as a public benefit corporation.
Doing well while doing good: Some 20 CEOs, led by Salesforce’s Marc Benioff, embrace philanthropy as a win-win situation for the community and the corporation in The Business of Changing the World.
To listen:
Nurturing values: Brett Hurt explains the resources he uses to scale companies, build values, and communicate with investors in this podcast interview.
Pandemic wake-up: The turmoil of the pandemic was the “ultimate growing-up experience” for business founders,” argues Airbnb founder Brian Chesky, in the podcast interview.
Chapter 18
Forming Your Company’s Values
“Before you embark upon this journey of your business’ vision and mission discovery, there are a few questions that you need to answer:
- Why are you in this business?
- How big do you want your business to be one day?
- Who is going to benefit from your product or service?
- What is the core purpose of the existence of your business?”― Pooja Agnihotri, author, 17 Reasons Why Businesses Fail
In the long history of commerce, the answer to the question, “Why does a company exist?”, has been reimagined many times. In our evermore disruptive, entrepreneur-driven age of deepening global challenges, it is time we do so again. Beyond the mission statement, beyond the revenue target, beyond even visions of a nine-figure exit, today’s company exists — to paraphrase philosopher Viktor Frankl — to search for meaning, as discussed in Chapter 1, The Soul of the Entrepreneur.
I realize, of course, that few business plans include this specific quest. The journey to meaning as the basis for corporate existence, after all, has been a long one. It’s still evolving and it’s hardly complete. So let me back up and explain.
For classical economists, the purpose of the corporation was modeled around what was arguably the first startup, the British East India Company, founded in 1600 with 281 investors. It was created to enable profit-seeking commerce with a league of multiple partners, a novel idea some 400 years ago. As the industrial age got underway in the 19th century with railroads, steamships, and the first sprawling factories, the reason for companies was simply scale — to exploit the benefits of being big, as discussed extensively in business historian Alfred Chandler’s 1978 book, The Visible Hand: The Managerial Revolution in American Business, that earned a Pulitzer Prize. Mass was key, as was the predictability that businesses could assume. Accordingly, firms existed to organize the push of mass-produced products to mass markets.
By the end of the 20th century, predictability was history. The world had moved on from brute push to agile pull, such that a duo of revolutionaries, both named Steve, could knock powerhouses like IBM and Xerox off their perches, quite literally from a workshop in a garage with a product named for a fruit.
Commerce had become leaner, meaner, faster, and driven by the cycles of microchip innovation, what we now call “Moore’s Law,” for the eponymous Co-founder of Intel Corp., Gordon Moore. We had moved from a world of analog push to a world of digital pull. Techniques to enable this new pull flourished, from just-in-time-delivery, to economic value analysis, downsizing, rightsizing, benchmarking, off-shoring, and later on-shoring. “The assumptions on which the organization has been built and is being run no longer fit reality,” wrote the late, great doyen of business gurus, Peter Drucker, in a famous 1994 essay, which I include on the Digital Companion.
Now well into the 21st century, the imperatives of the firm today are the scalability of connectivity, learning, performance, and iteration. A global pandemic, meanwhile, while tragic in scope and devastating in many lasting ways, has nonetheless accelerated the metamorphosis of the old analog economy toward the new age of the digital startup. More than 1.4 million business applications with expectations to hire employees were recorded in 2021 by the U.S. Census Bureau, a half-million more than in 2019. In the same year, more than 800 startups crossed the threshold globally to “unicorn” status, with valuations of more than $1 billion. The number of $10 billion “decacorns,” meanwhile, doubled from 15 in 2020 to 30 in 2021. As of this writing, two private companies have even crossed into the “hectacorn” status, (a valuation above $100 billion): ByteDance, the parent of TikTok, in 2020; Space X in 2021.
Against this volatile backdrop, the capitalism of today’s firm must be the accumulation of all the lessons learned since the founding of the British East India Company, to the launch of the MacIntosh by the two Steves nearly a half-century ago, and now beyond to so much more. Atop all of this, as the accelerating speed of technological innovation outruns the pace by which other societal institutions advance, the moral authority of the company becomes paramount. Today’s firm, in addition to its commercial success, must also be the fulcrum of values, even the exponent of a kind of secular religion — if you think of one of the primary benefits of religion as a means to organize values, as I do.
As the Cameroon-born philosopher Achille Mbembe, one of Africa’s leading public intellectuals, framed it in an interview in early 2022, “our core moral experience” is now the marketplace. “Both the market and technology now set the rules and procedures according to which we are obliged to live together as a connective body within new planetary limits,” he argued in the interview entitled, How To Develop A Planetary Consciousness, which I also include on the Digital Companion.
You’ll recall that at the outset, in Chapter 1, The Soul of the Entrepreneur, I argued that at its essence, entrepreneurship is a “call to the soul.” Moving from that premise, I argue here that the essential job of the entrepreneur, in turn, is to organize a community of souls into a collective — it is their shared values that make a company great. Shared values should become the North Star of the company, the guarantor that it is truly pursuing creative disruption and innovation, and not merely inhabiting the role. Examples of simple value mimicry are many, but few demonstrate this risk as dramatically as did two notable ones: the unmasking of Enron CEO Jeffrey Skilling, who resigned in 2001 and was convicted in 2004, and of Theranos CEO Elizabeth Holmes, whose fraud was revealed in 2018 leading to her 2021 conviction.
Of course, there are many ways to define, emphasize, and integrate shared core values into the DNA of your company. In one form or another, we’ve already discussed many of these, including Chapter 1, The Soul of the Entrepreneur, certainly. But also this is part of Chapter 4, The Importance of an Alway Be Learning Life; it’s an element of Chapter 9, How, and Why, to Ask for Help; this is of course among the goals of Chapter 11, The Most Proven Way to Hire Well; and, I certainly hope it comes across in Chapter 14, Seven Lessons Learned on the Journey from Founder to CEO. A profound study of this, built around the insight that we focus excessively on “managing teams” as we neglect “organizing” them, can be found in the work of the late pioneer of leadership studies, Warren Bennis.
“Throughout history, groups of people, often without conscious design, have successfully blended individual and collective effort to create something new and wonderful,” Bennis wrote in the classic of the leadership genre, Organizing Genius — The Secrets of Creative Collaboration. “The Bauhaus school, the Manhattan Project, the Guarneri Quartet, the young filmmakers who coalesced around Francis Ford Coppola and George Lucas, the youthful scientists and hackers who invented a computer that was personal as well as powerful, the creators of the Internet — these are a few of the Great Groups that have reshaped the world in very different but enduring ways.”
Bennis’ effort to reveal “how their collective magic is made,” is a wonderful read and I include a review to tempt you on the Digital Companion. But more immediately to the point, I’d like to share a few insights on how we’ve done it at data.world, where our chief organizing tool is the “Point of View,” or POV. This is our Magna Carta which — just as societies do with foundational documents — we update from time to time.
It was in Chapter 14 where I introduced the concept of the POV, and the book where it all began, Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets. As discussed there, a POV is an essential tool to shape and reinforce a company’s vision. But it is equally critical as the vessel for corporate values — which is why it is required reading at data.world for all new team members. As just one example in Play Bigger, the authors illustrate how Salesforce.com used its POV to internally amplify values, declaring, “It would devote 1 percent of equity to charity and was intent on pushing a new kind of corporate responsibility. It would speak out on social issues. It would be the industry pirate and defy convention.” As Salesforce CEO Marc Benioff himself put it, "Building the foundation from an intellectual idea to a practical reality that has served 100,000 people in need has been one of the most rewarding (experiences of my life). I have received the most remarkable opportunity to lead an organization that makes 'doing good' an integral part of doing well." On the Digital Companion, I include a review of his 2007 book on all of this, The Business of Changing the World: Twenty Great Leaders on Strategic Corporate Philanthropy.
Similarly at data.world we use our internal Magna Carta to strengthen our collective bonds. As a proud public benefit corporation, data.world’s activities include our open data community, now the world’s largest with more than 1.6 million collaborators and around 10,000 new members joining every week. These include Johns Hopkins University, which uses it to amplify COVID-19 data, and the Associated Press, which uses the resource as a tool to enable investigative reporting. We also provide the infrastructure of the Data Foundation’s “Policing in America Project,” which seeks to inform the ongoing debate about reform of America’s criminal justice system. More on these initiatives is on the Digital Companion. And this is only the beginning of our hopes to expand this free public resource for the betterment of humanity. I frequently remind our customers that by paying us to become world-class at the mastery of data inside of their companies, they are also helping a large multiple of others outside of their companies to collaborate for free on important issues facing humanity, from climate change to poverty.
“We proudly chose to be a Public Benefit Corporation (PBC) and Certified B Corporation to be here for the long-term and to be transparent about our sincere desire to help the world..,” our POV reads in part. “... We are passionate believers in the power of Conscious Capitalism. We are driven by the power of data to help humanity, and initiatives like our COVID-19 Data Resource Hub and Policing in America Project come naturally to us. We are determined to create a data-driven world where decisions are made quickly, accurately, and collaboratively…”
One way we’ve used the POV at data.world to articulate our team’s core values emerged during a new iteration of the document. This was in the spirit, incidentally, of a periodic review of “Operating Principles” we had learned about from the work of Netflix, and which I had the chance to discuss with the company’s CEO Reed Hastings at a TED conference. I sent the following message to all of our employees:
Team, in preparation for our Lunch & Learn on Wednesday to discuss our Operating Principles, please take one minute to send me the one or two values that you personally bring into our team. Such as “integrity,” “passion,” “caring,” “precision,” etc. — whatever you think your most important one or two values are. Please DM them to me by end of day tomorrow and I’ll share the results at the L&L.
The responses I received back were beautiful. They all resonated deeply. The top five were: Determination, Passion, Community, Integrity, and Curiosity, all of which became part of the bedrock of our core values after an all-hands exercise to deliberate on them with the entire team. At the Digital Companion, you’ll find a spreadsheet with the responses from one recent exercise, and you’ll see how I winnowed down the responses to move us toward a consensus on core values. When you do this yourself, don’t be surprised if you get a joke or two. One of our office comedians back then, who had created bots that roamed Slack and mimicked the voice of my co-founder, our Chief Product Officer Jon Loyens, is always clever. He responded with “terseness.” You can obviously discard the joker contributions, but greet them with humor too as that’s part of the fun of the exercise as well.
When I presented these results at the Lunch & Learn, the feedback was overwhelmingly positive and I suggested that we adopt these as our core values because “without each of you and your incredible work, each and every day, there is no company and there are no values.” Everyone agreed. And for several quarters after that, I asked new team members, as they joined us, to message me in the same way. I recompiled them every time, but when the top five core values — Determination, Passion, Community, Integrity, and Curiosity — didn’t change, I eventually stopped that practice. That didn’t surprise me as our people that formed these values in such a grassroots type of way were also the people doing the hiring, and I think that’s a quite beautiful and self-reinforcing aspect of our culture. Get your first 50 hires right and you’ll largely be set as you scale to 10x, or 500 people, and then to 100x, or 5,000 people, and beyond.
Now, you don’t have to do this during your first year as a new company. I initiated our core value creation at data.world after we were a little over two years old. To be fully candid, I began doing this after attending the annual Conscious Capitalism CEO Summit where a CEO remarked on stage, “If you want to learn something amazing, just ask each of your employees to share with you the core values that they bring to work every day.” He was right. That was mighty motivation. We didn’t write down our core values at my previous VC-backed startups, Coremetrics and Bazaarvoice, until we had matured. You want to get some operating history and some significant team build-out going before you do this exercise, or it is just aspirational with no real resonance for how you’ve actually been living your day-to-day business life as a collective soul. And the most beautiful way to form your values that I’ve ever found is the way we’ve done it at data.world — it was more of a top-down exercise at Coremetrics and Bazaarvoice, which had a form of resonance, but grassroots is the way to go as it creates a very authentic buy-in from everyone, immediately.
There are other concrete means to elucidate, refine, and integrate core values into your company. A practice I strongly recommend is to incorporate this into your annual reviews for team members. As with many human resource units, our Employee Experience department organizes biannual reviews on a “360-degree” basis. This includes upward feedback from a manager’s direct reports, reciprocal peer critiques from those who work closely together, and downward feedback from supervising managers to their direct reports. This is good and important, but as Albert Einstein famously advised, “Not everything that can be counted counts, and not everything that counts can be counted.” So what we do differently than most companies, however, is make a discussion of our core values a part of this. Employees discuss how their personal values align with those in our POV. This helps us grow and mature as a company with a comprehensive value system that everyone shares. Not long ago I discussed all of this on a podcast with my CEO coach, Kirk Dando. You’ll find that conversation on the Digital Companion.
Most broadly, we now stand at a remarkable juncture in the history of our new digital economy and the evolution of capitalism. In an essay for the online technology magazine TechCrunch, I argued in early 2022 that the very ideology underlying capitalism is changing, and I cited Thomas Jefferson’s counsel that, “Laws and institutions must go hand in hand with the progress of the human mind,” For if not, as Jefferson put it, “We might as well require a man to wear still the coat which fitted him when a boy.” In that essay, I made the case for the new business ideology of Conscious Capitalism, the latest advocate for which is Larry D. Fink, the CEO of BlackRock — the world’s largest asset fund managing $10 trillion — who wrote about this in his 2022 annual letter. In short, my argument was not simply that business has a responsibility to donate to PBS. But rather, that only the institutions of commerce have the scope, power, resources, and innovative spirit capable of taking on our most pressing global challenges. Both Fink’s letter and my essay at TechCrunch are linked on the Digital Companion and I hope you’ll take a look. Collective values are now at the core of capitalism.
You can and will find your own tools to nurture core values at your company. Yes, you need a business plan. Yes, you need a strategy. And, yes, you need investment. But never forget that we are at an inflection point in history, no less profound than those in 1600 with the advent of the multi-investor corporation, or the mid-1700s with the start of the industrial revolution, or in 1984 when the first Macintosh was released. In the newly emerging era of Conscious Capitalism, the core values of the collective are the most important form of capital your company will ever have.
“Culture is a thousand things, a thousand times. It's living the core values when you hire; when you write an email; when you are working on a project; when you are walking in the hall.”
— Brian Chesky, founder of Airbnb