Sunday, September 21, 2014

Values, Performance, and Hard Boundaries

Here, in Silicon Valley, I've noticed that we like to talk a lot about values and culture.

Yet many of these discussions make a very dangerous mistake: They attempt to justify values and culture based on business performance.

This is a very natural impulse.  When I'm trying to persuade people, I always try to speak their language.  Most business people feel most comfortable when decisions are phrased in terms of profit and loss, rather than right or wrong.  (In fact, in business, talking about right and wrong can earn you dubious glances; at best, hard-charging managers are instructed not to break the law)

Yet using utilitarian arguments to support a matter of principle represents a fundamental disconnect.

In his book, The Joy of Work, AES CEO Dennis Bakke wrote, "I kept saying that our values were not responsible for the run-up in our share price and should not be blamed for any down-turns in the future."

I've always heard that when the 2008 crisis hit, Zappos' investors told Tony Hsieh that while his emphasis on values and culture worked during good times, now that the business was struggling, he needed to ditch them and focus on the bottom line.  His response was to sell Zappos to Amazon, since Jeff Bezos wanted Zappos for its culture, and promised to take a hands-off approach.

As a CEO or Founder, you need to decide on your core values and make them non-negotiable.

This represents what I call the "hard boundaries" approach.  It's a lot easier to enforce a ban on eating bread, than it is to cut your bread consumption by 75%.  Everyone--including yourself--is more likely to respect a hard rather than soft boundary.

Your vacation policy is up for negotiation; your fundamental values are not.

(This post was inspired by an even better post by Joel Gascoigne of Buffer, on his company's transparency policy).

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