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At Novareté, we believe moving your organization’s values out of the handbook and into the daily activities of employees creates a unified culture that improves business performance and becomes a key competitive advantage.
There is research that backs this claim, showing a values-based culture can improve financial performance, employee loyalty, customer satisfaction, and overall product quality. However, numbers can only go so far to tell a story.
In this blog post, I would like to share a concrete example with you, based on a book I recently read about culture’s link to company performance. As you’ll see, there should be little doubt that instilling a strong culture – one based on principles over monetary outcomes – is not counterproductive. In fact, just the opposite: A values-based culture helped propel this company to gigantic success.
The book − How Google Works, written by company executives Jonathan Rosenberg and Eric Schmidt − details the way in which leadership places a high emphasis on both employees and customers. It provides management advice to other C-suite members looking to guide their company into the 21st century.
One of the secrets to success? Values. As I read, I was impressed with the sense of urgency to create a values-based culture. From hiring decisions to events to defining goals, values play a role in almost every corporate process.
If I were to break down my interpretation of Google’s values into three buckets, they’d be: 1) Make customers happy, 2) Make employees happy, and 3) Measure success against what is possible, not what the competition is doing. (In other words, the only competition you need to worry about is yourself.)
The Google executives do such a good job of articulating their points, I’ll let them explain.
“Make it easy for customers to leave. We have a team whose job it is to make it as easy as possible for users to leave us. We want to compete on a level playing field and win users’ loyalty based on merit. When customers have low barriers to exit, you have to work to keep them.”
“Once you identify the people who have the biggest impact, give them more to do. When you pile more responsibility on your best people, trust that they will keep taking it on or tell you when enough is enough.”
Check out our Change Agent blog post for our thoughts on who these people are.
“Don’t order [employees] to stay late and work or to go home early and spend time with their families. Instead, tell them to own the things for which they are responsible, and they will do what it takes to get them done.”
“When you’re a leader, everyone is watching, so it doesn’t matter that you dance poorly, it matters that you dance.”
“Don’t use market research and competitive analysis. Slides kill discussion. Get input from everyone in the room.”
On ignoring traditional metrics such as revenue:
“We are constantly amazed by how much business leaders obsess about their competition. It’s as if, once you get to a particular level in an organization, you worry as much about what your competition is doing as how your own organization is performing. This fixation leads to a never-ending spiral into mediocrity.”
“Bet on technical insights that help solve a big problem in a novel way, optimize for scale, not for revenue, and let great products grow the market for everyone.”
“There’s nothing wrong with continuous improvement and smart business tactics, but the tail is wagging the dog when market research becomes more important than technical innovation.”
Google is widely recognized for its strong workplace culture, passion for pleasing customers and incredibly strong market share. Consistently ranked one of the best places to work, the company is the result of careful construction of culture focused on excellence.
In the middle of the book, Schmitt and Rosenberg discuss how they intentionally defined Google’s culture from the outset, noting that culture ultimately stems from the founders of an organization. They warn against delegating the mission statement to the PR department – which most companies do long after a culture has developed internally, for better or worse. This communicates a lack of importance given to culture by leadership, and this perceived insignificance can mean employees don’t internalize your stated values.
“The difference between successful companies and unsuccessful ones is whether employees believe the words [of a mission statement],” Schmitt and Rosenberg write.
And at Google, people believe the words:
“A good litmus test is to ask what would happen if you changed the statements that describe culture. Take ‘Respect, Integrity, Communication and Excellence,’ which was Enron’s motto. If execs at Enron had decided to replace those concepts with something different – perhaps Greed, Greed, Lust for Money, and Greed – it might have drawn a few chuckles but otherwise there would have been no impact. On the other hand, one of Google’s stated values has always been to ‘Focus on the User.’ If we changed that, perhaps by putting the needs of advertisers or publishing partners first, our inboxes would be flooded, and engineers [outraged].”
Employees intuitively recognize that words on a page are meaningless – it’s what the leadership displays in their actions that communicate the true corporate values. If you care about your organizational culture, you should be the one defining it.
Think about it: If you changed your mission statement, would anyone care? Would anyone push back on you significantly? If not, you may need to ask yourself if your employees have truly internalized the company values.
What Google’s emphasis on developing strong culture means for a business leader:
Every company wants to be Google – or at least a little more like Google. With massive market value, incredibly loyal customers, and a work environment that attracts top talent across the world, the leadership at Google have instilled a culture that has done the company well. Specifically:
Google is currently ranked 17 on the Reputation Institute’s RepTrak 100, which measures public perception of the top 100 most well-liked companies. It has fluctuated ranks in the past years, including spots at No. 1 and No. 2, but it has maintained a position in the Top 20. Research indicates that public reputation can influence bottom line sales, so Google likely enjoys significant financial benefits and customer loyalty from this position.
Google is currently Number 2 on Forbes’ list of “Most Valuable Brands,” Number 2 in “America’s Best Employers,” and Number 4 in “Canada’s Best Employers.” Research indicates employees have a higher level of commitment to more “established” values-driven companies than employees of organizations that are just beginning to intentionally manage their cultures around core values. In other words, Google’s focus on culture from the beginning has paid off in employee loyalty.
Google’s parent company Alphabet is the second-most valuable company in the world. Again, this is not surprising: Research shows that self-governing [values-based] organizations outperform other types of organizations across every important performance outcome, including: higher levels of innovation, employee loyalty, and customer satisfaction; lower levels of misconduct; and superior overall financial performance.
I could provide more statistics, but I think you get the point. From the beginning, Google’s executives made an intentional decision to focus on culture over market share, and in the end, they got both.
I’m not saying that Google’s culture is entirely responsible for its success or that technological innovation and even luck had nothing to do with the outcomes. But I believe it would also be disingenuous to argue that implementing company values was unrelated to success. Without its strong, recognizable culture, Google would be little more than just another Silicon Valley tech company.
Still, even if it was unrelated entirely, the culture did not come at the cost of traditional metrics (profit, market share, stock price). In other words, your organization can operate on a strong set of values and be quite successful.
Conclusion: A values-based culture is worth it. And we’re here to help you build it.
I recognize the challenge of overhauling your organizational culture can be daunting. But it’s worth it. A 2011 report by Denison Consulting, LLC notes that “Corporate cultures develop with or without conscious effort. A culture created consciously takes much less effort than fixing a culture of bad habits created by unconscious means.”
Also, you’re not alone in the process – Novareté was, in part, created to help you navigate the change, and measure your progress. From Dilemmas, which analyze how your employees’ values compare to your company values, to Kudos, which reinforce positive behavior, our features help you define and produce the culture you want in your company.
If you want to learn more, we suggest you check out the free Culture Assessment tool. The Novareté Culture Assessment measures the health of your company’s culture and offers a breakdown of the results. In less than two weeks, you’ll receive the data needed to create an actionable plan to make an impact – all for FREE.