Values, when clearly articulated and lived out, become part of your organization’s DNA. They become a useful litmus test when making hiring decisions.

Values differentiate your company in the minds of your team and your customer.

There is a high degree of overlap between your values and your brand. Your brand is basically the way you make customers “feel” - it’s the sum of all the interactions people have with your company. And values that are consistently lived out represent one of the key ways you shape those interactions.

Seth Godin provides a super useful shorthand when doing positioning exercises. He suggests starting with the statement, “people like us do things like this.” And define what “this” is. The this is not the product you sell or service you provide. But it is how you go about doing it, and why. It is effectively your values.

Most companies can’t answer this question. But the strongest brands in the world do. Harley Davidson was famous for saying, “We sell the ability for a lawyer or accountant to walk into a bar and have people be afraid of them.”

Values help you filter candidates.

Strong, well-defined values become an incredibly effective filter for vetting potential team members. In most organizations we’ve found you can teach many of the skills necessary to do a job well. It’s much harder to teach or instill the appropriate values.

In fact, when we get to the Intentional Hiring Process, we will start with a values screen. This lets us avoid wasting time interviewing candidates that might have the right work experience but lack values alignment. In many cases, team members who are capable but have different values will create more problems for the business than they are worth.

Values help you make strategic decisions.

Values can be a useful litmus test when attempting to make important decisions. Partnering with certain companies, making acquisitions, deciding on customer segments to expand into can all be examined through the lends of values. Even product and pricing decisions can be examined through this filter. If craftsmanship is a core value, it’s unlikely you will have the cheapest product.

Why Values Don’t Stick

The problem with most organizations is not that they don’t have values. At some point they likely attempted to create values. And yet they find that they don’t stick. If you ask 10 people in their company, there’s a good chance they don’t even remember them. Why is that?

I’m going to suggest it’s because the values are incredibly difficult to create in a conference room. An they’re incredibly difficult to create by committee.

Companies don’t have values. People do.

In fact, I don’t think a company has values. I think people have values. And it’s the values of those people, lived out in the actions they take and the interactions they have with customers and each other, that represent the manifestation of the “company values.”

A company’s values are not what’s written on a slide deck or put on a plaque on the wall. They are the sum of the actions of the sum of he people in the organization.

It is incredibly difficult for someone who doesn’t share those values themselves to actually live them out consistently. When things get hard, who you naturally are comes out.

That’s why it’s so important to use values as a filtering criteria when hiring. You don’t come up with values, announce them to a company, and except a bunch of people who might not share those values to suddenly live them out. They either have those values or they don’t. While they can learn them, it can be very difficult, and it takes time. Skills can be acquired much faster than values can.

Values-by-committee often lack congruence.

So why does values by committee so often fail? After all, a committee is just a group of people. And in those exercises, they most likely are suggesting and advocating for values that they themselves hold.

In Traction, Gino Wickman has senior leaders end a values exercise by asking themselves to what degree they live up to the values just defined. Inevitably you find that each team member lives up to some but not others. This is because the values were created by committee - they’re a hodgepodge. While there might be a bit of overlap, no one fully embodies the values.

If your senior leaders don’t embody all of the values, their ability to model them to the team suffers. And if the leadership doesn’t model the values, the rest of the team comes to believe that they don’t need to either.

This is particularly true if the values are not embodied by the head of the organization - you.

The Solution: From a “Values Driven Leader” to Leader Driven Values

I believe the solution to this problem is to define values from the top down. To select values based on who you are as a leader.

Simply put, having leader driven values makes it much easier to model them as the leader. And while the rest of your team matters, you are the one consistent thing in the business.

Most companies operate this way anyway.

Many business owners often discover too late that their companies are effectively manifestations of who they are as people. If their company is disorganized it’s because they’re disorganized. If their company is cruel, it’s because they are cruel. If the company loves people, it’s because they love people.

The problem is most business owners don’t realize this. They don’t consciously think about their own values, their own strengths and weaknesses, and how those might manifest themselves in a company. As a result the company inherits what makes them great, but also what makes them awful. They often don’t realize it for years. But their team sees it.

If you’re going to create a company that is an extension of yourself anyway, you might as well do it intentionally.

An example.

Ayn Rand wrote a book called the Fountainhead in the 1940s. It’s a controversial book - its characters tend to be caricatures. It has a very odd view on romantic relationships. And it trumpets selfishness as an ideal. Many people hate it.

But for all its faults, it provides an ideal example of what it looks like to build a business based on your values.

Her hero is a man named Howard Roark. He’s a brilliant architect. He sees the world differently than everyone else, and that worldview manifests itself in his buildings. Most people don’t like his buildings. But the people he wants to work with see his buildings and immediately “get it.” He’s the only architect for them.

His employees are the same. He never gives them praise, except for a slight smile or nod when reviewing a building designed well. He works incredibly hard and expects them to do the same. He knows nothing about their personal lives, only talks about work. Most people hate working there. But the people he wants love it.

Throughout the book he routinely turns down commissions that would require him to compromise on his values, sometimes at great personal cost. He prefers to suffer than to water down his definition of what makes a great building.

Roark builds a company that he loves. It’s an extension of who he is.

Intentionally choosing values.

I want you to imagine that your company is a monument to your character. Not to your weaknesses, but to who you are at your best. There are things about your character that make you particularly compelling to others. There are things about your character that are noble and good. Those are really good clues into what your organization’s values should be.

It’s okay if you don’t live up to them 100% of the time. Having a business that has those values will make it more likely that you embody them, more often.

What if you aren’t sure what those are? Ask people who know you well what makes you tick. What they most admire about you. What makes you utterly unique and compelling. Often people can see what you can’t about yourself. You don’t have to accept what they say or incorporate them into your company’s values, but it can at least serve as useful data points.

What if you have multiple owners or business partners? I would urge you each list out the things that you admire about yourselves, and the things you admire about each other. (This can be a valuable exercise simply in terms of growing closer to your partners.) Then look at the Venn diagram where there’s overlap. I would caution you against choosing values that only one of you has - again, if you don’t all feel confident in your ability to embody values, you won’t be able to model them consistently and they’ll lose their effectiveness with your team. Better to have fewer values that you all agree with.

Say no to vanilla.

One of the common issues with values by committee is the temptation to round off the edges that make them compelling. As a result they neuter their impact. No one remembers them. Vanilla values that are interchangeable with any other company don’t attract.

The most common symptom is choosing values that are simply table stakes. It’s common to see values like “integrity.” EVERY company should have integrity. That isn’t a differentiator. That isn’t a rallying cry.

Values should be strong. They should stop people in their tracks. The words should be like a sledgehammer. They should have an opinion about the world.

When you’re thinking about your values, instead of rounding off the edges considering going to the extreme.

You don’t value “customer service”. You are obsessed with “customer delight.”

You don’t value “quality”. You value “flawless execution.”

You don’t value “friendliness”. You value “joy”.

You don’t value “efficiency”. You value “getting 1% better every day.”

You don’t value “customer relationships.” You “hug your customers.”

Values manifest themselves in action.

Values ultimately are reflected in our behavior. Our actions are always consistent with our values. We have a word for people who say they believe something but act in a way that is inconsistent with that belief - we call them hypocrites.

The last step in your values exercise is to identify behaviors that demonstrate evidence of those values in action. What are the behaviors you exhibit that are consistent with that value?

It’s okay if you don’t have a ton of them to start with - consider this a living document that evolves over time. As you see examples of this in your organization, add them to the document. As you see examples in the outside world that demonstrate a value, add it to the document. Make it concrete for your team, make it inspiring for your team.

Rolling values out to the organization.

Creating values that you model yourself consistently is a critical step in making sure the values stick. Creating examples to make it concrete for your team helps as well.

But it still takes time to build habits. We need to be reminded and triggered at appropriate cadences to make behavior change permanent. A couple suggestions to help:

Start with yourself.

You’ve chosen these values because you care about them. Bake them into your daily routine. If you have a morning or evening self-management process (if you don’t we should work on that together,) add a reminder to try and embody a value into your priority tasks or meetings for that day. Reflect on the previous day and ask yourself how well you lived up to your values.

It’s okay if you mess up - everyone does. But you need to be the one modeling these values more than anyone else if you expect them to stick.

As much as possible you want to be proactive rather than reactive. You want to “lead” the team rather than “managing”.

Unveil them at your all hands meeting.

In a future step, we’re going to take the work we’ve been doing and reveal it to the organization in an all-hands meeting. One of the topics will be your statement of values and the examples. You want to explain why you think these values matter, and set expectations for how you plan to ensure the organization models them going forward.

Assess your team

For each team member, ask them to assess themselves according to each value. Three options:

You are going to do the same thing based on how well you think they model those values. If a team member says (or you say) that they don’t embody one of the values, create a goal for them to start practicing that in the next quarter (we’ll talk more about setting quarterly goals in a future lesson.)

If they don’t embody any of them? You will probably want to counsel them out of the organization. People who don’t embody your values will create friction and stress for you and the rest of the team. This doesn’t mean they are bad people - simply that the things they value aren’t the same as yours. If you chose values that are strong and opinionated, this is likely.

Note also that this should happen over a period of time. If a third of your company needs to be replaced, that isn’t a band-aid you rip off immediately. It will take time to hire and replace those folks, and you want to give them a gentle off-ramp to their next role.

Create a cadence of accountability

A common theme in this program is the importance of triggers. It takes time for new habits to get ingrained, even in people who really want to change. While it’s possible to try and rely on them to create those triggers themselves, it’s much easier and effective to bake those triggers into a communication cadence for them. This can manifest itself in a number of ways:

Embed values into your hiring process.

As we mentioned earlier, it’s much easier to train for skills than for values. We recommend making values alignment the priority of the first phase of your hiring process.

This can be tricky. If you ask someone point blank if they resonate with a value they’ll say yes. They’re looking for a job, and they probably are coming from organizations that paid lip service to their values but didn’t actually manage to them.

The best way we’ve found to do this is to ask people value pair questions. Have someone choose between two sets of values - yours and an opposite or different value. It’s critical that the opposite in each pair is also a positive value. You don’t want to signal that one is better than the other (again, it probably isn’t - it’s just different than yours). But force them to choose between two values and you’re likely to get a much clearer picture of the person.

We’ve seen people try to embed little tests into the subsequent stages of the hiring process as well to see if they actually model them without thinking about them. For example if a value is cleanliness or conscientiousness, the interviewer could “accidentally” drop a piece of garbage behind them as they’re leaving the interview room and see if the candidate picks it up or not. If promptness or urgency is a value, you can send a follow up note and see how long it takes them to reply.

The Power of Values

Your values, consciously chosen and consistently lived out, can be a tremendous source of power and energy in your organization.

They tell the world what you stand for. They attract better talent. They attract your ideal customers, those customers are more inclined to stick around, and more inclined to tell others about you. And they help you create an organization you’re proud of.

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