Principles–beyond just being a moral compass, or some nice words printed on a corporate document somewhere or etched on a wall near a waterfall in a corporate lobby–what are they and why are they important to business success?
Principles are general and fundamental truths that are used in deciding conduct or making choices. They serve to guide and inform us, and illuminate the way. There are many examples of companies that have lost their way, and no longer have any recognizable, positive principles. They may have principles, but they are negativeones such as “Do whatever it takes to make money” or “Put the most money in my pocket as I can.” Certainly Enron could be considered a poster child for this entire group of companies, but there are many, and it would be unfair to just single out Enron.
Principles are the bedrock of a company, and they need to be given attention and made a priority. It does not suffice to just create a list of principles, and then never look at them again. Principles need to be discussed, and shared, and experienced at all levels of management in a company. As I already wrote above, principles serve to guide and inform, and they also “trump” any particular strategy or course of action that someone wants to take. For example, if one principle at Company X is to “buy green,” then that principle would trump any action that may go against it. Suppose an employee wanted to save a few dollars by buying a “non-green” product, let’s say office paper. In this case the employee, who thought he was doing something good like trying to save the company money, ended up violating his company principle of only buying green. This somewhat silly example is useful in helping to explain how principles are overarching and how they help a company stay on the right path–the path the company has chosen in advance.
The best thing that senior management can do is to ensure that their company has a set of principles that have been thoughtfully discussed and approved, and then they need to get the word out to all levels of the company. They need to talk about them frequently, in regular meetings and updates with everyone. Most importantly, they need to live them and set the example!
Interestingly, principles aren’t just for the big companies, by the way. Individual Entrepreneurs are well-served by establishing a set of principles for their own small company. One of my own principles is to not let work out-prioritize my family, and I need to remind myself of this principle from time to time to avoid drifting away from it and spending too much time at the office…