Habit 6

Connect through shared values

How to inspire passion in your people

Falling in love

If people are to bring their heart and soul into the office and raise their head above the parapet to offer new ideas and ways of doing things, the relationship with the business needs to be more than a transactional contract based on a wage slip at the end of the month. It needs to be more than a logical understanding of strategic objectives and their part in that – or even a sense of duty.

More than any other type of organisation on the planet a creative business needs to forge a relationship of trust and empowerment.⁵ Relationships are about emotion, connection, and even love. So, this habit is about how you can woo your employees. How you encourage them to fall in love with the idea of your business and what it does, just a little bit. Enough love to forge an emotional connection. People need an emotional connection to take risks, table ideas and start electric conversations.

Stuart Murphy, director of entertainment channels at the TV, broadband and mobile business Sky, sees it this way: ‘Each company has a personality. Values are a formal way, I suppose, of saying “this is how our company views life and treats people”. Your values need to make sense as a world view, as well as being appealing to customers and people who work there. I’ve been at places where the values have been very different to people’s behaviour. Management thought just by listing them, or writing them on the walls, it would make a difference. This isn’t the case. You need people who really believe the values – who are prepared to make the change personally.’⁶

People find it hard to fall in love with a business. They find it easier to fall in love with people. So, it’s important to imbue your business with the sort of attributes we normally associate with people: unique ways of thinking about things, preoccupations, passions, a certain recognisable style, attitudes and beliefs. You need your business to get a life – or, at least, a personality. You need your business to have values.

Values: not for sale

Core values are what the company believes in. Often they can be traced back to the beliefs and attitudes of the founders. They are deeply ingrained principles that guide actions and, crucially, are divorced from the logical, profit-making motive of a business. They require no commercial justification. You don’t have values to use in an investment argument with a rich investor from Dragon’s Den. You have them because they feel right.

Some companies argue that their values are so important they would stand by them, even if they lost money. Ralph S. Larsen, CEO of Johnson & Johnson, put it this way: ‘The core values embodied in our credo might be a competitive advantage, but that’s not why we have them. We have them because they define what we stand for, and we would hold them, even if they became a competitive disadvantage.’⁷

Values = business personality

Virgin Media employs a chief values officer called Red. Red sits on the executive committee. He has a big profile in the business. When I was working with Virgin Media on a project to refresh the Virgin values, I was based in Red’s office for some exploratory interviews. It was explained: ‘He’s out today.’ The office was complete with his personal items, security pass, and a nice view of the forest that surrounds the Virgin Media HQ in Hampshire. I was surprised to see he even has pictures of him holidaying with Sir Richard Branson on Branson’s private island.

Red is a puppet. That’s not a metaphor for a weak executive controlled by others. He really is a puppet made from furry red material. He was created by Virgin Media to represent the company’s values: insatiable curiosity, heartfelt service, delightfully surprising, red hot, smart disruption and straight up. Red symbolises Virgin Media’s personality and reflects Branson’s own entrepreneurial mindset. Red sends all-staff emails and occasionally appears at company events. He’s a tangible way for Virgin Media to start a dialogue with staff about how they can engage with and interpret the values.

People who believe what you believe

When employees fall a little bit in love with working for your business it’s called engagement. Engagement measures a person’s positive or negative emotional attachment to his or her business, job, team and colleagues.⁸ We fall in love with people, movements, pop bands, and even businesses, when our personal values have some kind of match, a crossover, with that entity. Engagement creates sparks. Studies demonstrate employee engagement plays a central role in translating resources and investment into innovative behaviour. Six out of ten people who report they are engaged by their company say it’s this emotional connection that brings out their most creative ideas. The proportion of employees who are unengaged and still have good ideas at work is a measly 3 per cent.⁹ Suzie Carr, head of talent, performance and engagement at Virgin Media, puts it this way: ‘To us it’s all down to discretionary effort. We know from our research engagement drives that, let’s face it, that’s gold dust.’

The same link between emotional connection and desirable outcomes occurs in the most unlikely places. BAE Systems Plc is a massive British defence, security and aerospace company with operations around the world. Building nuclear submarines and fighting vehicles of all kinds takes a high level of design, creativity and innovation right down to the factory floor. Managers at BAE report that measures to encourage engagement amongst shop floor employees reduced the time taken to build a fighter plane by a quarter.¹⁰

You’d think in the grip of an economic meltdown touchy-feely concepts like engagement would be quietly shelved. Not true. In 2012, in the depths of a global recession, leaders prioritised engagement ahead of trimming staff costs.¹¹ Nine out of ten of the world’s most admired companies believe efforts to engage employees created competitive advantage.¹² In fact, there is research spanning half a century that demonstrates staff engagement drives peak performance, productivity, low levels of absenteeism, better staff retention, outstanding customer service – and, of course, creativity and electric conversations.

Engagement will even encourage people to say nice things about your company when they go to the pub. In one business I’ve worked with, engineers were so ashamed of the company logo they would strip off any identification that linked them to the business before they knocked off for a pint. When the business was bought by another company that valued engagement, their behaviour changed. They were more than happy to advertise who they worked for. Some even made sure they put on a company fleece before leaving for a drink. They were proud of the association and wanted other people to know it.

Health warning: inspirational guidelines, not rules

One of the tricky balances of a creative business is to find people who share your values, who want to buy in to the culture of your business – but are also prepared to challenge the status quo. It is important that values are general principles – what we believe in – but not a behavioural straight jacket, or a one-size-fits-all recipe for corporate robots. The fact values mean slightly different things to different people only enhances the personal connection. There need to be guidelines that can be interpreted with flexibility, latitude and imagination. When values become behavioural rules they kill creativity.

Values and big picture strategy

It is important to understand how values sit alongside business strategy. Values are about emotional commitment and what the business believes in for all time. Strategy is about rational understanding and how the business copes with the next three to five years. They are not the same thing; but they do support each other.

Strategy is developed by answering the following crucial, big picture questions:

1. Where do we want to go – and what do you need to do differently to get there?
2. How do we compete to achieve our objectives?

The best way to answer these fundamental queries lies in an analysis of your strengths and weaknesses put together with the opportunities and threats in your competitive environment. The answer will be based upon a rational, cause-and-effect argument for how your business is setting objectives (question 1) and choosing to define its unique position in the marketplace (question 2).

To clarify the where do we want to go part of core strategy, I work with clients to create a set of clear corporate objectives. A solid, differentiated strategy is vital. It should be the core of any decent business plan or pitch for financial backing. The unique value proposition of your business, department or team is expressed in a blend of products cross-referenced with the customers you serve. With a creative business another important factor is how you do things – core competencies – and what you know – your unique knowledge base.

But all this sensible stuff is not enough. It runs into a problem when you need your people to love your business. Strategy takes you to the party; but doesn’t encourage anyone to dance. The problem is that most businesses are like Mr Spock from Star Trek. They rely solely on the left side of the brain where corporate strategy thinking happens. As a result their pitch to engage employees, is based on sensible, but uninspiring, arguments:

• Argument 1: The logic of success through good strategy (‘We offer you security and success’)
• Argument 2: The logic of transactional salary and benefits (‘You’ll be well paid and looked after if you stick with us’).

This is necessary, but not sufficient, to make electric conversations more likely. Creative businesses have to add Captain Kirk’s passion to Mr Spock’s logic. Creative business needs both.

We need to rebalance our businesses towards the right-hand side of the brain: emotion, passion, feelings, ethics – and creativity. Leaders need to learn to embrace the hard and soft sides of a business’ personality. In this way we can ensure organisational culture and behaviours are aligned with the big picture of commercial strategy. I use the thinking model¹³ in Figure 6.3 to kick off a strategy development process with boards of directors. It helps when a business is trying to plot its way forward because it recognises the dual importance of left-brain logical strategy and right-brain emotional values. We then use it to get to the nitty gritty of how both strategy and values drive culture and behaviours.

figure 6.3 How strategy and values drive behaviour^*

Finding a point of difference

Since the 1980s, when the strategy guru Michael Porter argued for differentiation as the main strategic focus, companies have been striving to do just that. Clearly it works: Southwest Airlines, Google, Amazon, eBay, Facebook, Pret A Manger and Cirque Du Soleil are all good examples of companies that did spectacularly well by being different. When you offer the market a new value proposition, you change things dramatically. You create a brand-new perceived value and, for a while at least, your business is the only seller.

But it is hard to create acres of clear blue water between your offering and another when a market is mature and standardised in the mind of customers. Take advertising, for example. Most corporate clients are accustomed to what they are buying, what they are looking for and how much it costs. There are differences between agencies, but often they are quite slight. I’m sure at some point a paradigm-busting new strategy for offering value in advertising will emerge. But, in the meantime, it’s difficult for agencies to distinguish themselves in a crowded marketplace.

Another challenge to being different is being able to take the required risks. Few executives feel they have the power or bank balance to rip up the rule book. If you are in middle management, or running a business owned by a corporate parent, it’s a ‘big ask’ to place large strategic bets without sign-off from above. But developing a unique culture is another lower risk route to differentiation. And it’s especially valuable for businesses striving to be creative because it builds a clear path to attract, retain and motivate talented people who have ideas.

Meaningless values

Wouldn’t you like to work for a fast-growing business, named as the most innovative company six years in a row; that had values of integrity, communication, respect and excellence chiselled in marble in the luxurious lobby? That was Enron. But, in 2001, the Texas-based energy business collapsed into bankruptcy and scandal. It was revealed its stellar performance was sustained by institutionalised accounting fraud.¹⁴ So much for integrity.

The ‘say-do’ gap

Meaningless values written on the walls have no power whatsoever. Authentic values embodied by management and lived by employees can change your commercial future. Authentic company values are shown by who gets rewarded, promoted or fired. Recently there’s been a sea-change in how seriously businesses take values. Some of this work to stimulate employees’ hunger for engagement has been successful. But problems remain. And anyone who has worked in a business knows exactly what they are: the yawning gap between say and do.¹⁵ This is the difference between what the business preaches, and what it practises. The gap between what you say as a manager, and what you do, eats away at your credibility. There are two types of say-do gaps that cause the most trouble:

• Straight-forward deceit: Leaders who use values to mask diametrically opposed leadership behaviours; assassinating unwanted employees or cost saving, for example.
• Insufficient commitment: Leaders who are corporate box tickers, apathetically ticking off items on the what-we-need-to-do-as-a-good-company form. This is a bit like paying lip-service to corporate social responsibility. Values are hard to implement because you have to match words with deeds. If commitment is not forthcoming, guess what? You get out precisely what you put in. Nothing.

If you are going to have values, they need to be sacrosanct and central to everything. The highly-successful content streaming business Netflix reinforces values in the 360-degree review process as well as hiring, promotions and exits. It asks employees to as act as values police by encouraging them to challenge behaviour inconsistent with their values of judgement, communication, impact, curiosity, innovation, courage, passion, honesty and selflessness.¹⁶

Corporate frisbees

Management deceit and insufficient commitment means a lot of energy is wasted on corporate frisbees.¹⁷ A new corporate frisbee is created when values are just words on a page and not lived in the business. When the corporate frisbee is thrown – often at a glitzy, razzmatazz event – employees in the trenches look up for a moment, admire its parabolic arc, and then . . . don’t give it another thought. The result: a total waste of time and money. Or worse, the corporate frisbee is viewed as a cynical exercise in pulling the wool over people’s eyes while crafty management get on with their real job of slashing budgets, cutting jobs and counting money.

Meaningless platitudes

Occasionally executives tell me: ‘Values are pointless; you could apply the same values to any business – they’re just platitudes.’ I find that’s often because the business has confused real values with permission-to-play values: the minimum behavioural standards required of any decent person. We all expect people to show integrity, to have respect for their co-workers and to be honest. But, unless you are putting your own differentiating twist on universal human values, you are not telling a distinct story of what you believe in as a company. It is possible to write differentiating values if you have a distinct enough vision of how you want people to be in the office.

Values and profit

Just to prove values are about real profit, and not just tree-hugging blather, here’s a salutary tale of a lot of money going West. In the mid-2000s, Tesco was the darling of the UK’s food retailing industry: the number one player and very profitable to boot. From its UK stronghold, CEO Sir Terry Leahy took the decision to move decisively into the tempting US market – and the Fresh & Easy supermarket chain was born. Leahy sent his most senior lieutenant, Tim Mason, to run the start-up and Fresh & Easy opened its first outlet in Hemet, California, on 1 November 2007.¹⁹

The supermarket was to be the first of 1,000 convenience stores that would bring much-admired British retailing to lucky US consumers. Just as the USA’s Walmart had bought the Asda chain in the UK; so Tesco would now challenge the US giant in its own backyard. Three booming US states – California, Arizona and Nevada – were picked for the launch. What could go wrong?

As it turned out: a lot. The venture never turned a profit during more than five years of trading. Only 199 stores were opened. After just two years, retail analysts were whispering Tesco had completely misjudged the US market by arrogantly imposing British retail models on a reluctant and conservative US shopper.²⁰ In April 2013 the new CEO Philip Clarke announced Tesco would be cutting its losses and selling the business. The total cost of this fiasco: £1.2billion.

There were a number of factors involved, but an indisputable point is Tesco failed to understand the needs of US shoppers. Retail consultant Phil Dorrell said: ‘Tesco took its eye off the ball in spectacular fashion and, in its goal to be a world-beater, forgot to take care of the basics.’²¹ What’s this got to do with values? One of Tesco’s most cherished values is to ‘understand customers better than anyone’. Tesco built its reputation on mining information to know the mind of British shoppers almost better than they did. But US customers were repelled by things UK customers took for granted: stark aisles, plastic-wrapped fruit and vegetables, ready meals and self-service checkouts. The USA is a country where bagging up groceries for struggling shoppers is a customer service essential. Despite deploying serious amounts of customer research, much of the Tesco management team on the west coast were Brits. Tesco fell down on its own core principle of customer insight. The moral of this story: forget your values at your peril; it leads to disaster.

Changing values

It is advisable to treat values as untouchable. It’s off-putting when a person’s personality seems to change at will. But never say never. The Virgin values mentioned earlier were an update from principles that had served the business well for decades. Sometimes even values need to be updated to stay tuned with what the business is all about. Take IBM, for example. I visited this technology giant in 2011 while delivering a leadership programme for a global TV production company. I was at IBM’s innovation hub in Stockholm and I can tell you they take creativity and innovation very seriously indeed. The sheer effort and focus upon generating new ideas speaks for itself. IBM boasts 12 research labs worldwide and has held the record for most patents generated by a company for 20 consecutive years. Its employees have garnered five Nobel Prizes, six Turing Awards, ten National Medals of Technology and five National Medals of Science.

Part of this continuing success may be down to the fact, after 89 years in business, the leaders of IBM decided they needed to change their values. One of the executives I was with told me in awe how they did it, while still gaining buy-in from the majority of staff – well over 400,000 people.

IBM wasn’t always that big. It was founded by president Thomas Watson, Sr in 1914 to make tabulating machines, scales for weighing meat and cheese slicers.²² At the time, Watson decreed three corporate principles called the basic beliefs: respect for the individual, the best customer service, and the pursuit of excellence. These informed IBM’s culture and drove success for decades.

But by the early 1990s the company had been through the most traumatic near-death experience in its history. Under Lou Gerstner ‘Big Blue’ fought back and transformed itself from a business that made huge mainframe computers into a provider of integrated hardware, networking and software solutions. In 2002, Sam Palmisano took over as CEO and felt the basic beliefs could still serve the company, but needed to be updated into a new set of values that could re-energise employees. Palmisano set about his task with a will. He first discussed it with 300 senior executives, and then opened up the debate through a survey of over 1,000 employees. He tried to get a sense of what people at all levels, functions and locations thought about IBM’s values.

Out of this research grew a set of propositions that were fed into a quintessentially IBM communication tool – the ‘Values Jam’ – a huge online discussion. After – and even during – the jam, company geeks pored over the postings, mining the million-word text for key themes. Finally, a small team that included Palmisano came up with a revised set of corporate values. He announced the new principles to employees in an intranet broadcast in November 2003: ‘dedication to every client’s success, innovation that matters – for our company and for the world, trust and personal responsibility in all relationships.’ Like most values, they don’t sound earth-shattering from a superficial read. But they are powerful within IBM because they have the legitimate buy-in of all employees.

Lightning conclusion

Values are about emotions, so they are perceived by some managers as ‘fluffy stuff best left to HR’. This is not something a creative leader can do. Developing inspiring values, and using their unique ability to connect with the passion of your employees, is vital to success. A match between your business values and the personal values of your employees is the spark that makes a creative culture fizz and crackle with electric conversations.

1 Ogilvy & Mather, 2013. Tham Khai Meng on innovation: pervasive creativity. Available at: <www.ogilvy.com/On-Our-Minds/Articles/Jan-2013-Innovation-Pervasive-Creativity.aspx.>

2 Broadbent, T., 2012. The Ogilvy & Mather guide to effectiveness. Ogilvy & Mather.

3 Ogilvy & Mather , 2013. Ogilvy & Mather retains network of the year title at Cannes Lions 2013. Ogilvy & Mather [online]. Available at: <www.ogilvy.com/News/Press-Releases/June-2013-OM-Retains-Network-of-the-Year-Title-at-Cannes-Lions-2013.aspx>.

4 Afshar, V., 2013. 100 Tweetable Business Culture Quotes from Brilliant Executives [online]. Available at: <www.huffingtonpost.com/vala-afshar/100-tweetable-business-cu_b_3575595.html>.

5 Arguably the only exceptions are the armed forces and emergency services, which require their personnel to lay their life on the line in the line of duty.

6 Murphy, S., 2013. Interviewed by Greg Orme at Sky Grant Way, Isleworth, 29 August.

7 Collins, J. and Porras, J.I., 2000. Built to last: successful habits of visionary companies. London: Random House Business Books.

8 Scarlett, K. What is employee engagement? Scarlett Surveys International [online]. Available at: <www.scarlettsurveys.com/papers-and-studies/white-papers/what-is-employee-engagement>.

9 Gallup, 2007 cited in Rayton, B., Dodge, T. and D’Analeze, T., 2012. The evidence: employment engagement task force “nailing the evidence” workgroup. Engage for Success. 12 November.

10 Hakanen, 2008 cited in Rayton, B., Dodge, T. and D’Analeze, T., 2012. The evidence: employment engagement task force “nailing the evidence” workgroup. Engage for Success. 12 November.

11 CBI Harvey Nash Employment Survey, 2012, cited in Rayton, B., Dodge, T. and D’Analeze, T., 2012. The evidence: employment engagement task force “nailing the evidence” workgroup. Engage for Success. 12 November.

12 The Hay Group, 2010 cited in Rayton, B., Dodge, T. and D’Analeze, T., 2012. The evidence: employment engagement task force “nailing the evidence” workgroup. Engage for Success. 12 November.

13 Based on Campbell, A., 1996. The Ashridge mission model, mission and management commitment. Ashridge Strategic Management Centre. I have added the concept of culture into the model (as well as behavioural standards) as I found it to be language of my clients and a useful way to make the intangible ‘climate’ of a business something that can be influenced and managed.

14 This story was used in Netflix, 2009. Reference guide on our freedom and responsibility culture. p.6.

15 Referenced in MacLeod, D. and Clarke, N., 2008. The four drivers of engagement in the UK government. Macleod Review as ‘organisational integrity’.

16 Netflix, 2009. Reference guide on our freedom and responsibility culture. pp.10–18.

17 With thanks to the inspiring Brian Bacon of the Oxford Leadership Academy.

18 The answer is Disney.

19 Poulter, S., 2013. Tesco profits cut by half after US failure: American stores will be sold or closed and UK openings scaled back as supermarket reels from £2 billion blow. Mail Online [online]. 17 April 2013. Available at: <www.dailymail.co.uk/news/article-2310315/Tesco-profits-cut-half-US-failure-American-stores-sold-closed-UK-openings-scaled-supermarket-reels-2billion-blow.html#ixzz2XQcmjP54>. 17 April.

20 Goodwin, C., 2009. Fresh & Easy: Tesco’s great American disaster. The Week [online]. Available at: <www.theweek.co.uk/politics/23805/fresh-easy-tescos-great-american-disaster.> 27 April

21 Poulter, S., 2013. Tesco profits cut by half after US failure: American stores will be sold or closed and UK openings scaled back as supermarket reels from £2 billion blow. Mail Online [online]. 17 April 2013. Available at: <www.dailymail.co.uk/news/article-2310315/Tesco-profits-cut-half-US-failure-American-stores-sold-closed-UK-openings-scaled-supermarket-reels-2billion-blow.html#ixzz2XQcmjP54>. 17 April.

22 Hemp, P. and Stewart, T.A., 2004. Leading change when business is good: an interview with Samuel J. Palmisano. Harvard Business Review, December. Available at: <http://hbr.org/2004/12/leading-change-when-business-is-good/ar/1>.

23 Indebted for some of these great questions to Osterwalder, A. and Pigneur, Y., 2010. Business model generation, Hoboken, NJ: John Wiley & Sons.

^*Based on Campbell, A., 1996. Mission and management commitment. Ashridge Strategic Management Centre, March. I have added the concept of culture into the model (as well as behavioural standards), as I found it to be the language of my clients and a useful way to make the intangible ‘climate’ of a business something that can be influenced and managed.