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How to Set Organizational Values and Guiding Principles

Shivani Ganguly | Thursday February 28th, 2013 | 0 Comments

3140808649_4cf8bc1289_nMy previous post on launching social ventures focused on vetting your concept and ensuring that you have a revenue model that will keep you in business and eventually allow you to turn a profit. As promised, here’s a look at some of the strategic questions that will help you to build your team, bring in investment, and ensure that the triple bottom lines of environmental, social, and financial well-being are in balance.

Setting your organizational values

After you’ve examined your concept and done some research, take a step back from the details and look again at the bigger picture. Setting your organizational values early in the evolution of your venture will help you and your team to make both broad strategic and specific day-to-day decisions about how to spend your time and money.

If you create these values thoughtfully and articulate them clearly to advisors, investors, and employees, you’ll be able use them to think through the guiding principles that will help you to stay on track as you iterate your concept.

Organizational values speak to your place in the world and how you interact with all of your stakeholders. Some of my favorites are Whole Foods and Numi Tea. Both sets of values speak to the unique ways that these organizations interact with their customers, employees, and communities, as well as their commitments to environmental sustainability.

Key questions for you to consider as you set your values:

  • As a founder, what values are most important to you as you build your business?
  • How will you interact with your stakeholders (think about customers, employees, vendors, the communities you work in and with, and shareholders)?
  • How can you balance your commitment to environmental sustainability with financial common sense (if applicable)?
  • What are you NOT willing to do to make your business successful?

As another example, my consulting firm’s values include collaboration, flexibility, innovation, and keeping it personal (in a good way). I came to these values through self-reflection and tested them by talking with my clients about how this impacts our interactions. I’ve also found that when I’m in a difficult situation with a client, reflecting on my values helps guide me in how to respond.

Guiding principles

Guiding principles take values one step further by helping you think through how your values impact some of your key strategic decisions. Some questions to ask yourself as you think about your guiding principles include:

  • How fast should we grow? Keep in mind resource constraints, viability of your revenue model, and your sales cycle (i.e. if you’re selling to businesses it will probably take a lot longer than if you’re selling to consumers—and your product needs to be priced accordingly).
  • How much should we do in-house versus outsourcing? All startups are resource-constrained, and outsourcing can be a good way to add resources quickly and inexpensively. But you can lose personal interaction with customers by outsourcing customer service, or complicate processes before you need to by bringing on additional vendors or partners.
  • What do you need to be the best in the world? For one of my clients, the answer is operations and logistics because they have a perishable physical product and their margins are heavily impacted by delivery time and ingredient costs. Think about what the key drivers of your business are and make a commitment to learn how to be great at them (or bring in people who are).
  • How can you keep your triple bottom line balanced? This may lead you to make decisions around your product and marketing that aren’t ideal from a social or environmental impact, but are necessary to keep you in business.

As you’re answering these questions, it’s important to think through the implications. If you decide to grow fast, you’ll likely need to bring in more investment earlier in your company’s evolution, and you as a founder may end up with a smaller portion of equity. On the flip side, if you grow slowly, you may miss out on market opportunities and be overtaken by competitors. Think through the specific implications of these principles for your business, and try to find a balance.

More to come

The next post in this series will focus on building your team—finding co-founders, your first key hires, and how to compensate them in cash and equity. Future topics planned include investment structure, a deeper look at the ups and downs of revenue models, pricing, and an exploration of pitching to investors as a social venture. If you have ideas for other topics, please leave a comment below!

[Image credit: Heather Katsoulis]


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