Weekly Business Idea

June 8, 2018 – What is the Cost of Your Core Values?

Posted on | June 8, 2018 | No Comments

Main Idea:

Does your company have core values?  Are the real core values the same as the stated core values?  Does your team know the company core values?  Do you know what the real core values are?  What happens when they are tested?  Which core values win?

Expansion of the Idea:

In the Tuesday morning Wall Street Journal, there was an interesting article on the departure of the founders of WhatsApp from Facebook.  WhatsApp is a simple, secure messaging system that Facebook bought for $22 billion dollars in 2014.  I have never used WhatsApp, but from what I read, one of the founders’ core values was privacy and security.  They had accumulated 450 million users but weren’t making a ton of money.  When Facebook bought them that was their opportunity to cash out.  However, Facebook’s core values don’t include privacy and security.  A clash was coming.  It took about 4 years but Facebook’s advertising model was introduced to WhatsApp’s business.  The founders could not handle it and finally left.

As I was reading the article, it was apparent that the founders’ core values were such that they could not handle the intrusion of Facebook type ads in their software and they finally left, leaving $1.3 billion on the table.  (It is a lot easier leaving that much money on the table when you have already collected over $20 billion.)  I had three observations on this:

  1. They had built a huge business with core values.
  2. They then sold out the business and their core values for a lot of money.
  3. They rediscovered their core values and left money on the table.

The main takeaway is that core values have a cost.  If they don’t have a cost then they are probably not a core value.  The cost may be money, time, lost opportunities or inconvenience.  But there is a cost.  The reason is that they are a boundary.  Your core values help control your decisions.  The irony is that only by sacrificing short term cost will you gain long term benefits.

If your core values include customer service, then you need to have systems to provide that service, even if it costs you money.  If one of your core values is teamwork, then you need to be prepared to get rid of a high performer who is not a good team player.

Core values are really beneficial for companies that are focused on long term results.  Companies that are strictly focused on short term frequently end up with a core value of making the most money that they can.  I am all for making the most money that you can.  However, when you focus on the short term, you risk losing long term customers or employees.  That is the cost of that core value.

Core values have a lot of power.  They can help build great businesses by inspiring employees and customers.  They can also shatter relationships when they are violated.  They are like a lot of other pieces of running a small business, they need attention.  However, when they are clear and visible in a business, the results can be extraordinary.

Questions to consider:

  1. Do you have stated core values?
  2. Are there unstated core values?
  3. Are there conflicts between numbers 1 and 2?
  4. Have you discussed core values with your team?

A very interesting book to read about implementing service standards (core values) is Be Our Guest, written by the Disney Institute.

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    These weekly ideas are brought to you by FitzGerald & FitzGerald P.C. For more information about how to use these ideas with your small business contact Tim FitzGerald at trfitz@fitz-net.com.