By: James Collins and Jerry Porras
Truly great companies understand the difference between what should never change and what should be open for change, between what is genuinely sacred and what is not.
Vision provides guidance about what core to preserve and what future to stimulate progress toward.
But vision has become one of the most overused and least understood words in the language, conjuring up different images for different people: of deeply held values, out- standing achievement, societal bonds, exhilarating goals, motivating forces, or raisons d’être.
A well-conceived vision consists of two major components: core ideology and envisioned future.
Core ideology defines the enduring character of an organization – a consistent identity that transcends product or market life cycles, technological breakthroughs, management fads, and individual leaders.
Core ideology provides the glue that holds an organization together as it grows, decentralizes, diversifies, expands globally, and develops workplace diversity.
Any effective vision must embody the core ideology of the organization, which in turn consists of two distinct parts: core values, a system of guiding principles and tenets; and core purpose, the organization’s most fundamental reason for existence.
A small set of timeless guiding principles, core values require no external justification; they have intrinsic value and importance to those inside the organization.
And Ralph S. Larsen, CEO of John- son & Johnson, puts it this way: “The core values embodied in our credo might be a competitive advantage, but that is not why we have them. We have them because they define for us what we stand for, and we would hold them even if they became a competitive disadvantage in certain situations.
The point is that a great company decides for itself what values it holds to be core, largely independent of the current environment, competitive requirements, or management fads.
A company need not have as its core value customer service (Sony doesn’t) or respect for the individual (Disney doesn’t) or quality (Wal-Mart Stores doesn’t) or market focus (HP doesn’t) or teamwork (Nordstrom doesn’t).
A company might have operating practices and business strategies around those qualities without having them at the essence of its being.
Companies tend to have only a few core values, usually between three and five
To identify the core values of your own organization, push with relentless honesty to define what values are truly central.
If you articulate more than five or six, chances are that you are confusing core values (which do not change) with operating practices, business strategies, or cultural norms (which should be open to change).
A company should not change its core values in response to market changes; rather, it should change markets, if necessary, to remain true to its core values.
Who should be involved in articulating the core values varies with the size, age, and geographic dispersion of the company, but in many situations we have recommended what we call a Mars Group
It works like this: Imagine that you’ve been asked to re-create the very best attributes of your organization on another planet but you have seats on the rocket ship for only five to seven people. Whom should you send? Most likely, you’ll choose the people who have a gut-level understanding of your core values, the highest level of credibility with their peers, and the highest levels of competence.
Core purpose, the second part of core ideology, is the organization’s reason for being. An effective purpose reflects people’s idealistic motivations for doing the company’s work.
It doesn’t just describe the organization’s output or target customers; it captures the soul of the organization.
One powerful method for getting at purpose is the five whys. Start with the descriptive statement We make X products or We deliver X services, and then ask, Why is that…