Why Values Matter in Business Planning
A company’s strong sense of values during the business planning process and later, can guide it through troubled times and also improve the bottom line. Studies have shown that companies that recover best from man-made catastrophes and emerge with their reputations intact are the ones with the ability to recognize their responsibilities to their customers, shareholders, employees, and the public.
Plenty of real-life examples illustrate just how important a strong sense of values can be when a company faces a crisis. Consider a few recent cases:
When certain chemicals in Coca-Cola products were rumored to have made several hundred people sick in Europe, the governments of France, Belgium, Luxembourg, and the Netherlands ordered Coke products off the shelves.
The company, scrambling to define what caused the illnesses while simultaneously working to repair its image, issued an apology that amounted to a values statement: “The Coca-Cola Company’s highest priority is the quality of our products. One hundred thirteen years of our success have been based on the trust consumers have in that quality. That trust is sacred to us.”
Over the years, British Petroleum (BP) carefully polished its reputation for protecting the environment through initiatives to cut greenhouse gas emissions. Then, in 2010, a BP-owned oilrig in the Gulf of Mexico exploded, creating a massive oil spill. Many analysts agree that the company’s slow and often flat-footed response to the ongoing disaster seriously damaged BP’s public image.
To repair that damage, the company launched a multimillion dollar TV ad campaign highlighting the BP’s efforts to clean up the Gulf, many of them featuring employees who live and work in the area. Although the campaign has helped win some hearts and minds, industry observers say BP still has a long way to go to win back its former reputation.
Owners of Amazon’s e-book reader were shocked to discover some years back that certain books they had bought for the device had been deleted by the company. Why? Amazon hadn’t properly secured the right to sell the titles. (The titles included the George Orwell novel 1984, about Big Brother.) The episode created a public relations nightmare for Amazon. The company’s founder quickly issued an apology that reflects its values.
“This is an apology for the way we previously handled illegally sold copies of 1984 and other novels on Kindle. Our ‘solution’ to the problem was stupid, thoughtless, and painfully out of line with our principles. It is wholly self-inflicted, and we deserve the criticism we’ve received. We will use the scar tissue from this painful mistake to help make better decisions going forward, ones that match our mission.”
Notice the words “principle” and “mission.” They show how Amazon’s strong sense of values helped it respond to a potentially catastrophic mistake.
These examples involve big companies, which is hardly surprising because, after all, how often does a business like Mary & Pete’s Dry-Cleaning Service make the pages of The Wall Street Journal? However, values remain important even when you’re self-employed or part of a very small company. The following are just two examples:
A chiropractor resigned from a large medical group, dissatisfied with the way patients were treated in the HMO setting. He opened a small practice, which soon attracted more patients than he could treat. He began to make plans to enlarge his practice, move to a larger facility, and hire two more chiropractors, but then he stopped and took stock.
The reason he established a private practice — and one of his guiding values — was his belief that patients deserved individualized, personal care. He realized he would spend more time managing staff and less time treating patients. The one thing he valued above all would be diminished, so he decided not to enlarge the practice. Instead, he formed a network with other chiropractors to whom he could refer patients.
A painting contractor with a large and successful business began to worry about the environmental impact of some of the chemicals used in his paint products. His company valued its role as a local business that offered summer jobs to college students and supported events like the Little League.
But that coveted role seemed in jeopardy if the products it used every day posed a danger to its employees and to the community. Reflecting on the company’s core values, the CEO decided it was time for a change. He replaced the paint products with alternatives that were more environmentally friendly, despite the fact that they were more expensive and cut into his profit margin.
A savvy businessman, he decided to promote the fact that the company had gone green. That gave him an edge over the competition, and in the end his business’s bottom line improved.