A company without leadership principles is like a ship without a rudder; it drifts aimlessly in the sea of competition, subject to the whims of every passing current. Leadership principles set the course, provide a sense of direction, and anchor your business in the turbulent waters of the marketplace.

In the words of Ray Dalio, founder of Bridgewater Associates, “Principles are fundamental truths that serve as the foundations for behavior that gets you what you want out of life.” If we apply this to the business context, guiding principles are the fundamental truths that shape the behaviors and decisions leading your business toward its goals.

John Rossman, former Amazon executive and author of ‘The Amazon Way,’ elucidates further: “Principles and mechanisms drive behaviors and results. Clear, bold principles lead to bold and beneficial behaviors.”

But how do you develop these guiding principles, and how do they impact your business? Let’s delve deeper.

Define What Your Business Stands For

The first step in creating guiding principles is to define what your business stands for. What is your company’s purpose? What are its core values? What are the standards you will uphold, no matter what?

As Netflix’s CEO, Reed Hastings, once said, “The actual company values, as opposed to the nice-sounding values, are shown by who gets rewarded, promoted, or let go.”

Your guiding principles should reflect the true nature of your business, not just platitudes that sound good on paper.

Involve Your Team in the Development of Core Values

Your guiding principles should resonate with everyone in your company, not just the leadership. Involving your team in the process of developing these principles will not only ensure that they reflect the diverse perspectives within your company but also foster a sense of ownership and commitment to these values.

“Leadership is not about being in charge. It’s about taking care of those in your charge,” says Simon Sinek, renowned leadership expert. By involving your team, you’re demonstrating that you value their input and that they’re integral to the company’s success.

Make Your Guiding Principles Actionable

Guiding principles are not just words; they’re the foundation for action. They should guide decision-making at all levels, influencing everything from daily operations to strategic planning.

As Amazon’s 14 Leadership Principles demonstrate, actionable guiding principles can drive innovation, customer satisfaction, and accountability. They’ve set a high bar for customer obsession, commitment to operational excellence, and long-term thinking.

The Value and Benefits of Guiding Principles

Guiding principles offer numerous benefits, including increased employee satisfaction, customer satisfaction, innovation, and accountability.

Employee Satisfaction 

Employees who understand the company’s guiding principles can align their work with these values, increasing satisfaction and engagement. “When people are financially invested, they want a return. When people are emotionally invested, they want to contribute,” says Simon Sinek.

Customer Satisfaction

Guiding principles prioritizing customer satisfaction can lead to more loyal customers and increased repeat business. As Jeff Bezos of Amazon says, “We see our customers as invited guests to a party, and we are the hosts. It’s our daily job to make every important aspect of the customer experience a little bit better.”

Innovation

Leadership principles can foster an environment that encourages innovation. Google’s “10 things we know to be true” has consistently fostered innovation, with principles like “Fast is better than slow” and “You can make money without doing evil.”

Accountability 

Lastly, guiding principles foster accountability by setting clear expectations for behavior and decision-making. This fosters trust within the organization and with customers. As Jack Welch, former CEO of General Electric, stated, “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”

Leadership principles are not just a “nice-to-have” in your business toolkit. They are essential for guiding your company’s behavior, creating a shared understanding among your team, and cultivating a resilient and adaptable organization. They bridge your company’s mission and daily operations, ensuring alignment across all levels.

In conclusion, creating leadership principles may seem daunting, but the rewards are immense. They are the compass that keeps your business moving in the right direction, the rudder that steers your ship through stormy seas, and the anchor that holds your company steady amidst change. As you embark on this journey, remember the words of Steve Jobs, “Great things in business are never done by one person; they’re done by a team of people.”

Embrace the collective wisdom of your team, stay true to your purpose, and let your leadership principles light the way toward success.

Getting Started – Etch Them In Jello

In The Amazon Way: Amazon’s 14 Leadership Principles, John Rossman outlines a suggested path for teams or companies to build their own leadership principles. 

Establishing your team’s leadership principles should be a participative, thoughtful, and tactical process. Begin by visualizing future success through a hypothetical press release, contemplating your team’s growth, cultural changes, challenges, and leadership principles. This future vision forms a living document for constant reference and assessment.

Your leadership principles should be embedded in reality, validated through potential scenarios based on your vision. Further, consider various angles of your organization, including customers, stakeholders, beliefs, mission, non-negotiables, work ethics, accountability, and reputation.

Nurture an environment of creativity while brainstorming principles and research leadership tenets of other admired companies for inspiration. Subsequently, involve decision-makers in rationalizing and consolidating a draft of these principles. They will not only verify the principles but also promote them.

Ensure these principles distinctly reflect your culture and strategy. Avoid generic, vague principles that don’t provide a competitive edge.

Build mechanisms to manifest these principles and draft them. Communicate the principles consistently, ensuring every senior individual actively participates. Display strong commitment to these principles, even if it necessitates tough decisions, to communicate their significance.

Finally, don’t rush to declare the principles as completed. Think of them as etched in jello. Put them into practice and work to make them real. After some time and practice, you might need to refine or reconsider in order to finalize them.

John Rossman is the author of The Amazon Way: Amazon’s 14 Leadership Principles and is a leading leadership keynote speaker. If you’d like to discuss your leadership situation, let’s connect.