I was having a conversation with a client today discussing risk and we discussed corporate values and whether those are a marketing tool for the company or are they more valuable because they are a set of concepts/beliefs that the company uses to make decisions, measure itself against and drive bottom line results.
If these values you talk about are a marketing tool then it is relatively simple. You use those stated values to design and communicate to your prospective customers/vendors and existing customers/vendors what do you have to offer and how are you offering those services or products to the market. When you are creating marketing tools and communicating with your customers you ensure that the voice that you are using is encapsulated in those values. Your business risk can be expressed in terms of how your customers and vendors might react when they experience the fact you do not necessarily operate by those stated values that attracted them to you in the first place. You can then quantify the value of that reaction in business dollars on the top and bottom lines.
Now if you are using those stated values as part of your corporate decision-making and how you run the company including how you treat your customers and your suppliers then that is a little different because this is no longer simply a marketing tool but in fact something you consider critical to your operations and therefore how do you measure yourself against those values and if you were a company that is managed or directed or controlled by a board then how much is that board willing to invest in how well you operate under those values and need those values and whether you are in fact compliant with the state of values. What is important about this side of the equation is that your values actually generate market value for you so they not only act as how you communicate and deal with your customers and your vendors you in fact measure yourself and your customers and vendors against those corporate values as well as your returns on the bottom line. In this case you would want to understand what it costs you to adhere to and measure yourself against your corporate values and what the projected and actual ROI is of that investment and the gains you make by operating and going to market in this manner.
This is kind of an interesting discussion because for many companies these values are a marketing term and the investment that they make in them is the cost of developing these values and why they want to use them in the market. They believe that that is what customers are looking for and what will attract them. Where they may run into difficulties is where they have stated that these are their corporate values in their marketing materials but when they actually deliver their product or services those values are not necessarily evident.
Where your values are something that you run your business by and make decisions with then those values become evident in the product or services that you provide and the way that you act and interact with stakeholders including how you remain viable as a company. You believe that those values have more value to you as a company than simply a set of phrases or words in marketing messages and communications and that they generate income and profitability. When you actually live by those values, you are able to quantify and qualitatively measure yourself against those values to show your existing and prospective stakeholders that you do in fact meet those values and measure yourself against them so that they know clearly what to expect from you because they can look to their experience with you and provide feedback from their perspective.
There is risk in both versions. It’s a choice and one that can and does affect value, as evidenced by a study by Bain & Company, which found that companies with strong corporate values outperform their peers by 19% on average. What do you do in your companies?