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Why Values Should Be at the Heart of Your Business Strategy

Salesforce’s Lee-anne Knight talks with Geoff Martin, Professor of Strategy at the Melbourne Business School, on the importance of values within a company's strategy – and how you ensure the two work together. 

Lee-anne Knight: Geoff, I’ve had so many people say to me during COVID-19 that the way their organisation has behaved has really challenged their values. Do you think what we’ve been going through with COVID makes business’s values even more important?

Geoff Martin: I’ve seen a lot of data that shows employees and customers are more likely to want to know who you really are before doing business with you. Crises force us to reveal more about ourselves – we learn more about everything, from our perception of the importance of personal liberty to why you prefer to believe a conspiracy theorist rather than someone with a PHD. As a result we all start talking the language of values. 

Lee-anne: And that can be traced back to really basic ways of viewing the world, can’t it? 

Geoff: It can. Different ways of viewing the world, philosophies on life – it is all different language to describe our values. 

Lee-anne: So what are values? 

Geoff: It’s a set of a few words at your core that can explain all of my behaviours and choices. We say culture equals values times behaviours, because you can have values, but it’s only going to create a culture when those values are reflected in behaviours. 

Lee-anne: I talk with businesses about their values, and then about their strategy, and often the two just don’t align – in fact, sometimes they’re completely contradictory.  

Geoff: I saw a great example of a business doing it well recently, and this company it breaks its values down into ‘core’ and ‘ways of working’, and that begins to help disentangle it. 

The core values are the character-based values – humility, excellence, respect. These are the non-negotiables; how we carry ourselves at work, how we interact with the world, how we interact with one another. These values are actually the order winners. But they can’t be successful if you haven’t got the ways of working, the more functional side of your value proposition, worked out. 

Lee-anne: Trust is something that’s in short supply for many businesses at present. Where does that fit in?  

Geoff: With that functional side of your value proposition there’s an emotional dimension too, and that’s where trust comes in. Trust has been in short supply for big businesses since Hayne [the Banking Royal Commission] and the GFC. And trust is often part of a purchase decision. So how do you get trust? 

You get it through the repeated, consistent delivery of the functional side of the value proposition. In the B2B world, if you can solve a business’s problems, and help them deliver their value proposition to their customers, you earn trust. 

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Lee-anne: So when you’re building a strategy, whether it’s for a project or your overall company, how do you make sure it enables your values to shine through?

Geoff: It’s got to start with the employee value proposition. How do we make sure that we’re building a workplace that they are proud of, feel psychologically safe within, and want to be part of? 

Then you look at the customer value proposition; if those employees are satisfied behaving in consistent ways, then we’re more likely to hang on to that trust aspect as an emotional aspect of our customer value proposition. The third element is towards stakeholders, and how we’re managing risk. We need to codify those values, and implement really strong procedures to bring them to life. 

Lee-anne: And then it’s a matter of bringing those values into the day-to-day and keeping everyone accountable, isn’t it? 

Geoff: It is, absolutely. I had someone working with me who stuck up big pieces of butcher’s paper on the kitchen wall and wrote down the three words that were going to be their values, and got everyone to write down behaviours that were inconsistent with those values. Other businesses have made time in their monthly meetings to call out behaviours that are inconsistent with those values, and celebrate behaviours that are consistent. 

A company in Canada has started encouraging employees to post examples of their behaviours brought to life, and HR’s developed a scoring system to reward those displaying the company values. There’s a storytelling aspect to it, and it produces stories that become legend. You hear people say, “You know what, it cost me some money, but it was worth it because it was in the interests of living our values.” The values really need to be lived. 

Lee-anne: I love the notion that your values have to be lived, they have to be real and genuine – even if it costs you something. They should feel so natural, like they’re an old pair of slippers you step into at home. They feel right. Salesforce’s Founder and CEO Marc Benioff does it here actually. We’re always talking about our values, and trust is our number one value – because without trust we’ve got nothing. 

But you’ve got to see it lived in the leadership team, you’ve got to see it on the shopfloor, you’ve got to be constantly talking about the link between values and culture, because if you’re not then your strategic misalignment is going to come about pretty quickly – you’ve got employees going that way, and your strategy going the other. 

Geoff: It’s the ethical behaviour of boundaries around which we make choices and execute our strategy isn’t it? That’s the definition. For the past 20 years I’ve been analysing strategies and it’s really interesting. The corporate websites of some of the big brands in Australia speak so much about values, they talk about customer and social responsibility, they present a really gender-balanced team. Some of the others are the opposite. They might mention values once, the pictures of their senior teams are blokes in suits. But linking values to strategy is something the more enlightened brands are really good at. The ones who get it right have it narrowed down three key words. 

Lee-anne: And those three words seep right through the strategy. 

Geoff: They do. They’ll be evident in how we market, how we sell. It’ll be evident in all of our choices, the objectives we set, the incentive structures we create, and who we hire in particular.  

Lee-anne: If you’re a business leader, how do you create that strategy-value alignment if it’s not already there? 

Geoff: I’m working with a couple of CEOs who’ve gone into new positions recently, and I’ve told them: build your story about the kind of culture you want. And you’re going to build that culture because you’re going to keep reminding people of those three words that define your values. Take everyone through how it’s going to be. Once you’ve done that, and you’re spending a month getting to know your management team, put it all on a matrix – the behaviours you want, and the people that demonstrate them consistently. 

You may well have some people who are really, really good at what they do, but they’re toxic because they behave in ways that are just completely inconsistent with who you want to be as an organisation.

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Lee-anne Knight is the Senior Director, APAC Strategic Business Planning at Salesforce. Geoff Martin is a Professor of Strategy at the Melbourne Business School.

Salesforce Staff

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