Tag: Values Based Leadership

The values companies live by are becoming increasingly important for today’s consumers and employees. A recent survey from Deloitte found that both Millenials and Gen Z were willing to remain with a company for longer if they were happy with its environmental and societal impact. They were also willing to reject job offers if the companies failed to align with their values. As each new generation shows a clear favoring toward values, it will become increasingly important that companies become values-based businesses to attract and retain talent—and potentially even improve the employer and consumer experiences. 

But keeping a business in line with its declared values can be difficult. The recent collapse of FTX highlights exactly what can happen when your values become untethered from your business. Whether your company is losing track of its original values or not delivering on them as promised, this hints at an imbalance between what people want and what’s practical for business. As values-based companies become more important to people, it’s crucial that companies are able to answer the question of what a successful values-based business actually looks like. 

As an organization working to educate the next generation of entrepreneurs and business leaders, we’ve considered what it takes to do exactly that, and we believe that much of it is a matter of balance.

To succeed, values-based businesses need a more measured approach

The way to approach values-based goals and planning is to ask not only how a venture or business is adding community value but what that value-add is actually worth to customers. If it’s not worth what it’s costing to produce, then chances are good that it’s not financially viable. 

In order to be sustainable, a company’s values need to align with its performance—not drag it down. For example, environmentally friendly products often cost more than their environmentally unfriendly counterparts. So, if a startup is looking to create a product that’s better for the environment, leaders need to ask themselves if consumers are willing to pay for the extra cost that goes into making it? This is because a values-based business usually needs more than good intentions to succeed—it needs to be able to earn its keep.

While a values-based business should have its own set of values, these values should also reflect the community that the business resides in or markets to, the values of its customers, and the values of shareholders. This can be part and parcel of being financially viable. If your consumers, community, and shareholders all believe in the values of your business and the products or services you produce, they will be more likely to stay loyal customers. 

How entrepreneurs and startup leaders can successfully lead with values

Leading with values is admirable and can be immensely profitable and beneficial to the community. Research has shown that values-based brands perform 134% better than others on the stock market. But this approach needs a commitment that amounts to more than just lip service—it requires a strong belief in establishing business values and mission with a solid foundation on which they can grow. Here are a few places to start:

Be genuine

No matter how skilled business leaders may be, they can’t manufacture intrinsic value—it needs to already be there. Leaders need to truly believe in what they’re doing rather than using values as a means to gain financial independence or be their own boss. It’s got to be genuine. If it’s not genuine, then don’t do it.

Quite a bit of environmental, social, and governance (ESG) investing, for example, is done on the backs of marketing glitz and little else. In a 2022 report by The Harris Poll, 86% of executives polled believed their company’s ESG efforts were making a difference, but only 36% of executives reported having tools to measure that difference. On top of that, only 17% are using the results to optimize their efforts.  

The same is often true of social responsibility and diversity efforts. Too often, a single person is hired to head up these initiatives but given few resources to actually get the job done. The end result is that the values espoused by these positions don’t actually add up to anything beneficial for the community or for the company. Part of being genuine in the business world is making sure your efforts have the intended impact, so while you’re running your initiatives for ESG or EDI, don’t forget to check in and make sure the results are as expected.

Focus on doing one thing of value well

For those who truly have values as their central mission, the next step is to ensure there’s a viable enterprise to support it. This doesn’t mean figuring out how to turn a 50% profit or becoming the next Facebook; it means being able to do one thing well. This selectivity of the mission is the foundation of efficiency, and it helps to determine the fundamentals of performance for a startup.

An excellent example of this in action comes from Aravind Hospital in India. The late Dr. Govindappa Venkataswamy was one of the best cataract surgeons in the country. He brought people dealing with cataracts to the hospital and helped to restore their vision for free. In order to sustain this practice, he created a system where wealthy patients would receive this same treatment but could pay to have a private room rather than lying on a mat on the floor with others.

As a result, he managed to turn a 51% profit, making it possible to continue to help others and put money back into the community. If he had tried to do this for every single ailment in the hospital, the whole thing would have likely collapsed. But by focusing on one thing he did well, he could excel and make a real difference in people’s lives.

Don’t ignore the importance of performance

A popular approach for Silicon Valley startups is to endure losses for as long as possible in the hopes of being able to monetize later. While this has worked in some cases, it doesn’t change the fact that it’s bad business. Entrepreneurs should focus on profitability, not creating short-lived buzz.

Simply put, your business must be profitable to produce results. If you want to sell innovative products, create a workplace that benefits the employees that work there, or donate your profits to charity, it must be successfully funded to graduate from a dream to a reality.

A model centered on performance still holds true in a values-based company. To perform and make a difference, a values-based company makes decisions that will benefit the company, its employees, and its clients/customers to be financially stable for the long haul. If you want to become the entrepreneur or business leader that you aspire to be, remember that your values can and should go hand-in-hand with financial success.

Eli Snir, senior lecturer in management for WashU Olin Business School, wrote this for the Olin Blog.

When thinking about the value of business education, one invariably ends up realizing that a business school is all about integrating multiple disciplines into a coherent analysis.

Yes, business classes involve statistics, marketing, accounting, strategy and finance. But to realize the value of these, integration across disciplines is key. That’s the objective of the poster session in the Managerial Statistics II course, DAT 121, a required undergraduate course that draws mostly second-year undergraduates.

Students choose a project of their own to demonstrate the skills they learned in the class, which are primarily multiple linear regression. Throughout the semester, our student groups work on their projects to hone their skills. The poster session is the culmination of this effort. Students present their work on posters to other students, faculty and staff.

Some of the posters that students displayed

Our key motto at WashU Olin is a value-based, data-driven, approach to decision-making. Each person brings their values to bear when choosing a project to analyze. Topics encompass the vast breadth of student interests, including public health, consumer engagement, movie success, financial markets, video game industry analysis, house prices and the always-popular sports analyses. Statistics is the tool that combines all of these together.

Through rigorous analytical methods, students develop models to understand the relationships between the independent variables and their chosen dependent variable. Often, these models assist in making decisions. We are laying the foundation for a data-driven approach that should guide students throughout their professional career.

A poster session is a format that is professional while being somewhat relaxed. The diverse audience in attendance challenges students to prepare a message that is managerial while showing their technical accomplishments. Casual visitors to Olin are interested in understanding the managerial insights from these analyses.

On the other hand, faculty stop by, too. They frequently want these presentations to exemplify students’ technical skills. Questions often require students to justify the methodologies they chose and explain statistical processes that are utilized. Fortunately, Olin students shine on both accounts. They represent the success of our programs.

And don’t forget the food. We enjoyed high-quality snacks throughout the event.

Pictured at top: The author, Eli Snir, with Avi Holzman, Kate Sifferlen and Omeed Moshirfar.

Peter Boumgarden, Koch Center’s director and Olin’s Koch Professor of Practice of Family Enterprise, wrote this for the Olin Blog.

When it comes to our mission of supporting family business leaders as they pursue new ways to thrive in the emerging economy, we can learn a great deal by looking at WashU Olin’s model of being data-driven and values-based. But living this theory in practice means flexing a muscle that is often under-developed in many organizations, family businesses notwithstanding.

So what does it mean to have an eye toward relevant data while simultaneously being shaped by a guiding set of values? At the Koch Center, one way that we do this is in our unique approach to combining data and design in our engagement with the broader business community.

Inaugural data+design dession: Balancing continuity and change

On October 29, the Koch Center hosted the first of our new “data+design” series. Each of these sessions is organized around a particular strategic challenge for organizations. Our first event focused on how family and private enterprise balance a commitment to continuity with the past alongside the need to change to match any number of emerging realities.

Approximately 50 leaders from around the region participated in a session designed to leverage some of the university’s best offerings, particularly a rigorous approach to data built upon a strong research foundation. Unique to this model, we asked each participating leader to fill out an assessment that mapped their organization across several distinct dimensions before our time together. This battery of assessments included a modified version of the “World Management Survey,” a measure of business uncertainty, and an evaluation of how much they have changed over the past year and must change over the year ahead.

While it can be helpful to get objective numbers on these items, the data+design format enabled us to provide each attendee with a customized report that contrasted their self-assessment with all other attendees. Indeed, much of the value can come through this comparison. It is one thing to know you self-assessed at a “3.5” out of “5” when it comes to your company’s talent strategy, but a whole different level of insight if you know others in your organization scored this same item lower, and the average across a set of peer institutions was closer to 4.

With comparative data in hand, the group came together on October 29 and heard me present a set of research-backed framings on what kind of balance is especially high-performing. One study in particular from McKinsey & Company indicated that firms that maintain a relatively robust refresh rate in their product/service portfolio outperform those who do not change enough and those who change too frequently. This refresh rate of approximately 10-30% change over a decade they called “rivers” in contrast to the static “ponds” (less than 10% refresh) or overly dynamic “rapids” (over 30% change). Simultaneously presented with data about where their organization stands alongside a guiding framework to guide our discussion, and we were off to the races.

Extending rigorous measures with design and values

But back to Olin’s guiding framing, even rigorous data without a precise understanding of values runs into limits. After all, it is one thing to know your organization’s metrics compared to your peers, but the leader still has to make clear tradeoffs on what they are optimizing toward and why.

For example, core value commitments will inevitably shape whether one prioritizes progress on this dimension and how one goes about operationalizing this commitment. For example, how do leaders balance accountability with grace? What kind of patience is required as people move to aspirational performance standards? Critical considerations for building this into practice are not always easily captured in the data alone.

And so, the discussion pushed forward with designing potential futures with data in one hand and a set of guiding values in mind. The “design” part of “data+design” came in by our use of forcing mechanisms to have those present consider more than one potential future for these design challenges. “Want to professionalize your approach to growth and innovation? Let’s see if you can identify four different routes in this direction.”

In this approach, we used a modified version of the “Crazy 8’s” design prompt to push people to generate four different alternative futures. In doing so, we encouraged leaders to expand the number of strategic options too many of us consider—which Dan and Chip Heath have found is unfortunately often only one.

Generating progress through the power of data and design

Generating creative routes forward for family businesses will require creativity. In so much as this ownership form is commonplace across the country and globe, approaching questions of strategy and structure with fresh eyes holds the potential for a transformative effect for the families who lead the operations and the broader global economy.

As a university, one of our goals is to support this creativity by bringing elucidating frameworks and the precision of empirical work while at the same point leveraging the teaching function to push our thinking in ways we would not have considered previously. For us, this work requires leveraging the power of data while also operating up to the generative power of design fueled by close attention to both leader and firm values.

We look forward to walking this journey together.

Written by Joe Dwyer for the 2019 Olin Business magazine

For Dave Peacock, being values-based and data-driven is key to the success of Schnucks Markets in achieving its higher purpose of “nourishing people’s lives.” Peacock, EMBA ’00, is president and COO of Schnucks, a St. Louis-based regional grocery chain with 15,000 employees. Communicating Schnucks’ purpose is vital to the company’s culture, he said. It’s also important in attracting new employees to the company, which hires as many as 5,000 new workers each year.

“We have regular sessions to talk about  the importance of our Midwest family values and how that fits with our purpose of nourishing people’s lives,” he said. At Schnucks, those values speak to a customer-first mentality, the willingness to try new things, a culture of tolerance and hard work and haste to help those in need.

Peacock also formed a data-focused unit at the company in January, hiring Tom Henry, a member of the board of WashU Olin’s Center for Analytics and Business Insights, to serve as chief data and analytics officer. Henry now leads a 50-person business unit with the mission of “constructing and maintaining a purpose-built information management environment, governed and utilized by teammates at all levels of the enterprise, where trusted and increasingly intelligent insights are produced.”

Meeting consumer demand

Schnucks’ efforts align with growing consumer sentiment. Nearly 80% of Americans say they’re more loyal to purpose-driven brands, according to a 2018 study by public relations agency Cone/Porter Novelli. The same study said more than three-quarters aren’t satisfied with brands that only make money; they expect companies to positively affect society.

That shift is in step with WashU Olin’s brand positioning—to “champion better decision-making by preparing and coaching a new academy of leaders who will change the world, for good.”

The movement dovetails with the work of Olin professors Stuart Bunderson and Anjan Thakor, who are at the forefront of this advancement in business strategy that could help workers achieve professional success and fulfill values-based ambitions in their professional lives.

Bunderson, director of Olin’s Bauer Leadership Center and the George and Carol Bauer Professor of Organizational Ethics and Governance, has published a book about it, The Zookeeper’s Secret; Thakor, along with Robert E. Quinn from the University of Michigan, published a new book in August called The Economics of Higher Purpose and a cover story (“Turning Purpose into Performance”) in the July–August 2018 issue of Harvard Business Review.

Benefits: Dollar signs and beyond

A common theme of Thakor’s and Bunderson’s scholarship indicates that young professionals, and many others, want to work for companies that articulate a greater purpose—improving the world where they can, whether that’s in their local communities or addressing societal issues worldwide.

In addition, their work shows more than anecdotal evidence that purpose-driven organizations generate more worker and customer loyalty. Increasingly, workers are holding their employers more accountable and demanding to see more examples of executing on purpose, according to Thakor.

Those companies with the most clarity in the pursuit of their purpose frequently perform better financially, according to a 2016 study led by The Wharton School.

Thakor and Bunderson, however, also warn of pitfalls in creating a purpose-driven organization. Leaders of purpose-driven companies can’t take on every charity case and could face backlash from employees when workers’ pet projects aren’t a priority. Further, having a purpose doesn’t guarantee financial success, especially for startups.

“Creating a higher purpose is not a tool or tactic to make more money or achieve better financial performance,” said Thakor, the John E. Simon Professor of Finance and the director of doctoral programs at Olin. “Turning purpose into performance is very hard. Emotionally, it takes a lot of effort.”

He stresses that firms must meet two conditions: First, the identified purpose must be authentic, and second, it must be communicated with clarity. Thakor says being authentic is hardest, in part because it goes beyond putting posters on walls and communicating from HR to employees.

Can purpose have a downside?

“Every company now has a statement of principles that is displayed, and most of the time people in an organization understand it has virtually no meaning for the decisions the company makes,” Thakor said. “So, it doesn’t really affect the employees.”

For a purpose-driven company, that’s not the case. Managers and employees are vested in the core values and make decisions based on what they believe supports those core values. As a result, being purpose-driven will have costs and impose constraints.

“That’s especially significant when a company’s competitors are without purpose and have no restrictions,” Bunderson said. “Those competitors are not restrained in the business deals they will pursue. Purpose has to be backed by actions, mission and commitment. The purpose-driven company will say, ‘We won’t do that.’”

While there are hazards in the purpose-driven organization, Bunderson and Thakor agree that the benefits of being purpose-driven outweigh the risks.

There are a couple of ways purpose can help,” Bunderson said. “It’s not just feel-good, and it can be a competitive advantage.”

For example, millennials seek purpose as much as profit in their work, so communicating about a purpose-driven organization can be an advantage when recruiting 20-somethings or MBA students—or when fielding inquiries from recruiters.

For example, millennials seek purpose as much as profit in their work, so communicating about a purpose-driven organization can be an advantage when recruiting 20-somethings or MBA students—or when fielding inquiries from recruiters.

Sue McCollum, JD ’15, said having a values-based purpose, especially during challenging times, engages employees and keeps them moving in a positive direction. McCollum is chairman and CEO of wine and spirits distributor Major Brands Inc.

One of the ways Major Brands does that is through its Safe Home program, offering thousands of free rides home a year to bar patrons in a partnership with ride-hailing service Lyft. “It’s part of our push for social responsibility and accountability that has become really important to our people here, to our suppliers and to our customers,” McCollum said.

The challenge: Establishing purpose

Workers, customers and investors want to be part of something greater than themselves, research has shown. Having a greater purpose, however, has to be more than a mission statement and jargon about respect, teamwork and shared vision, Thakor said. It’s about creating leaders who are prepared to make, and stick with, difficult values-based, data-driven decisions.

The biggest challenge is for leaders to establish a company’s higher purpose, Thakor said.

“Giving to charity is not higher purpose; every company does that,” he said. “It’s not having a mission statement; most companies have those. It’s about going through a group of exercises to discover an authentic purpose that will guide all future business decisions.”

In his book, Thakor cites Apple and Walt Disney Co. as examples    of companies that successfully established their higher purpose. Disney’s purpose in Disneyland was to create “a place for people to find happiness and knowledge.” For Apple, he offers a Steve Jobs quote: “Great companies must have a noble cause. Then it’s the leader’s job to transform that noble cause into such an inspiring vision that it will attract the most talented people in the world to want to join it.”

Once the purpose has been discovered and established, it should carry over into all aspects of the company, from how meetings are run to the people who are hired.

The concept of business leaders making decisions based on values —as well as data—is growing, but isn’t novel. Olin’s strategic pillar focused on creating leaders who make values-based and data- driven decisions has its roots in the business school’s founding.

“We’re talking about issues at the core of what we stand for,” Bunderson said. “In 1915, when William Gephart was making the case for why the university needed a business school, he cited the need to understand complex information (that’s the data part) as well as the need to consider how our decisions affect the broader society (that’s the values part). Being values-based and data-driven is in our DNA.”

Eight Steps to Organizational Change

Anjan Thakor outlines the steps in his book, The Economics of Higher Purpose: Eight Counterintuitive Steps for Creating a Purpose-Driven Organization, co-authored with Robert Quinn, professor emeritus at the University of Michigan’s Ross School of Business and a cofounder of the school’s Center for Positive Organizations.

1. Envision a purpose-driven organization
2. Discover the purpose
3. Meet the need for authenticity
4. Turn the higher purpose into a constant arbiter
5. Stimulate learning
6. Turn midlevel managers into purpose-driven leaders
7. Connect the people to the purpose
8. Unleash the positive energizers

More support for purpose

On August 19, 2019, the powerful Business Roundtable lobby—which includes the CEOs of dozens of major US companies—issued a revised “Statement on the Purpose of a Corporation.” The one-page declaration, with 181 signatures, includes a corporate imperative to support and invest in communities and people: “Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

“Data can be used for great good to make a significant positive difference in our communities and our lives… but not without some problems.”

– Naveen Pinjani, Sr. Director Big Data Analytics at Daugherty Business Solutions

At the Data for Good conference on October 5, speaker Naveen Pinjani, along with consultant Jonathan Leek, dynamically kicked off a panel on the Vacancy Collaborative. The Vacancy Collaborative’s mission is to address St. Louis’s vacant property issue and perfectly reflects the conference’s core goal: to celebrate the combination of values-based-leadership and analytics.

Leek knew two things before the creation of the Vacancy Collaborative: He was a skilled data analyst and he wanted to help the community. Knowing this and the brutal fact that about 15 percent of all land in St. Louis is vacant, he put his skills to use.

Addressing this issue has been complicated. Leek asked, “How do we address what we can’t understand?” The data problem presented was that there are city employees who are doing the best they can, but aren’t trained in using and analyzing data. Leek recognized that systems are often put in place by those unfamiliar with data best practices. Along with volunteers, Leek set out to use his data skills to tackle the basics—how many vacant properties/lots exist, where they’re located, and what to prioritize.

Over the past year, the Vacancy Collaborative has combined four data sets, cleaned them up, and defined what each set means. They are on their way to incredible impact. The volunteer aspect of the project comes with its pros and cons; Leek explained its lack of bureaucracy is great, along with the autocratic decision-making process, but there’s a lack of input from domain experts and limited tools, resources and time.

Even with the negatives, the Vacancy Collaborative was able to convince Cindy Riordan, CIO of the city of St. Louis. Riodan said, “The vacancy data lit a spark with our [the City of St. Louis] staff.”

The vacancy issue affects the entire city from crime rates, to public health, to the city budget. The Vacancy Collaborative is now working on refining its web portal and even expanding to new data sets unrelated to vacancy. If you’re interested in reading more, check out STLVacancy.com.

Sarah Podolsky, BSBA ’19, wrote this on behalf of the Bauer Leadership Center. Pictured above: Jonathan Leek, a consultant with Daugherty Business Solutions and volunteer with the Vacancy Project, presents to the Data for Good audience.