What are guiding principles?
Guiding principles create a framework for your team and organization’s decisions. They are aligned with your company’s values and growth strategy. They also help define the behavior you expect to see in your team when choosing how you’ll achieve your vision.
Guiding principles should be guided and supported by your overall core values as an organization. Another way to think about the topic is guidelines for decision-making for your team.
Check out this exercise to identify your AI guiding principles.
Core Values vs Guiding Principles – What’s the Difference?
Guiding principles and core values, representing an organization’s non-negotiables, both play crucial roles in shaping its behavior, culture, and decision-making processes.
They serve distinct purposes and have different characteristics. Successful companies use both in tandem to express how they expect their organization to behave and how they make decisions.
Core Values
Core values are fundamental beliefs and ethical standards that define what is important to an organization. They represent the organization’s highest priorities and deeply held driving forces. Core values are:
- Timeless: They remain consistent over time, regardless of changes in the organization’s goals, strategies, or environment. Core values might need to be adapted every decade or so. .
- Deeply Held Beliefs: They reflect the fundamental principles that guide an organization’s behavior and decision-making. .
- Cultural Foundation: They shape the organization’s culture and influence how employees interact with each other and with external stakeholders.
- Identity: They help define the organization’s identity and purpose, often reflecting the personal values of the founders or key leaders.
Examples of Core Values:
- Integrity
- Innovation
- Customer Focus
- Respect for Our Team
- Excellence
See our full post for our favorite examples of core values here.
Guiding Principles
Guiding principles are broad, strategic guidelines that direct how an organization operates and makes decisions. They provide a framework for action and behavior in alignment with the organization’s mission, vision, and values. Guiding principles are:
- Action-Oriented: They offer practical guidance on how to behave and make decisions that impact your organization’s growth and future.
- Strategic: They help align actions and decisions with the organization’s strategic goals and objectives. .
- Flexible: They can evolve as the organization grows and as circumstances change, ensuring that the organization remains adaptable and responsive. .
- Contextual: They are specific to the organization’s context, mission, and vision, providing tailored guidance that helps achieve long-term success.
Examples of Guiding Principles:
- Prioritize customer satisfaction in every decision.
- We make decisions that focus on continuous improvement.
- Embrace innovation and change with AI.
- Maintain transparency and accountability.
- Follow the golden rule in all interactions – is this the best decision for the business?
Key Differences between Guiding Principles and Core Values
- Nature: Core values are deeply rooted beliefs and impact your culture. A guiding principle is meant as a non negotiable guideline for how you make decisions.
- Stability: Core values are don’t often change. Guiding principles can be adapted to meet the needs of your market, business, objectives, or teams.
- Purpose: Core values define what an organization stands for; guiding principles define how it operates and makes decisions.
Understanding and clearly defining both core values and guiding principles are essential for building a cohesive and effective organizational culture that drives success and aligns with the organization’s mission and vision.
How to Keep Focus with Your Guiding Principles
Oftentimes, the minute that the “ink” is dry on a strategic plan, there’s a new opportunity, a new dynamic, a new something that’s going to come out of left field that’s going to upset the focus that you’ve created in your strategic plan. So, what do you do about that?
Pulling Guidelines Out of Your Strategic Planning Process
One way to address this issue is by having an agreed-upon set of guidelines or guiding principles that help keep your strategy alive and agile. Guiding principles are not values, as values are behaviors. And they’re not actions. They’re guidelines that help decision-making.
They address the challenge. And the most important thing, if you sit down with your executive team and you say, “Let’s develop some guiding principles,” it’s never going to work. Listen for the guiding principles that will inherently come out of your planning process. Just pay attention and keep a list of guiding principles running on the side.
“We Will….” Statement
Here is a stem completion that will help you know whether you have a guiding principle instead of a value or an action: “We will…” So, to put this to work, define your problem or your challenge.
Any great strategic plan has a mega challenge or problem or maybe a mega opportunity to solve. So, in this case, a simple one might be, “How do we maintain profitable growth?” And to do that, what will our “We will” statement be? .
When creating your guiding principles, limit them to less than half a dozen statements that are targeted at solving this problem.
Guiding Principles to Put in Place
What are some principles to put in place? Here are some examples:<\p>
- Focus: Only pursue one opportunity or field of play at a time.
- Intent: What is your intent? Maybe it’s growth over profitability, or you may actually prioritize profitability over growth.
- Return: Set a timeframe for your minimum expectation for cash flow. Maybe it’s three years, or maybe it’s five years.
- Impact: You might have a guiding principle for impact, meaning “something” is co-equal to profit. What is that “something”? Maybe it’s employee satisfaction, which would be co-equal to profit. In other words, don’t pursue things that deteriorate your employee’s satisfaction.
- Core: What is the “core” of your business? Ask the question, “We will always choose XX over XX. Or for example, “We will always choose our core business over new business.”
Those are just some examples of how you might keep your strategy alive when new things come in front of you and your team. There will be some new decisions to make, knowing that you have a challenge or problem to solve, but you have some guidelines that will help keep your strategy agile. For more information on this topic, check out the master, Richard Rumelt, and his book, “Good Strategy Bad Strategy,” where he goes into a lot more detail on this subject.
