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In July, I found myself in a deconsecrated Spanish monastery near Madrid giving an early-morning talk about corporate values to a group of hungover young would-be entrepreneurs.
The signs were not propitious. I had seen the group’s applications for the five-day course, which included sessions on innovation, succession planning and the global economy. Not one had listed “values” as the session he or she looked forward to most. Many anticipated building their networks. Evidently quite a lot of networking had taken place in Madrid the previous night.
Who can blame them? “Values”, whether discussed in terms of old-fashioned corporate social responsibility or newer-fangled business purpose, sound monasterially worthy. It wasn’t that my audience did not care about values, it simply took them for granted.
But I had two advantages in addressing the topic with this group. One was that it was made up mainly of scions of family firms, which often draw strength from principles embedded over generations. The other is that they were familiar with an unfolding case study on what happens if you pursue the wrong values: Uber, the transportation company whose founder Travis Kalanick had resigned days earlier.
The realisation that values can also create value for companies is growing. In an EY poll, three-quarters of leaders believed setting a broad purpose created value in the short and long term. Among the top reasons cited was that purpose helped “attract and retain top talent”. In other words, values were valuable to my audience that morning in Spain.
Which brings us to Uber. Kalanick was always a controversial, aggressive leader but his decline accelerated in February when Susan Fowler, a former Uber engineer, went public with her claim that the company had ignored her sexual harassment complaints. Uber was not only failing to attract and retain talented female engineers, she said, but also repelling them — a sign of something gone awry in its whole value system. (Uber data in March showed women and minorities made up a greater percentage of those hired in the preceding 12 months than in the general Uber workforce.)
To be clear, it is not that Uber had no stated values. In fact, it had too many, according to the report into its various controversies commissioned from a law firm. They included “toe-stepping” and “always be hustlin’ ”. The report suggested some of its principles were redundant or had been “used to justify poor behaviour”. It urged Uber to eliminate those values, streamline the rest and make them more inclusive, positive and accessible. Critically, it encouraged senior leaders to “exhibit the values on a daily basis”.
The Uber report is a decent template for how to restore and reform corporate principles. It also helped galvanise discussion among my audience. One questioned the apparent contradiction between my stress on the importance of a long-standing purpose and the urgent need to change values when they lead the company down the wrong path, as at Uber. The implicit challenge was: are core principles really that dispensable?
I draw a distinction, though, between overarching values, such as respect, integrity and humility, and the more specific operational aims that jeopardised Uber’s reputation. The latter must be kept under constant review. For instance, the way Fowler’s harassment complaint was allegedly mishandled suggests Uber neglected basic norms of personnel management that it could and should have introduced as it grew.
An organisation’s broader purpose needs to be reinforced in different ways to avoid becoming over-familiar, but such principles do endure, sometimes for centuries, and often at family businesses. Denise Kenyon-Rouvinez of IMD business school focused part of her research on Japan’s Takanashi family, who are involved in making Kikkoman soy sauce. They laid down their values (including “do not be lazy” and “do not tell lies”) in the 17th century — and all are moral, rather than commercial, goals.
As the Uber story illustrates, values can represent a choice. “We decide what’s important,” says Valerie Keller of EY, be it the short-term return to owners or the wider wellbeing of all stakeholders.
One way of thinking about this choice is as an Uber driver, offered two options: a smooth route to the destination and a hairpinning, potentially faster alternative. Take the first, and the passenger arrives satisfied and in comfort. Take the second — via Kalanick Drive, if you like — and the passenger may get there quicker, but shaken and reluctant to use your service again.
Andrew Hill is the FT’s management editor