📕 Part I: Early Stage

Company Principles: Define how your company does business

The best companies define what they value most in the form of principles — and apply them in critical areas, such as evaluating talent and making business decisions. This creates a culture of freedom and responsibility designed for the pace of change in business today.

Amazon and Netflix are two examples of strong cultures with decades of outperformance.  Both invested heavily in their organizational design and use principles to guide their people and strategy.

If you review Amazon’s Leadership Principles or Netflix’s culture memo, you’ll notice they are centered on specific actions that can be implemented and measured, as opposed to vague sounding values, like “excellence.“

Actionable principles empower individuals to exercise their own judgement without much oversight, as long as they align with the most important things at the company.

“Your culture is how your company makes decisions when you’re not there. It’s the set of assumptions your employees use to resolve the problems they face every day. It’s how they behave when no one is looking. If you don’t methodically set your culture, two-thirds of it will end up being accidental, and the rest will be a mistake.” — Ben Horowitz, Andressen Horowitz

So if that’s true, what actions lead to finding and keeping product-market fit?  Does your team work to improve their judgement by seeking diverse perspectives? Can you achieve wildly ambitious goals if your entire company operated that way?

Get started brainstorming ideas for your company principles with the short exercise below. Blend what you feel is needed to win your market with the best attributes of current or former colleagues.  When completed, you’ll receive a summary of your answers for the next section.

3 min to complete

Create your company principles

Once completed, you'll receive an email with a summary of your responses.

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1

Think about the most effective colleague, employee or co-founder you've ever worked with. What made them a high-performer?

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2

Think about the colleague, employee or co-founder you've enjoyed working with most. What made them a great teammate?

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3

Think about a colleague, employee, or co-founder that didn't work out. What were the major issues — functional, leadership, or otherwise?

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4

To acheive your long-term vision, do you need to prioritize hiring builders that are eager to invent?

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5

If you had to choose one approach for your company, which of the following would prefer?

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6

How do you prefer to balance long-term oriented thinking with delivering short-term results?

Choose as many as you like
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6

Which of the following describes how you and your co-founder do business?

Be aspirational but know that the seeds of these values must already have been sown.

Make between 4 and 6 choices
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7

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To implement them successfully, you’ll need buy-in from the rest of your team.  Use the principles you selected as a starting point to guide a thoughtful discussion with other leaders at your company.  Collect new ideas, consolidate and edit, and filter down to the most important ones.

Here’s how Jeff Lawson worked with his leadership team to formalize Twilio’s company principles:

  1. Convene a diverse group of leaders — Assemble a small group from different roles/backgrounds to discuss over dinner (or Zoom), prioritizing those who can thoughtfully consider the long term success of the company. Open the conversation informally but with insistence that it’s important: “We’re together to work on articulating the values of the company. Let’s start by voicing what you value about your interactions with each other and the kind of people we’d like here.”
  2. Record ideas until they’re in the triple digits — Let your group share freely.  Encourage thinking big, differently, and even silly ideas. Some will be prolific; others will need some time to think. But everyone needs to push past the obvious or nebulous answers that come first (honesty, hard work, teamwork, etc) and prioritize actions that helps your team make decisions. Collect all ideas without qualification. Then tell the participants thank you, and that you’ll follow-up.
  3. Be the Chief Editor Officer — Group and consolidate the ideas into roughly 20 principles. A weeks later, convene the group and evaluate the consolidated ideas. Ask the team: Which of these ideas resonate with you and which do not?
  4. Put them to The Oxygen Test — After the first round of feedback, the CEO should do another round of consolidation until there are about 10 principles. The final step is to put each value to the test with one question: Which of these couldn’t you live without out? The goal is to keep those only that are natural and indispensable, like oxygen.

At your next all hands, share your principles with your employees and how you plan to implement them at your company. Getting your company bought in is as important as the ideas themselves. Reed Hastings, in his new book, explains why team alignment is so important:

“If you hire a high-performing chef and give her free range to cook what she wants, but you haven’t shared that your family hates salt and that any salad dressing with sugar will be rejected by all, it’s likely your household won’t like the meal delivered to their plates. In this case, it’s not your chef’s fault. It’s yours. You gave your cook freedom but you and your chef were not aligned. In a company...context gets set effectively across the organization when all leaders are focused on building alignment.” — Reed Hasting, Netflix

Accordingly, Netflix’s mantra is “loosely coupled, highly aligned.”  When it comes to aligning the team, we recommend starting with your hiring process to attract talent that already fits with your ideal company culture.

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