Why Startup CEOs Have a Problem With Mission and Values — and How To Solve It
It was the second time he’d asked for help. But the CEO I was coaching was having real trouble. “I’m going back and forth with my team,” he said, “but we still can’t get the mission right.”
You can imagine the pressure he feels under. Ever since Simon Sinek’s influential TED talk in 2009 — arguing that great leaders inspire employees and customers by starting not with what they do or how they do it, but why — many startup founders feel they must be doing something wrong if they can’t come up with a compelling mission statement and an accompanying set of values.
It’s easy to see the attraction. Big visions and big ambitions can lead to big outcomes. You try to organize the world’s information and make it universally accessible and useful, and you end up with Google. You urge people to think different, and you end up with Apple. Or you build an electric car that actually feels better than one powered by fossil fuels, and you end up with Tesla.
In 2017, before difficult questions started being asked about execution, investors valued Tesla similarly to General Motors, even though GM sold one hundred times as many cars.
Yet big missions and their accompanying values can easily go wrong. Facebook’s declared goal — ‘to give people the power to build community and bring the world closer together’ — looks less pious now that we know the platform has also been used to incite genocide. And then there’s Uber, which declared one of its values ‘customer obsession’, and began by trying to fix the problem of customers being pressured to give tips to cab drivers for crappy service. As it became more powerful, Uber then cranked up its ‘take rate’ from drivers. And when drivers began to complain that it was squeezing their earnings down towards minimum wage, the company ‘solved’ the problem by bringing back tipping — a neat but cynical way to use moral pressure to increase prices to customers without taking the blame.
There are also small risks, one of which is that you might look hollow or insincere: look at the wry takedown in David Mitchell’s Soapbox of the way companies claim to be ‘passionate’ about everything from tax optimisation to selling sofas. A better approach might be to borrow from Argentine serial entrepreneur Martin Varsavsky, who started a phone company in Spain. When he was asked at an industry conference to name his biggest customers — most people in the industry at the time thought it was important to do business with investment banks or global consultancies — he had a modest answer. “I don’t have any big customers,” he said. “I just have good customers.” And he was right: the small businesses he served were less demanding, and delivered higher margins, than the JP Morgans or Accentures of the world.
So what does this mean for you, if you’re running a startup? First, decide whether the product or service you’re building is one that you truly, honestly believe is destined to change the world, and is ten times better than its nearest substitute. If so, then you’re in the market for an ambitious mission statement, which you’ll find it easy to define, since it will be obvious from the ways in which your product is so dramatically better than the alternatives.
If not, that’s still OK. You can still build a top-class business that’s in a highly competitive market but still has terrific products, hires talented people, and provides customer service that people want to tell their friends about. Think Amazon, pre-AWS: whether or not its destiny was to be the Everything Store, as Brad Stone’s interesting book calls it, the company was competing with other merchants in every category where it did business; it just provided a service that was much better — and over time, became much, much better.
So what are the implications, then, for the mission and values you should set down and devote yourself to?
about what you have and what you can aspire to. There are too many companies out there claiming ‘integrity’ as their top value that are actually run by creepy slimeballs whose behaviour sets the tone for the rest of the organisation. Lucy Kellaway, the house cynic of the Financial Times newspaper, gave a memorable talk in which she tested senior execs different businesses, and found that 19 out of 24 got their own companies’ value statements mixed up with those of other companies.
Although they are in fashion, they may actually correlate negatively with performance. Kellaway showed in a simple chart that while 83 of the top 100 companies in the FTSE index have value statements, the 17 that don’t have one outperformed the rest by 70% over the previous ten years.
When choosing values, remember that what matters more than the values themselves is the trade-offs between them. You may declare the ambition to provide amazing service to clients, have ecstatically happy staff, and deliver outstanding returns to shareholders. But what do you do when you can’t have all three, and maybe not even two? One way to think about your company’s values is to imagine moving a slider between apparently unrelated things. Which would you choose: being more profitable or more honest? Faster or more thorough? Kinder or more meritocratic?
Richard Branson, for example, doesn’t put customers first; when defining his business in public, he puts employees first, and shareholders, memorably, third. If you have a set of values, their order is what’s most important: it means that when employees are faced with a tough decision, they can look at the list and choose the outcome that accords closest with the top value rather than the second.
JFK’s 1961 speech arguing that the US should commit itself to “achieving the goal, before this decade is out, landing a man on the moon and returning him safely to the earth” wasn’t just good rhetoric; it was also specific, measurable, achievable, realistic and time-bound. That’s what makes them SMART goals.
As the JFK example shows, Peter Thiel’s comment in his book Zero to One (from Amazon US and UK) is spot on: people routinely overestimate what they can achieve in a year, but routinely underestimate what they can achieve in ten years.
So what do you do if you’ve gone through the exercise of defining your company mission and values — perhaps for the tenth time — and you still don’t feel that you’ve nailed them?
Well, it’s worth remembering the throwaway comment from a celebrity chef that I’ve quoted above. Good execution matters every bit as much as having an inspirational mission. So rather than spend too much time agonising, simply go ahead and keep building the business. Ask yourself every day how you can serve your customers better, how you can make your product easier to use, how you can come up with ideas to make their lives more convenient that your competitors haven’t thought of.
And remember that often, big missions require more knowledge about the world than an early-stage startup can expect to have. The shape of the mountain range becomes visible only when you’ve climbed the first few foothills.
That’s what happened with the CEO I was coaching. Our discussions revealed that because of the pressures of running the business, he hadn’t gone out to talk to his customers for a while. Establishing a habit of picking a customer every day or two and calling them helped him discover some great insights that produced an exciting mission and an inspiring set of values.
I’m Tim, and I run a seed fund out of London that invests in SAAS, platforms, marketplaces and tools. I’ve backed 50 companies and sat on 19 boards, and I also coach Series A and B CEOs introduced by VC firms in Europe, America and Asia. I founded a startup and took it to an IPO on the NASDAQ, and before that worked for The Economist and the Financial Times.
Lessons From Startup CEOs is a series of blog posts covering nine of the most important skills I’ve seen in founders who are most successful in scaling their companies. If you’d like to read more of them, please follow.
Why Startup CEOs Have a Problem With Mission and Values — and How To Solve It
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