Note: This article is part of a series of How to Develop a Strategic Plan. For additional articles in this series, please refer to the end of the article.
CEOs running businesses with more than 11 employees know this truth: a company without clearly defined core values is like a ship without a rudder. Core values aren’t just fancy words on the wall—they’re the bedrock of organizational culture and the foundation for sustainable growth within the 3HAG Strategic Framework.
Many CEOs struggle with defining authentic business core values that truly represent their organization. It’s not uncommon to start with something that feels right, only to realize months later that these values don’t actually reflect what the company stands for. This post walks through the why, how, and what of establishing core values that stick.
What Are Core Values and Why They Matter
Core values aren’t aspirational statements about who you want to be. They’re the consistent, accepted behaviors already present within your organization—the fundamental traits that define who your people are at their core.
Unlike corporate mission statements or brand values meant for external consumption, true core values are internal, lived principles that guide decision-making and behavior throughout the company. They’re what CEOs look for when hiring, what they use when evaluating performance, and unfortunately, what they reference when letting someone go.
The most successful companies have core values that:
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- Act as a foundation for the Strategic Framework
- Create alignment across all departments and levels
- Guide decision-making during challenging times
- Help attract and retain talent that fits the company culture
- Establish trust among team members, customers, and stakeholders
Core values truly matter because they’re the principles CEOs and their teams would uphold even if doing so created a strategic disadvantage.
The Step-by-Step Approach to Gutting Out Your Initial Core Values
The process of defining core values isn’t always smooth. Many CEOs and leadership teams find themselves “gutting it out” through multiple iterations before landing on something that feels authentic. Here’s how to get started:
Step 1: Individual Reflection
Have each member of your leadership team answer these questions individually:
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- What behaviors do we consistently demonstrate as an organization?
- What principles would we refuse to compromise on, even for financial gain?
- Which team members best represent what this company stands for?
- What behaviors do we want new hires to display from day one?
This initial reflection helps surface what’s already living within your organization rather than creating aspirational values from scratch.
Step 2: Group Brainstorming and Sharing
Bring your leadership team together and follow this process:
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- Have each person share their individual lists
- Form smaller breakout groups to discuss and find patterns
- Ask each group to determine the three to five values they believe are most core to your organization
- Reconvene and compare findings across groups
This collaborative approach helps identify the values that are consistently recognized across different perspectives within your leadership team.
Step 3: Apply the Core Value Test
Once you’ve identified potential core values, it’s time for the real test. For each potential value, ask your team to answer these questions with a simple “Yes” or “No”:
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- Would you build a new organization around this value regardless of industry?
- Would you want this value to continue 100 years into the future, no matter what changes occur?
- Would you hold this value even if it became a competitive disadvantage?
- Do you believe those who consistently breach this value don’t belong in your organization?
- Would you personally continue to hold this value even without reward?
- Would you change jobs before giving up this value?
- If you had enough money to retire comfortably, would you still apply this value to your activities?
Values where two-thirds of your group answers “Yes” to all questions are likely your authentic core values.
Step 4: Distinguish Between Core Values and Aspirations
Many CEOs mistake aspirations for core values. A final check should confirm that your selected values aren’t just wishful thinking but are behaviors already present within your team.
Ask: “Are we already living this value consistently, or is this something we hope to become better at in the future?”
True core values reflect your current reality, not your desired future state.
Tips for Defining Authentic Core Values
The Mars Group Exercise
This powerful tool from Jim Collins asks your team to imagine recreating your organization on Mars. With only five seats on the rocket ship, who would you send to represent the best attributes of your company?
The people selected typically embody your core values, helping to confirm what truly matters to your organization.
Keep Refining Quarterly
Smart CEOs know that core values aren’t set in stone after the first attempt. Return to them quarterly to refine language and understanding. This ongoing process ensures your values remain relevant and authentic as your company evolves.
Limit to 3-5 Core Values
Too many core values become difficult to remember and implement. The most impactful core values are few in number but rich in meaning. Aim for 3-5 values that truly capture the essence of your organization.
Use Simple, Clear Language
Avoid corporate-speak when articulating your values. Use language that’s easily understood and remembered by everyone in your organization, from the C-suite to entry-level positions.
Examples of Powerful Core Values
From “The Ideal Team Player” by Patrick Lencioni
Lencioni identifies three essential virtues that make someone an ideal team player:
Humble – Lacking excessive ego or concerns about status
Hungry – Always looking for more to learn, do, and take on
Smart – Having good judgment and intuition around group dynamics
These three simple values create a powerful framework for hiring and team development.
Well-Known Organizations
Zappos:
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- Deliver WOW Through Service
- Embrace and Drive Change
- Create Fun and a Little Weirdness
- Be Adventurous, Creative, and Open-Minded
- Build Open and Honest Relationships with Communication
Southwest Airlines:
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- Warrior Spirit
- Servant’s Heart
- Fun-LUVing Attitude
Netflix:
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- Judgment
- Communication
- Impact
- Curiosity
- Innovation
- Courage
- Passion
- Honesty
- Selflessness
Integrating Core Values into Your Strategic Framework
Once established, core values become the foundation upon which your 3 Year Highly Achievable Goal (3HAG) is built. Without clear values guiding your organization, even the most brilliant strategy can fall apart during execution.
Core values help CEOs make better strategic decisions, build stronger teams, and create alignment throughout the organization. They’re not just nice-to-haves but essential elements of sustainable growth.
The work of defining and living core values isn’t always easy—it requires CEOs to “gut it out” through challenging conversations and ongoing refinement. But this foundation work pays dividends when it comes time to execute on strategic initiatives.
Remember: your core values shouldn’t change much over time. What should evolve is how clearly you articulate them and how consistently you apply them across your organization.
The most successful CEOs don’t just define core values—they live them, hire & fire by them, make decisions through them, and sometimes, when necessary, part ways with those who can’t align with them.
What core values are at the heart of your organization? Are they truly authentic, or is it time for a refresh? The foundation of your 3HAG Strategic Framework depends on getting this right.
Next Steps
- How to Define Your Core Business Purpose: The Foundation of Strategic Success
- How to Uncover Your Business Core Values: What are They and Why They Matter 👈 (You are here)
- How to Create a BHAG (Big Hairy Audacious Goal)
See Also
How to Develop a Strategic Plan: Building Your Cultural Foundation First
Notes
The 3HAG™ framework is described in Shannon’s book: 3HAG Way: The Strategic Execution System that ensures your strategy is not a Wild-Ass-Guess!
3HAG™ is a trademark of Shannon Byrne Susko, Founder & CEO of Metronomics
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