How values drive HiQ

I saw an interesting presentation about how to build and manage a value-driven organization last Friday. The presentation was a collaboration between HiQ, a Swedish IT-consultancy, and Kevin Ryan, owner of the management consultancy Thread.

The evening started off with,  Jerker Lindsten, CEO of HiQ Gothenburg, doing a Guitar Hero performance.

I am definitely no Guitar Hero. I sometimes whistle a little bit, but that’s it! As you can see in the picture above, the performance was greatly appreciated the rest of the audience.

When the audience was warmed up, Kevin Ryan took the podium. Kevin has worked closely with Lars Stugemo, CEO of HiQ International and one of the original founders, to articulate the company values and instill them in the HiQ organization.

Kevin began by talking about the conceptual differences between a traditional maximize-the-profit business and a value-driven business. Kevin built the explanation up in stages and I believe the audience got it.

When I talk about value-driven organizations (whether presenting, writing or just ranting) I often talk about how a value-driven organization can bring costs down in ways a traditional business organization cannot do. Kevin did something smarter, he talked about how the cost of evil is going up.

He is right of course. Thanks to the Internet a single dissatisfied customer can easily tell the entire world exactly why she/he is dissatisfied. Companies that get this have a strong incentive to be on their very best behavior. Those that don’t get it will eventually be forced out of business. Their customers will just walk away to somewhere where they feel welcome and appreciated.

Thus, the cost of indifference and evil is way up from what it used to be, and as customers become used to their new power, will rise even more in the near future.

Building organizations that truly care requires a different kind of leadership from what we are used to seeing. Kevin used George Bush and Barrack Obama as examples.

Obama is an empowering leader, and proved himself a very good systems thinker during his presidential campaign. Kevin did point out that Obama may have done just one too many deals with the devil in order to get the health insurance bill through. Nevertheless, the idea stands: Empowering leadership a la Obama is way more effective in our highly interconnected world than the Command & Control style represented by Bush in Kevin’s presentation.

I think the last slide in Kevin’s presentation sums up the profit-driven and the value-driven views very well.

Lars Stugemo, one of the founders of HiQ took over, and talked about how the focus on values affect HiQ.

Lars mentioned that the core values of the company haven’t changed much since 1995, although the way of expressing them has evolved.

In 2009 HiQ put their core values right on the front of their annual report. I think the move was an excellent one, and I do hope it inspires leaders of other companies to think seriously about their own values, and about how to use their business organizations to express and promote them.

Kevin and Lars did provide a very good high altitude fly-by. I think it was the right amount of information for the audience to absorb. It left me hungry for more though.

The expressed values of an organization are effective when they affect every day behavior of the people belonging to or interacting with the organization. Figuring out the link between a value and a behavior can be very difficult though.

What Lars did not talk about is the systemic changes necessary to make the behaviors stick, and how difficult it can be to connect the dots. That would have been overkill for the evening.

Since it is in my area of interest, I’ll give you an example anyway. Note that it is my own example. Neither Kevin, nor Lars went into details, so I have no idea how HiQ encourages developers to write simple code. There are usually several different but valid solutions for how to achieve simplicity in any particular situation:

For a programmer, valuing simplicity may be interpreted (a bit oversimplified) as “take care to refactor code”. Pair-programming is a practice that can reinforce refactoring behavior, so a company that wants to produce simple code might promote pair-programming as a way to do it.

On the other hand, MS Project, because of the Critical Path algorithm it uses to calculate task buffers, can easily discourage refactoring, so a company striving for simple code might either elect not to use MS Project, or complement it with some product like CCPM+, that replaces the Critical Path algorithm with a better one. Or, they may elect to take the hit from the Critical Path algorithm, and compensate in some other way.

I will skip the details about how a commonly used task scheduling algorithm can drive behavior that reduces the quality of work, not just for programming tasks, but also for other types of work. It is beside the point here. The point is that translating values into behavior will require systemic changes that may be far from obvious. (Besides, I have written about the shortcomings of the Critical Path algorithm elsewhere. No use kicking an algorithm that is already down.)

Also worth noting: Simplicity from the point of view of a customer is very different from simplicity from the point-of-view of a programmer, which is different from simplicity from the point-of-view of a project manager, and so on.

Going for simplicity involves achieving the optimum balance. Usually the balance should be weighted heavily in favor of the customer, but most organizations are designed to assign greater weight to internal considerations. That means you must consider large scale organizational design, rules for promotion, Key Performance Indicators, leadership training, and a host of other things, just to achieve simplicity.

Figuring things like these out requires both a lot of work, and the courage to experiment. Both Kevin and Lars touched on the enormous amount of work necessary, but they, very wisely I think, chose to preserve the sanity of their audience by omitting the gory details.

I cornered them both right after the presentation and asked a few questions. Though we spoke very briefly, I got the impression that they both have put not only a lot of effort, but also a lot of thought into what they are doing. I have no doubt they could tell a lot of stories about how counter-intuitive and challenging designing a value-driven organization can be.

Even though more and more organizations strive to become value-driven, and a new generation of value-driven organizations is cropping up, going value-driven still requires a lot of trail-blazing.

In a way, running a value-driven company will always require a lot of exploration and a spirit of adventure. Business leaders cannot just copy & paste values from some successful organization and expect this to work in their own. (Though I am certain many will try.)

In other ways though, having examples to draw from is incredibly useful, just like climbing Mount Everest became easier once Sir Edmund Hillary and Tenzing Norgay had done it in 1953.

Today, there are plenty of examples of value-driven organizations to draw from, like Gore & Associates who have been value-driven since the sixties, Semco who is renowned for pushing its principles well into places where no business has ventured before, Whole Foods, BNI, Branson’s Virgin Group, and many others.

Unfortunately the link between the success of these companies and their focus on core values is poorly understood outside the companies themselves. It is as if if Sir Edmund and Tenzing came back from their Mount Everest expedition, told the world about it, and everyone was too busy falling off cliffs to listen to their story.

For every company that goes seriously value-driven, the link between core values and long-term success as an organization will be understood a little bit better. And, truth to tell, even though we have a reputation for empowerment and employee participation in decision making in Sweden, I think we are in great danger of lagging behind. Therefore, I do hope Kevin and Lars will keep telling the HiQ story.