In a step by step methodology to build valuation in a company, I use an established model to raise the benchmark multiple for companies that is a seven-step process. This works best, fastest, most smoothly when the steps are followed in order, with each one having a documented strategy that is then implemented. Yes, by documented I mean written down, by implemented I mean carefully and thoroughly taken from strategy to execution.
It may not surprise you that many businesses, in their rush forwards, skip some of these steps, then end up having to “retrofit” fit them later. As you would imagine, to do that is not fast or smooth.
Now, the step people skip over most often is the first and most foundational, what I call “Talent, Capability and Culture”. For more on the Valuation Model and this “V+2” step, read this post: “Build Business Valuation – Think in Ink“.
Today, though, I’m going to highlight that the “Culture” part of that first step ends up with a company having a clear and concisely stated Intent, their WHY, their reason for being (apart from making money, that is!). It also then has Ethos Points it is working towards so their business builds in alignment with that Intent. Finally, in documenting their Culture as a living document, there are Values, each of which has definitions, activities, behaviours that all agree to live by.
An example today that is not in such a concise form is the document above, written by the novellist Cormac McCarthy for the Santa Fe Institute. Follow the link for a more legible copy of his typewritten and manually corrected page of “Operating Principles”.
I love this, it gives a “soul” to the organisation in the way it is depicted. Pulling out core elements from this, the Intent feels very much to be: “To Push Creativity to its Practical Limits”. In so doing, their set of Operating Principles could readily be developed into a set of values (though I love this just as it is!), such as:
- Have Fun
- Beyond Relentless
- No Boundaries
If you wrote down your Intent and Values, what would they be and how would you use them as your Operating Principles