A guiding principle is unlike a mission statement, vision, or even the company’s values. Rather, a Guiding Principle brings together the executive’s personal beliefs and business philosophy to get to the heart of how they have built their business. In many ways, the culture/values of the business are derived from the leader’s guiding principle.
There isn’t one set of guiding principles that works for everyone, but rather, endless numbers of guiding principles; they are a unique expression of who a business executive is at his/her core. The specifics of a guiding principle are not as important as whether or not a leader has one to begin with, and whether they have communicated it throughout the firm’s ecosystem.
Strategic Principles are about where a business leader focuses their time and resources to create a formula for the firm to effectively operate and grow. Strategic principles may or may not be written in stone; some leaders have strategic principles that remain consistent regardless of the economy, industry, or type of business they were running, while others adapt their strategic principles, reacting to changing market conditions and new business opportunities.
Customer Principles are focused on understanding a firm’s relationship with its customers as a key determinant of their firm’s future. Similarly, Employee Principles revolve around the belief that the relationship between employers and employees is a key factor for success, that employees differentiate a firm in the market, and that it is important to cultivate a culture that truly values people.
Personal values are not always easy to stand by in leadership roles, when everyone is closely watching both your words and deeds. However, in living their own values, top executives can demonstrate their priorities to everyone in their company and effectively lead by example. Leadership Principles involve the idea that a leader’s individual leadership style and priorities can be transformative, and create companies that are an outward reflection of these principles.
Finally, Character Principles are personal qualities that empower people to perform as the leaders of their firms, adding a uniquely personal quality to their leadership style which governs their actions and decisions. Whether these principles were instilled at an early age, or adopted after an impactful experience, they are a part of each CEO’s individual DNA and, as such, their firm’s DNA.
When you hear business leaders talk about their own guiding principle, it becomes clear how these principles translate into their firms on a daily basis. It also becomes clear that these guiding principles are at the root of what keeps successful entrepreneurs and executives pointed in the right direction when others around them might lose their way, serving as a way to provide direction for the internal operations of a firm, as well as a point of differentiation in the marketplace as a whole.