Chapter One

Basic Concepts

Shared values are fundamental principles and beliefs that inspire a group to
consistent and purposeful behavior, sustained despite changes in
membership and leadership of the group.
A communityneighborhood, team, or businessis an association of
individuals who share a common purpose. To achieve their purpose,
each member of the community must meet some mutual expectations
for behavior: People expect neighbors to respect their property, care
for the environment, and demonstrate social responsibility; they
expect teammates to be committed and supportive; they expect
employers to be fair and employees to be productive. Shared values
are the principles that underly these mutual expectations and serve as
the touchstone for practical, day-to-day decisions and activities in
support of shared goals. They are the source of what General Electric
chairman and CEO Jack Welch sees as "an affinity among people who
want to grapple with the outside world and win. Their personal
values, dreams, and ambitions cause them to gravitate toward each
other ..."[1]
Implicitly or explicitly, our values influence every decision we make
as individuals and as communities. They are expressed in the
alliances we seek, the people and achievements we celebrate, and the
stories we tell. They are revealed by our responses to people and
events; sources of pride, satisfaction, and disappointment; by what
we spend our time on and what we view as significant.
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The values of a business are expressed in product and service quality,

environmental policies and practices, company publications and
advertisements, and office heroes and legends. Other indicators of
values in the workplace are the emotional climate (degree of
formality or familiarity, openness, humor); management style
(suggested by the presence or absence of such artifacts as time clocks,
bells, and reserved parking places); and the language used to describe
positions and relationships. (At Disney theme parks, for example, all
employees are "members of the cast," who are "on stage" during their
working hours. This captures significantly different values from
those of the company that speaks of employees as "shifts" or "hands.")
Because values are so fundamental to our thoughts and actions, we
tend to believe they are absolutes"the way normal people see
things." We may not readily accept that other individuals and groups
have equally compelling, but different, values. In fact, we are likely
to be suspicious and mistrustful of people whose behavior is
inconsistent with our values, using our values as a reference for
interpreting their behavior and responding with hostility, as did the
various organizations in pre-1991 IMS. Team members who operate
at cross-purposes and neighbors who constantly bicker over the back
fence are often operating by different sets of values. In thinking
about values, it is important to distinguish between virtues
(standards of moral excellence) and values (principles that motivate
behavior).

Personal Values and Shared Values

Personal values determine and support individual and social
priorities such as life, liberty, and justice. Personal values are
strongly felt and highly emotional (for example, dignity, truth, and
honor). Our personal values are communicated and reinforced by
parents, teachers, and peers; by formal publications about what is
"right" behavior, and by the ceremonies, legends, and folklore of the
community. Personal values guide our behavior in all
relationshipswith families, communities, employers and
employees, and with society at large. They can be thought of as
relationship values, creating the environment in which we live and
work. Personal integrity demands constancy of relationship values
across all the dimensions of this environment, family, community,
societal, professional, business, and other associations.
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Basic Concepts

In addition to relationship values, a second order of values supports

the unique goals and priorities of each of the many communities of
which we may be members. The medical professions, for example,
highly value excellence, dedication, and selflessness; financial
institutions value accuracy and accountability. In the workplace,
particular goal-oriented valuescustomer focus, innovation,
teamworksupport specific business priorities, such as customer
satisfaction, market leadership, or profitability. These second-order
shared values tend to be task values, influencing how we get the job
done. Task values generally have a rational and pragmatic appeal,
although ideally they, too, engage the spirit and emotions. Safety, for
example, a shared value in the old Bell System, reflected a concern for
people as well as a business need to minimize costs associated with
job injuries.
Task values are communicated and reinforced by the behavior of
leaders, the formal policies and practices of the business, and the
collective wisdom and tradition passed on in everyday conversation.
Task values do not necessarily carry over into all dimensions of our
lives, but we consciously and unconsciously seek alignment of values
in relationships, memberships, and career choices. The stronger the
alignment, the stronger our personal commitment and ability to
behave consistently with our values.
It was a perceived conflict of task values with fundamental
relationship values that undermined IMSs early attempt at gaining
commitment to the original set of values. In focus groups, for
example, IMS people challenged the notion of "a passion for winning"
as a justification for uncaring, manipulative behavior aimed at
"winning at all costs."
Some companies make a point of acknowledging the distinction
between task and relationship values. General Electrics values
statement, for example, balances "business characteristics"lean,
agile, creative, ownership, rewardwith "individual
characteristics"reality, leadership, candor, simplicity, integrity,
dignity.[1]

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Values Are Not Rules

Both values and rules promote predictable and consistent behavior
among the members of a group, but values are not rules or laws.
Rules govern primarily by prohibiting specific actions and behaviors.
Compliance with a code of conduct, for example, is measured by the
absence of activity. Values influence us to make decisions and take
actions that are consistent with a particular standard of conduct,
although they may vary considerably from one individual to another.
Outside forces form and shape our values, but we decide how to
translate them into action. Values are, by definition, an expression of
choice and self-control, whereas rules tend to control and constrain
freedom of choice.
Which is the more helpful way to provide travel information from
one point to another: a road map or a set of directions (15 miles on the
freeway; right at the exit ramp to the second stop light; left when you
cross the bridge, etc.)? Directions free the traveler of any need to
make decisions; they may make it possible to predict time of arrival
with a fair degree of accuracy. If the ramp is closed or the bridge is
out, however, the traveler has no idea what to do. A road map offers
choices, though not necessarily the same ones you would make. It
also provides guidance for circumstances you may not anticipate.
We can think of shared values as a road map for the work
environment, and of rules and regulations as a set of directions: Both
help an organization move from one place to another, but managing
by values permits each traveler to discover the unique opportunities
present in the journey.

Basic Concepts

Why Are Strong Shared Values Important to the Business?

"The world of the American corporation has changed dramatically
since 1960 and ...we are indeed in a transforming era," Rosabeth Moss
Kanter concluded in The Change Masters.[2] The pace of change has
accelerated even more since 1983, when Kanter identified increasing
diversity and the growing presence of women in the workforce,
higher education levels, family lifestyles, and social and
environmental awareness among the significant changes that have
challenged peoples fundamental working assumptions. Additional
changes noted by Tom Donaldson include media influence on
customer and employee expectations, the global evolution toward a
less hierarchical workplace, a change in the focus of work activities
(from delivery of products to delivery of information and services),
and a revised social contract in industrialized societies: In
Donaldsons view, economic, political, and social changes of the
twentieth century have redefined the very nature of the contract
between business and society. No longer tolerant of risks to
employee, community, or environmental well being in the pursuit of
profit, society today holds the corporation accountable to all its
constituenciesemployees, customers, and community, as well as
shareowners.[3]
These profound changes have affected the corporation in several
ways:
They have thrust people into positions of responsibility for
whichin an earlier, more hierarchical erathey would have
served lengthy apprenticeships. Lacking maturity and experience
and without strong values to guide them, they tend to make
expedient decisions. Faulty o-rings, devastating oil spills, and
savings and loan failures are a few of the all-to-common examples
of the potentially disastrous consequences.
Family, community, and other social institutions traditionally
shaped and reinforced a commonly held set of values. As the
influence of these institutions has been diluted, and as their values
have tended to be less aligned, corporations can no longer assume
general commitment to a common set of core values.
Markets, economic realities, strategies, and goals have been
redefined. Old task values may have little relevance in the context
of these new markets. AT&T, for example, has traditionally
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maintained high standards of individual excellence.* However, in

a marketplace that grows ever more competitive, a higher priority
must be given to the value of teamwork.

Shared Values Engage and Empower People

As AT&T and other institutions have discovered, a clear statement of
fundamental values and beliefs becomes doubly urgent in this climate
of change. From the employees perspective, values help to establish
that
this is what it means to work for this company
this is what I can expect.
From the business perspective, a commitment to shared values
promotes trust and fosters true empowerment. Employees who
subscribe to the values of the business are trusted to act in the best
interests of the business because their choices and decisions and those
of the business owners and senior managers are made in the same
spirit.
A values-based approach to managing the business engages and
empowers people in several ways:
The energy of the organization is directed into productive channels
and at the same time liberated to explore those channels creatively.
Innovation is encouraged, as well as the risk-taking that leads to
breakthroughs. Without shared values, people are inclined to cling
to tried and true actions and safe behaviors to protect their jobs.
People are governed in exceptional situations by the sound,
objective standards that guide their behavior in unexceptional
situations. Formed and framed in the context of the everyday
experience, shared values are especially powerful in moments of
crisis, enabling people to respond to the crisis as an everyday
occurrence.
________________
* "The old Bell System was like a great football team with the best athletes and the best equipment. Every Saturday
morning, wed run up and down the football field and win 100 to 0 because there was no one on the other side of
the line of scrimmage; we were a monopoly. Being human, the football players found their competition inside the
team...Cross-departmental competition raised costs and prevented new initiatives."[4] (Ray Smith, Bell Atlantic
CEO).

Basic Concepts

Because shared values have a life and meaning beyond any one
individual, they represent stability and continuity in times of
change and reorganization.
Finally, shared values create a business environment in which
people can focus more effectively on quality and business goals.
Recall how feelings of distrust and internal competition prevented
the IMS leadership team from dealing with the real problems of the
business. How much easier it is to identify improvement
opportunities and true root causes in an atmosphere of trust,
cooperation, and caring, in a work environment where integrity,
teamwork, and respect are strong and vital.

Values Support Quality and Business Goals

A total quality approach emphasizes empowered, fully involved
people working in teams, often across functional and operational
boundaries. These teams come together in the work environment, not
as a voluntary union of kindred spirits, but as representatives of
operations and functions that support a larger process. Membership
may be stable or temporary, or more likely a mix of the two. Shared
values play a critical role in enabling these teams to make decisions
rapidly and act in concert. Without a common base of values, team
members can become locked in endless conflicts and power struggles,
as did the IMS EQC in its early daysstalled and, as Osl observed
then, unable even to recognize, far less to resolve, their real problems.
Total Quality, like shared values, is aspirational, representing "the
best of what we strive to be." Through process management and
strong partnerships with customers and suppliers, AT&Ts Total
Quality Approach[5] provides the operational structure for continuous
improvement. Shared values constitute the inspirational system that
enables involvement, cooperation, and shared commitment to a
common vision and long- and short-term plansthe essential
elements of the Total Quality Approach.
Shared values help to determine quality and business goals, and
influence how the goals are defined, deployed, and pursued. For
example, AT&Ts Universal Card Services (UCS) business unit
announces its primary value in the Jacksonville headquarters
lobby: "Customers are the center of our universe." From this
explicit value

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Chapter 1

of commitment to customers, UCS derives long-term business goals

(to be the benchmark for customer service) and short-term plans
and programs (identify and develop new customer options; offer
customers a single point of contact).
Shared values foster the behavior that enables a business to achieve
quality and business goals. Results of a recent study of over 200
leading companies suggest that relevant, appropriate values are a
key factor, along with a strong and adaptive culture, in the success
of leading performers.[6]
At UCS, human resource policies and practices train and reward
employees for demonstrating commitment to customers.
Individual efforts by UCS employees contribute to the success of
the larger teamthe UCS business unitwhose devotion to
attentive, cheerful, responsive customer service has rapidly
attracted a large and loyal customer base.
Shared values help to ensure successful business relationships. For
example, the outcome of hiring decisions, mergers, and
negotiations with suppliers depends on compatibility of values.
Arnold Hiatt, retired CEO of Stride Rite Shoes, offers a good
example of this. Over the years, Hiatt steadfastly resisted
acquisition of his childrens shoe business, Blue Star, by companies
who did not share Blue Stars commitment to the health and
comfort of the young customer. Eventually, Hiatt sold the
company to Stride Rite on the strength of their shared values.
"When a mother bought a pair of Stride Rite shoes, it wasnt an act
of commerce, it was an act of confidence."[7] Today, StrideRites
core valuesembedded in a culture characterized by respect for
people, social responsibility, participation, and expertiseare the
basis of relationships with customers, suppliers, and dealers.
"Have our stockholders suffered?" Hiatt asked in a retirement
interview. "Well, those that invested $10,000 in 1984 would now
[1992] have $155,000. Not bad."[8]

Basic Concepts

Can a Business Successfully Adopt New Values?

As many U.S. businesses have discovered in recent decades, changes
in purpose or priorities may require new behaviors and emphasis on
different task values. Rapid growth, new direction, and regulation or
deregulation, are a few examples of changing business conditions that
call for reexamination of corporate values. Another is the decision to
pursue international business: A look at the global marketplace
reminds us that standards for acceptable behavior in one location or
culture vary widely from those of another. Across cultures, the
variation is often significant.
Changes are not accomplished easily, however, nor can we expect
new values to be internalized quickly. An organization can restate or
redefine values as a way of redirecting energy to new goals or of
responding to changes in the environment. Intellectually, the new
values may win ready acceptance throughout the organization as the
logical way to advance the common purpose. But the old values may
have deep roots.
According to McKinsey & Co.s Jon Katzenback, there are no clear
examples of unqualified success in effecting cultural change. Where
companies have made significant progress, it is when people have "a
shared sense of urgency, have common goals, and organize
themselves into small teams."[9] The successful introduction of new
values in the business also requires that:
The change address the level of task values, rather than
relationship values.
The change is not too great; the new values are not drastically
different from the old values.
The change is evolutionary, rather than fast and abrupt.
New values are compatible with the values of the other
communities to which employees belong and which are constantly
reinforcing their values.
The appeal to change is not based entirely on reason, but
accommodates the personal and emotional dimension associated
with values.

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People are involved and inspired, rather than required, to change.

Leaders visibly demonstrate that they will live the values and
empower and enable the transition to new supporting systems that
reinforce the values.

Transformation Takes Time

In large companies like GE and Xerox, cultural change has taken
place over a period of seven to ten years. Four years seems to be the
minimum even in smaller companies.[6]
Management commitment to the values, as evidenced by visible
changes in operating style and systems, determines how readily
people accept new values and how rapidly new values are reflected
in new behavior. Size of the business is a factor as well. Like a ship
heading for an iceberg, a corporation must deal with its own
momentum when a change in course is necessary. The larger the
ship, the more difficult it is to change its course and the longer it
takes.
The rate of change is affected by the pervasiveness and strength of the
old values. As Welch observed of GE, "We built much of this
company in the 1950s around ...plan, organize, integrate, measure.
We brought people in buses over to Crotonville and drilled it into
them. Now were saying, liberate, trust, and people look up and
say, What? Were trying to make a massive cultural break. This is at
least a five-year process, probably closer to ten."[1]
In the IMS story, we can recognize several distinct stages in the
transformation effort. These stages, typical of the experience of other
businesses that have adopted a values-based approach to business,
can also be seen in the story of AT&Ts Common Bond. (Appendix B
provides a more detailed description of the development of Our
Common Bond.)
1.

People are drawn together in the name of a common purpose or

vision.
IMS Story: Several AT&T reorganizations occurring between
1984 and 1989 contributed to the development of a centralized
information management division.
Common Bond: A century-old business attracted a large, loyal
workforce dedicated to a tradition of universal service.

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Basic Concepts

2.

An outside forceopportunity or threatenergizes the

community.
IMS Story: As Osl reminded the EQC in January of 1990, "our
customers are warning us. Our marketplace is warning us."
Common Bond: Divestiture, economic forces, and the 1988
Direction for AT&T redefined the organizational structure and
working relationships.

3.

As members of the community translate energy into action,

their shared values emerge.
IMS Story: The Horizons experience helped the EQC to express
the values of respect and teamwork. During the summer of
1990, focus groups participants from across IMS described
strong, emotional responses to decisions and practices that
conflicted with their values.
Common Bond: Decentralization forced business units to
question old assumptions, develop new approaches, and make
painful decisions, guided by both traditional "Bell System"
values and emerging market-focused values.

4.

These shared values are captured in language.

IMS Story: The Core Values Team worked from November 1990
through January 1991 to identify and articulate the common
themes in the data from focus groups, surveys, and the EQC.
Common Bond: Bob Allen responded to employee requests for
clarification about "what we stand for" by drafting a statement
of seven values and chartering an officer task force to champion
a corporate values initiative. The team of AT&T business unit
and division leaders represented Microelectronics, Capital
Corp., Istel, Consumer Products, Universal Card Services,
Consumer Communications Services, and NCR, as well as IMS;
all organizations had shared values in place.

5.

The fit of the shared values is evaluated against vision, purpose,

and individual values.
IMS Story: The EQC "signed on" in February 1991; each IMS
employee develops a personal commitment after reflection and
experience of values in the Horizon program.
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Common Bond: Review and discussion over an 18-month

period involved analysis of two company-wide surveys (1991
Employee Attitude Survey and Employee Communications
Readership Survey) and telephone and focus group interviews
with employees from eight states, four countries, all parts of the
business, and all job levels. Rewritten as five statements
expressing the hundreds of AT&T voices, The Common Bond
became Our Common Bond in April 1992.
6.

Positive, critical, desirable values are reinforced; negative,

unsupportive values are discouraged or ignored.
IMS Story: Values-based decisions and actions are rewarded
and communicated, meetings and programs emphasize values,
and policies are reviewed for inconsistencies. Management
decisions are openly challenged when they are perceived as
failing to "walk the talk."
Common Bond: First step will be an anonymous senior
management feedback process aimed at recognizing and
changing behaviors that do not support Our Common Bond.
Extensive changes in support systems (training, education,
appraisals, compensation) are planned as part of a continuing
process for enrolling, reinforcing, and renewing Our Common
Bond.

Change is rarely comfortable, but it can be especially threatening

when it is initiated by an outside agent. Diving in may be
frightening, but not nearly as terrifying as being thrown in
unexpectedly. Resistance to new values is likely to be stronger in an
environment where business conditions contribute to an insecure
workforce. People who have achieved success in one culture tend to
resist a new order in which
their strengths have become liabilities, or
they must re-establish their competence against a new set of
criteria, with no guarantees that they will be successful.
The skills required to manage in a highly controlled and predictable
environment, for example, have less relevance in an innovative,
flexible, adaptive workplace characterized by teamwork and
cooperation, innovation and customer focus. Such a transition
redefines the role of management.
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Basic Concepts

Other transition issues include contracts with represented employees,

impact of regulatory agencies, and relationships with customers,
suppliers, and other partners.
The business must deal with these issues sensitively and thoroughly,
and provide the training, education, and other support to reorient
employees and develop the skills required in the new order. Chapter
3, Living Our Values, examines the support required to engage and
sustain the enthusiasm and commitment of employees throughout
the business.

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14

REFERENCES
1. Tichy, Noel and Ram Charan. "Speed, Simplicity, Self-Confidence: An Interview
with Jack Welch." Harvard Business Review. September-October 1989.
2. Kanter, R.M. The Change Masters. 1983. New York: Simon and Schuster.
3. Donaldson, Thomas. 1983 "Constructing a Social Contract for Business." In Ethical
Issues in Business. New Jersey: Prentice Hall. p.165.
4. Kanter, Rosabeth Moss. 1991. "Championing Change." In Harvard Business Review.
January-February.
5. insert ref
6. Kotter, John and James Heskett. 1992 Corporate Culture and Performance. New York:
MacMillan, Inc.
7. Stone, Nan. 1992. "Building Corporate Character: An Interview with Stride Rite
Chairman Arnold Hiatt." In Harvard Business Review. (March/April).
8. "Seeing Public Service as an Investment." In Newsweek. May 4, 1992. p. 60
9. "Pulling Ones Weight at the New IBM." In The New York Times. July 5, 1992.

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