Core Values: Building organizations with soul

Author: Wu Hongbiao
Publisher:
Publish Date: 2006-12-01
Features: Strongly recommended by Wang Pu, Chief Partner of Peking University Consulting Group. A great organization can survive in the long run, not primarily because of its structure or management skills, but because of the spiritual strength we call belief—as stated by Thomas Peters in In Search of Excellence. What truly sustains a company is the core values deeply rooted in its employees' hearts—as emphasized by Jim Collins in Good to Great. A well-managed business can be profitable; a well-managed business can be healthy; a business with a strong culture can make its employees happy—as highlighted by Gao Jianhua in Smiling Away from HP.
Since June 1996, when Peking University Consulting Group was established, we have provided consulting services to numerous enterprises. Through our interactions with these companies, we have found that those that develop rapidly and are well-managed invariably have a strong corporate culture, where their owners and employees work with passion. In an environment where the average lifespan of a private enterprise is only 2.9 years, and on a stage where young Chinese companies must compete with powerful multinational corporations, how can our businesses survive, grow, and thrive? How can we cultivate our core competencies? For a long time, the question of what constitutes a company's core competency has been a focal point of attention and debate. Some say it is high technology, others say it is corporate systems, organizational development, team spirit, and so on, with no consensus. But whatever the case, this exploration has gradually deepened people's understanding of business management.
I believe that Mr. Wu Hongbiao's book Core Values is a product of this gradual deepening of understanding, and it has also elevated people's perception of businesses to a new level, proposing the idea that "core values are a company's core competency." The concept "ideas take precedence over systems, and systems take precedence over technology" is widely accepted. Therefore, core values are the foundation of all ideas, systems, and technologies. Technological advantages and the competitiveness they demonstrate are the product and embodiment of a company's core values. Only by having the right core values and fostering a corporate culture centered on these values can a company develop its core competency.
Some international research results also support this conclusion. The "Transnational Corporation Competitiveness" research team at Columbia University Business School found that the core philosophies of these top 500 global companies are rarely related to commercial profits. When the Japanese government summarized the factors behind the rapid economic development during the Meiji Restoration, it published a white paper, attributing Japan's growth to three elements: first, spirit; second, regulations; and third, capital. The proportions of these elements were: spirit accounted for 50%, regulations for 40%, and capital for 10%. This conclusion highlights the critical role of spiritual and cultural elements in business operations and economic development.
Research findings from the RAND Corporation, McKinsey & Company, and other international management consulting firms indicate that the fundamental reason why top 500 global companies outperform others lies in their ability to infuse vitality into their corporate culture, paying special attention to the cultivation and improvement of core values such as teamwork, customer-centricity, equal treatment of employees, and innovation. This cultural strength ensures their long-term success.
A survey by Charles Hamptom and Alfons Trompenaars, a British-American scholar, on 15,000 corporate managers in 12 countries—including the U.S., UK, Germany, Italy, Sweden, Japan, and Singapore—revealed that different companies are influenced by their unique value systems during the process of creating wealth. This demonstrates that core values play a central role in the development of businesses and other organizations.
To gain core competency, a company must start by establishing core values and building a corporate culture centered on these values. Chinese businesses have gone through stages of prioritizing finance, marketing, and technology before finally recognizing that people are the foundation of the enterprise. But how can we unite people and maximize their potential? The answer is: establish core values and a corporate culture centered on them.
Lu Xun once said, "People need a bit of spirit." Businesses also need spirit, and this spirit should be used to organize people, creating cohesion and creativity. This spirit is the corporate culture centered on core values. In essence, a company's core competency stems from its core values.
I am delighted to see these ideas thoroughly discussed in Mr. Wu Hongbiao's book Core Values. The book not only emphasizes the importance of core values but also explains their mechanism of action in a business, describing two key threads through which core values operate.
First thread: Core values → Company's vision and mission → Strategic goals and plans → Execution.
Second thread: Core values → Company's philosophy and principles → Corporate systems → Employee behavior.
These two threads will undoubtedly guide companies in refining their core values and building their culture. I believe this book will deepen people's understanding of business management and help Chinese enterprises improve their management standards and enhance their core competency.