Developing Purpose, Vision, and Values for Long-Term Business Success

In this article, Don James, CPA, of DJ Tax Solutions explains why every successful business should begin with a clearly defined purpose, vision, and set of core values. While financial planning, tax strategy, and profitability are essential, businesses that endure for generations are often guided by something deeper: a clear understanding of why they exist and where they’re going.

Why Purpose, Vision, and Values Matter for Your Business

Jim Collins points out that when Merck & Company reached its hundredth birthday, it published a book titled Values and Visions: A Merck Century. Note that the title doesn’t even mention what Merck does. Collins reasons that the company could have titled the book From Chemicals to Pharmaceuticals: A Merck Century, or A Hundred Years of Financial Success at Merck. But it didn’t. It chose instead to emphasize that throughout its history, the company was guided and inspired by a set of ideals.

In 1935, George Merck II articulated those ideals when he said, “We are workers in industry who are genuinely inspired by the ideals of advancement of medical science, and of service to humanity.” Decades later, three full generations of leadership later, the company’s chief executive sang the same idealistic tune: “Above all, let’s remember that our business success means victory against disease and help to humankind.”

My point in citing Merck is not to praise the company – it has had its share of public controversies. The point is to illustrate how Purpose, Vision, and Values (collectively known as “Core Ideology”) can guide a company for years, keeping it on track through generations of management teams.

Purpose, Vision, and Values are three of the seven elements typically included in a strategic plan. They are the “soft” elements, but they are critical to the success of the plan. This article explains in detail what they are, why they are important, and provides examples.

Start With Your Financial Goals

Before you begin developing your strategic plan and clarifying your Purpose, Vision, and Values, it is important to understand what exactly you need from your business. Bruce Wright observes in The Wright Exit Strategy that “the whole purpose of starting a business is to create a means of income for yourself sufficient to support your immediate lifestyle needs and set aside enough money for the future, or to build the equity or value in the business to a point that you can sell it and become financially independent.”

How much do you need? What is your magic number? In other words, you need a financial plan first.

Your Business Starts With You

Second, you can become an entrepreneur in the true sense and create a business that serves your life if you accept an adventure of personal exploration. You embark on the adventure at the beginning, and the beginning is you. If you want a better life, then make a serious commitment to get it.

Creating a better life for yourself has nothing to do with your business, until you complete an exploration of your essential character:

• What are your core beliefs?
• What kind of life do you want?
• What do you value?
• What is your essence?

Michael Gerber’s E-Myth calls this Your Primary Aim. Your Primary Aim is about your life, not your business. Your business is simply one of the many aspects of your life. Your Primary Aim is the essence of your purpose in life – a brief statement summarizing whatever it is in you that is the source of your vitality, your commitment, your passion. It is not about material things. It is about life.

Now let’s look at the pieces of your strategic plan.

What Is Purpose?

Purpose is the set of fundamental reasons for a company’s existence beyond just making money. Purpose need not be wholly unique – its role is to guide and inspire, not necessarily to differentiate. Numerous studies of employees have concluded that involvement in meaningful work is actually a more important factor than pay. Meaningful work is what gets business owners, and employees, out of bed in the morning.

One of life’s central challenges is to keep closing the gap between where we are and where we want to be. This includes the connection between the work we do and knowing in our hearts the actual difference our efforts are making in the world. We need to understand what our contribution does to help people in their own work or their own lives. These meaningful activities are the single most vital catalyst for prompting us to keep giving more of our untapped capacity to our daily efforts.

Purpose is broad, fundamental, and enduring. A good purpose should serve to guide and inspire for 100 years or more. A visionary company continually pursues, but never fully achieves or completes, its purpose. It is a perpetual star on the horizon. It builds on our past, lives in our present, and holds hope for our future. Purpose is the spiritual DNA from which vision, strategies, and goals sprout.

Examples of Purpose from Visionary Companies

• • Merck: “We are in the business of preserving and improving human life. All of our actions must be measured by our success in achieving this goal.”
  • Hewlett-Packard: “Technical contribution to fields in which we participate. We exist as a corporation to make a contribution.”
  • Johnson & Johnson: “The company exists to alleviate pain and disease.”
  • Marriott: “Make people away from home feel that they are among friends and really wanted.”
  • Walt Disney: “To bring happiness to millions and to celebrate, nurture, and promulgate wholesome American values.”

What is Vision?

Vision should be presented as a pen picture of the business in five to seven years’ time in terms of its likely physical appearance, size, activities, and so on. Vision answers the question, “Where are we going?” It is the picture of the end result – something you can actually see, not vague.

Vision and direction are essential for greatness. In world-class organizations, everyone has a clear sense of where the enterprise is going. Only when leaders know that their people understand the agreed-upon vision and direction can they attend to strengthening the organization’s ability to deliver on it.

Vision helps people make smart choices because their decisions are being made with the end result in mind. As goals are accomplished, the answer to “What next?” becomes clear. Vision takes into account a larger picture than the immediate goal.

Martin Luther King Jr. described his vision of a world where people live together in mutual respect. In his “I Have a Dream” speech, he described a world where his children “will not be judged by the color of their skin, but by the content of their character.” He created powerful and specific images from the values of brotherhood, respect, and freedom for all – values that resonate with the founding values of the United States. King’s vision continues to mobilize and guide people beyond his lifetime.

Tests of a Compelling Vision

• • Helps you understand what business you’re really in
  • Provides guidelines that help you make daily decisions
  • Provides a picture of the desired future that you can actually see
  • Is enduring
  • Is about being great – not solely about beating the competition
  • Is inspiring – not expressed solely in numbers
  • Touches the hearts and spirits of everyone
  • Helps each team member see how he or she can contribute

What Are Core Values?

Values govern the operation of the business and its conduct or relationships with society at large, customers, suppliers, employees, the local community, and other stakeholders. Values answer the questions “What do we want to live by?” and “How?” They need to be clearly described, so you know exactly the behaviors that demonstrate that the value is being lived. They are learned and revealed internal governors of right and wrong that we feel in our gut and throat. They help us choose what is most important.

Characteristics of Core Values

• • Not to be confused with specific cultural or operational practices
  • Not to be compromised for financial gain or short-term expediency
  • The organization’s essential and enduring tenets – never to be compromised
  • Sustained through many changes from one generation to another – the stake in the ground that keeps everyone from veering too far off course
  • Boiled down to a piercing simplicity that provides substantial guidance
  • Visionary companies have between 3 and 6 core values; more than that, and you begin drifting away from those that are truly core

Bringing Purpose, Vision, and Values Together

It goes without saying that Purpose, Vision, and Values must be interlinked and consistent with each other. Visionary companies combine Purpose and Values into a Core Ideology (Core Ideology = Core Values + Purpose).

Sample Core Ideologies

Walt Disney:

• • No cynicism allowed
  • Fanatical attention to consistency and detail
  • Continuous progress via creativity, dreams, and imagination
  • Fanatical control and preservation of Disney’s “magic” image
  • To bring happiness to millions and to celebrate, nurture, and promulgate wholesome American values

Marriott:

• • Make people away from home feel that they are among friends and really wanted
  • People are number one – treat them well, expect a lot, and the rest will follow
  • Work hard, yet keep it fun
  • Continual self-improvement
  • Overcome adversity to build character

As you develop or discover your Purpose, Vision, and Values, make sure they are yours, not someone else’s that just sound good. Purpose and Values come from the heart.

Build a Business That Lasts

Jim Collins raises the question, “How can we be sure the core ideologies of highly visionary companies represent more than just a bunch of nice-sounding platitudes – words meant merely to pacify, manipulate, or mislead?”

Social psychology research strongly indicates that when people publicly espouse a particular point of view, they become more likely to behave consistently with that point of view, even if they did not previously hold it. The very act of stating a core ideology influences behavior toward consistency with that ideology.

Enduring great companies don’t exist merely to deliver returns to stakeholders. In a truly great company, profits and cash flow become like blood and water to a healthy body: they are absolutely essential for life, but they are not the very point of life.

Turn Your Vision Into a Strategic Plan

At DJ Tax Solutions, we believe successful businesses combine sound financial planning with intentional long-term strategy. Whether you’re building a new company, planning for growth, or preparing for succession, aligning your financial plan with your purpose and vision can help position your business for lasting success.

Contact DJ Tax Solutions to schedule an introductory consultation and begin building a strategy that supports both your business goals and your personal vision.