When I talk about principles in a business, what I’m referring to are the fundamentals pillars which serve as the foundation for the business. In contemporary management thinking, business values seem to get the limelight, and while they’re important, so is setting your principles, and doing so early.
What’s the difference between principles and values?
Steven R. Covey gave a pretty good description of the differences between the two. In his view, principles are permanent, unchanging and universal; while values are internal, subjective, and may change over time.
In a business context, principles are the internal laws you will establish which are set in stone. And when you set up your principles, you do not compromise them. Ever. They determine who you are, and become the bedrock on which your business is grown.
Why is it important to have principles?
I believe that having a set of principles is an incredibly powerful tool to help you understand who you are. And more importantly: they help you understand who you are NOT. And knowing these things means decision making is so much easier.
There are so many businesses out there who don’t know what they are not. And in these cases they try to be everything to everyone. A clear indication of when a business is in this position, would be when a cross section of employees is asked to explain what the business is. If you get an array of different answers, it’s a tell tale sign that that business doesn’t have firm principles. And if this is the case, you may find yourself pulled in all sorts of directions.
Establishing a set of principles serves as a compass, which the business can use whenever there is doubt, or the business needs to decide on competing priorities, or which opportunities to pursue.
When you are in the early stages of building a business, with the hunger for growth constantly at the back of your mind, it is very tempting to say “Yes” to everything that comes across your path. This could ultimately be your downfall. And this is where principles shine. You should never say yes to anything that compromises your principles.
Finally, you shouldn’t think of hiring people who are not willing to embrace your business’s principles. Sharing these with potential recruits early often helps to make better hiring decisions in the long run.
How do we treat principles in IndieFin?
At IndieFin, we hold tightly to our principles, but loosely to our practice. What this means is that we are very flexible on execution, and embracing new ideas. But, are dogmatic when it comes to our principles.
Principles should necessarily be difficult to accomplish, and highly opinionated. Everything we do hangs off our principles, and new ideas or directions are tested against these. We have about 10 principles in our manifesto, and I won’t bore you with all of them, but can give you a taste to illustrate what I mean.
We’re our own first customers
We build the kind of products that we want to use. We prioritise product ideas that inspire us. If the product or experience is not good enough for us, it is not good enough for our clients.
When clients succeed, we succeed
Our business priorities are our customer’s priorities. This means we will always build products that profit the user first, and us by implication. When the client loses, we lose.
We build good products
Good trumps easy. Good trumps price. Good trumps profit. We’d rather do nothing than do something poorly.
How do you determine your own principles?
If you’re setting up a business, and you’re currently a one-man team, then it’s a little easier to do. This is because you only have to convince yourself what your principles should be.
A good thought experiment is to ask yourself, “what are the laws you would put in place to govern your business and your decisions”. An alternative approach is to ask yourself the negative version. Something like, “what will you never do?”.
For me personally, I grew tired of building financial products for an abstract group of clients. I seldom found myself inspired by the products I was building, and very rarely bought the products that I had built. It was therefore incredibly important to me that what we build at IndieFin are things we would buy.
If you’re an already established business with a few people in your team, setting the principles needs to be a collaborative exercise, where everyone participates and contributes. After all, you and your people will be the ones who will need to live with what you decide.
