Chen Chunhua: Whether values can produce performance depends mainly on the management of values

Introduction: in reality, a lot of enterprises will imitate the values of successful enterprises, but they will often misunderstand the secrets of their success and overestimate the functions of the values themselves. While the essence of corporate culture is behavior habits rather than concepts. Like the old saying, everyone knows the methods of achieving success, but only a few people can really do it.

 

1. Corporate culture provides conditions for sustained competitive advantage

 

Jay B. Barney, the main founder of Enterprise Resource-based View, believes that corporate culture can be a source of maintaining competitive advantages. In order to provide sustained competitive advantages with corporate culture, he put forward three conditions:

➣ First of all, culture must be of worth.It can make what enterprises do achieve high sales revenue, high marginal income and consume low cost, or allow enterprises to increase financial value in other ways, that is, culture must generate positive economic effects.

➣ Moreover, culture must be rare and scarce.It must have extraordinary characteristics compared with most other organizations.

➣ Last but not least, culture must be hard to imitate. Enterprises without such culture cannot carry out activities that can change their culture and make it become the culture. If other enterprises try hard to imitate, there will be a lot of unfavorable reputations, experiences and so on for enterprises that are imitated.

From "From Ideas to Behavioral Habits" to "Activation Organization", I have always been emphasizing that the essence of corporate culture lies in behavioral habits rather than concepts. Only when corporate culture is transformed from concept to action can it truly work. As the core of corporate culture, values meet the above-mentioned three conditions set forth by Barney, and are also in line with my requirements for the landing nature of corporate culture, and become the core competitiveness of enterprises.

 

2. Prominent features of value-based corporate culture

 

For enterprises, value is both an abstract and concrete core gap. Value-based enterprises have two prominent features in respect of corporate value:

➣ The first feature is: The values of an enterprise, as the core code of conduct, directly guide and decide the decision-making results and daily operations of the enterprise, and guide the behaviors of the enterprise and its employees.

➣ The second feature is: The values of an enterprise, as the concept that the enterprise has been long sticking to in its operation, rarely change arbitrarily along with the change of the operator, and the values are respected for a long time.

Values are so significant, but the embodiment of values of some Chinese enterprises still remain only on slogans, banners and websites. Despite that they have pretty nice copywriting descriptions of values, they render no much practical guiding significance to the behaviors of enterprises, and even deviate from values in concrete practice. Still some other enterprises' values are like a kaleidoscope. Along with changes in the preferences of leaders and the management, they frequently modify the ethical standards and cultural connotations of enterprises, leaving employees at a loss.

It is undoubted that values themselves are very crucial. Many enterprises learn from successful enterprises mainly by imitating their values and establishing their own enterprise values with them. However, a lot of enterprises actually misunderstand the secrets of these successful enterprises and overestimate the function of values themselves.

Values themselves will not be automatically converted into productivity, and whether they can produce performance depends not merely on the values themselves, but more on the management of the values. For instance, a large number of enterprises learn from Huawei's values, but most of them cannot really learn them in practice. This is where the reason lies in. It is not that the values themselves are so "high-end,magnificent and classy" or difficult to imitate, but that the management of values makes it difficult for learners to imitate, which is precisely the real competitive advantage of an enterprise. This tallies with the motto:everyone knows the method of success, but only a few people can really make it.

So what exactly does the management of values do? If an enterprise intends to learn it by imitation, where should it proceed with? Here, two examples are listed to give a graphic answer.

 

3. Amazon's management of values

 

One of Amazon's values is to make innovations and remain simple. With respect to innovative management, Amazon has become "the best company in the world in allowing failure". In reality, most of the enterprises will accept the ideas about innovation, but they are never willing to take on the failure and detours in the process of realizing innovation. While Amazon considers that the secret of the company is to allow failure.

Bezos said: "This culture is deeply convinced in several principles and acts on this basis, and what I said includes paying attention to users instead of competitors; yearning for innovation and exploration; being willing to fail; remaining patient with long-term development and taking occupational pride in operational excellence."

Failure and creativity are inseparable twin brothers, and Amazon is arguably the world's most tolerant place of failures. Creativity itself includes attempts, unknowns, adventures, failures, trial and error, etc. A great many companies fail to create new value fundamentally because they are afraid of failure, unable to tolerate failure, and worried about the consequences brought about failure.

How to tolerate failure or encourage trial and error behaviors? The important thing is to implement trial and error management into decision-making and mechanism.

➣ In the first place, authorization decisions. The decision-making of the vast majority of enterprises is a rational process that requires adequate information, proper methods, caution, gradual steps, and thoughtful thinking. More importantly, it is essential to consult all parties to ensure that risks are controllable. This process is a decision-making process that most managers are familiar with, and there is nothing wrong with it. But the most likely result of such decision-making is that in order to prove the correctness of their own decision, people will continue to maintain this decision, making it nonadjustable and irreversible. However, there is a conflict between the actual operating environment of the enterprise and the decision-making process and results because the environment is changeable and cannot have sufficient information, and meanwhile, decision-making participants may not be capable enough to make correct judgments in unknown fields. To this end, decisions should be variable and reversible, making decisions and environmental uncertainties match with each other.

➣ Furthermore, establish a trial and error mechanism. Despite that it is considered that many businesses Amazon does have no connections, while in Bezos' view, there is a certain connection between Amazon's various businesses, Uncovering the superficial cause, there are no big differences between a variety of businesses, which share a unique organizational culture. It is precisely with those failed products that can bring about successful products. Bezos said: "if you think Fire Phone is a big mistake, we are currently developing a 'bigger mistake' . I'm serious, and some new products will make Fire Phone seem worthless. " These so-called "bigger mistakes" include Kindle, Fire, Prime, Echo, Alexa, and Cloud Computing Services, all of which have gained market recognition, making Amazon a huge success.

4. Alibaba's management of values

 

▲ Ali employees are preparing for the Double Eleven

During my continuous research on China's leading enterprises, I was impressed by Alibaba's management of values. Wherein, Alibaba's value assessment differs largely from the assessment systems of companies that focus only on key performance indicators.Moreover, it even shifts the identification work of values forward and uses values to identify matching employees in the investigation and selection of job seekers. For this purpose, it also innovatively designed the "Smelling Officer" (examiners specially set up to assess whether the values of applicants are in line with the positions they apply for).

Smelling Officer is usually a senior employee who has worked in Ali for more than five years and is fully aware of Ali's values. During the recruitment process, the Smelling Officer "smells" out the values of job seekers by carefully observing their words and deeds, and selects those job seekers who match Ali's values based on experience. For instance, interviewers will never tire of telling job seekers Ali's values, while Smelling Officers will carefully observe the expressions, attitudes and behaviors of job seekers, and those job seekers who take relatively low interest and focus on income will undoubtedly be eliminated in the first place. For another example, Ali encourages cooperation and puts organizational goals more important than personal interests. During the interview, Smelling Officers will ask job seekers how they feel about themselves, and if they are too self-centered, they will not be selected. Smelling Officers' interview is an important aspect of Alibaba's value assessment, and their role is to block those who do not conform to Ali's values outside the door first.

In the concrete design of assessment mechanism, Ali's assessment has two dimensions, one is the traditional performance dimension and the second is the value dimension.These two dimensions divide employees into four categories, as shown below in detail.

 

▲  Alibaba's assessment model

In the first quadrant: "Ali persons". Only those who achieve double high scores in both performance and values are recognized and encouraged by Ali.

In the second quadrant: "wild dogs". Such employees, despite their high performance, score low on values, and in Ali's view, are not competent for the job.

In the third quadrant: "eliminated ones". They have neither high performance nor high recognition of values. Not only does Ali not want such people, other enterprises will reject them as well definitely.

In the fourth quadrant: "little white rabbits". They cannot achieve high performance, even if they get high marks on values, they are not qualified.

Undoubtedly, not all people are in the first quadrant, so those in the second quadrant and the fourth quadrant have to adjust themselves to become excellent "Ali persons" in the first quadrant.

With regard to assessment contents and methods, Ali uses its core value for assessment, namely the "six miles holy sword", consisting of six aspects of five projects. The assessment method is the mission accomplishment system, that is, for each aspect composed of five projects, if one person's first project is not achieved, then it is useless even if other projects are achieved. The reason for the adoption of the mission accommodation system is determined by the progressive logic of the six projects of "six miles holy sword". For example, in respect of the idea of "customer first", the first project is "respecting others and maintaining Alibaba's image anytime and anywhere", the third project is "in the process of communicating with customers, even if it is not their responsibility, they will not pass the buck", the fifth project is "having advance service awareness and nipping in the bud". Even if an employee can do not pass the buck and serve ahead of schedule, if he does not respect others, he will have no effect, and the score in "customer first" will be 0. In Ali's view, if one does not respect others, he will not really do not prevaricate with customers, let alone have a sense of service ahead of schedule.

In the assessment cycle and procedures, Ali carries out evaluation on a quarterly basis, of which the score of the assessment of values accounts for 50% in that of comprehensive evaluation. 6 projects * 5 items = 30 assessment rules of values, the staff conduct self-evaluation first, and then the department heads make evaluation. Employees' self-rating is compared with the rated ones, and department heads conduct performance interviews with employees, confirming their good job performance, pointing out shortcomings and indicating the direction of improvement.

It is precisely the value assessment and evaluation mechanism of "six miles holy sword" that make the employees of Alibaba reach a consensus on values, and constantly drive the growth of the enterprise with values, especially the growth of employees.

 

5. The impact of value management on performance

 

Corporate culture, especially the values, affects the behaviors of employees, while the behaviors of employees affect the feelings of stakeholders, which influences the interaction ways between the departments and individuals internally, and the interaction ways between business activities of enterprises externally. These two interaction ways exert a immediate impact on the efficiency and benefits of the enterprise, and thus on the business performance of the enterprise.

On the whole, it is precisely the management of values rather than the content of values themselves that really transforms the values of an enterprise from ideas to behavioral habits and also produces performance.(End of the article)

 

(The main content of this article is the refinement of key points of Professor Chen Chunhua's works, "From Ideas to Behavioral Habits", "Becoming a Value-based Enterprise" and "Activation Organization", Wu Linjun, Senior Editor of "Huaxia Jishi E Insight")assists in sorting out the content.