The Core Value Equation
Five steps that turn core values from a poster on the wall into the language of accountability.
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 95%
Darius Mirshahzadeh's Core Value Equation is a five-step manual for building a core-value-driven organization: discover, design, roll out, implement, and measure for efficacy. The insight underneath it is that companies don't have values — people do — so if you never define and enforce the company's, you get whatever your individuals brought with them, and their values show up in their actions consistently. Discovery narrows a 105-word list down to a ranked top 15 and then to a final 4-6. Design converts those words into viral, sticky language that survives tests for authenticity, longevity, negativity, and product-creep. Roll-out and implementation teach the values into the team and build systems so people attach their individual values to the company's, and measurement keeps the whole thing honest over time.
Origin
In 2006, running a 40-50 person mortgage company and getting his teeth kicked in, Darius joined Verne Harnish's Birthing a Giant program at MIT and was introduced to core values. At graduation night, the founders of Nurse Next Door asked a room of 60 accomplished CEOs to stand if their company had core values — everyone stood. Stay standing if you can recite them: half sat down. If your employees know them: half the rest sat. If your customers know them: everyone sat down. That room of CEOs sitting down was the pivotal moment. Over the next five years of business struggle, Darius experimented with how to design values people could actually use, and wrote The Core Value Equation in 2019.
Core principles
- 01Companies do not have core values; people do — if you don't define the company's, you inherit a hodgepodge by default.
- 02Core values are the fundamental beliefs and the personality of the organization.
- 03Values only work when they become the language of accountability.
- 04Values must be designed to be viral and sticky, not just discovered and filed away.
- 05The moment the CEO stops living the values, the values are dead.
- 06Visionary companies stand for no more than seven and no fewer than three values.
How to run it
- 1
Discover what's authentic to you
Work from a broad list of value words (the book supplies 105), eliminate down to your top 15, then rank them — values have a hierarchy — and land on your final set of four to six.
Pro tip Four or five is the sweet spot. Built to Last found visionary companies stand for no more than seven and no fewer than three.
Watch out Don't pick values to please imaginary future clients or team members. If you discover in that mode you'll choose warm-and-fuzzy words for an organization that isn't warm and fuzzy.
- 2
Design them to be viral and sticky
Turn each value into memorable language with a description of what living it looks like. Run each through the tests: is it authentic, does it stand the test of time, is there negativity in it, is it actually a product rather than a value?
Pro tip Give each value a catchy secondary name so it lodges in memory — the same reason branding uses sticky language.
Watch out Boring words like integrity, driven, or excellence are indistinguishable from every competitor's and give people nothing to work with.
- 3
Roll them out to the team
Bring the designed values to the team and teach them what they are and what they mean. Show individuals how to leverage their own personal values to make the company values more alive.
Pro tip The interaction has to feel organic, but you need a deliberate process to create that organic interaction.
Watch out You don't learn a language overnight — expect this to take time, and make every touchpoint easy or people won't engage.
- 4
Implement ongoing systems
Build the values into the recurring machinery of the business so they drip through the organization and become the standing basis for holding people accountable.
Pro tip You won't always live the values — the goal is always trying, and getting back to center when you fall off.
Watch out If you tolerate mediocrity while claiming excellence, the team manages itself to the lowest common denominator.
- 5
Measure for efficacy
Consistently check whether the values are actually functioning as the language of accountability — whether they're screened for, referenced, and producing alignment rather than friction.
Pro tip Friction is the signal. Where friction appears, a value is being violated.
Watch out The minute the CEO doesn't live the values, you put a bullet in the head of the values.
In the wild
At MIT's Birthing a Giant graduation, the Nurse Next Door founders asked 60 CEOs — including alumni like Kendra Scott, 1-800-Flowers and Rackspace founders — to stand if their company had core values. All stood. Half sat when asked to recite them. Half of the remainder sat when asked if employees knew them. Everyone sat when asked if customers knew them.
→ Darius concluded that everyone is told to have mission, vision and values but nobody knows how to make them actually operate, and spent the next several years building the step-by-step method.
Darius went all-in on culture in an industry he describes as a graveyard for culture after the 2007-08 meltdown, pairing values with scale systems and best practices imported from other industries.
→ The Money Source went from 30 to 1,000 employees in three years and became one of the largest lenders in the US, managing roughly $100 billion in mortgages — bootstrapped, with Darius ranked the number nine highest rated CEO in America on Glassdoor.
Common mistakes
Treating values as a box to check
Most people treat core values as an MBA-program exercise you complete and file. Figuring out what's meaningful is necessary but insufficient — without deliberate design for virality and stickiness, and rollout and measurement systems, nothing changes.
Picking values that aren't authentic
A bad value is one that isn't true. If you claim you value showing up for the team and you, the CEO, don't, you've killed the value on arrival.
Picking nice-sounding words instead of true ones
Values don't need to be nice. If you're a tough, gritty organization, say so — Uber's seventh value was literally 'toe stepping'. Warm-and-fuzzy language on a non-warm-and-fuzzy company just creates misalignment when the wrong people join.
Is it for you?
Best for
Founders and CEOs scaling past the point where they can personally hand-train every hire.
Not ideal for
Solo operators or tiny teams where the founder still knows and trains everyone directly, and no shared language problem exists yet.
From the transcript
“My belief is that core values have the opportunity to be the language of accountability for your organization.”
“Companies do not have core values, people have core values.”
“You need to discover what's authentic to you, discovering your values. You need to design them to be viral and sticky, then you need to…”
“The minute that CEO doesn't live the values, you just put a bullet in the head of the values.”
From the episode
Darius Mirshahzadeh: The Core Value Equation
Darius Mirshahzadeh