Why Jim Collins Is Wrong About How to Create Core Values
Jim Collins's revered method for establishing company core values might not suit all businesses, particularly when disconnected from customer value propositions. Here are my suggestions for crafting your company's core values, based on real results.
BY BARRY RABER EDITED BY KARA MCINTYRE DEC 26, 2023
Key Takeaways
Adopting a holistic approach that integrates company mission, brand promise and customer-focused principles can lead to more relevant and effective core values.
Core values shaped by business specifics are dynamic, support growth and are better aligned with customer needs and company objectives.
Opinions expressed by Entrepreneur contributors are their own.im Collins is the guru of gurus on how to create great companies. He literally wrote the best-selling books on it — including Good to Great and Built to Last. He studied companies for years to share his observations.
While I don't disagree with Collins on much, I strongly disagree with him on how to create company core values. If you follow his process to create your values, you will be selling your company short of its potential.
Core values are the deeply ingrained principles that guide all of a company's actions; they serve as its cultural cornerstones.
Collins's process is overly focused on personal values and could result in developing values that are largely disconnected from the company's customer value proposition. That misalignment could hinder the growth and support of the business — and highlights the potential benefit of adopting a more effective process.
Visit the 'Red Planet' (but don't stay)
The core exercise in Collins's process is the "Mission to Mars." In this exercise, the leadership team selects a group of five to seven people who do a "super job" of articulating the company's core values because they embody those values. The group answers a series of six questions. The first three questions revolve around their strongest personal values, while the last three focus on values that should never change under any circumstances. The result is the values those people share in common.
What's missing here? All consideration for the company itself! The exercise totally disregards what the business is about — its industry, its purpose and mission, its brand and what value it is known for delivering to the customer, its customer base and its competitive advantage — you get where I'm headed.
One question in his process specifies that you should disregard the industry you are in (it shouldn't matter). Another asks if you would hold the value even if it became a competitive disadvantage (Spoiler alert: The answer he wants is yes), while the third asks if the value would be valid 100 years from now. What company lasts for 100 years? And what young company disregards its customers, thinking that will help them last for 100 years? Collins calls these enduring values, and I can see why.
The average age of a business in America is 10 years. You might be challenged to make it that long — much less 100 years — if you choose enduring values that have nothing to do with your business.
Collins came up with The Hedgehog Concept, which is the confluence of what a company is deeply passionate about, what they can be the best in the world at, and what drives their economic engine. The best companies have a strong Hedgehog. With a strong enough Hedgehog, company values may not matter. But for the other 30 million businesses in America, it would be smart to tilt the scale in your favor by approaching core values development in a more comprehensive way.
Try this instead
While the Mars Mission exercise can contribute to ideas for company core values, I think you need to replace the last three questions with questions more specific to your organization. The exercise should consider the business you are in, the industry, your brand and competitive advantage.
This works best if you start by defining several foundational tenets for the business, then use those to work from in addition to the Mars Mission results that identify core values shared by exemplary individuals. These tenets include the company's core purpose or focus, mission, vivid vision, vision statement, the "big hairy audacious goal" and, especially, the brand promise.
Examining these company tenets, ask:
What key non-negotiable factors are crucial to the success of these elements?
What guiding principles are core to how we must operate to align with these?
What behaviors do we need to exhibit consistently to make it happen?
What top three priorities, essential actions or qualities must we uphold continuously to deliver on our promises for our customers and team?
Now, drawing from this much larger brainstorm of ideas, develop your company's core values.
While the end result could include two or three values around the shared attributes of the existing team or how they work together that are key to preserving company culture, two or three values should guide how the company delivers for customers or the direction the company is committed to pursuing.
While Collins is focused on companies built to last 100 years, like Merck and Disney, I am focused on looking 10 years ahead as a time frame for your values. (Coincidently, that is the recommended timeline to achieve a "big hairy audacious goal," another great Jim Collins invention). If in 10 years your values could be enhanced to align better with the evolving needs of the company, its employees and customers, don't hesitate to tweak them. Core values don't have to be forever.
I recently wrote an article about four entrepreneurs who sold their businesses for $50-$150 million within 12 years of founding. Each shared their core values with me — and for all four, at least half of their core values directly related to their approach to delivering value to the customer, either by process or product. It's clear that their achievements in 12 years (or less) were significantly influenced by core values.
One benefit of producing values in this way is they are more tangible and yield visible results. That makes it easier to identify related behaviors and performance, enabling you to create effective recognition and motivational tools that amplify employee and company performance.
While I know of no book or Bible on how to write company core values, artificial intelligence is in the news a lot. I asked ChatGPT how to write core values, and the response was much closer to what I'm advocating than what Collins articulated.
Exceptional core values have the potential to propel a company to new heights in a short amount of time. They can be so powerful. Invest the time to formulate them correctly, hire employees who are a great fit with them and watch their transformative impact.
Barry Raber, is an Entrepreneurs’ Organization (EO) Member, CEO of Business Property Trust, a Portland, Oregon, company that owns and manages RV storage through Carefree Covered RV Storage and self-storage through Bargain Storage. He is also a thought leader who shares experiences for businesses at Real Simple Business.
FAQ: Why Jim Collins Is Wrong About How to Create Core Values
Q: What is Jim Collins's method for creating core values?
A: Jim Collins's approach, outlined in books like Good to Great and Built to Last, centers on a "Mission to Mars" exercise where a small group of five to seven people who embody the company's culture answer a series of questions about their strongest personal values and what values should never change under any circumstances. The result is the values those individuals share in common.
Q: Why does the article argue that Jim Collins is wrong about core values?
A: The article's central critique is that the Jim Collins core values method is overly focused on personal values and largely ignores the business itself — its industry, mission, brand promise, customer base, and competitive advantage. That disconnect can produce core values that have little to do with how the company actually delivers value to customers, potentially hindering growth rather than supporting it.
Q: What's the problem with the Mission to Mars exercise?
A: The Mission to Mars exercise asks participants to disregard the industry they're in, hold values even if they become a competitive disadvantage, and choose values that would still be valid 100 years from now. The article argues that for the vast majority of businesses — whose average lifespan is just 10 years — building values around 100-year endurance and away from customer focus is a risky and impractical approach.
Q: What does a better core values process look like?
A: Rather than relying solely on personal values, the article recommends starting by defining key business tenets — including your mission, brand promise, vivid vision, and big hairy audacious goal — and then asking what non-negotiable principles are required to deliver on those commitments. This produces core values that are grounded in both company culture and customer value proposition, not just the shared personality traits of a handful of team members.
Q: How should customer-focused core values factor into the process?
A: At least half of a company's core values should directly relate to how the business delivers value to its customers — whether through process, product, or service. The article cites four entrepreneurs who each sold their companies for $50–$150 million within 12 years, all of whom had core values strongly tied to customer delivery. Customer-focused core values create a natural engine for growth and business success.
Q: Do core values have to last forever?
A: No — and that's a key point of disagreement with the Jim Collins approach. Rather than building values meant to last 100 years, the article recommends thinking in a 10-year time horizon. If your values need to evolve to better align with the changing needs of your company, employees, and customers, it's perfectly fine to update them. Core values should be durable but not permanent.
Q: What's the Hedgehog Concept, and does it change anything?
A: The Hedgehog Concept is a Jim Collins framework built on the intersection of what a company is passionate about, what it can be the best in the world at, and what drives its economic engine. The article acknowledges that companies with a powerful Hedgehog may be able to succeed even with weak core values — but for the other 30 million businesses in America that don't have that advantage, a more comprehensive and customer-connected approach to core values is a smarter path forward.
Q: What's the right balance between people-centric and business-centric core values?
A: The article recommends that two or three values reflect the shared attributes of the team and how they work together — preserving company culture — while another two or three values should guide how the company delivers for customers or the strategic direction it's committed to. That balance ensures values serve both internal alignment and external growth.
Q: How quickly can strong core values make an impact?
A: Faster than most people think. The article points to businesses that achieved extraordinary results — exits of $50–$150 million — within 12 years of founding, with customer-focused core values playing a significant role. Unlike the Jim Collins core values method which is oriented toward long-term institutional endurance, a business-specific approach can produce visible, tangible results in a much shorter window.
Related Articles
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To dive deeper into crafting and evaluating impactful core values, you can read the full article here.
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To explore the complete process and practical examples, read the full article here.