The Impact of Google’s "China Syndrome" on Your Business Strategy

Google's short-term decision to redirect Chinese searches may feel like a huge commercial meltdown. In reality, they are paving the way for more companies to courageously lead from our values, not our wallets.

In the 1979 award-winning thriller, The China Syndrome, a reporter (Jane Fonda) and cameraman (Michael Douglas) discovered safety violations at a nuclear power plant. The term "China Syndrome" reflected the belief that if an American nuclear reactor plant experiences a meltdown, the core will melt through the earth until it reaches China. (suspend your disbelief for a moment—we all know that the opposite side of the globe is actually the Indian Ocean).

It may appear that Google is currently facing a business crisis — but they are actually averting a long-term commercial meltdown.

The core of any organization is defined by its values. Our values determine the way we run our lives as well as how we do things at work. When companies are not living their core values, they have no safety net. They are inviting a meltdown of trust, repute, and long-term viability. When they defend their core values, they create a more temporary, less threatening challenge: controversy.

Google's China Syndrome underscores three important reminders:

1.  Defending your values takes courage. It's easy to kowtow to investors' short term expectations. It takes a strong spine to let your values create short term pain in the hopes of long term gain. Google's brand equity and repute will win this battle in the long term, and will give other companies (such as GoDaddy) the confidence to follow suit.

2.  Using values to make strategic choices is finally going mainstream. Madoff, WorldCom, Enron, and Adelphia taught us that strong market share, misguided growth, and money do not necessarily translate into wealthy companies. And they are not sufficient to drive the right long-term behaviors. When successful companies like Google are willing to take such a powerful stand, I am hopeful that we are learning from our past mistakes.

3. Google's gutsy announcement accelerates the demise of commercial secrecy and isolation. Sure, some industries (such as defense) need to conceal their secret sauces and innovations—for awhile. But the time we can expect to dominate a given market, industry or segment just shrunk significantly. Customers, market researchers, and innovators everywhere will demand more collaboration and transparency in every interaction.

Some compelling research further encourages us to take our values seriously. In their seminal book entitled Corporate Culture and Performance, Harvard Business School professors John Kotter and John Heskett surveyed over 200 companies across more than 22 industries for 11 years, beginning in 1990. They found that firms with a strong corporate culture based on a foundation of shared values outperformed the other firms in the following areas:

  • Revenue grew more than four times faster
  • The rate of job creation was seven times higher
  • Stock price grew twelve times faster
  • Profit performance was 750% higher

This data further support the extra effort I take to help my clients identify, document, and communicate their values. Guiding principles are essential to fostering disciplined decision-making. It may invite turmoil and media attention in the short term, but it will avert an energy crisis in the long term. And a sustainable, healthy business starts with a strong core.

Image: http://www.flickr.com/photos/pamhule/ / CC BY 2.0

Copyright 2010, Lisa Nirell.  All rights reserved.

Add New Comment

2 Comments

  • Lisa Nirell

    Hello Ron,
    I think we both agree on one thing: the days of growth at any price are rapidly ending. And as time progresses, wealth and money are no longer synonymous.
    I will check out your website and learn more about how you are helping create wealthier, sustainable companies. Check out http://blog.energizegrowth.com for some great CEO interviews and success stories. Much like Google, these companies inspire me!

    Warm wishes,
    Lisa

    --
    Lisa Nirell
    "The Business Energizer"
    EnergizeGrowth LLC
    author, "EnergizeGrowth NOW: The Marketing Guide to a Wealthy Company"
    http://blog.energizegrowth.com
    phone: 541-593-8787

  • Ron Carucci

    Lisa - your points are spot on and I share your accolades for Google's business decisions. Part of Google's responsibility as a dominant market leader in their sector is not to just be the "pace horse" for search engines, or the pace horse for avante garde cultures that allow people to devote a percentage of their time to developmental activities outside their discipline. They are also responsible to be a global leader and to be a pace horse for the world they so richly influence. Such dramatic stands - potentially history-altering stands - send major signals to corporate leaders contemplating significant growth opportunities, especially in China's vast untapped consumer markets. I spend my days with enterprise leaders caught between major strategic intersections, boards, growth options and talent defections, and the navigational equipment that bests serves them in those moments is the moral, generative compass that guides them every day. Leaders and organizaions who lack a shared set of deeply held, unassailable principles hit whitewater and often tip their boats unrecoverably. Building a generative culture that can endure competitively over time requires deep work and attention. We applaud organizations that view the values that glue them together as a core asset to be managed as an integral part of all the resources in their portfolio. Lisa, you are right. Without them, the enterprise risk is almost immeasureable.
    For more on our work on generative cultures, visit us at

    http://www.passagesconsulting....

    --
    Ron Carucci
    www.passagesconsulting.com