You know those corporate values statements? Turns out they have weird correlations to performance.

At some point in the mid-1990s, as the dotcom bubble filled with foul air, the collective conscience of American business decided that what every firm needed was a good set of core values. Blame James Collins and Jerry Porras, authors of Built to Last (HarperBusiness, 1994), who famously noted that great companies are “guided by a core ideology — core values and sense of purpose beyond just making money.”


Management retreats were scheduled and laminated plaques cemented to the walls. Today, some 80% of the country’s 100 largest companies state their so-called core values publicly, and squads of consultants stand ready to help you drill down into your core.

In keeping with our own (unpublishable) mission, we at the CDU launched an investigation of core values. We assembled a sample of 21 companies, about half from among the most- and half from the least-admired in the United States. Firing up the CDU computers, we input the companies’ values and their performance relative to the S&P 500 over five years. What did we find?

1. Team players are losers. The 21 companies cite 41 different values of which five — the core core values — are cited five or more times: teamwork, excellence, integrity, respect, and, at number one — appearing in more than half of our sample — customer service. Sadly, the companies citing these superstar values underperformed the S&P by, on average, 18%. The biggest losers: Firms that embraced teamwork, whose stocks lost 30% versus the market.

2. Opposites attract. The best-performing values in our sample are among the CDU’s personal favorites: citizenship and environmental stewardship, both of which helped elevate their companies above market by 68%. How heartening to think it’s possible to be both eco-friendly and a player. That’s what we thought, anyway — until we noticed that the only two companies citing these core values are Waste Management, whose stock soared after it settled fraud charges with the SEC, and everybody’s favorite environmental steward, ExxonMobil.

3. More is more. Strange but true: The more values a company has, the better its stock performance. But there’s another, even more powerful, indicator: Words per value. That’s right, having at least some values of two words or more (e.g., shareholder value) pumped up returns by 16% over the S&P. Companies with all one-word values, by contrast, lost 2%. And Berkshire Hathaway, whose core values run some 5,000 words, beat the S&P by 65%.

As a test, we applied our findings to a defunct company to see if we could have predicted trouble. Turns out, we could: The company had only five core values (bad), three of which were among the most popular (bad), and all of which were one word (also bad). That company’s name? Enron — whose core value is now, of course, zero.



shiny-object syndrome (n.) a tendency among clients to want to incorporate every irrelevant fad into their business