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Why Startups Need Guiding Principles

& How to Make Them Work

 

There’s a persistent myth in the startup world that to build an innovative company you need a freewheeling culture that lets everybody do things their own way. 

But in my experience, working in a startup is like being in a rowboat that’s within the sight of the shore: It’s tightly packed, and everyone’s excited about where they may be going; but if even a few people get overexcited and begin to row at their own pace, the boat just starts going in circles. 

In other words, while creativity and individuality are qualities entrepreneurs should absolutely cherish and nourish, they can never stand in the way of alignment. That’s because in a startup, capital efficiency is vital–you have to produce results faster than you burn cash–so operations have to be lean. 

If there’s anything I’ve learned in my years as an entrepreneur it’s that talent is elastic: Three smart people rowing in sync can make the boat go faster and farther than a dozen less-motivated or -skilled people. In many cases, startups succeed simply because they hire the best people and get them working in alignment.  

How does alignment work? For us, it comes down to establishing a set of Guiding Principles, and then embedding them into the fabric of the organization. 

 

Defining And Developing Guiding Principles 

Most successful companies–many of which began as small startups–have underlying principles that guide their employees and outline the organization’s values. Amazon, for instance, has 14 different statements that make up its Amazon Way. 

But developing those principles in a way that’s collaborative (so they get buy-in from the entire team), clear and reflective of leaderships’ experiences can be daunting, particularly because it needs to happen early in a startup’s lifecycle, when operational structures are less defined.  

The initial ideas for my company’s Guiding Principles began with me, but before rolling them out I sought input from the entire team in a way that invited participation without sacrificing focus. 

Zipari launched in 2014. In December of 2017, I drew up principles based on lessons I’d learned in my career. From there, I invited my executive leadership team to provide their thoughts, during which time we collectively researched other successful companies’ statements and values. At the end of that process, we had an initial draft of our Guiding Principles. 

We introduced the draft to the full staff at our next weekly town hall, followed by a survey sent to everyone in the company asking them which GP they associated with most and which would have the most (and least) impact on their jobs. We also invited them to submit any kind of recommended changes to the GPs, whether to the names of principles or their descriptions. Only after incorporating the team’s feedback did we finalize Zipari’s Guiding Principles and begin planning how we would effectively roll them out organization-wide.

 

Embedding Guiding Principles Into Daily Operations

Guiding principles will die on the vine if they’re not attended to as part of a startup’s operations. 

Put another way: The principles can’t align the team unless the team is using them to inform everything they do. 

For entrepreneurs it’s critical to be deliberate, consistent and loudly demonstrative in embedding guiding principles into their employees’ day-to-day work lives. 

At Zipari we’ve done that by building the GPs into our Friday town hall meetings. Every Wednesday we send out a survey asking the team to nominate someone who displayed one of the GP behaviors in their work. At the town hall I highlight the selected team member with a photo and a quote in front of the entire organization, describing how they embodied a Guiding Principle and reiterating why that principle is so critical to our success. Since going virtual, we continue this recognition through Zoom town hall meetings. Each shoutout comes with a pin representing the relevant GP–a tangible, public recognition and a constant reminder of what’s important to us. 

We also hang posters outlining our Guiding Principles in every conference room and common area and send laminated copies to our remote colleagues: If you work at Zipari, they’re hard to miss. 

Another significant factor in Guiding Principles proving effective are the principles themselves. It all goes back to alignment. Our GPs specifically focus on vision, talent, communication, execution and sustainability to drive maximum efficiency. There’s no GP that says, “Work whatever hours it takes” but there is one that says “Set goals and iterate–break large tasks into smaller, achievable objectives.” This saves everyone time since we are not waiting on long-running goals, which leads to mounting risk that the goals could be missed.  

Of course, at the end of the day none of this works without the right people. That’s in our GPs too: “Hire the Best: Never compromise on required experience and skills.” It’s why we have never deviated from our insistence that all nontechnical hires have at least five years of experience in health insurance. And it’s why we hire less than 1 percent of the candidates who apply for jobs here (in the first half of 2020, we hired 59 people; we had over 7,700 applications for those roles). 

Our Guiding Principles enabled us to organically build an enterprise software platform company with 20 different products in six years. They’ve helped us find the right people and directed those people to the right goals–those that are aligned with the vision of the organization. Most importantly, it’s allowed us to be incredibly capital efficient, thus requiring the minimum capital to generate the highest possible revenue.


Mark Nathan is the founder and CEO of Zipari, the first and only consumer experience platform built specifically for health insurance. Nathan began his over 25-year career as a robotics engineer at NASA and spent half of his career leading the modernization of customer experience at Guardian, one of the largest insurance companies in the nation. The other half of Mark’s career has been dedicated to developing enterprise-level, consumer-oriented technology for large consumer brands like Apple, Disney and ABCNews.com.