{"id":124652,"date":"2024-03-18T15:49:00","date_gmt":"2024-03-18T19:49:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=124652"},"modified":"2024-03-22T14:42:46","modified_gmt":"2024-03-22T18:42:46","slug":"basic-business-principles","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/basic-business-principles\/","title":{"rendered":"The Top 4 Basic Business Principles (Claire Hughes Johnson)"},"content":{"rendered":"\n

What are the fundamental business principles your company should focus on? When should you draft a company mission statement<\/a>?<\/p>\n\n\n\n

To ensure that your company has a clear identity to guide its business model, business expert Claire Hughes Johnson recommends that you codify your company’s key principles in a set of guiding papers. These should include four components: your company\u2019s mission, long-term targets, key values, and team charters. <\/p>\n\n\n\n

Learn more about these basic business principles to get you started.<\/p>\n\n\n\n\n\n\n\n

Principle #1: Company Mission<\/h2>\n\n\n\n

The first basic business principle is drafting a mission statement<\/em>\u2014that is, a concise statement outlining why your company exists<\/strong>. She clarifies that such statements should be unique to your company and ambitious\u2014unique because they lose value if other companies can repeat your mission verbatim, and ambitious because they need to propel your company\u2019s growth over the long term. For example, a coffee company aiming to produce ethically sourced coffee at a reasonable price might have the following mission statement: \u201cTo eradicate unethical coffee sourcing practices in developing countries and provide high-quality coffee at fair prices.\u201d<\/p>\n\n\n\n

(Shortform note: In addition to Hughes Johnson\u2019s advice, experts offer a wide variety of tips<\/a> for crafting an effective mission statement. For example, they recommend that you orient your mission statement around your long-term goals, since short-term goals and culture are liable to change. Additionally, they suggest you solicit feedback from current employees when drafting your mission statement, since your employees can tell whether the statement truly resonates with the company.)<\/p>\n\n\n\n

Principle #2: Long-Term Targets<\/h2>\n\n\n\n

Because mission statements often tend to be abstract, Hughes Johnson explains that companies should also codify several concrete long-term targets <\/strong>that can motivate employees<\/a> and orient the company\u2019s actions. For instance, a new sports betting<\/a> company might have the following long-term targets: \u201cEarn 5% of the sports betting market share in three years; increase revenue<\/a> by 20% annually for the next five years; and develop three features that differentiate our sportsbook from competitors.\u201d <\/p>\n\n\n\n

(Shortform note: Many experts recommend setting SMART targets<\/a>\u2014targets that are specific, measurable, achievable, relevant, and time-bound. Specific<\/em> targets prevent any uncertainty from infecting your goals. By picking a measurable<\/em> target, you ensure that you can track your progress<\/a>. Setting achievable<\/em> targets guarantees that you don\u2019t set yourself up for failure with unrealistic aims, and by making targets relevant<\/em>, you ensure that they help further your company\u2019s mission. Finally, by setting a time limit<\/em>, you can give your company a sense of urgency in pursuing its targets.)<\/p>\n\n\n\n

Principle #3: Values<\/h2>\n\n\n\n

Hughes Johnson notes that while long-term targets establish your company\u2019s aims, writing down your values establishes your company\u2019s culture<\/strong>. She writes that when you choose your values<\/a>, the most important consideration is that they\u2019re authentic\u2014otherwise, your employees will recognize that they\u2019re contrived and derive little motivation from them. For this reason, she recommends seeking feedback<\/a> from your employees about your values to ensure they\u2019re true to your company. Apple employees, for example, might say they value creativity, ingenuity, and innovation, since Apple\u2019s goal is to drive technological progress<\/a> worldwide. <\/p>\n\n\n\n

(Shortform note: Although Hughes Johnson emphasizes the importance of codifying your company\u2019s values, others have argued that corporate values are often little more than lip service<\/a>. After all, publicly traded companies are obligated to maximize value for their shareholders, meaning that when they\u2019re forced to choose between maximizing<\/a> profits and adhering to their values, it\u2019s likely that they\u2019ll choose the former.)<\/p>\n\n\n\n

Principle #4: Team Charters<\/h2>\n\n\n\n

Finally, to provide employees with guidance on a more fine-grained level, Hughes Johnson recommends drafting a team charter to clarify the purpose of each individual team<\/strong>. Such documents, she explains, provide valuable clarity to team members about their specific goals and responsibilities\u2014unlike the mission statement, which is focused on the company\u2019s bigger picture. In particular, she argues that team charters are essential in phases of rapid growth, since these phases often cause confusion about team members\u2019 specific roles while the company is evolving. <\/p>\n\n\n\n

(Shortform note: Although Hughes Johnson writes as if a team charter is an immutable document, other business experts clarify that you should update team charters on a consistent basis<\/a>\u2014be it monthly, quarterly, or annually. Your team\u2019s goals will change as your company grows, and you\u2019ll need to make changes to your team charter to reflect these evolving goals.)<\/p>\n","protected":false},"excerpt":{"rendered":"

What are the fundamental business principles your company should focus on? When should you draft a company mission statement? To ensure that your company has a clear identity to guide its business model, business expert Claire Hughes Johnson recommends that you codify your company’s key principles in a set of guiding papers. These should include four components: your company\u2019s mission, long-term targets, key values, and team charters. Learn more about these basic business principles to get you started.<\/p>\n","protected":false},"author":14,"featured_media":124680,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,79],"tags":[1427],"class_list":["post-124652","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-entrepreneurship","tag-scaling-people","","tg-column-two"],"yoast_head":"\nThe Top 4 Basic Business Principles (Claire Hughes Johnson) - Shortform Books<\/title>\n<meta name=\"description\" content=\"For a business to succeed, you must think long-term. 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