The company philosophy

More and more companies are framing their own company philosophy, which they ideally want to live by within their organization and present to the public. Such a philosophy is becoming more relevant, especially for scalable companies, as it provides a clear direction and can serve as an orientation for actions. In this article, you will learn what components make up a company philosophy and what makes a good one.

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What is a company philosophy?

A company philosophy is basically meant to show a specific direction or guiding principle for the company and positively influence the company’s public image. Through the company philosophy, the self-image and fundamental principles are written down in the form of a target state. A company’s philosophy defines the mission statement, a clear vision and company values.

Mission Statement

A company’s mission statement describes an organization’s core objective, usually from a social point of view or with emphasis on corporate social responsibility (CSR). The mission corresponds, so to speak, to the way in which goals should be achieved.

Vision

“What would we like to achieve together in the future?” This is the question the company vision addresses. The goal is to formulate a meaningful and motivating vision to positively influence an employee’s own actions.

Values

Company values provide concrete action orientation. They are primarily directed at the company’s own employees and are often communicated to applicants for employer branding purposes. First and foremost, values are aimed at work practices, interpersonal collaboration and responsibility. When implemented correctly, they act as a guide for how employees should act. Values are modifiable components of the company philosophy. They can be reviewed from time to time and adjusted as necessary, for example, if a company scales and finds certain values are no longer in line with their company philosophy.

Company Philosophy

Mission Statement:
“What do we want to achieve together?”

Vision:
“What do we stand for as a community?”

Values:
“What principles should guide our actions?”

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Why do company’s need a philosophy?

A company philosophy can fulfill various purposes and functions, both internally and externally.

Integration function:
On an employee level, the company philosophy should strengthen an employee’s feeling of belonging and increase their motivation and commitment (corporate identity).
Orientation function:
The vision of a company philosophy can serve as orientation for values and standards. For example, in the case of recruiting, it can facilitate the selection of suitable employees by determining if the applicant fits into the company philosophy. Depending on how relevant the company philosophy is, some companies will already determine if the applicant matches their values during the interview process.
Coordination function:
On an external level, the respective company philosophy can positively represent the company’s public image. It offers stakeholders, (potential) customers and opinion leaders an answer to the question: “What does this organization stand for?”
Decision-making function:
A company philosophy can also offer a foundation for further development and change processes, providing a framework for short-term and long-term changes.

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How are OKR and philosophy related?

The introduction of the OKR method is an important and useful step for living up to the company philosophy sustainably and achieving long-term goals. To ensure the link between company philosophy and OKR works well, the OKRs need to be aligned with the company goals.

In general, the integration of OKRs is suitable for any type of strategic artifacts, as OKRs make them measurable and, in this way, “bring them to life” and make them feasible.

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Company visions: good and bad examples

One of the main reasons company philosophies fail is when they primarily focus on a good public image and have little to do with the actual values of the company. A company philosophy, however, can only lead to a good image if it is not only communicated externally but also lived internally by employees and leaders. This is the only way it can appear authentic and improve the reputation of the company.

How do you formulate a good company philosophy?

A company vision or philosophy should inspire “outside” and motivate “inside.”

A good company philosophy…

Elicits an emotional response
Provides a clear direction or orientation
Paints a picture of the future
Is timeless
Improves a current state or significantly eliminates societal pain points

Company visions: good examples

Facebook/Meta: “Give the people the power to build community and bring the world closer together.”

IKEA: “To create better everyday life for the many people.”

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What makes a company vision a good one? They:

Are clear and unambiguous.
Aim to improve or revolutionize a specific problem area with their product(s).
Answer the questions “For whom?” and “What?”
Are written in the form of an instruction or activity.

What to avoid when formulating a company philosophy

In contrast to these corporate philosophies, the following are unfavorably depicted company visions that do not fulfill the aspects mentioned above.

Company visions: bad examples

“We want to grow twice as fast as the market at a profit of X.”

No problem to be solved
Not targeted at customers
Dependent on the success of the competition

“We want to have a 20 percent market share within the next 3 years.”

Not formulated qualitatively
Only targets a specific time frame
Only internally useful; uninteresting and possibly too sensitive (Should the competition know this?) for external use
Does not target customers or their pain points

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Company philosophy FAQ

What is a company philosophy?

The company philosophy provides a specific direction or guiding principle for the company and should positively influence its public image. Through the company philosophy, the self-image and fundamental principles are written down in the form of a target state.