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

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 experiencing a business strategy crisis right now–but they are actually averting a global commercial meltdown in the long term. Here’s why.

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 a while. 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 strategy begins with a strong core.

Copyright 2010, Lisa Nirell.  All rights reserved.

Image: Google Beijing, China

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