Principled Entrepreneurial Decisions by Stanford

Stanford University’s School of Engineering developed an approach to teaching ethics to aspiring entrepreneurs called PEAK, Principled Entrepreneurship: Action and Knowledge.

Through this method, we help students develop a set of values and principles they will take with them for their lives and careers in whatever path they choose. At our talk with GCEC, we would plan to share with the conference a glimpse into the approach we take to our flagship course, “Principled Entrepreneurial Decisions”. We will share our approach and materials
that educators could consider using as part of their teaching of entrepreneurial ethics.

We will share examples of frameworks, cases, and activities we use to help the students on their journey, we will possibly include a video clip of the class, and we will answer questions about our approach. Time permitting, we will also share some of our emerging work regarding understanding how companies can instill principled decision-making in their culture. Overall, our perspective is that if companies adopt a broad set of principles – that by definition will come into conflict – they will make better decisions and achieve better outcomes and have a better lexicon for communicating principled decisions.

Presented by Jack Fuchs

  • What founder principles are guiding our decision-makers?
  • Situations where principles come into conflict and need to be wrestled with
  • Be true to yourself and everything will work out alright
  • Case study: Cloudflare = traffic prioritization on the internet
  • One model – who gets to use enterprise website for free – set of partners who, if they vouch for you, then you get it for free
  • Video – from a lecture in class about the FBI showing up at your door
  • Cases with Themes
    • Bloom Energy – Climate Tech
    • Robinhood – Responsible Innovation
    • Oracle – Diversity, Equity, & Inclusion
  • Facebook has always had the principle of engagement
    • If you are going to violate engagement, then go all the way to Mark Zuckerberg
    • Imagine if they had been equipped with a principle about hate speech, violence, and more
      • Hey my engagement is going up, but there’s a genocide going on
      • Then, they could be making a decision based on principles
  • CONCEPT
    • Principles will come into conflict
    • Want people to develop a broad set of principles
    • Wrestle with those principles
    • In wrestling, will make better decisions
  • Frameworks
    • Values and principles – definitions, examples, and development methods
      • Values = Fundamental beliefs that allow us to make general judgments about what is good or bad
        • 1-3 words long
        • Drive behavioral norms at a high level
      • Principles = actionable rules of conduct for making both life and organizational decisions. Principles are derived from our values. 
        • Not actual rules or a specific recipe
        • Meant to come into conflict
        • Ex. achieving cash flow break even is a good principle
          • Could offset another principle of doing great things for customer
        • Principles don’t usually go on the website
    • Categories of principles – thought-starters for breadth
    • Criteria for principled decisions – effectiveness and evaluation, including methods of instilling
  • Q&A: How do you protect against overbearing or dominant personalities in the room?
    • We have an application that screens for agreeableness
    • Credo to sign about not being mean
    • Prof is self-deprecating
    • Prof attacks the guest speakers the first few weeks
    • When silly things happen in the case, I talk about it
      • Model the behavior we want to see (no thick skin)
    • The first week, use a guest speaker who is young and students don’t realize that she is in the room
  • Zoom
    • It was a low point of people not willing to disagree with others
    • Stanford has heightened sense of people feeling threatened or triggered
    • It helps to put them in the role-play situation because then playing a character and not themselves, so can be a step removed
  • Mistake
    • Last year tried to get the broadest amount of classroom participation
    • 60 students, 57 show up, 52 talk at least once
    • It was too much because some undergrads just want to hear themselves talk
    • Participation grades for each class session were part of the problem
  • Our Perspective
    • Tend to be weighed differently for different decision making
    • …missed a few slides…
  • Great example “When we set an expectation with a customer, we own it.”
    • A good principle sets a scope and action
    • Consider it’s impact on a leadership team decision
  • Principle-based discussion or disagreement
    • For me, principle X is more important, which is why I think you’re wrong
    • Not just “I think you are wrong
  • “That will be in the package…”
  • Categories of principles
    • Organizational
      • Culture
      • Structure
      • Process
    • Operational
      • Departments
    • Stakeholders
      • Investors
      • Board/governance
      • Partners
  • IDEA: Think of an organization that you work with…
    • Think of principles that already exist in that organization…
      • How would it benefit to put them down on paper and communicate them effectively?
      • Make them part of your vernacular when debating and discussing as a team
      • Here’s how we deal with XYZ stakeholders or situation
      • Ex. worked with 20 professionals in 6 working groups to document principles
        • Never really wrote it down at a 40-year-old firm
        • What would we tell a newcomer at our company about how we do things to indoctrinate them?
  • IDEA: If you do it in advance then you will make better decisions
  • How are principles developed
    • Source: Ray Dalio – Principles book – came to course for 2 years and helped students develop their individual personal principles
    • We iteratively improve our principles over time based on actions, decisions, results, and reflection
      • Company mission
      • Values (individual, company, community) inform your principles
      • Experiences (past challenges, crucibles, situations, difficult decisions)
        • This happens a lot to reflect back and see guiding light about your principles
      • These 3 lead to principles (organizational, operational, stakeholder)
    • Then
      • Decide & Act → Reflect → Revise Principles
    • Experiential Learning
      • Write an overarching vignette and then roles to play
      • Cases are all available with teaching notes for the case
      • Responsible AI
      • Positioning to Customers (product delays – do we tell customers)
      • Responsible Innovation
    • PEAK’s Target Audience
      • Students – touch students directly at Stanford, and around the world through our courses
      • Educators – share our materials and pedagogy with global educators
      • Companies/Community – Reach broader community through direct and indirect influence
    • When I look back on my career…
      • Having congruent values on every level leads to peace and tranquility
  • LIFE GOAL: CONGRUENT VALUES ON EVERY LEVEL
    • Individual Values (me)
    • Organization Values (group, organization, company)
    • Community Values (field, industry, geography)
    • Don’t need to be the same…but they should rhyme!
  • The more aware you are of your principles, the less likely you are to blur the lines
    • Which principle wins out
    • At one point in life (single and selfish), principle X wins out
    • At a later point in life (parent), principle Y wins out
  • “Maybe not today, maybe not tomorrow, but soon, and for the rest of your life…” Casablanca
  • Wrestling with principles > comprising principles
  • Resources
    • I have videos of full teaching lectures
    • Notes on how to pull out role plays or get conflict to happen
    • Invite people to visit the class and see it happen
  • Ex. Investment firm example with 4 major categories to define their principles
    • Picking and winning great deals
    • Due diligence
    • Company building
    • Exits and distributions
  • How do you help students to do self-exploration to know themselves, their values, and their principles?
    • Yes, we do have exercises for students to develop their own values and principles
    • A workshop that’s really cool
    • We’re not trying to create great ethics students – just improve a bit – 1000 people moving 1 foot
  • How does culture factor in?
    • It does influence principles a lot
    • Geography, religion, upbringing, ethnicity
    • Want you to come up with principles that work for you, your project team, or company
  • “What does it mean to show up prepared?”
  • Have (awkward) conversation up front to define principles together
  • Do you have students
    • Students have a hard time coming up with principles that are profit-related
    • Tend to be overly idealistic
  • Takeaways
    • Be explicit about your values and principles
    • Evolve and prioritize your principles wisely
    • Communicate your principles explicitly within your organization
      • Onboarding in 9 locations…
      • Principles help you scale
    • Execute according to your principles – you will accelerate your growth
      • Don’t make decisions that go against them
  • Applying it with students to identify their principles
    • Ask each student to reflect back on key decisions they made in life and what principles they had that guided those decisions
    • Powerful serotonin and oxytocin thinking about those major decisions
  • Applying it with companies to identify their principles
    • Ask company leadership for 3-5 key categories to define principles
    • Task individuals with individual brainstorming of principles in each category
    • Form small groups to brainstorm together
    • Work with clients to decide how to decide on their principles
  • Remember, we are playing the infinite game, and if we die, then we can’t help anyone else
    • The guiding principle can be the desire to live to play another day

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