Operating Principles
Operating Principles

Operating Principles

This page is a work in progress, part of a multi-year effort to capture and share learnings, frameworks, tools, and processes to run organizations. See Running Organizations for more.

What Are Operating Principles?

"Principles are fundamental truths that serve as the foundations for behavior that gets you what you want out of life." - Ray Dalio (Source: Principles: Life and Work)

Principles Define Behaviors

Operating principles clarify what your core values look like in practice. They define the behaviors that uphold your core values and teach people how to think and behave in the organization.

Principles are the "rules of the game" and the "boundaries" that are so important for reinforcing the kind of culture you want because they make the organization's philosophy practical for everyday use.

"Toxic cultures are characterized by compliance to enforced rules. In contrast, remarkable cultures are committed to principles that are applied. The difference is like night and day. When you step into an organization with a remarkable culture, it is obvious that the employees are glad to be there. You can sense people committed to doing their best work. There is a presence of excitement and the air." - Dee Ann Turner (Source: Bet On Talent)

How Principles Are Expressed

The ___ Way

Many organizations have a "Way" that they do things, which is a grouping of their Operating Principles. These "Ways" constitute an organizational philosophy - a way of thinking. The big consulting firms are a good example of this.

"There is a McKinsey way, a Goldman Sachs approach, and a Bain philosophy, to cite only three examples of firms with strong ideologies, clear strategies, and the financial success to match. At these firms, if you don't subscribe to the ideology, you don't stay and argue or act as a silent dissenter. You walk. Or, eventually, you'll be asked to walk." - David Maister (Source: Strategy And The Fat Smoker)


Another common way of expressing principles is through "axioms." Here's an axiom example from Decurion:

"We believe that work is meaningful, that work gives meaning to people’s lives. For us, meaning comes from three things: developing oneself, creating something excellent and enduring, and contributing to other people. We believe that people are not only means but also ends in themselves. Most businesses view people (employees, customers, suppliers, and others) as a means to some end, such as completing a transaction or meeting a goal. We feel that reducing people to a role in a process dehumanizes them. While honoring the roles they play, we approach people as fellow human beings, as ends in themselves. We believe that individuals and communities naturally develop. Much of the literature on development ends with the teenage years. But we know that adults continue to develop. Our structures and practices create conditions that pull people into greater levels of complexity and wholeness. And while we did not begin with this belief, our experience has shown us that pursuing profitability and human growth emerges as one thing. They are part of a single whole, not two things to be traded off or two elements of a “double bottom line.” We capture this axiom by saying that nothing extra is required." (Source: An Everyone Culture)


Ray Dalio's Bridgewater constitution is an example of a "Way" document based on company Principles.

"The ‘Operating Principles’ document — the Bridgewater constitution, which all citizens of the company seek to uphold (or ‘fight like hell’ to change, if they disagree) — is not about the laws of finance, the market economy, or investing. Instead, it’s about the ways people act to foster and preserve a culture of truth and transparency. The principles set a clear bar of excellence for all decision making and are the common textual and conceptual reference for every Bridgewater employee." (Source: An Everyone Culture)

A Level Below Core Values

Core values, done well, are unique, meaningful, and last for many years, for many stages of the organizational lifecycle. Principles are more fluid, more customized to the work you do, and more direct as to how people should do that work.

"The highly subjective nature of value statements renders them nearly meaningless. Values are couched in the language of platitudes: respect, integrity, and even having a positive impact on communities mean different things to different people" - Anna Held (Source: The Problem With Corporate 'Values')

Principles add concrete meaning to values. They explain how to exhibit values like "Respect" or "Integrity," in your job role.

If a core value is about Agility, then Operating Principles like those explained in the Agile Manifesto, explain how that agility is expressed in the culture:

3 Agile Principles from the Agile Manifesto
  • Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.
  • Welcome changing requirements, even late in development. Agile processes harness change for the customer's competitive advantage.
  • Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.

A Level Above Practices

Most companies use best practices or procedures for executing processes. Principles are a level above those practices. Principles instruct people on how to think and decide for themselves, instead of dictating exactly how the work should be done.

That doesn't make principles better than best practices. Principles are highly valuable in situations where people need to use their best judgment.

No Principles = No Thinking

If you skip over principles and try to execute solely through best practices and SOPs, you'll end up with a team of people who don't think for themselves.

"As soon as you give people concrete practices, you run into the danger that some of them will follow the advice to the letter instead of trying to understand the principles… The mindless adherence to rules, combined with a steady loss of principles, is always a prelude to bureaucracy." -Jurgen Appelo (Source: Managing for Happiness)

Best practices work best when variance creates problems, as best practices tell you exactly what to do to produce a consistent output. An effective organization needs both principles and best practices.

Principles Are Uniquely Yours

There are a finite number of human values, so organizations naturally share some of the same core values. There are many ways to define a specific value and countless ways to behave by those interpretations, which means there are infinite principles for operating. Principles provide a backbone for your core values, your strategy, and your purpose - all unique components of your organization.

Context matters. A critical 2012 principle at Facebook could be disastrous for your organization. That same "move fast and break things" principle at Facebook didn't make sense at Facebook 10 years later.

“If you were running, say, a nuclear power plant, a data backup service or a bank, 'move fast and break things' would be a perfectly disastrous motto." - Taylor Pearson (Source: How to Use the Cynefin Framework to Make Better Decisions)

Updated For Constant Evolution

As the business context changes, so should your operating principles. Your "deeply held organizational beliefs" (core values) don't change, but principles should change as the cultural and strategic contexts change.

"The key to a great culture is creating and fostering a never-ending conversation about the ‘rules of the game.’ The rules define the boundaries or guardrails so that everyone knows exactly how to act, how to communicate, and how to treat each other." - Dee Ann Turner (Source: Bet On Talent)

How Many Principles Should We Have?

Operating Principles can be created at an organizational level, a team level, and even a job role level. That means there are no limits to how many Operating Principles you can have in your organization.

"An organization can have dozens of guiding principles that help leaders and employees alike make good decisions for the business by applying the principles and using their best judgment. Generally, these principles have grown over the life of the organization and represent a unique part of the organizational culture." - Dee Ann Turner (Source: Bet on Talent)

Bridgewater is run by 210 Operating Principles.

How To Create Operating Principles

Elements of Effective Principles


Principles are best expressed as phrases, not as single words. Those phrases should provide sufficient detail so that people can use them to think through common challenges they'll run into in their day-to-day work.


Use stories and storytelling to explain how principles can be used. What's an example of how that principle has been used in past customer service or sales or marketing scenarios?

Write them down, speak them out loud, test them against reality, and improve them over time.

Weaved Into The Day-to-Day

As with core values, you need to find "hooks" to integrate principles into the work, rather than expect people to memorize them. This means integrating them into core documentation - your process docs, templates, SOPs, and checklists. This should be a core effort of your management team.

"If a company’s principles have to be memorized, it’s a warning sign that they aren't sufficiently woven into the fabric of that company. We know and remember Amazon's principles because they are the basic framework used for making decisions and taking action. We encountered them every day, measured ourselves against them, and held one another similarly accountable." (Source: Working Backwards)

Reflecting on The Past

Reflecting on past decisions the organization has made and then working to deduce the underlying principle behind those decisions is one way to discover what the right principles are for your organization.

As you reflect on current business issues, you find that they often rhyme - you've solved this sort of issue before. Developing and improving principles gives you a shorthand for creating better solutions with each iteration, all while upholding and reinforcing your values.

"Almost all 'cases at hand' are just 'another one of those,' identifying which 'one of those' it is, and then applying well-thought-out principles for dealing with it. This will allow you to massively reduce the number of decisions you have to make (I estimate by a factor of something like 100,000) and will lead you to make much better ones." - Ray Dalio (Source: Principles: Life and Work)

Principles Examples

Centratel's Thirty Operating Principles (Source: Work The System) - very detailed for a smaller organization.
  1. Company decisions conform to the Strategic Objective, Thirty Principles, and Working Procedure documents.
  2. We are the highest-quality answering service in the United States. We do whatever it takes to ensure the quality of service to our clients, employees and vendors is impeccable.
  3. We draw solid lines, thus providing an exact status of where things stand. Documented procedures are the main defense against gray area problems.
  4. “Get the job done.” Can the employee do his or her job, or is there always a complication of one kind or another? This ability to “get the job done quickly and accurately without excuses or complications” is the most valuable trait an employee can possess.
  5. Employees come first. We employ people who have an innate desire to perform at 100 percent. We reward them accordingly. The natural outcome is we serve our clients well.
  6. We are not fire killers. We are fire prevention specialists. We don’t manage problems; we work on system enhancement and system maintenance in order to prevent problems from happening in the first place.
  7. Problems are gifts that inspire us to action. A problem prompts the act of creating or improving a system or procedure. We don’t want setbacks, but when one occurs we think, “thank you for this wake-up call,” and take assertive system-improvement action to prevent the setback from happening again.
  8. We focus on just a few manageable services. Although we watch for new opportunities, in the end we provide “just a few services implemented in superb fashion,” rather than a complex array of average-quality offerings.
  9. We find the simplest solution. Ockham’s Law, also called the Law of Economy, states, “Entities are not to be multiplied beyond necessity . . . the simplest solution is invariably the correct solution.”
  10. The money we save or waste is not Monopoly money! We are careful not to devalue the worth of a dollar just because it has to do with the business.
  11. We operate the company via documented procedures and systems. “Any recurring problem can be solved with a system.” We take the necessary time to create and implement systems and procedures, and in the end, it is well worth it. If there is a recurring problem, a written procedure is created in order to prevent the problem from happening again. On the other hand, we don’t bog down the organization with processes and procedures that target once-in-awhile situations. Sometimes we elect to not create a procedure.
  12. “Just don’t do it.” Eliminate the unnecessary. Many times, elimination of a system, protocol, or potential project is a very good thing. Think simplicity. Automate. Refine to the smallest amount of steps or discard altogether. Would a simple “no” save time, energy, and/or money?
  13. Our documented systems, procedures, and functions are “off-the-street.” This means anyone with normal intelligence can perform procedures unassisted. The real-world evidence of this is we can hire an individual “off-the-street” who has good typing skills and have him or her processing calls by the second day. For this result, protocols have to be efficient, simple, and thoroughly documented. (Before we implemented our systemized training protocol, it would take six weeks to train a TSR.)
  14. Do it NOW. All actions build on “point-of-sale” theory. We don’t delay an action if it can be done immediately. Just like any major retail outlet, we “update inventories and databases at the exact Appendix B: Centratel’s Thirty Principles 209 time the transaction takes place.” There is no paperwork floating around the office after a physical transaction. We ask, “How can we perform the task NOW without creating lingering details that we must clean up later?”
  15. We glean the Centratel mindset from Stephen Covey’s books, including The 7 Habits of Highly Successful People, First Things First, and The 8th Habit. As well, we consider Good to Great by Jim Collins; The E-Myth Revisited by Michael Gerber; and Awaken the Giant Within by Anthony Robbins.
  16. We pattern individual organization upon Franklin-Covey theory. We use organizing mechanisms that are always at hand. We prioritize, schedule, and document. The system is always up-to-date and we use it all the time. (For Centratel, this is Microsoft Outlook.)
  17. Sequence and priority are critical. We work on the most important tasks first. We spend maximum time on “non-urgent/ important” tasks via Stephen Covey’s time-matrix philosophy.
  18. We double-check everything before release. If a penchant for double-checking is not an innate personal habit, then it must be cultivated. Double-checking is a conscious step in every task, performed either by the individual managing the task or someone else.
  19. Our environment is spotless: clean and ordered, simple, efficient, functional. No “rat’s nests,” literally or figuratively.
  20. Employee training is structured, scheduled, and thorough. Assertive client contact is also structured, scheduled, and thorough.
  21. We are deadline-obsessed. If someone in the organization says they will be finished with a task or project by a certain date and time, then he or she commits to finishing by that deadline (or, if legitimate delays intrude, advise coworkers well in advance that the deadline is impossible).
  22. We maintain equipment and keep it 100 percent functional at all times. If something is not working as it should, fix it now—fix it now even if it’s not necessary to fix it now. It’s a matter of good housekeeping and of maintaining good habits. This is just the way we do things.
  23. Mastery of the English language is critical. We are aware of how we sound and what we write. We do whatever we can to improve. We are patient as a coworker corrects us.
  24. We study to increase our skills. A steady diet of reading and contemplation is vital to personal development. It is a matter of self-discipline.
  25. As opposed to “doing the work,” the department manager’s job is to create, monitor, and document systems (which consist of people, equipment, procedures, and maintenance schedules).
  26. The COO oversees department heads and overall systems. It is the COO’s job to direct, coordinate, and monitor managers.
  27. We avoid multitasking activities. When communicating with someone else, we are 100 percent present. We give full attention to the person in front of us (or to the task at hand). We focus on listening and understanding. Read the classic Treating Type A Behavior and Your Heart by Meyer Friedman. “Mindfulness” is paying complete attention to one thing at a time: read Full Catastrophe Living by Jon Kabat-Zinn.
  28. When in the office we work hard on Centratel business. We keep our heads down; we focus, and in turn the company pays very well. That’s “the deal.” The workweek rarely exceeds forty hours.
  29. Complete means “complete.” Almost or tomorrow is not “complete.” In particular, this is germane to administration staff’s use of task functions.
  30. We strive for a social climate that is serious and quiet yet pleasant, serene, light, and friendly. Centratel is a nice place to work.
ABInBev's 10 Principles
  • We dream big.
  • We are owners who think long-term.
  • We are powered by great people and build diverse teams through inclusion and collaboration.
  • We lead change and innovate for our consumers.
  • We grow when our customers grow.
  • We thrive when our communities thrive.
  • We believe in simplicity and scalable solutions.
  • We manage costs tightly and make choices to drive growth.
  • We create and share superior value.
  • We never take shortcuts.
Uniqlo's 23 Management Principles, distilled to 8 key themes (Source: Uniqlo Boss 'Without a Soul, a Company Is Nothing'):
  1. Put Customers First. Yanai's number one management principle is: “Respond to customer needs and create new customers.
  2. Contribute to Society. For Yanai, a company's value is intrinsically linked to the value it brings to society as a whole. Successful companies must serve society, while a company that does not exist in unity with society and only pursues its bottom line will not survive.
  3. Embrace Optimism. Yanai believes great businesses must embrace “high hopes for the future” and encourages Fast Retailing's managers to think and invest positively and proactively. “There is nothing to gain from pessimism,” he says. “If you are waiting around for fortune or luck, they will not come. Don't be passive. Nobody can predict the future. So why don't you venture out and create one? Those who create the future will be blessed with luck.”
  4. Learn From Failure. Yanai is no stranger to failure. But over the years, he has come to see failure as a key learning opportunity. One of his most important principles reads: “Thoroughly analyse information relating to successes and failures. Remember what you learn and put it into practice the next time around.”
  5. Focus on the Details. Yanai often says: “God is in the details.” The comment reflects his belief in executing relentlessly with a sharp focus on perfecting what he calls “the small things.” “A gap of one millimeter makes all the difference as it widens more as we move forward,” he told Takeuchi. “The secret to success is doing the basics day in and day out until you get tired of it,”
  6. Be Your Own Critic The importance of self-critique is captured in another of Yanai’s key principles: “Review and rethink your actions and approach to improve and renew yourself.”
  7. Connect to the World. Fast Retailing’s future is inextricably linked to success beyond Japan and Yanai has long aimed to turn Fast Retailing into a truly global organisation, making English the firm’s official language and establishing management training and innovation centres in New York, Shanghai, Paris and Singapore.
  8. Disrupt Yourself. Adapting to change is a key theme for Yanai, who is fond of comparing Uniqlo to a technology company.
O'Reilly Media Operating Principles
  • Is it best for the customer? Everyone we engage with is our customer—not only the people who buy our products and services, but also speakers, authors, and business partners.
  • Look from the outside in. Start with the customer’s point of view. It’s about them, not us! Focus on how whatever we’re creating or promoting matters to the recipient. Connect with others outside of the company—people who have jobs similar to yours, competitors, companies whose work you admire (get out of the building and actually talk to people!). That outside perspective helps us continually redefine who we are.
  • Tell meaningful stories. Stories matter—people are wired to pay attention to them, and we understand through narrative. Our products always have a meaningful story, a “why this is important,” behind them. Our job is to tell those stories in a way that’s meaningful to the customer and illustrative of the company’s values.
  • Surprise and delight. Go for thoughtfulness, extras, whimsy, the unexpected—those special touches that lift us above the ordinary and create a shared experience of “Yes!” Whether it’s creating a product, communicating with customers, or working with co-workers and our network, aim for surprise and delight.
  • Err on the side of generosity and reciprocity. We humans are wired to help those who help us—reciprocity is a better way to motivate behavior than rewards! It’s a kind of currency. With customers, communities, and co-workers, when you ask for something, make sure to give something back.
  • Embrace, adapt to, and drive change. Expect tomorrow to be different from today. Your job, your audience, your co-workers, your desk, your boss—these are all likely to change as the company experiments and grows. Whether driven by internal inspiration or external circumstances, there’s always an opportunity to do something better or new.
  • Is it best for the company overall? Think higher than your project, team, department, or division. Go for the biggest possible benefit.
  • If it’s high impact for the company, it’s high priority for you. It’s easy to fill up your day with the routine, the “nice to do,” or things that someone requests. Don’t! Do the things that get us closer to company goals.
  • If you have a better idea or you see something that’s not working, say so! Whether it’s your job or not. We need the smarts and creativity of every employee to succeed. Feel free to offer suggestions and put forth new ideas. They may not all get adopted, but they’ll be heard and considered.
  • Know your numbers. No matter what your job, there are important numbers that gauge success. Know what those are, and keep tabs on them.
  • Measure what matters. You can’t manage what you don’t measure—how do you know if something’s working unless you can track its progress?
  • If you’re not sure, ask. Ask anyone! While your manager should be a good source of answers, feel free to check in with people outside your group.
  • Context matters—say why, not just what. When you’re relaying a decision or requesting information, include the reasons behind it. Those reasons should include how it supports our business goals and company values.
  • If you can’t agree in under 60 minutes, bump it up. To be an agile company, we need to get to decisions quickly. It’s management’s job to make the call when work groups hit an impasse.
  • Be tough on problems, not on people. Dig deep to find the best solutions—attack problems fearlessly and incorporate ideas from those with different perspectives. Don’t be afraid to disagree, but do it with respect. Focus on issues and facts, not personalities or positions.
Goldman Sachs Business Principles
  1. Our clients’ interests always come first. Our experience shows that if we serve our clients well, our own success will follow.
  2. Our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore. We are dedicated to complying fully with the letter and spirit of the laws, rules and ethical principles that govern us. Our continued success depends upon unswerving adherence to this standard.
  3. Our goal is to provide superior returns to our shareholders. Profitability is critical to achieving superior returns, building our capital, and attracting and keeping our best people. Significant employee stock ownership aligns the interests of our employees and our shareholders.
  4. We take great pride in the professional quality of our work. We have an uncompromising determination to achieve excellence in everything we undertake. Though we may be involved in a wide variety and heavy volume of activity, we would, if it came to a choice, rather be best than biggest.
  5. We stress creativity and imagination in everything we do. While recognizing that the old way may still be the best way, we constantly strive to find a better solution to a client’s problems. We pride ourselves on having pioneered many of the practices and techniques that have become standard in the industry.
  6. We make an unusual effort to identify and recruit the very best person for every job. Although our activities are measured in billions of dollars, we select our people one by one. In a service business, we know that without the best people, we cannot be the best firm.
  7. We offer our people the opportunity to move ahead more rapidly than is possible at most other places. Advancement depends on merit and we have yet to find the limits to the responsibility our best people are able to assume. For us to be successful, our men and women must reflect the diversity of the communities and cultures in which we operate. That means we must attract, retain and motivate people from many backgrounds and perspectives. Being diverse is not optional; it is what we must be.
  8. We stress teamwork in everything we do. While individual creativity is always encouraged, we have found that team effort often produces the best results. We have no room for those who put their personal interests ahead of the interests of the firm and its clients.
  9. The dedication of our people to the firm and the intense effort they give their jobs are greater than one finds in most other organizations. We think that this is an important part of our success.
  10. We consider our size an asset that we try hard to preserve. We want to be big enough to undertake the largest project that any of our clients could contemplate, yet small enough to maintain the loyalty, the intimacy and the esprit de corps that we all treasure and that contribute greatly to our success.
  11. We constantly strive to anticipate the rapidly changing needs of our clients and to develop new services to meet those needs. We know that the world of finance will not stand still and that complacency can lead to extinction.
  12. We regularly receive confidential information as part of our normal client relationships. To breach a confidence or to use confidential information improperly or carelessly would be unthinkable.
  13. Our business is highly competitive, and we aggressively seek to expand our client relationships. However, we must always be fair competitors and must never denigrate other firms.
  14. Integrity and honesty are at the heart of our business. We expect our people to maintain high ethical standards in everything they do, both in their work for the firm and in their personal lives.