Define your core values in 6 steps: (1) audit your peak decisions, (2) identify recurring patterns, (3) stress-test with real tradeoffs, (4) write behavioral definitions, (5) rank-order by conflict scenarios, and (6) pressure-test with your team. The process takes 2-4 weeks and should produce 3-5 values with specific behavioral anchors, not aspirational words.
I’ve watched over 200 CEOs go through a core values exercise. The pattern is almost always the same.They sit in a room. Someone brings a list of 300 words. People circle the ones that feel right. They negotiate. They compromise. They leave with five values nobody disagrees with: Integrity. Excellence. Innovation. Teamwork. Customer Focus.Three months later, nobody can remember them without checking the website.That’s not a values exercise. That’s a vocabulary exercise. And the reason it fails is the starting point. You can’t define your core values by looking at a list of nice words and picking favorites. You define them by looking at your actual behavior under pressure and naming the patterns you find there.The process below works because it starts with your decisions, not your aspirations. It takes about two hours if you’re honest with yourself. And the values you end up with won’t be the ones that sound impressive. They’ll be the ones you’ve already been living, whether you named them or not.If you want broader context on what core values actually are and how they’re used across organizations, read the complete guide to core values for leaders.
Why Most Values Exercises Fail
Before the process, let me save you from the three mistakes that kill every standard approach.Mistake 1: Starting with a list
When you start by scanning a list, your brain does something predictable: it gravitates toward socially desirable words. You pick “integrity” because who would say they don’t value integrity? You pick “innovation” because it sounds forward-thinking. You pick “family” because it feels warm.None of that tells you what you actually stand for when a decision costs you something.The fix: start with your decisions, then find the language. Not the other way around. If you do want to reference a list for language refinement later, the core values list with 250+ examples is organized by category so you can match your patterns to precise language.Mistake 2: Group consensus as the method
Asking a room of 10 people to agree on company values produces the lowest common denominator. You get the five words nobody objected to, which means you get the five words with the least tension, specificity, and operational value.The fix: the founder or CEO defines the values first. Then the leadership team pressure-tests them. The order matters.In founder-led companies between $1M and $10M, the company’s values are the founder’s values whether you acknowledge it or not. Your team already operates according to your unspoken standards. The job isn’t to create new values from collective input. It’s to name the ones that already drive your decisions and make them explicit.Mistake 3: Stopping at words
“Integrity” is a word. “Do what you said you’d do, or communicate immediately when you can’t” is a value. The difference: one sounds nice. The other tells you what to do at 9 AM on Tuesday when you realize you can’t deliver on a commitment.Every value needs behavioral rules. If you can’t describe what the value looks like as an observable action, it’s too abstract to be useful. More on this in Step 5.The 6-Step Process
Step 1: The Decision Audit
This is the foundation. Skip it and nothing else works.Pull up your calendar, your email, and your memory. Identify your last 10 significant decisions. Not routine stuff. The ones that involved tension, trade-offs, or consequences. Things like:Hiring or firing someone. Accepting or rejecting a client. Saying yes or no to a partnership. Cutting a product or initiative. Confronting or avoiding a hard conversation. Spending or not spending significant money.For each decision, write down your answers to four questions:- What was I protecting?
- What was I willing to sacrifice?
- What was non-negotiable?
- What pattern do I see across multiple decisions?
Step 2: The Frustration and Admiration Test
Your values also reveal themselves through your emotional reactions to other people’s behavior.Write down three situations in the last year where another person’s behavior genuinely frustrated or angered you. Not minor annoyances. The kind of frustration that stuck with you.Then write down three situations where another person’s behavior genuinely impressed you. Not impressed in a surface way. Impressed in a way that made you think “that’s how I want to operate.”Your frustrations reveal violated values. Your admiration reveals aligned values. The specifics matter more than the categories.When I run this exercise with founders in my CEO mastermind, the frustrations almost always cluster around the same themes for each individual. One CEO gets furious at missed commitments. Another gets furious at politeness over honesty. Another gets furious at inaction during uncertainty. Each pattern points to a different core value.Step 3: The Peak Experience Analysis
Think about two or three moments in your career where you felt most aligned, most effective, most like the leader you want to be. Not the biggest wins. The moments where everything clicked.For each moment, ask: What was I doing? How was I behaving? What principles was I operating from?At Arcules, my peak moment wasn’t the Canon acquisition. It was a Tuesday afternoon when I walked into a team meeting and realized that the entire product direction had been decided without me. My leadership team had debated, decided, and presented the plan. They used our stated priorities to make the call. They didn’t need me.That moment told me more about my values than any retreat ever could. I valued building leaders who could operate independently. I valued systematic decision-making. I valued being replaceable in day-to-day operations so I could focus on strategy.Step 4: The Naming Process
By now you should have raw material from three sources: your decisions, your emotional reactions, and your peak experiences. The patterns across all three sources are your real values.Here’s where most people reach for single words. Don’t.Name your values as short, specific phrases. The rule: if the phrase tells you what to do, it works. If it just tells you what to feel, it doesn’t.Doesn’t work: Honesty Works: “Say the hard thing early.”Doesn’t work: Growth Works: “Better today than yesterday. Every day.”Doesn’t work: Family Works: “Protect the non-negotiables that keep me whole.”Doesn’t work: Excellence Works: “Ship it better than expected, every time.”The specific version creates accountability. You can measure whether you said the hard thing early. You can’t measure whether you “valued honesty.”For language inspiration, scan the phrase-based examples in the core values list organized by category. But only after you’ve identified your patterns. The list refines your language. It doesn’t replace your discovery work.Robert Glazer, who’s written about this process in HBR, makes the same point: effective values are short, action-oriented phrases that tell people how to behave. Single words are decorative. Phrases are operational.Step 5: The Pressure Tests
This is where most exercises end. And that’s why most values are decorative. You need three tests before a value earns the “core” label.The Cost TestHas this value ever cost you something significant? Lost revenue? A relationship? Comfort? If you’ve never paid for it, it’s an aspiration, not a value.I passed on a potential investor at Arcules because he made comments about the women on my leadership team. Cost six months of runway. Slept fine. That told me “protect the people who protect the mission” was a real value, not a poster.If you can’t point to a moment where a value cost you something, it hasn’t been tested yet. That doesn’t mean it isn’t real. It means you need to watch for the moment it gets tested and see what you actually do.The Tension TestCould a reasonable, intelligent person hold the opposite position? If yes, it’s a real value. If no, it’s a permission-to-play expectation.“We value quality” fails this test. Nobody argues for low quality. “We’ll miss a deadline before we ship substandard work” passes. Someone could reasonably say “We ship on time and fix later.” The disagreement is what makes it a real value.“We value teamwork” fails. “No brilliant jerks. We’ll sacrifice individual talent for team health every time” passes. Netflix built a culture on this, and it’s a value because it has a real cost.The Behavior TestCan you describe what this value looks like as an observable action at 9 AM on a Tuesday? If yes, it’s operational. If no, it’s still too abstract.“We value transparency” is abstract. “Share revenue numbers with the full team every month, including months when the numbers are bad” is observable. Your newest hire can understand it and act on it from day one.Every value that survives all three tests is core. Everything else goes on a different list: aspirational values you’re working toward, permission-to-play values that are table stakes, or accidental values that exist by habit.For the full taxonomy, read what are core values and why the standard definition fails.Step 6: The Narrowing
You should now have somewhere between five and twelve phrases that passed all three tests. Too many. Narrow to three for your company. Three to five for yourself.The narrowing question: “If I could only keep three of these, which ones would most fundamentally change how my team operates if they were removed?”The values that would leave the biggest hole are the ones that matter most.Brene Brown recommends two. Patrick Lencioni says three to five. I tell every CEO: three for the company. Your team needs to be able to recite them from memory and apply them in a live situation without reaching for a reference document. Three is the upper limit for that kind of instant recall.If you want to explore the distinction between personal core values and company values in more depth, I’ve written a separate guide on that.After the Process: Making Values Operational
Defining values is the beginning. Operationalizing them is where the work starts.Every value needs behavioral rules. Three to five specific, observable guidelines that translate the principle into daily practice. I covered this in depth in core values in the workplace, including how to embed values into hiring, onboarding, weekly meetings, performance reviews, and even firing decisions.The short version: if your values aren’t present in your hiring interview questions, your weekly team meeting, your performance conversations, and your recognition system, they’re still decorative. The definition work is necessary. It’s not sufficient.For leaders who want to connect values to a daily operating rhythm, the Daily Command protocol in The 5-Minute Leader was built specifically for this. Five minutes each morning to align your day with your values and priorities before the reactive chaos takes over. It’s the bridge between “I defined my values” and “I live them daily.”The Process Applied: A Real Example
Let me walk through how this looked for me.Decision Audit: Across 10 decisions at Arcules, three patterns kept showing up. I protected my team’s development even when it slowed delivery. I chose speed over perfection in almost every product decision. I confronted uncomfortable truths rather than letting them fester, even when the conversation was painful.Frustration/Admiration Test: I got most frustrated by indirect communication and political maneuvering. I most admired people who made fast decisions and owned the consequences openly.Peak Experiences: My best moments were when my team operated without me and when I had honest, difficult conversations that changed someone’s trajectory.Naming:- “Build leaders, not followers.”
- “Decide fast, correct faster.”
- “Say the hard thing early.”
