Imagine a group of people going on a journey to pursue a guiding star across a mountain range. As the time goes on, that guiding star is always out there on the horizon, never attainable, but always pulling the people forward. At any given moment, more people might join or leave the group, but the group is always climbing a mountain to reach the guiding star. Once the group reach the top, they need to sight against the guiding star and pick yet another mountain to climb.
Growing a company is like this journey in pursuit of a guiding star. Each day on this journey, people are faced with a blizzard of situations to respond to. How to ensure the group is heading towards the right direction? How to decide which mountain to climb and how? The team needs a compass to guide them throughout the journey, and that compass is principles.
What are principles? As Ray Dalio puts it in his book Principles:
Principles are fundamental truths that serve as the foundations for behavior that gets you what you want out of life. They can be applied again and again in similar situations to help you achieve your goals.
Every adventure has its specific purpose so the princples might vary, however each journey has fundamental truths and explicit principles can be applied replicably to similar situations. Without principles, when a team face new situations, they would be forced to react to all those situations individually, as if they were handling each for the first time. If instead the team classify those situations into types and have good principles for dealing with them, the team will make better decisions more quickly and have better culture and result.
A great company culture is a principled culture. To be principled means to consistently operate with principles that can be clearly explained.
A great leader is a principled leader who establishes principles that can be clearly explained with the team and consistently operates with those principles.