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MISSION STATEMENTS and STRATEGY
Simonne Vermeylen,
1. The nature of strategy
The basic questions
Essay help on What is a mission?
Strategic management resolves three basic questions
1. What do we want?
This question refers to the steering elements of a strategy, which include the business an organization is in, or wants to be in; the objectives; the values and norms, and the corporate culture, including procedures and systems.
. What must we do?
Here, the organization focuses on the requirements and evolution of the environment. What are the regulatory changes affecting the company? How do consumer preferences evolve? Which threats do we have to face? How is the competition doing?
. What can we do?
Which resources do we have and which one do we need to acquire or to develop?
There is a constant tension between the ambition, the actual and potential resources and the exigencies of the environment. An organization in its quest for superior returns, resolves this tension through the implementation of a competitive advantage which is the answer to the question what makes the company offerings "irresistibly attractive" to the potential customer?
The mission statement steers the strategy
The mission statement belongs to the steering elements. It summarizes the basic choices which guide the decision making process over a longer period of time.
As a matter of common sense, most strategic plans start with the mission statement, or at least with the goals and objectives that a company wants to reach through the plan. However, the crafting of a strategy is not so straightforward subject to the laws of orderly thinking. In daily life practice an organization will constantly review its ambitions against its resources and the environment. These can be affected by moves of competitors, or by new laws for example. What is finally put down as the goal of an organsiation is not so much the "dream", but rather the result of careful consideration and continuous rethinking of numerous strategically relevant factors. Contrary to most textbook formulations, we are of the opinion that a mission statement may be the starting point of a strategic plan, but is not necessarily the starting point of a strategic process.
. What is a mission?
An organization's mission is the purpose or reason for the organization's existence. It tells what the company is providing to society a service, a product or both. A mission statement then is a text including the goals and objectives, the strategic choices and the values. Neither in practice nor in the literature is there one all compassing prescription about what a mission statement should cover.
A well-conceived mission statement defines the fundamental unique purpose that sets a company apart from other firms of its type and identifies the scope of the company's operations in terms of products (services) offered and markets served.
It may also include the firm's philosophy about how it does business and treats its employees. It puts into words not only what the company is now, but what it wants to become (ambition) the vision of management of the firm's future. (Thus there is a difference between a mission the latter describes what the firm does now, and the vision, which articulates what the firm would like to become. Of course, mission and vision can be combined in one statement. Also in a lot of articles, mission and vision are used as synonyms).
In summary, a mission statement " tells who we are and what we do as well as what we'd like to become".1
Nightingale presents the following definition
A statement of vision, or ambition that defines success and establishes the ground rules by which success will be achieved for a particular company or institution; the articulation of management¢s intent regarding the future of an organization, expressed in aspirational terms. "
. Content
Ideally a mission statement should be guided by the following questions
A general concept of the business
§ The business activity Moving people and material vertically and horizontally over relatively short distances (Otis Elevator)
§ Believes about the keys to success (innovation) how to add value, skills, and the way to meet challenges and opportunities.
§ What business are we in? Are there limitations to the kinds of businesses we can or we want to be in?
§ What do we have to do particularly well to compete or succeed?
§ How do we add value to our customers? How does that differ from what competitors do?
§ What are our most critical challenges?
§ What are our most important opportunities?
Often the business activity will be narrowed down to the "core business" which is the "bread and butter" focus of the company on a particular market or product. Especially in the field of corporate strategy, the definition of the core business protects the group against moves of unrelated diversification. This viewpoint is not shared by Hamel and Prahalad (14) who argue that the dichotomy between core business and unrelated diversification tends to be sterile. Instead they propose not to think in terms of core business, but instead in terms of core competencies which are the connective tissue that holds a portfolio together (p. ).
A sense of uniqueness or identity
§ What makes one organization different from others? Fingerprints?
§ Who are our major competitors?
§ In what way are we unique? Which of these areas of uniqueness are we proud about? Which are we embarrassed or worried about?
§ What are our relative strengths and weaknesses? Take AMRO bank (before it merged with ABN) The company's strength is to be found in its seamless domestic distribution network, its top quality corporate and private client base, its leadership position in investment banking and treasury, its superior technological infrastructure and in the dedication and quality of its employees and management. (Nightingale, p. 8)
Philosophy about employee relationships
§ Connects the broad purpose to the implementation by each employee.
§ What do employees expect or deserve in exchange for their efforts? - high wages, promotion, profit sharing, security...
§ How important are employees to the success of the firm? Are some categories more important than others are?
§ How do employees see one another? as friends, competitors, partners?
§ What do we believe about developing skills, as opposed to hiring skills?
Orientation to external stakeholders (shareholders, the public, financial institution, regulatory agencies...)
§ A clear sense of the group's role provides direction to the choice's people make and the priorities they set
§ Who are the most important stakeholders?
§ What is our relationship to each of these groups? Do we learn from them, compete with them, or do we try to fool them?
§ What do we believe about their view of us? Are we trustworthy, dishonest or hard bargainers?
4. The mission statement as a strategic tool
Strategic intent
A mission statement, when developed with the involvement of all levels in the organization, should create a shared understanding of what the company stands for. As such, it acts as the competitive agenda, sustained over a long period of time.
In the concept of "competence-based " strategy , the mission statement gets less attention. Instead, it is argued that organizations should develop a strategic intent this is a stretch target, based upon imagination, not limited to what seems possible today. It is an ambition, not a wild dream as critics often say.
Take John F. Kennedy's ambition when he launched the Apollo program a man on the moon by the end of the decade (170). At the moment this ambition was expressed, the USA was not ready for this challenge, but the fact that people believed in it freed the resources needed, directed research and focused the attention on this goal.
Although the line between an mission and an intent can be very thin, an intent does not come in the place of a mission. It is another way of channeling the efforts to stay ahead of competition. Kodak's intent reads as "to remain a world leader in imaging". This ambition combines chemical and electronic imaging, thus forcing the company to think about the possibilities of a new combination. Should Kodak have said that it wanted to be a leader in chemical imaging, then it would most likely limit itself to leveraging its competence in this field. The combination of two different technologies however stretches the efforts to something new, possibly not imagined by competition, and thus giving Kodak an edge.
Insofar both the intent and the mission increases the aspiration level of an organization, the are both powerful strategic tools to
§ Develop new competencies
§ Leverage existing competencies
§ Design the path for resource development (strategic architecture)
§ Avoid opportunism
§ Define the core business and the core products
§ Design a (balanced) score card
§ Think more creatively about diversification and alliances
Strategic intent, mission and vision
A lot of mission statements incorporate a statement on the vision of the company. The concept of vision however is often misunderstood, insofar it serves as a goal statement, or as an "opinion". A vision is rather
1. Something seen otherwise than by ordinary sight (as in a dream or trance)
. A vivid picture created by the imagination
. Unusual wisdom in foreseeing what is going to happen/ to foresee something as through mental acuteness
A vision is the basis for the articulation of a strategic intent, since it assumes a well based view on the developments and the possibilities in the industry and in the market. Scenarios are a powerful tool to develop a vision, which should be more than a sterile dream . Developing a vision of the future ensures that every opportunity is examined, and that options are left open for further exploration.
A vision can also be seen as a much better alternative to the much used extrapolation. The latter is more static, since it builds on the current picture, and assumes that actual trends can and will not be altered. A company that is driven by a clear vision takes a dynamic position and will organize itself to come closer to the vision.
The risk of a dream finding the equilibrium between idealism and opportunism
In their quest to find idealistic values and visions that can inspire a large number of people, organizations may end up with statements that are too broad and abstract to be of any help in making tough strategic choices. Selznick suggests two negative consequences.
First, when people attempt to rely on overgeneralized purposes to guide their decisions, they sooner or later will have to refer to more realistic criteria to guide their decisions. Lack of consensus about these criteria makes them uncontrolled and uncontrollable, thus immediate exigencies will dominate actual choices .
Second, too much abstraction leaves little room for measurable progress. When people feel that the final goal is unattainable, they will rather be discouraged than inspired by it.
Not everybody agrees with this point of view. Some authors indeed argue that a mission statement and the values voiced in it, should be almost religious , idealistic enough that people feel embarrassed and uncomfortable .
In his article The Vision Trap Gerhard Langeler, president of the Systems Group of Mentor Graphics Corporation cautions against grand, abstract visions. " The company may wind up making more poetry than product", he states, warning the reader to be very careful when developing missions. They indeed can become too grandiose and beyond anyone's power, and as result not be "bought" by the stakeholders and the employees in particular.
Broad or narrow?
A mission may be defined broadly or narrowly in scope. It can be general or rather specific. Serve the best interests of shareholders, customers and employees is broad, but keeps the company from limiting itself to one field or product line. It fails to clearly identify what it makes or what product/markets it plans to emphasize.
A narrow one, such as Watteeuw's one word "gears" may be more useful since it clearly states in which business the company is active. It may be not sufficiently inspiring, since it restricts the firm's scope of activities in terms of products offered the technology used, and the markets served.
5. Objectives
Whereas a mission statement typically voices value judgements, objectives are a more specific and quantitative restatement of the corporate image as of a particular time in the future. An objective tells where the company, or the SBU is going and when it wants to get there. A clear financial objective for example reads as follows
The company has as its objective 15% profit before tax and 0% return on stockholders equity and long-term debt .
Or on innovation Maintain a basic technological capability permitting the Company to develop, produce and market a specific product within one year. Development is directed toward products which will have a significant market within to 5 years.
In order to specify objectives, it is necessary that a future description of the company or SBU be developed hence the mission or general purpose of the organization. Only when each manager has a sufficiently detailed translation to see where unit is going and what each person's role should be, can specific objectives be expressed.
Quantification is necessary to show the implications of a decision. Costs, payoffs, contributions, the probability of success need to be reflected in the objectives. For example , read Textron's objectives To achieve the goal of superior performance, the specific targets for the ten-year period ending in 18 are
· Sales expansion at an average compound rate of 8% to § .5 billion
· Net average income growth at an average compound rate of 10% to § 00 million
· Earnings per share up at an average compound rate of 10% to §6.00.
6. Advantages and functions of a mission statement
Why is having a shared vision important? There is little agreement on this issue.
In general, a mission lets people know the general purpose of the organization, their role therein, and why they should be proud of it.
The mission promotes a sense of shared expectations in employees and communicates a public image to important stakeholder groups in the company's task environment.
A mission statement offers 1) inspiration, as people feel uplifted by the purpose of the organization, ) integration because several groups see what they have in common and why they need to cooperate and ) focus that keeps the company from drifting into wasteful activities
Defining competitive domains and ethical restraints can help managers and employees to prioritize and focus their efforts. This is confirmed by the research finding that the most successful firms tend more often to mention values (in addition to profit making) as their purpose.
We see four positive functions
1. Inspiration
A shared vision can energize people and satisfy one of his basic needs to feel important and useful . Companies who maintain good internal relationships, value employee development and reward performance, tend to perform better than those who do not, according tot a study of Fortune 500 firms (commented by Pearce). Their study does not demonstrate univocal causality focusing on values does not guarantee long term success. But it is significant to see that part of the recipe for success seems to consist of an outspoken interest in values and people's concerns. For clarity's sake, 0% of all the firms in the sample did explicitly mention that they valued profitability. However, the top quartile performers more often stated values related to HRM philosphies, concern about their public image and explicitly referred to a self-concept.
. Unobtrusive control
Since an executive can not be everywhere every time, a mission provides employees with a compass that points their feet in the right direction without being told, or without direct supervision.
Also Ouchi argues that a widely shared philosophy can to some extent replace giving orders and closely supervising and controlling workers, thus leading to both increased productivity and supportive relationships at work. A shared vision thus can affect the perspective or premises that people use to make decisions in the absence of rules, direct supervision or threats.
. Focus
The mission can channel the energy, preventing the employees from dissipating their strengths in a variety of unrelated directions. According to Selznick organizations without a vision tend to drift as they are exposed to short-term opportunistic trends. What is more, without a business concept, organizations will never develop distinctive competences which set them apart from their competitors.
4. Integration
A mission is also an integrating force in the organization, thus a mechanism for coordinating the efforts. In the absence of some sense of purpose, energy is often wasted when political issues are repeatedly debated but never fully resolved. The absence of vision can result in endless struggles over where efforts and resources should go.
7. Values
It is generally accepted that a mission statement should include values and norms.
Values are the widely held, but important beliefs and convictions which drive the behaviour of people .
In 1 Digital Equipment Company sponsored a survey of executive opinion in the UK, called Corporate Values. The Bottom Line Contribution. (Foster, p. 16). The survey questioned 4 managers, and found that 80% of these organizations had written value statements, 8% expected values to gain importance over the next three years, and 8% believed that properly implemented values contributed to profitability.
Usually, management will agree on a set of values they believe necessary for success, but often they don't represent the values the organization currently adheres to. Listing values which just sound nice is dangerous, because for many employees they are the most important part of the mission statement.
However most of these value statements are lopsided they state expectations but don't give back anything.
The problem with some value statements is that employees read them and look around. And it is there where most mission statement programmes are being killed. Management is judged constantly and it must be prepared to have its behavior benchmarked against the values.
8. What constitutes a good a mission statement?
The format
Good or useful mission statements should exhibit at least three qualities
1. Short, brief, simple these adjectives indicate that brevity and simplicity make mission statements easy to understand and remember. In general, verbose statements demonstrate a lack of clear thinking rather than creativity.
. Flexible, broad. Take the Macintosh (of Apple Computer) Division's mission statement To improve the creativity and productivity of people. It leaves sufficient room for product and market additions such as software, books, training, printers while progress towards the goal can be measured.
. Distinctive. A mission statement should set the organization apart. Therefore one should avoid general and generic expressions such as highest quality , or we strive for the highest customer satisfaction.
The following criteria can be added to this list.
4. Ambitious and inspiring. The mission statement should stimulate people to stretch their skills and capabilities.
5. Controversial. If one agrees that a mission statement is the expression of basic choices, then it can always be subject to reasonable criticism. When the Body Shop states We will be the most honest cosmetic company around", it goes diametrically against the common messages of other cosmetic companies, thereby challenging other opinions.
The effectiveness of a mission statement
Because of the causal ambiguity attached to a mission (successful companies may have good mission statements, but having a good statement is no guarantee for success), research rather concentrates on the "effectiveness" of a mission statement . These authors use five factors to rate an effective mission. The first relates to the mission itself it should be inspiring, set targets, be flexible and vivid, be pragmatic. The second factor refers to the process used to develop the mission statement, while the third factor is about the process of "selling" the mission, thus the tactics to get the message across. The fourth factor of the model measures the credibility of the seller, based upon the observation that the sincerity and the commitment of the seller(s) largely influences the success of the exercise. The fifth and final factor measures the organizational commitment of the individual employee the extent to which employees feel part of the team, which in turn will facilitate their acceptance of new goals.
The Ashridge model is based upon a questionnaire which has 5 parts the purpose, the strategy (business domain, strategic positioning), the values, the behavior standards and the character (the portrait of the company).
Pearce hypothesizes that a comprehensive mission statement development sets the stage for comprehensive planning efforts. The statements ought to act as guidelines for management to focus and direct the company's planning efforts. Thus once again, it seems that the process is more important than the final outcome.
Regrettably, many mission statements are little inspiring, boring and very general. Especially publicly stated missions give the reader a "d jà vu" feeling. One of the major reasons is that missions are political compromises, where all parties involved had to give in, where controversial statements are polished for the sake of acceptability, leaving little uniqueness or inspirational character.
Changes occur because of changed practices, not changed rhetoric , Wilkins ( p. 6) remarks. And Nightingale phrases the same message it is the process, and not the product that usually determines whether or not a mission statement becomes an effective management tool.
Most authors agree that a good mission should be sufficiently inspirational, in order to stretch the resources. Revealing the invisible , Oldelft's concise mission may seem unrealistic and too broad, yet progress into that direction is measurable and can continue to be made. When Mahatma Gandhi dreamed of an India free from intolerance, that appeared as utopian and extreme. Yet although the goal was never reached, visible progress was made. We can therefore conclude that a mission statement should be understood in the context of an organization and how its members interpret and apply it, before one can say that it is effective, utopian or not,
. The process of a mission formulation
Should an organization start with a clear and new mission, or does the mission evolve over time, as a result of experimenting and sometimes building (political) support behind the scenes?
When an organization is in the midst of a crisis, or when it feels clearly that old choices are no longer applicable, a new mission can trigger the desired changes. After a crisis new goals give new hope and direction.
On the other hand, putting a mission on paper can also serve the purpose of gluing the organization. For example, after a merger or an acquisition, many organizations feel that they need a revised mission statement to unify the parties. In that case, one will not look for shocking new choices, but rather try to reach a consensus on the common themes that will bring people together, rather than estrange them.
Most authors agree in their observation that the creation of a mission statement is an evolutionary process.
The incremental process that most managers use in developing a shared mission, is very similar to what Quinn describes as the process that is followed to formulate a strategy. The logical incrementalism is a process by which executives build consensus through experimenting and testing. Instead of locking themselves into irreversible commitments or providing a focus for opposition, successful managers take their time for the political process to mature. This approach offers more flexibility and room for revision without loosing face in an uncertain environment, since it leaves sufficient room for new information. This view comes very close to what Selznick calls the risk of premature self-definition .
Mission management is the term used to describe the process to generate consensus and commitment which leads to the formulation of a mission statement. It also includes the communication and implementation throughout the organization.
Conclusion
Mission statements can be a powerful strategic tool. All too often, they are created for the sake of corporate communication a fashionable message, well edited, but sterile. Companies which enter into the process of mission development should realize that it is a time- consuming and controversial exercise, yet rewarding when supported by the whole organization.
Examples of mission statements(Foster 1)
Maytag Corp.
To improve the quality of home life by designing, building, marketing and servicing the best appliances in the world.
Lloyds Bank plc
The thoroughbred bank
Our aim is to be the best and most successful company in the financial services industry best in customer service, best to work for, best in creating value for our shareholders. But superior performance does not come easily.
We have many able competitors and more to come in the years ahead. To be the best, we know that we must have the best people, backed by the best technology and the best training, and concentrate their efforts on those businesses in which we have the experience and the ability to excel.
Our strategy starts with our customers? We can only create value for our shareholders, if we create value for our customers. And customers' needs and expectations are changing rapidly. Today's customers are more selective than ever. They want wider choice. They want better quality. Above all, they want greater value for money. That is why our strategy is to focus on the things we can do well and then strive to do them better than anybody else.
The successful management of change is crucial to our progress. We see innovation whether in the form of a better product, service or delivery system or a low cost product, service or delivery system - as the main way to encourage people to buy from s instead of our competitors. To attract and hold our share of customers, we have to adjust to their changing needs, not to expect them to adapt to ours. (Foster, p. 86-87).
The Royal bank of Scotland Group plc
Where people matter .
The Royal Bank of Scotland Group, headquartered in Edinburgh, provides high quality, competitively prices banking, insurance and related financial services.
Our core market is the United Kingdom. We are active in Europe to serve and develop our UK commercial banking customer base, and in the north-east USA to diversify our earnings.
We aim to be recognised as the best financial institution in the United Kingdom. In striving towards that aim we are mindful of our responsibilities to
· Shareholders, who entrust us with stewardship of their capital ;
· Customers, who confide management of their affairs to us ;
· Employees, who commit their careers to us ; and
· The Communities in which we operate.
Achieving our aim while successfully balancing these responsibilities is the primary challenge. We believe that we can best respond to this challenge by remaining independent.
Sedgwick Group plc
Sedgwick provides risk consultancy, insurance broking, employee benefits consultancy and financial services from more than 0 locations in 58 countries.
Sedgwick's goal is to win with quality wherever the group operates, through expertise of its staff, by its commitment to providing an ever-increasing level of service for its clients, by improving shareholder value and through its relationship as a good citizen of the communities of which it is a part.
Sun Life Assurance Society plc
Sun Life
Sun Life aims to be the leading life assurance, pensions and investment company in all our chosen market sectors. We will meet our customers' needs for protection, security and investment growth and will seek to achieve total customer satisfaction through continuous improvement of our products, performance and service.
Sun Service
We will be distinctive by understanding and meeting our customers' needs in three areas
Superior solutions
· Using technical and financial expertise to create outstanding products and services.
Superior service
· Delivering a fast, friendly and fault-free service, second to none in the industry.
Superior satisfaction
· Delivering consistently superior investment performance and providing efficient administration at below industry average cost.
Sun Spirit
We will deliver this commitment to industry excellence by
· Putting the customer first at all times.
· Taking individual responsibility to satisfy customer needs.
· Maximising opportunities for self-development.
· Creating an environment of professionalism, integrity and fun.
· Valuing teamwork as the means to attain our objectives.
· Seeking continuous improvement in all our operations.
· Taking pride in Sun Life.
Refererences
Block, P. (187). The Empowered Manager. Positive Political Skills at Work. San Francisco, Jossey-Bass.
Campbell, A., M. Devine, et al. (10). A sense of mission. London.
De Hen, P. E. (10). "Heel respectabel hoor, maar saai, saai!" FEM(17, augustus).
Foster, T., R.V., Ed. (1). 101 Great Mission Statements. How the Worlds Leading Companies Run their Businesses. London, Kogan Page Limited.
Hamel, G. and C. K. Prahalad (18). "Strategic Intent." Harvard Business Review(May-June) 6-76.
Hamel, G. and C. K. Prahalad (14). "Competing for the Future." Harvard Business Review(July-August) 1-18.
Kinston, W. (186). "Purposes and the Translation of Values into Actions." Systems Research() 147-160.
Langeler, G. (1). "The Vision Trap." Harvard Business Review March-April 46-56.
Markides, C. and V. Papadakis (17). What constitutes an effective mission statement an empirical investigation. Strategic Management Society, Barcelona.
Nightingale, G., J; (1). Successful Mission Management. 101 Great Mission Statements. How the Worlds Leading Companies Run their Businesses. T. Foster, R. London, Kogan Page Limited 144.
Ouchi, W. (181). Theory Z How American Business can meet the Japanese Challenge. Reading, MA, Addison-Wesley.
Pascale, R. and A. Athos (181). The Art of Japanese Management. New York, Simon & Schuster.
Pearce, J. A. and F. David (187). "Corporate Mission Statements The Bottom Line." Academy of Management EXecutive 1() 10-116.
Quinn, J. B. (180). Strategies for Change Logical Incrementalism. Homewood, Ill., Irwin.
Rogers, D., C.D. (177). Business Policy and Planning. Text and Cases. Englewood Cliffs, New Jersey, Prentice-Hall Inc.
Schoemaker, P. J. H. (1). "How to Link Strategic Vision to Core Capabilities." Sloan Management Review(Fall) 67-81.
Selznick, P. (157). Leadership in Administration. Evanston, Ill., Row, Peterson.
Wheelen, T., L. and J. D. Hunger (18). Strategic Management and Business Policy. Entering 1st Century Global Society. Reading, MA, Addison-Wesley.
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