Developing a Mission Statement

A. A company mission statement can be a powerful force to clearly define your company’s business philosophy. In the beginning a company is formed to accomplish something that does not exist in the marketplace or to do a better job than existing companies. What can be its possible special purpose?

B. Can you define the difference between company’s mission and vision?

Which words below apply to mission and which apply to vision?

dream unattainable reality major goals a real stretch challenging out of reach

C. Read the text

The Business Vision and Company Mission Statement

While a business must continually adapt to its competitive environment, there are certain core ideals that remain relatively steady and provide guidance in the process of strategic decision-making. These unchanging ideals form the business visionand are expressed in the company mission statement.

In their 1996 article entitled Building Your Company's Vision, James Collins and Jerry Porras provided a framework for understanding business vision and articulating it in a mission statement. The mission statement communicates the firm's core ideology and visionary goals, generally consisting of the following three components:

1. Core valuesto which the firm is committed

2. Core purposeof the firm.

3. Visionary goalsthe firm will pursue to fulfill its mission.

The firm's core values and purpose constitute its core ideology and remain relatively constant. The core ideology is not created in a mission statement; rather, the mission statement is simply an expression of what already exists. The specific phrasing of the ideology may change with the times, but the underlying ideology remains constant.

Core values

The core values are a few values (no more than five or so) that are central to the firm. Core values reflect the deeply held values of the organization and are independent of the current industry environment and management fads.

One way to determine whether a value is a core value to ask whether it would continue to be supported if circumstances changed and caused it to be seen as a liability. If the answer is that it would be kept, then it is core value. Another way to determine which values are core is to imagine the firm moving into a totally different industry. The values that would be carried with it into the new industry are the core values of the firm.

Core values will not change even if the industry in which the company operates changes. If the industry changes such that the core values are not appreciated, then the firm should seek new markets where its core values are viewed as an asset.

For example, if innovation is a core value but then 10 years down the road innovation is no longer valued by the current customers, rather than change its values the firm should seek new markets where innovation is advantageous.

The following are a few examples of values that some firms have chosen to be in their core:

• excellent customer service

• pioneering technology

• creativity

• integrity

• social responsibility

Core Purpose

The core purpose is the reason that the firm exists. This core purpose is expressed in a carefully formulated mission statement. Like the core values, the core purpose is relatively unchanging and for many firms endures for decades or even centuries. This purpose sets the firm apart from other firms in its industry and sets the direction in which the firm will proceed.

The core purpose is an idealistic reason for being. While firms exist to earn a profit, the profit motive should not be highlighted in the mission statement since it provides little direction to the firm's employees. What is more important is how the firm will earn its profit since the "how" is what defines the firm.

Initial attempts at stating a core purpose often result in too specific of a statement that focuses on a product or service. To isolate the core purpose, it is useful to ask "why" in response to first-pass, product-oriented mission statements. For example, if a market research firm initially states that its purpose is to provide market research data to its customers, asking "why" leads to the fact that the data is to help customers better understand their markets. Continuing to ask "why" may lead to the revelation that the firm’s core purpose is to assist its clients in reaching their objectives by helping them to better understand their markets.

The core purpose and values of the firm are not selected - they are discovered. The stated ideology should not be a goal or aspiration but rather, it should portray the firm as it really is. Any attempt to state a value that is not already held by the firm's employees is likely to not be taken seriously.

Visionary Goals

The visionary goals are the lofty objectives that the firm's management decides to pursue. This vision describes some milestone that the firm will reach in the future and may require a decade or more to achieve. In contrast to the core ideology that the firm discovers, visionary goals are selected.

These visionary goals are longer term and more challenging than strategic or tactical goals. There may be only a 50% chance of realizing the vision, but the firm must believe that it can do so. Collins and Porras describe these lofty objectives as "Big, Hairy, Audacious Goals." These goals should be challenging enough so that people nearly gasp when they learn of them and realize the effort that will be required to reach them.

Most visionary goals fall into one of the following categories:

• Target- quantitative or qualitative goals such as a sales target or Ford's goal to "democratize the automobile".

• Common enemy- centered on overtaking a specific firm such as the 1950's goal of Philip-Morris to displace RJR.

• Role model- to become like another firm in a different industry or market. For example, a cycling accessories firm might strive to become "the Nike of the cycling industry."

• Internal transformation- especially appropriate for very large corporations. For example, GE set the goal of becoming number one or number two in every market it serves.

The most successful company missions are measurable, definable, and actionable project statements with emotional appeal that everyone knows and can act upon. For example, a mission to "be the best health-care provider in the world" for a multi-national HMO organization sounds good. But a simple mission statement from Honda — "beat GM!" — is better because it's a project statement that can be measured every day by every employee. Mission statements can also affect company strategies and tactics. If Honda Motors were to change its mission to "Beat Toyota," different strategies would be called for, along with different geographic tactics in sales, advertising, and distribution of cars.

How important is it to define your company's mission?

Consider a famous U.S. refrigerator manufacturer whose sales were growing only at the rate of new home-building during the 1950s. They undertook a years-long project to define whether they were in the business of building refrigerators to preserve food or in the business of food preservation. They decided they were in the business of food preservation, which got them eventually into new product and business areas such as artificial atmospheres (e.g. nitrogen for fresh fruit preservation, freeze-drying technologies) and increased their sales from hundreds of millions of dollars to several billion dollars by the 1980s.