This essay examines the need for a company to construct a Mission Statement. This statement generally contains the central values and beliefs of the firm and it must be adhered to by all employees. However, the question posed here is that in today’s intensified competitive
business world, is there any requirement for such a document. There is no doubt that competition has become the focal point of many businesses’ concentration, with a perceived neglect of these beliefs and values. This is simply a reflection of the market. In saying this, it is still my opinion that there is a place for companies to make and adhere to a Mission Statement. I will further develop my opinion on this.
Introduction:
“If you don’t know where you are going, any road will take you there” Raymond G Viault, CEO, Jacobs Suchard, Switzerland.
“A voyage of a thousand miles begins with a single step. It is important that that step is in the right direction.” Old Chinese saying, undated.
“How can we go forward when we don’t know which way we are facing?” John Lennon, 1972.
“Most strategic planning involves preparing dense documents filled with numbers and jargon. But building the process around the picture yields much better results” (Chan Kim and Mauborgne, June 2002,p.77).
Mission, vision, values and strategic goals are appropriately called directional strategies because they guide strategists when they make key organisational decisions (Duncan et al, p.1 87). In this paper we examine the key directional strategies of the organisation and their application to real world situations.
The mission — providing direction:
The mission of an organisation attempts to capture the distinctive purpose or reason for being. Primarily it is a statement of purpose and when clearly understood the complexity of the environment can be reduced and organised in a way that can be analysed in light of the goals the organisation wishes to achieve. Thompson (2002, p.93) suggests that a mission statement should not address what an organisation must do in order to survive, but rather what it has chosen to do in order to thrive. It should be positive, visionary and motivating.
Ackoff (1986) proposes that a good mission statement have five characteristics:
• It will contain a formulation of objectives that enables progress towards them to be measured,
• It differentiates the company from its competitors,
• It defines the business that the company wants to be in, not necessarily is in,
• It is relevant to all stakeholders in the firm, not just shareholders and managers,
• It is exciting and inspiring.
Campbell (1989) argues that to be valuable mission statements must reflect corporate values, and the strategic leader and the organisation as a whole should be visibly pursuing the mission. He takes a wider perspective to include aspects of the corporate vision arguing that there are four issues involved in developing a useful mission. Firstly, it is important to clarify the purpose of the organisation and why it exists. Secondly, the business and its activities should be described and the position that it wants to achieve in its field. Thirdly, the organisation’s values should be stated. How does the company intend to treat its employees, customers and suppliers? Finally, it is important to ensure that the organisation behaves in the way that it promises it will. This is imperative because it can inspire trust in employees and others who significantly influence the organisation. Mission statements can all too easily just state the obvious and as a result have little real value. The secret lies in clarifying what makes a company different and a more effective competitor, rather than simply restating those requirements that are essential for meeting key success factors. Companies that succeed long term are those which create competitive advantages and sustain their strong positions with flexibility and improvement. Both the vision and mission should support this.
As noted by Thompson (2002, p.94) the principal purpose of these statements is communication, both internally and externally and a major benefit for organisations is the thinking they are forced to do in order to establish sound statements. It is essential that the mission or indeed the vision is more than a plaque on a wall in the foyer; employees have to make the words mean something through their actions. For a mission statement to be a living document, employees must feel that the organisation actually means what it is saying in the mission and vision statements and must develop a sense of ownership, commitment and purpose in its implementation. Critically there must be an element of trust, for without it the desired outcomes will not be achieved. Employees should be involved in the development and communication of the mission and top-level management must be committed including the CEO in mission formulation. The mission clearly should correspond to the basic philosophy or vision underlying the business, and if there is a sound philosophy, strategies that generate success will be derived from it. In the hierarchy of goals, the mission captures the organisation’s distinctive character. It is not merely an expression of hope but is an attempt to capture the essence of purpose and commit it to writing. In essence, an organisational mission is a broadly defined and enduring statement of purpose that distinguishes a health care organisation from other organisations of its type and identifies the scope of its operations in product, service and market terms (Duncan et al, 2006, p.188). As noted by Duncan et al (2006, p.189) the mission statement is a crucially important part of strategic goal setting. It is the superordinate goal that stands the test of time and assists senior managers and indeed workers in navigating through periods of turbulence and change. It is described as “the stake in the ground that provides the anchor for strategic planning”. However, mission statements cannot be substituted for well-conceived and carefully formulated strategies. A sense of mission is not a guarantee for success. The organisation has to adhere to the mission and regularly review it to be sure it remains relevant in changing times and should carefully evaluate strategic decisions with the use of its mission statement.
When new opportunities present for the organisation, there are three critical questions to be considered such as “are we not doing some things we should be doing”, are we doing some things we should not be doing? and are we doing some things we should continue to do but in a fundamentally different way?” to determine whether or not the new opportunity is consistent with its essential distinctiveness.
As outlined by Duncan et al (2006, p. 193) there is no single way to develop and write mission statements. To define the distinctiveness of an organisation, mission statements must critically emphasise those aspects of the business that make them unique. Mission statements invariably include the target customer and market, they indicate the principal services delivered or provided by the organisation, specify the geographical area within which the organisation intends to concentrate its activities, identifies the organisation’s philosophy, confirms the preferred self-image and desired public image. Components such as organisational philosophy, self-concept and desired public image are particularly associated with higher performing organisations (Bail et al, 1999).
Academics and consultants have developed an armoury of tools to help companies understand their strategic positioning. Chan Kim and Mauborgne (2002, p.78) describe the drawing of a strategy canvas as a “unique tool to mapping strategic direction.. .11 does three things in one picture”. It shows the strategic profile of an industry by depicting very clearly the factors that affect competition among industry players as well as possible future factors, it shows the strategic profile of current and potential competitors, identifying which factors they invest in strategically and finally it draws the company’s strategic profile or value curve, showing how it invests in the factors of competition and how it might invest in them in the future. Southwest Airline’s profile is a perfect example of a good strategy, because it shows the three complementary qualities that characterise an effective strategy: focus, divergence and a compelling tag line “the speed of a plane at the price of a car whenever you need it”. As noted by Chan Kim and Mauborgne (2002, p. 83) “Completing the four steps of visualising strategy will put strategy back into strategic planning, and it will greatly improve your chances of coming up with a wining formula. As Aristotle pointed out “The soul never thinks without an image”.
Vision — an expression of hope:
Vision is a description of what the organisation will be like and look like when it is fulfilling its purpose.
Effective visions possess four important attributes: idealism, uniqueness, future orientation and imagery.
Visions are about ideals, standards, and desired future states. Effective visions are statements of destinations that provide a compass heading to where the organisation’ s leadership collectively want to go. Visions are built on images of the future and images motivate people to pursue the seemingly impossible. As aptly put by Gerry M Murphy, CEO, Greencore plc, Ireland “strategy development is like driving around a roundabout. The signposts are only useful if you know where you want to go. Some exits lead uphill, some downhill — most are one-way streets and some have very heavy traffic indeed. The trick is in picking the journey’s end before you set out — otherwise you go around in circles or pick the wrong road”.
The job of building a vision for an organisation is frequently referred to as pathfinding. As noted by Duncan et al, 2006 the goal of the pathfinder is to provide a vision, find the paths the organisation should pursue, and provide a clearly marked trail for those who will follow. A vision-led organisation is guided by a philosophy to which leaders are committed but that has not yet become obvious in the daily life of the organisation. The role of the strategic leader must be the keeper of vision, who holds on to the vision even when others have lost hope. For an organisational vision to be successful it must be clear, coherent, consistent, have communicative power and be flexible. An effective vision must remain open to change as the picture of the future changes and as the strategic capabilities of the organisation emerges and changes over time. Although visions are futuristic and based on hope, they require strategic leaders who can articulate the vision and translate it into terms that everyone in the organisation understands and accepts. It should translate into a common language and ordinary currency.
Values – what we stand for and believe in:
Values are the fundamental principles that organisations stand for and which makes them unique. Ethical behaviour and socially responsible decision making are often associated with organisational values. It is important that managers, employees and key stakeholders understand the values that are expected to drive an organisation. Mission, vision and value statements are tools for “getting better at what we do”. Framed mission, vision, values and slogans are merely exercises and futile if they are not made real by commitment and action.
As noted by Treacy and Wiersema (1993, p.84) “Companies that have taken leadership positions in their industries in the last decade typically have done so by narrowing their business focus, not broadening it. They have focused on delivering superior customer value in line with one of three value disciplines — operational excellence, customer intimacy or product leadership”. Dell for instance is a master of operational excellence — providing customers with reliable products or services at competitive prices and delivered with minimal difficulty or inconvenience. Customer intimacy, the second value discipline, is about segmenting and targeting markets precisely and then tailoring offerings to match exactly the demands of those niches. Companies that excel in customer intimacy combine detailed customer knowledge with operational flexibility so they can respond quickly to almost any need, from customising a product to fulfilling special requests. As a consequence these companies engender tremendous customer loyalty such as Home Depot which is better than any other company in its market at getting the customer precisely the product or information he/she wants.
The key guiding principle of the newly structured Irish health services (Health Service Executive) is that all decisions at the HSE should be measured against what will deliver the best care for patients. “It is vital that the enthusiasm of our staff is harnessed by working in collaboration and communicating with each other, by building relationships and working as true partners and teams”(p.6).
As aptly put by Duncan et al (2006, p. 185) in the health care environment, with its emphasis on cost reduction, consumer loyalty assumes strategic importance because loyal customers enable the organisation to make money, save money and save time. Placing the customer first is an organisational value that must permeate the entire staff at all levels, yet placing the customer first cannot be achieved without also having the organisation value employee loyalty — customer loyalty starts with employee loyalty. Loyalty is a long-term commitment and is dependent on an organisation’s ability to consistently deliver a memorable customer experience that leaves them with an ongoing favourable image, feeling and union with the provider. A memorable customer experience is not from a single event but transcends many differentiating service encounters across a wide spectrum of employee-customer interactions. Customer loyalty is much more fundamental than just customer satisfaction and is critical in highly competitive markets, In essence, the organisation that has a value to place customers first and values employees who achieve customer loyalty will have value itself (Duncan et al, 2006, p. 186).
Strategic goal setting — towards mission accomplishment:
Goal-setting should be focused on those areas that are critical to mission accomplishment. Mission statements and strategic goals should be consistent, compatible and aligned with each other, for instance does the mission provide for the formulation of a set of goals that are specific enough to give guidance to the organisation yet broad enough to provide for the necessary flexibility required? Duncan et al (2006,p. 208) identifies critical success factors as the foundations for strategic goal setting. The strategic goals, in turn, become the anchors for objectives and action plans. Critical success factors are those activities that organisations must engage in and do in order for the organisation to achieve high performance and must be compatible with the mission, vision and values. Leaders must identify a relatively small number of activities that are critical and essential to accomplish the mission aid build momentum to realise the vision
Strategic goals provide more specific direction in accomplishing the mission and vision and possess characteristics such as:
• Activities critical to mission accomplishment,
• The link between critical success factors and strategic momentum,
• Formulated by leaders but have a common currency and language throughout the organisation,
• Limited in number.
Evaluating Mission Statements:
In managing strategic momentum, managers should continuously assess the performance of the organisation against the mission, vision, values and goals to determine whether they remain appropriate and critically revisiting the road map again. Engaging as many groups and stakeholders as possible throughout the organisation in developing directional strategies is critical in building a successful future for the organisation. In the HSE Corporate Plan Professor Drumm CEO notes “As this Plan has been framed during a time of transition, we would envisage that we may need to incorporate additional actions, or indeed revisit some actions, during the life of the Plan”(p. 5). It is critical that not just a partial but full evaluation takes place in order that the Irish Health Services, delivered as a single entity continues to strive towards achieving the organisational vision of “consistently providing equitable services of the highest quality to the population we serve”. We wait to see if the mission statement, as set out in diagrammatic format attached, proves to be “the stake in the ground that provides the anchor for strategic planning”. All of this evidence can only serve to show the true importance of having a mission statement. I will now discuss the mission statement in terms of the respective schools of strategic management.
Prescriptive & Emergent Schools
There are many ways to think about strategic management in organisations. In fact, Henry Mintzberg identified ten distinct schools of thought concerning organisational strategy. Three of these approaches were prescriptive: the design (conceptual) school, the planning (formal) school and the positioning (analytical) school. Six schools of thought were descriptive (emergent, intuitive) and dealt with philosophical approaches to strategic management: the entrepreneurial school (a visionary process), the cognitive school (a mental process), the learning school (an emergent school), the political school (a power process), the cultural school (an ideological process), and the environmental school (a passive process). The final school of thought, the configurational school, specifies the stages and sequence of the process and attempts to place the findings of the other schools in context.
Given the careful reasoning of the proponents of these various approaches to strategic management, it is safe to assume that there is no one best way to think or learn about strategy making in organisations. Prescriptive approaches to strategic management rely on the development of a logical sequence of steps or processes (linear thinking). Emergent models, on the other hand, rely on intuitive thinking, and learning and are viewed as being a part of managing. Both approaches are valid and useful in explaining an organisation’s strategy. However, neither the prescriptive nor the emergent assumption, by itself, is enough. David K. Hurst explained:
“The key question is not under which of these approaches of action is right, or even which is better, but when and under what circumstances they are useful to understand what managers should do. Modern organisational life is characterised by movements between periods of calm, when prospective rationality seems to work, and periods of turmoil, when nothing seems to work. A t some times, analysis is possible: at other times, only on the ground experience will do.”
As a result, both approaches are required. It is difficult to initiate and sustain organisational action without some predetermined logical plan. Yet in a dynamic competitive market, managers must expect to learn and establish new directions as they progress. In reality, the methods are both complementary and contradictory- the prescriptive approach is similar to a map, whereas the emergent model is similar to a compass. Both may be used to guide one to a destination but in some cases they may indicate different routes. Maps are better in known worlds – worlds that have been charted before. Compasses are helpful when leaders are not sure where they are and have only a general sense of direction.
Therefore, what is needed is some type of model that provides guidance or direction to strategic managers, yet incorporates learning and change. I f strategy making can be approached in a disciplined way, then there will be an increased likelihood of its successful implementation. A model or map of how strategy may be developed will help organisations view their strategies in a cohesive, integrated and systematic way. Models are abstractions that attempt to identify, simplify, and explain processes, patterns, and relationships inherent within certain situations. As a result, models are quite useful because they circumvent the need to store masses of data and allow us to recognise the logic underlying a series of interdependent activities. Without a model or map, managers run the risk of becoming totally incoherent, confused in perception, and muddled in practice.
Conclusion:
As I have stated during this essay, a mission statement is vital to a company’s success. This still rings true in today’s competitive environment and in the schools of strategic management. The reasons for this have been explored throughout. I hope I have succeeded in proving my point that a mission statement is still an important part of a company’s palns.
Bibliography:
1. Chan Kim,W, Mauborgne, R, Charting Your Company’s Future, Harvard Business Review, June 2002.
2. Health Matters, Summer 2006, Volume 2 Issue 2.
3. Swayne, L. E.,Duncan, WJ.,Ginter, P.M. Strategic Management of Health Care Organisations, 2006 Blackwell Publishing, London.
5. Thompson, J.L. Strategic Management, 2002, Gray Pubishing, Tunbridge Wells.
6. Thompson, J.L. Understanding Corporate Strategy, 2001, Gray Publishing, Tunbridge Wells.
7. Treacy,M, Wiersema, F Customer Intimacy and Other Value Disciplines, Harvard Business Review, Jan/Feb 1993, Vol. 71 Issue 1.