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4. Mission, Vision, and Values

The mission, vision, and values statement 1

  • Mission Statement:
    • Why does the organization exist?
    • What is the reason for the organization’s existence?
  • Vision Statement:
    • It states the desired future position of the company.
    • What does the organization want to achieve in the future?
    • What does the organization want to become?
    • It should include specific goals and objectives.
    • Goals are the desired outcomes: E.g. Increase revenue by 10% and reduce costs by 5% in the next year.
    • Objectives are the specific steps to achieve the goals: E.g. Get 5 new clients every month (to increase revenue) and automate the billing process (to reduce costs).
  • Value statement:
    • Profits should not be the only purpose of the organization, but it should also have a positive impact on society.
    • It is a set of beliefs and principles that guide the organization.
    • This is vital for the organization’s culture and attracting talented employees.

Chapter 4: Mission, Vision, and Values 2

Mission Statement

  • It communicates the organization’s reason for being, and how it aims to serve its key stakeholders.
  • Customers, employees, and investors are the stakeholders most often emphasized, but other stakeholders like government or communities (i.e., in the form of social or environmental impact) can also be discussed.
  • Mission statements are often longer than vision statements.
  • Sometimes mission statements also include a summation of the firm’s values.
  • Values are the beliefs of an individual or group, and in this case, the organization, in which they are emotionally invested.

Vision Statement

  • It is a future-oriented declaration of the organization’s purpose and aspirations.
  • In many ways, you can say that the mission statement lays out the organization’s “purpose for being,” and the vision statement then says, “Based on that purpose, this is what we want to become”.
  • The strategy should flow directly from the vision; since the strategy is intended to achieve the vision and thus satisfy the organization’s mission.
  • Typically, vision statements are relatively brief.
  • Example: Starbucks’s vision statement, which reads: “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.”

Roles Played by Mission and Vision

  • Communicate the purpose of the organization to stakeholders:
    • The better employees understand an organization’s purpose, through its mission and vision, the better able they will be to understand the strategy and its implementation.
  • Inform strategy development:
    • A good strategy is how well it helps the firm achieve its mission and vision.
    • A funnel: Mission > Vision > Strategy > Goals and Objectives.
    • In the narrowest part of the funnel, you find the strategy —it is clear and explicit about what the firm will do, and not do, to achieve the vision.
    • Vision statements also provide a bridge between the mission and the strategy.
    • The best vision statements create tension and restlessness with the status quo, that is, they should foster a spirit of continuous innovation and improvement.
  • Develop the measurable goals and objectives by which to gauge the success of the organization’s strategy:

Mission and Vision in the P-O-L-C Framework

Organizing

  • Organizing is the function of management that involves developing an organizational structure and allocating human resources to ensure the accomplishment of objectives.
    • It includes organization design, staffing, and organizational culture.
  • Organizational design is a formal, guided process for integrating the people, information, and technology of an organization. It is used to match the form of the organization as closely as possible to the purpose(s) the organization seeks to achieve.
    • Organizational design should reflect and support the strategy—in that sense, organizational design is a set of decision guidelines by which members will choose appropriate actions, appropriate in terms of their support for the strategy.
  • Organizational structure defines the formal relationships among people and specifies both their roles and their responsibilities.
    • Administrative systems govern the organization through guidelines, procedures, and policies.
    • Information and technology define the process(es) through which members achieve outcomes.
  • Organizational culture is the workplace environment formulated from the interaction of the employees in the workplace.
    • Organizational culture is defined by all of the life experiences, strengths, weaknesses, education, upbringing, and other attributes of the employees.
    • While executive leaders play a large role in defining organizational culture by their actions and leadership, all employees contribute to the organizational culture.
  • NIH (Not Invented Here) describes a sociological, corporate, or institutional culture that avoids using products, research, or knowledge that originated anywhere other than inside the organization.
    • As a sociological phenomenon, the “not invented here” syndrome is manifested as an unwillingness to adopt an idea or product because it originates from another culture.
    • P&G has been able to combat this NIH bias and gradually change its culture toward one that is more open to external contributions, and hence in much better alignment with its current mission and vision.
  • Social networks are often referred to as the “invisible organization.” They consist of individuals or organizations connected by one or more specific types of interdependency.
    • Networks deliver three unique advantages: access to “private” information (i.e., information that companies do not want competitors to have), access to diverse skill sets, and power.
    • Private Social Networks allow employees to easily collaborate and share information or insights across large distances.

Leading

  • Leading involves influencing others toward the attainment of organizational objectives.
    • We typically think of some individuals as leaders because they are visionary.
    • We might describe a very purposeful person as being “on a mission”.
  • In most cases where we think of revolutionary companies, we associate the organization’s vision with its leader—for instance, Apple and Steve Jobs, Dell and Michael Dell, or Google with the team of Sergey Brin and Larry Page.

Controlling

  • Controlling involves ensuring that performance does not deviate from standards. Controlling consists of three steps:
    • (1) establishing performance standards.
    • (2) comparing actual performance against standards.
    • (3) taking corrective action when necessary.
  • Mission and vision statements are often ambiguous by design because they are intended to inform the strategy not be the strategy.
  • A Leading indicator serves to predict where the firm is going, in terms of performance.
  • A Pacing indicator tells you in real-time that the organization is on track, for example, in on-time deliveries or machinery that is in operation (as opposed to being under repair or in maintenance).
  • A Lagging indicator is the one we are all most familiar with. Firm financial performance, for instance, is an accounting-based summary of how well the firm has done historically.
    • Even if managers can calculate such performance quickly, the information is still historic and not pacing or leading.
  • Strategic human resources management (SHRM) reflects the aim of integrating the organization’s human capital—its people—into the mission and vision.

Creativity and Passion

  • Types of Creativity:
    • Investment: external orientation with high control. It is characterized by being first and being fast.
    • Imagination: external orientation with flexibility emphasis. It is characterized by new ideas and breakthroughs.
    • Improvement: internal orientation with high control. It involves making an existing idea better.
    • Incubation: internal orientation with flexibility emphasis. It concerns a vision of sustainability—that is, leaving a legacy. This type of creativity is more complex because it involves teamwork, empowerment, and collective action.
  • Programmed thinking often called left-brained thinking, relies on logical or structured ways of creating a new product or service. In terms of mission and vision, this means a logical and deliberate process is used to develop the vision statement.
  • Lateral thinking is about changing patterns and perceptions; it is about ideas that may not be obtainable by using only traditional step-by-step, programmed, logic.
  • SCAMPER is a checklist tool that helps you to think of changes you can make to an existing marketplace to create a new one—a new product, a new service, or both. It stands for:
    • Substitute.
    • Combine.
    • Adapt.
    • Modify.
    • Put to another use.
    • Eliminate.
    • Reverse.
  • The Nominal Group Technique (NGT) is a method of facilitating a group of people to produce a large number of ideas in a relatively short time.

Stakeholders

  • Stakeholders are individuals or groups who have an interest in an organization’s ability to deliver intended results and maintain the viability of its products and services.
  • Managers must consider stakeholders’ interests, needs, and preferences in the development of a firm’s mission and vision, but first, you must:
    • Identify critical stakeholders and get a handle on their short- and long-term interests.
    • Calculate their potential influence on your strategy
    • Take into consideration how the firm’s strategy might affect the stakeholders (beneficially or adversely).
  • Influence reflects a stakeholder’s relative power over and within an organization.
  • Importance indicates the degree to which the organization cannot be considered successful if a stakeholder’s needs, expectations, and issues are not addressed.
  • Typically, stakeholder evaluation of both quantitative and qualitative performance outcomes will determine whether management is effective.
    • Quantitative outcomes include stock price, total sales, and net profits.
    • Qualitative outcomes include customer service and employee satisfaction.
    • Different stakeholders may place more emphasis on some outcomes than other stakeholders, who have other priorities.
  • Stakeholder analysis refers to the range of techniques or tools used to identify and understand the needs and expectations of major interests inside and outside the organization’s environment.
    • Managers perform stakeholder analysis to gain a better understanding of the range and variety of groups and individuals who not only have a vested interest in the organization, and ultimately the formulation and implementation of a firm’s strategy, but who also have some influence on the firm’s performance.
    • Managers thus develop mission and vision statements, not only to clarify the organization’s larger purpose but also to meet or exceed the needs of its key stakeholders.

Identifying Stakeholders

  • The first step in stakeholder analysis is identifying major stakeholder groups.
  • Internal Stakeholders: shareholders, business units, employees, and managers.
  • External Stakeholders:
    • Diverse groups such as governmental bodies, community-based organizations, social and political action groups, trade unions and guilds, and even journalists.
    • National and regional governments and international regulatory bodies will probably be key stakeholders for global firms or those whose strategy calls for greater international presence.
  • Start by identifying groups that fall into one of four categories: organizational, capital-market, product-market, and social.
  • Step 1: Determining Influences on Mission, Vision, and Strategy Formulation:
    • Organizational stakeholders: people or teams that may play a role in developing or implementing the strategy; this includes managers and employees.
    • Capital-market stakeholders: people who affect the availability or cost of capital; this includes shareholders, venture capitalists, banks, and other financial institutions.
    • Product-market stakeholders: parties whom the firm shares its industry with; this includes suppliers, customers, and strategic partners.
    • Social stakeholders: external groups and organizations that may be affected by or exercise influence over firm strategy and performance, such as unions, governments, and activist groups.
  • Step 2: Determining the Effects of Key Decisions on the Stakeholder:
    • Step 2 in stakeholder analysis is to determine the nature of the effect of the firm’s strategic decisions on the list of relevant stakeholders. Not all stakeholders are affected equally by strategic decisions.
    • Identify the most affected stakeholders and consider their interests and needs.
  • Step 3: Determining Stakeholders’ Power and Influence over Decisions:
    • Does the group have direct control over what is decided, veto power over decisions, nuisance influence, or no influence?
    • Recognize that although the degree to which a stakeholder is affected by firm decisions (i.e., step 2) is sometimes highly correlated with their power and influence over the decision, this is often not the case.
    • In some companies, frontline employees may be directly affected by firm decisions but have no say in what those decisions are.
    • Power can take the form of formal voting power (boards of directors and owners), economic power (suppliers, financial institutions, and unions), or political power (dissident stockholders, political action groups, and governmental bodies).

Crafting Mission and Vision Statements

  • The steps of crafting mission and vision statements:
    1. The process.
    2. The content of the mission and vision statements.
    3. Communicating the mission and vision statements to all relevant stakeholders.
    4. Monitoring.
  • mission statements have given attention to the following six areas:
    • What “want-satisfying” service or commodity do we produce and work constantly to improve?
    • How do we increase the wealth or quality of life or society?
    • How do we provide opportunities for the productive employment of people?
    • How are we creating a high-quality and meaningful work experience for employees?
    • How do we live up to the obligation to provide fair and just wages?
    • How do we fulfill the obligation to provide a fair and just return on capital?
  • When writing your statements, use the present tense, speaking as if your business has already become what you are describing. Use descriptive statements describing what the business looks like, and feels like, using words that describe all of a person’s senses.

Developing a Personal Mission and Vision

  • Note that the development of a personal mission and vision, and then a strategy for achieving them, are exactly the opposite of what most people follow. Most people do not plan further ahead than their next job or activity (if they plan their career at all).
  • Steps:
    • Define a long-term goal, a BHAG (Big Hairy Audacious Goal).
    • Second, sketch out your personal values, or “Guiding Philosophy”—a set of core values and principles like your own Declaration of Independence.
    • Once the vision is set, you have to develop some long-term goals, then intermediate-term goals, and so on.
    • Define short-term goals, and see how they interact with your long-term goals.
  • A personal mission and vision statement is a bit different from a company mission statement, but the fundamental principles are the same.
  • 5-Step Plan to Develop a Personal Mission Statement:
    1. Identify Past Successes.
    2. Identify Core Values.
    3. Identify Contributions.
    4. Identify Goals.
    5. Write the Mission Statement.
  • A useful mission and vision statement should include two pieces:
    • What you wish to accomplish and contribute and who you want to be.
    • The character strengths and qualities you wish to develop.

References

  1. 365 Careers. (2018, January 26). The mission, vision, and values statement [Video]. YouTube. https://youtu.be/8wem6FZAucw ↩

  2. Carpenter, M., Bauer, T., & Erdogan, B. (2010). Management principles, v. 1.1. https://2012books.lardbucket.org/books/management-principles-v1.1/s08-developing-mission-vision-and-.html ↩