STRATEGIC MANAGEMENT---VISION AND MISSION OF AN ORGAINSATION
COMPANY’S VISON AND MISSION STATEMENT
These terms are often misunderstood. Typically a Vision is what a company wishes to become or aspires to be and mission is what the company is and why it exists.
Jerry Porras and James Collins in their Book – “Built to Last..” have given a good framework for developing a vision and a mission. They divide this into two parts – core ideology and envisioned future.
Core ideology is the unchanging part of the organization, its character. It would not change for a long time, even if it were a disadvantage. Envisioned Future is a goal to be reached.
Core ideology in turn has two components, core values and core purpose.
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 has 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.
The Envisioned Future also has two components – 10 to 30 years audacious goals and a vivid description. The audacious goals are what the company would like to achieve, they are tough, need extraordinary commitment and effort, need a bit of luck and are ambitious. It is thinking far into the future of what to achieve and start today. The vivid description is putting the goals into words that evoke a picture of what it would be like to achieve your audacious goals.
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.
While visionary goals may require significant stretching to achieve, many visionary companies have succeeded in reaching them. Once such a goal is reached, it needs to be replaced; otherwise, it is unlikely that the organization will continue to be successful. For example, Ford succeeded in placing the automobile within the reach of everyday people, but did not replace this goal with a better one and General Motors overtook Ford in the 1930's.
Microsoft –
Vision ‘ Empower people through great software anytime, any place, and on any device.’ (1999).
Intel-
“ Our Vision: Getting a billion connected computers worldwide, million servers, and a trillion of dollars of e – commerce. We are Vision – catalyst the chemical reaction, the starter motor that kicks the high performance engine to life. Key to action, implementation and results – the paintbrush that gives the subsequent strategy shape, form and purpose.”
The vision is quite simply the desired future for your business put over in a way that excites and motivates the other people. It is difficult.
Challenge – future state – exciting of getting there. - Collins and Porras (1996)
(BHAG) - Big Headed Audacious Goals. And this conveys something of the stretch and excitement implied in a true vision in that it must genuinely convey a picture of a desired future state. Tony Blair set BHAG if ever there was one, to the first Labour Party Conference following the party’s election victory in 1997.
Benefits of a Vision
A vision helps to create a common identity for the entire company and helps to develop a shared sense of purpose. It helps to bond the employees together. They are usually inspiring. Because they are futuristic, they encourage looking far ahead into the future. Thus they also foster risk taking, and focus on building skills and competencies to achieve the vision. It gives a direction of where the company wants to go.
Characteristics of a Mission Statement
A mission as defined by Peter Drucker says that a mission is stating what a company will be, why it exists. So it is the reason for the existence of the organization. It is the role it wants to play in society. So a mission should be feasible, realistic and achievable. Tisco wanted to become the world’s lowest cost producer. Mission should be clear and precise, so the employees have clarity on what to achieve. Phillips wants to make things better for the benefit of consumers. It should be motivating for the employees so they will put in efforts and give commitment. It should be distinctive and should indicate the strategic aspects the company wants to pursue.
Key Elements in Developing a Mission Statement:
Three key elements must be taken into account in developing mission statements:
1)History of the Organization: Critical characteristics and events of the past must be considered in formulating and developing a mission statement.
2)Organization’s distinctive competencies: The organization should seek to do what it does best. Once this has been determined, it can incorporate its competency into the mission statement.
3)The organization’s environment: The management should identify the opportunities provided and threats/challenges posed by the environment before formulating a mission statement.
Elements of a Mission Statement:
1)The mission statement should specify the products to be produced and/or services to be rendered, markets and/or customer groups to be served, markets and/or customer groups to be served and the type of technology.
2)The primary concern for survival and development through profitability.
3)The organizational philosophy in terms of basic beliefs, values, attitudes and aspirations
4)Management style to be practiced
Characteristics/Features of Mission Statement:
1)Market Focus Rather Than Product Focus: Customers are a key factor in determining an organization’s mission. In recent years a key feature of mission statements has been external rather than internal focus. Hence, it is viewed that, the mission statement should focus on the broad class of needs that the organization is intending to satisfy (external focus) not on the physical product or service that the organization is serving at present.
2)Achievable: The mission statement should realistic/feasible i.e. It should be practically achievable. Therefore the organization should consider any limitations to its resources while formulating its mission statement.
3)Motivational: A well defined mission provides a shared sense of purpose. Thus the mission should motivate the employees and managers to work for the organization, customers and the society.
4)Specific: The mission statement should be precise and specific and provide direction and guidelines for management’s choices between alternative courses of action. Similarly it should not be so narrow as to restrict the management’s activities.
5)Clear: The mission statement should be stated in clear terms.
6)Distinctive: The mission statement of one organization should be different from those of similar organizations.
7)Indicate Major Components of Strategy Objectives: The mission statement without the objectives and strategies is incomplete. The organization’s mission statement, therefore, should indicate the objectives and strategies to be employed.
8)Achievement of the Policies: The mission statements of organization’s should include major policies they plan to follow in the pursuit of their missions.
Functions Of A Mission Statement:
1)It should define what the organization is and what the organization aspires to be.
2)It should be limited enough to exclude some ventures and broad enough to allow for creative growth.
3)It should distinguish a given organization from all others.
4)It should serve as a framework for evaluating both current and prospective activities.
5)It should be stated in terms sufficiently clear to be widely understood throughout the organization.
Need For A Written Mission Statement
1)To ensure unanimity of purpose within the organization.
2)To provide a basis for motivating the use of organizational resources.
3)To develop a basis, or standard for allocating organizational resources.
4)To establish a general tone or organizational climate.
5)To serve as a focal point for those who can identify with the organization’s purpose and direction.
6)To facilitate the translation of objectives and goals into a work structure involving the assignment of tasks of responsible elements within the organization.
Contents of Mission Statements
1)Company Product or Service : Identifies the goods or services produced by the organization
2)Markets: Describes the markets and customers that the organization intends to serve.
3)Technology: Techniques and processes by which the company produces goods and/or renders services
4)Philosophy/ Core Values: A statement of organizational philosophy commonly appears as part of the mission statement. It reflects the basic beliefs and values that should guide the organizations business.
5)Public Image: Mission statements normally contain some reference to the type of impression that the organization wants to leave with its public.
These terms are often misunderstood. Typically a Vision is what a company wishes to become or aspires to be and mission is what the company is and why it exists.
Jerry Porras and James Collins in their Book – “Built to Last..” have given a good framework for developing a vision and a mission. They divide this into two parts – core ideology and envisioned future.
Core ideology is the unchanging part of the organization, its character. It would not change for a long time, even if it were a disadvantage. Envisioned Future is a goal to be reached.
Core ideology in turn has two components, core values and core purpose.
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 has 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.
The Envisioned Future also has two components – 10 to 30 years audacious goals and a vivid description. The audacious goals are what the company would like to achieve, they are tough, need extraordinary commitment and effort, need a bit of luck and are ambitious. It is thinking far into the future of what to achieve and start today. The vivid description is putting the goals into words that evoke a picture of what it would be like to achieve your audacious goals.
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.
While visionary goals may require significant stretching to achieve, many visionary companies have succeeded in reaching them. Once such a goal is reached, it needs to be replaced; otherwise, it is unlikely that the organization will continue to be successful. For example, Ford succeeded in placing the automobile within the reach of everyday people, but did not replace this goal with a better one and General Motors overtook Ford in the 1930's.
Microsoft –
Vision ‘ Empower people through great software anytime, any place, and on any device.’ (1999).
Intel-
“ Our Vision: Getting a billion connected computers worldwide, million servers, and a trillion of dollars of e – commerce. We are Vision – catalyst the chemical reaction, the starter motor that kicks the high performance engine to life. Key to action, implementation and results – the paintbrush that gives the subsequent strategy shape, form and purpose.”
The vision is quite simply the desired future for your business put over in a way that excites and motivates the other people. It is difficult.
Challenge – future state – exciting of getting there. - Collins and Porras (1996)
(BHAG) - Big Headed Audacious Goals. And this conveys something of the stretch and excitement implied in a true vision in that it must genuinely convey a picture of a desired future state. Tony Blair set BHAG if ever there was one, to the first Labour Party Conference following the party’s election victory in 1997.
Benefits of a Vision
A vision helps to create a common identity for the entire company and helps to develop a shared sense of purpose. It helps to bond the employees together. They are usually inspiring. Because they are futuristic, they encourage looking far ahead into the future. Thus they also foster risk taking, and focus on building skills and competencies to achieve the vision. It gives a direction of where the company wants to go.
Characteristics of a Mission Statement
A mission as defined by Peter Drucker says that a mission is stating what a company will be, why it exists. So it is the reason for the existence of the organization. It is the role it wants to play in society. So a mission should be feasible, realistic and achievable. Tisco wanted to become the world’s lowest cost producer. Mission should be clear and precise, so the employees have clarity on what to achieve. Phillips wants to make things better for the benefit of consumers. It should be motivating for the employees so they will put in efforts and give commitment. It should be distinctive and should indicate the strategic aspects the company wants to pursue.
Key Elements in Developing a Mission Statement:
Three key elements must be taken into account in developing mission statements:
1)History of the Organization: Critical characteristics and events of the past must be considered in formulating and developing a mission statement.
2)Organization’s distinctive competencies: The organization should seek to do what it does best. Once this has been determined, it can incorporate its competency into the mission statement.
3)The organization’s environment: The management should identify the opportunities provided and threats/challenges posed by the environment before formulating a mission statement.
Elements of a Mission Statement:
1)The mission statement should specify the products to be produced and/or services to be rendered, markets and/or customer groups to be served, markets and/or customer groups to be served and the type of technology.
2)The primary concern for survival and development through profitability.
3)The organizational philosophy in terms of basic beliefs, values, attitudes and aspirations
4)Management style to be practiced
Characteristics/Features of Mission Statement:
1)Market Focus Rather Than Product Focus: Customers are a key factor in determining an organization’s mission. In recent years a key feature of mission statements has been external rather than internal focus. Hence, it is viewed that, the mission statement should focus on the broad class of needs that the organization is intending to satisfy (external focus) not on the physical product or service that the organization is serving at present.
2)Achievable: The mission statement should realistic/feasible i.e. It should be practically achievable. Therefore the organization should consider any limitations to its resources while formulating its mission statement.
3)Motivational: A well defined mission provides a shared sense of purpose. Thus the mission should motivate the employees and managers to work for the organization, customers and the society.
4)Specific: The mission statement should be precise and specific and provide direction and guidelines for management’s choices between alternative courses of action. Similarly it should not be so narrow as to restrict the management’s activities.
5)Clear: The mission statement should be stated in clear terms.
6)Distinctive: The mission statement of one organization should be different from those of similar organizations.
7)Indicate Major Components of Strategy Objectives: The mission statement without the objectives and strategies is incomplete. The organization’s mission statement, therefore, should indicate the objectives and strategies to be employed.
8)Achievement of the Policies: The mission statements of organization’s should include major policies they plan to follow in the pursuit of their missions.
Functions Of A Mission Statement:
1)It should define what the organization is and what the organization aspires to be.
2)It should be limited enough to exclude some ventures and broad enough to allow for creative growth.
3)It should distinguish a given organization from all others.
4)It should serve as a framework for evaluating both current and prospective activities.
5)It should be stated in terms sufficiently clear to be widely understood throughout the organization.
Need For A Written Mission Statement
1)To ensure unanimity of purpose within the organization.
2)To provide a basis for motivating the use of organizational resources.
3)To develop a basis, or standard for allocating organizational resources.
4)To establish a general tone or organizational climate.
5)To serve as a focal point for those who can identify with the organization’s purpose and direction.
6)To facilitate the translation of objectives and goals into a work structure involving the assignment of tasks of responsible elements within the organization.
Contents of Mission Statements
1)Company Product or Service : Identifies the goods or services produced by the organization
2)Markets: Describes the markets and customers that the organization intends to serve.
3)Technology: Techniques and processes by which the company produces goods and/or renders services
4)Philosophy/ Core Values: A statement of organizational philosophy commonly appears as part of the mission statement. It reflects the basic beliefs and values that should guide the organizations business.
5)Public Image: Mission statements normally contain some reference to the type of impression that the organization wants to leave with its public.