Engaging in Organizational Soul-Searching - Articles - Andrew Schwartz

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Engaging in Organizational Soul-Searching
by Andrew E. Schwartz

For startup companies and businesses in transition, a mission statement is critical.

A mission statement is a charter that defines the basic business in which the enterprise will engage, the types of products it will make or the services it will provide, the markets it will serve, and perhaps how the company will conduct its affairs - in other words, its purpose. Some managers may tend to regard its preparation as an academic exercise in verbal hairsplitting that offers little guidance in making hard decisions. Indeed, some mission statements are so broad and vague as to recall the prophecies of ancient oracles; others are mere public-relations floss. But if done well, a mission statement can establish a firm foundation for guiding a startup company on the best course or an older business in transition in setting its growth strategy.

Time Well Spent: Mission statements can help companies determine their proper market niche, suggest new fields for the company to conquer, and even serve as a constraint, indicating, perhaps only implicitly, enterprises in which they must refrain from participating. Without the mission statement, getting sidetracked gets easier.

Mission statements can further the cause of sound planning in other ways, too. The act of devising a statement forces management to take a hard look at its external threats and opportunities and at its internal competencies. If this part of the planning process had been neglected, drafting a mission statement will perhaps focus attention on such potential weak areas.

If an organization lacks a mission statement, it is worthwhile to at least try to draft one. Even if it does not yield an acceptable final draft, the exercise will be rewarding for the hard work which must go into figuring out the company’s direction and putative purpose.

Mission statements may not be applicable to some organizations. There are those simply too diversified to have them. It would take an artful writer to define the mission of such conglomerate companies. It is not unusual, however, to find mission statements for each of the constituent businesses of diversified companies. These statements may permit the corporate office personnel and the management of each subsidiary business to agree on the scope and limitations of the markets that the constituent businesses will serve and the products or services they will offer. They can also help the employees feel that they are contributing to the goals of the parent company, while still maintaining a focus on the subsidiary in which they are employed.

Ultimately, employees are the main audience for a company’s mission statement. The statement not only furthers a common understanding of the organization’s purpose among them but also nurtures allegiance and commitment. All three are essential if employees are to work together effectively to promote the organization’s ends.

After having been developed, a mission statement must rarely need to be altered, and then only as a result of a significant change: perhaps a sharp decline in the company’s markets, the crystallization of a new opportunity, or the accession of a new management.

The Analysis Process:
There are two basic methods for incorporating objectives into mission statements. The first is based on a general overview of the company. The second involves a more detailed, and explicit analysis. In both, it is important to differentiate between the objective and more specific plans for reaching it.

The general overview: Some important questions are asked like: Why does the company exist and what kind of business is it in? Is there a particular market or niche that it will concentrate upon? How will the company be distinctive in its business methods?

Once these questions are answered, the focus moves to the accomplishment of these broadly expressed objectives. What actions will the company take toward increasing and maintaining profitability, innovation, market standing, or productivity? What financial and physical resources can be depended upon? How will the company oversee and assure manager performance and development while also controlling worker performance and attitudes? In what ways will the public be responsible for determining the success of the company?

Detailed analysis: In this second method, the construction of the statement is broken down into three parts before the incorporation of the objectives.

The first phase entails briefly and concisely defining the corporate purpose. The second phase examines this purpose by asking several questions: What type of industry is the company involved in? What is the company’s specific function? How must the company conduct its business based on the type of customer it will be involved with? Will the company focus on a value-added, upscale image, or is it price- or availability-oriented? What will the location of the company be? Is this strategically best?

The third phase reflects the company’s determination of the conduct of its business. What are the management values? Are there ethical factors or societal considerations involved? What about the company’s relationship with its employees? What is the management style? Will there be openness in decision making? Will the power be centralized or decentralized? What risks will the company be willing to take?

Here, performance and management objectives are the long term measurable target of the corporation. Performance objectives can be measured quantitatively. They involve examining the return on investment, earnings per share, capital structure, and sales growth. They are used in the marketing side in measuring the market share of the company and its industry position. In operating, they measure the company’s productivity, cost per unit, and assets per employee.

Management objectives are qualitative. They measure personnel development, the external reputation and image of the company, system development, and the research side of the company.

Drawing up the Statement: What principles must a company keep in mind when developing a mission statement?

First, appropriate criteria must be chosen for defining the business. There are several alternatives for defining one’s services: by the products one produces, by unique resources that the company possesses, by a particular strength that the company has, by unique financial measures, or by needs that are met.

Second, management must identify the opportunities and threats confronting the company, the critical success factors in the marketplace, and the company’s internal strengths and weaknesses. Then it will have to look both forward and backward. “What have we been doing?” and “What do we want to change?” In the end, though, it is the forward look which must determine the content of the mission statement, to set the future direction: “What do we want the corporation to become?”

Third, recalling the dilemma of finding a marketing niche while avoiding marketing myopia, a company must strike a sound balance between too wide and too narrow a definition of the business. Too wide a definition can leave the organization with no real direction for strategic planning, while too narrow a statement can blind management to, or cause it to ignore, environmental changes, opportunities, and threats.

Fourth, the firm must make sure management can and will dedicate itself to the statement. This means that before signing off on a mission statement, all those who will be affected by it in a significant way ought to grasp its implications and agree to live with them. This may mean being prepared to accept the often uncomfortable and disquieting process of change, which is a constant in life and in business. A mission statement will sometimes clearly imply a totally new direction for the company.

Fifth, a chief executive who has to sign off on a mission statement will feel more comfortable if he or she has had a hand in devising it. But this raises a practical problem. It is clearly unwieldy to ask ten or twenty executives to join in drafting a statement. Yet if the statement is strictly the product of the chief executive’s pen (or word processor), it will be that individual’s mission statement, not necessarily the organization’s. Perhaps the actual drafting of the statement is best done by a management groups that includes the chief executive.

Sixth, anyone who has to draft a mission statement must pretend that he or she is an advertising copywriter. “Tell the world in 25 words or less who you are and what you want to become.” The statement must be concise and to the point.

Andrew E. Schwartz, CEO, A.E. Schwartz & Associates of Boston, MA a comprehensive management training and professional development organization offering over 40 skills specific programs and practical solutions to today's business challenges.

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