Thursday, November 14, 2013

Does Your Corporate Mission Statement Deliver, Or Is It Time For Change?

There is a problem with many companies' missions--or at least their mission statements. While most companies have a mission statement, few are perceived as committing to or living up to a mission. In many cases, the mission statement itself is a big part of the problem, offering little by way of guidance or inspiration for employees.

Corporate missions should rarely change, but it is healthy for leaders every now and again to revisit their organization's mission, consider its pertinence to the world and employees, and either recommit or adjust that mission. Intel's Andy Grove put it well: "A corporation is a living organism; it has to continue to shed its skin. Methods have to change. Focus has to change. Values have to change. The sum total of those changes is transformation." Perhaps it is time for your firm to consider a transformation with a Mission Checkup?

The data is quite compelling (and depressing) with respect to how bad companies are at achieving missions beyond those measured on income statements and balance sheets, at least in the eyes of consumers. Havas Media's recent Meaningful Brand Study found that 71% of US consumers believe companies and brands should play a role in improving our quality of life and well-being, yet only 36% think that brands work hard at doing just that. The 2013 Edelman Trust Barometer arrived at a similar finding--49% of consumers say it is important for a company to address society's needs in its everyday business, but just 26% believe companies do this.

The view from the inside is no different. A 2008 study from the Institute for Corporate Productivity found that while 84% of organizations have a mission statement in place, 62% of corporate leaders believed just half of their employees could repeat the company mission statement if asked. This is especially disappointing considering how vital the corporate mission is to employee engagement and commitment. A recent study by Spherion found that employees who worked at firms with clear mission and follow-through were twice as likely to want to stay with their current employer and three times more likely to have very good or excellent job satisfaction.

People want the brands they buy and the companies they work for to stand for something more than making money--in other words, to be mission-driven--yet few companies seem to be able to satisfy this expectation. Some leaders may feel that mission statements are an antiquated concept in an era of constant pressure for financial performance, but there are many examples of mission-driven companies that deliver outstanding results without sacrificing ideals. In fact, there is significant evidence that being both mission-driven and profitable is not mutually exclusive but highly compatible. Stanford University Press's "Companies on a Mission" notes "a solid business case has emerged in dozens of studies showing that the companies that are the leaders in environmental responsibility and in ethical behavior to people are outperforming their peers as measured by all traditional business standards."

So if consumers and employees want companies to be mission-driven, and if most companies have a mission statement, and if mission-driven companies achieve stronger financial results, then why is it there such a problem? In many cases, the issue is that business leaders do not reinforce the importance of their company's mission, opting instead for goals focused on increasing margins rather than achieving something greater. In many cases, however, I think the problem may be even more rudimentary--the simple fact is most corporate mission statements are awful.

Many companies would do well to reconsider their mission. The world has changed considerably in the past decade or two, and it is possible yesterday's mission statement is no longer as relevant as it once was. It is healthy and helpful periodically to reconsider the corporate mission--to do a Mission Checkup--and either reinforce the existing mission to employees or reframe the purpose of the organization for all stakeholders.

Of course, not all companies have mission statements. Some, including my new employer, commit to a vision or set of values rather than an explicit mission statement. Whatever the label, the same is true: employees should know what is expected, share purpose and aspire to achieve an ambitious goal defined by more than mere profitably. In my initial weeks at American Express, I have already experienced many ways, large and small, that my peers are committed to the values and vision of the organization.

Here are four factors that make for an inspiring and powerful corporate mission:

The mission is unique and differentiated

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I am amazed as I survey corporate mission statements just how many look like they could be cut and paste from one company to another. If you look at your mission statement and find it could equally apply to any of your competitors, you have a problem. An undifferentiated  mission cannot produce outcomes or reputation that is unique, nor can a mission that is equally applicable to any organization inspire something different and outstanding from employees.

One Fortune 500 firm is committed to "build a corporate culture that respects and values the unique strengths and cultural differences of our associates, customers and community." As opposed to all the other firms who want to build a disrespectful corporate cultures that ignore employees' strengths? One bank has a mission of creating "the best outcomes for our clients and customers with financial solutions that are simple, creative and responsible." Well, that certainly will help the company stand out versus all those competitors striving to create bad outcomes with products that are complex, uninspired and irresponsible, won't it? Too many mission statements are full of platitudes and appear to have been derived from some sort of online "mission statement generator."

One problem of many mission statements is that they are framed only around company culture or products. Creating products that satisfy expectations or building a respectful culture is not a mission; those are table stakes. If your mission statement suffers from this myopia, then it may be time to consider taking it a step farther. The best mission statements do one of several things: They aspire to change the world; they commit to improve customers' lives in significant ways; or they demand the organization achieve something so big and audacious that no other competitor would want, be willing or be able to do the same.

Coca-Cola wants to "refresh the world" and "inspire moments of optimism and happiness," and the company succeeds both financially and in advancing toward that mission. This is an example of a mission statement that strives for something beyond business outcomes, but a great mission statement can also commit to achieving something for the company; the secret is to have that mission be big and audacious! Putting "a computer on every desk and in every home, all running Microsoft software" was a ballsy, unexpected, world-changing mission for Microsoft--one it achieved beyond anyone's wildest imaginations when the company defined that mission in the 1980s. Now that's a mission statement that drove results!

The mission aspires to more than just financial results

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Too often, corporate mission statements merely aspire to achieve financial results. They want to produce "superior operating results," "build value for our investors," "deliver a competitive and sustainable rate of return" or "deliver profits and growth to our shareholders," (All are taken from the mission statements of Fortune 500 companies.) But as evidenced by the Havas and Edelman studies, these are not the sorts of missions that consumers expect, nor is making someone else wealthy a very motivating mission for employees.

Business outcomes are, of course, required, but are they really the mission of the company? As author and management consultant Steve Denning points out, "A growing number of companies have chosen a different goal.... Making money is the result, not the goal, of their activities. The interesting thing is that when they operate this way, they make a lot more money than companies that focus directly on making money." Apple is one of the companies that Denning cites, and last year the company's design chief noted, "Our goal isn’t to make money. Our goal absolutely at Apple is not to make money." Considering Apple has become the world's most valuable brand according to Interbrand's annual study, that comment is either funny or very telling. (I think the latter.)

Of course, Apple is hardly alone in believing that profitability, size or growth is not the mission. David Packard, who built HP into one of the world's largest and most successful corporations, said this about his company:
"I think many people assume, wrongly, that a company exists solely to make money. While this is an important result of a company's existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so that they are able to accomplish something collectively that they could not accomplish separately – they make a contribution to society, a phrase which sounds trite but is fundamental.” (Thanks to Judy Gombita for sharing this quote with me.) 
Go ahead and strive to be the biggest, most profitable, fastest growing company with the largest market share in your industry--but ensure your company's missions tells customers and employees that the organization stands for something more than just profit and returns.

The mission forces tough decisions

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I was recently reminded of a terrific Bill Bernbach quote by my friend, David Rabjohns, CEO of MotiveQuest. Bernbach, who founded Doyle Dane Bernbach (now known as DDB) once said, "A principle is not a principle until it costs you money." The same is true of a mission--if your corporate mission encourages your employees to say "yes" to everything rather than to make hard decisions, then it really is not a mission.

Steve Jobs exhorted his employees to think differently and to create the most intuitive and beautiful products imaginable. This mission demanded that Apple make tough and risky decisions. For example, Apple engineers toiled to make the smallest device possible for their first iPod prototype. Jobs was unimpressed and demanded (despite the costs) that the team return to the drawing board. (It is said that when his engineers claimed they could not make the iPod any smaller, Jobs dropped the prototype in a fish tank and pointed out that rising air bubbles indicated room for improvement.) Another tough mission-based decision came with the launch of Apple stores. Analysts criticized the costly move and pointed out that Gateway stores were failing, but Jobs felt Apple could create a retail experience that was the most intuitive and beautiful in the industry. He was right--Apple fulfilled the mission and filled it coffers.

USAA offers another example of how tough mission-based decisions can work. Many of you know that USAA's mission is to facilitate the financial security of those who have served in the US military and their families. What you may not realize is that USAA banking products are available to anyone, regardless of military service. The organization could promote its bank products to new markets, but it chooses not to, because doing so would violate USAA's mission. A strong mission that forces tough decisions has helped to make USAA the most trusted company in the US.

The mission is top of mind for all employees

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Finally, and perhaps most obviously, a mission that employees do not know cannot help to guide their behaviors and decisions. Too many companies tell new employees about their mission but then fail to reinforce it constantly.

There is a simple test for whether your company is doing enough to promote its mission to employees: Ask them. At USAA, you can stop random employees in the hall and ask the company mission, and they can recite it word for word; however, at many firms, employees are unable to tell you what their company stands for or wants to achieve.

A nondescript and forgotten mission cannot inspire employees, guide their behaviors or provoke consumers to become customers (and customers to become advocates). Without an internalized mission, there is nothing to which employees can commit to beyond their immediate tasks and their own paychecks, and as Peter Drucker notes, "Unless commitment is made, there are only promises and hopes…but no plans."

If your mission statement only appears on your web site and is not in the minds of every employee every day, then it is more a PR tactic than it is a mission. A mission is only a mission when employees at all levels know it and work toward it. Done right, a unique, inspiring, tough and recognized mission is the difference between mere profitability and success. Former GE CEO Jack Welch summed it up nicely: "No company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it."


Unknown said...

Another interesting post, Augie. I found the point about differentiation most intriguing. Having worked in a life insurance company for the past two decades plus, we routinely bemoaned the lack of differentiation in the industry and considered it solely as an advertising problem. That is, how could we use advertising (TV, of course) to differentiate ourselves from our peers.

What we didn't do, until most recently -- and, I think, unfortunately, half-halfheartedly -- is examine our own history and how we had maintained fidelity to the original goals and vision of the the founders. Actually, we HAD in fact done so, but unconsciously. This was so ingrained in the culture that it was no longer really articulated. Odd it was, but I think it is not unique.

So, the lesson might be: Don't look to ad agencies to differentiate your company; look to yourselves, to what you actually do as a company.

Augie Ray said...

Ken, there is great wisdom in your comment. I love the dictum to not rely on ad agencies to differentiate the company. In fact, I think this is a huge a problem for most companies--they create undifferentiated products and undifferentiated services and an undifferentiated culture, and then they think they can create differentiation with the right campaign or tagline. It's a fundamentally flawed system. The more I've worked with different organizations, the more I've come to believe that leadership's job is to create differentiation and then the agency's job is to realize that differentiation in marketing communications. Too often, marketing is just the old "lipstick on a pig" tactic, trying to disguise the ugly truth, which is that the company, brand, product or service is largely generic vis-a-vis the competition.

Thanks for the comment!

christianrenard1 said...

Great comment Augie. I think the outcome of that is that CEO's brains should be hybrid. Most of them have a left-brain software invented in the early 20th century by Ford and Sloan. Today, a lot of Value creation happens in the digital space, and it's CEO's right brain job to mobilize Brands stakeholders new potential to the benefit of his enterprise. Sure it starts with Mission Statement,Culture, etc...

Augie Ray said...

Christian, I like the software analogy. I think it's time for CEO v2.0! (Or, probably higher than that.) :)