The Ohio State University’s Ohio Manufacturing Institute grew out of the work of the research team that wrote Driving Ohio’s Prosperity, a report released in the early months of the Great Recession. It examined the automotive cluster’s role in central Ohio’s economy. The team, with analytical assistance from The MPI Group, examined why some parts of the supply chain looked to be merely strained, while others were showing signs of extreme stress. We witnessed the effects of legacy constraints of Detroit-headquartered OEMs, and how they negatively impacted their supply chains; we also saw differences in the companies that supplied the new domestic assemblers—particularly Toyota and Honda. The most resilient of the automotive parts suppliers were not only good at meeting current performance demands of customers, but were also good at working with them on future projects, providing both new products and new technologies. Some of this diversity was due to cultural differences in supply-chain-management between the OEMs; more of it was due to managerial differences among the suppliers themselves.
All of this led us to think hard about the centrality of a company’s value proposition to its planning and operations. We read through mission and value statements for a number of companies, and we heard many references to core corporate values. But something was missing from all of them. Many were clearly the output of earnest, consultant-fueled writing exercises by the leadership team, completed at retreats just moments before the bar could open. In fact, we found that the two most important constituencies of any organization were rarely mentioned: customers and owners.
What could go wrong when you ignore the people who pay you?
The Ohio Manufacturing Institute recognizes five major stakeholders in organizations. In order of importance they are: customers, owners, managers, employees, and community. Without products, and customers who buy them, there is no company. And without owners who invest capital, there is no future. Corporate value propositions should speak to both—and yet value propositions themselves are missing from many corporate planning and vision exercises.
Beyond Mission and Vision Statements
Maybe, you might think, that’s what mission and vision statements are supposed to address. Consultants certainly think so; consider, for example, Bain and Company’s guidance:
"A Mission Statement defines the company's business, its objectives and its approach to reach those objectives. Vision Statements describe the desired future position of the company."
In other words, mission statements answer the existential questions about a company: Why does it operate? Which values do its owners espouse? In which market(s) will it compete? Vision statements can answer the What-will-we-sell? and How-will-we-do-it? questions, but more often end up resembling marketing taglines.
Bain’s guidance tries to avoid this by specifying necessary components of mission and vision statements:
- Identify corporate culture, values, strategy and view of the future by interviewing employees, suppliers and customers
- Address the commitment the firm has to key stakeholders, including customers, employees, shareholders and communities
- Ensure that the objectives are measurable, the approach is actionable, and the vision is achievable
- Communicate the message in clear, simple and precise language
- Develop buy-in and support throughout the organization
The last three bullets are about implementing mission and vision statements; I have no quibble with them. It’s the first two that give me pause—because they’re a recipe for business pabulum. Why? Because they fail to specify why the organization exists. What is its purpose in terms of goods and services? Does it give primacy to value provided to customers and returns to owners?
I am cynical about most mission and vision statements because they appear to be written by either marketing consultants or social workers. As a result, they typically don’t mention the existence of products or customers, or the inconvenient fact that something has to be sold so that money can be made. Too often value propositions and core competencies are missing, even though corporate culture, values, and strategy only have meaning after identifying the company’s lines of business and their value propositions.
My cynicism about mission and vision statements was only heightened when, in preparing for this post, I ran across a webpage put up by Threads, an HR consultancy, that offered up “a core value list with 500 examples.” I can just see someone saying: “Let’s Google core values and download some good ones!”
Oh boy, that sounds authentic.
The next step on this journey was to review lists of mission statements recognized as exemplars. There are many collections available online, with an emphasis on those that inspire. Here are a few: Larry Kim, CEO of WordStream, published “30 Inspiring Billion-Dollar Startup Company Mission Statements” in Inc. AdWeek’s Tim Nudd identified “The 24 most inspirational mission statements” in September 2015. The UK-based insurance company Unum also found 24 mission statements to inspire. Missionstatements.com collected the Fortune 500’s mission statements, because, if their owners are the biggest, MIssionstatements reasoned, their mission statements must be the best! (By the way, Missionstatements.com has mission and vision statement writers on call, and offers package pricing — meaning that a mission-vision combo can be ordered right after reserving a caterer for your strategic retreat!)
What could go possibly go wrong with your strategic plan, formed by retreat coordinators downloading generic core values like so many business buzzword side dishes?
HubSpot is a web-based marketing software provider with an engaging and thoughtful blog, so I settled on examining their list of “12 Truly Inspiring Company Vision and Mission Statement Examples.” What I found? It is a rare mission statement that acknowledges that a product has to be sold.
- You cannot figure out what services American Express provides. Instead, the company has “a mission to be the world’s most-respected services brand. To do this, we have established a culture that supports our team members, so that they can provide exceptional services to our customers.”
- You would not know that Life Is Good sells t-shirts (instead, it spreads optimism).
- The fact that sweetgreen is a restaurant chain takes some figuring out, because it describes itself as a “destination for delicious food thats (sic) both healthy for you and aligned with your values.”
- The fact that Patagonia is an outdoor clothing and recreational equipment company is opaque.
Two mission statements are near misses. Jet Blue’s mission is to “better the lives of customers, employees, and communities and to inspire others to do the same.” Even though they neglect to mention that they operate an airline, the company remains busy “bringing humanity back to the skies.” (A big differentiator in today’s airline industry). Honest Tea “creates and promotes great-tasting, healthier, organic beverages”; I trust they sell some, too.
Only four organizations on HubSpot’s list make a clear connection between a value proposition and their mission:
- Warby Parker “offers designer eyewear at a revolutionary price.”
- Ikea offers “a wide range of well-designed, functional, home furnishing products at prices so low that as many people as possible will be able to afford them.”
- Cradles to Crayon is a social service nonprofit that provides essential items to low-income and homeless children ages 8 to 12, for use at home, school and play. They clearly connect need with mission with business model in their posted material.
- Universal Health Services provides “superior quality healthcare services that: PATIENTS recommend to family and friends, PHYSICIANS prefer for their patients, PURCHASERS select for their clients, EMPLOYEES are proud of, and INVESTORS seek for long-term returns.”
Only Universal Health has all the components of a mission statement: customers, owners, and service line.
It’s possible that my sample is biased because my search for “great” mission and value statements turned up lists selected to inspire, not to provide business guidance. Another problem is that many of the lists are constructed by marketers and self-described “business strategists,” who may be particularly drawn to the inspirational. I suspect, however, that my search yielded a representative sample. Look up a few yourself and decide if you agree that mission and vision statements are usually just, well, mush.
What’s the alternative? Cancel your corporate retreat and avoid the resulting drivel. Instead, move the company forward by recognizing that it is a business; acknowledge that customers and owners are its primary constituencies; and understand that strategy, culture and vision are tools for delivering products to customers and returns to owners. Connections to community and service are fine values, but they’re also investments that generate returns in talent attraction and retention, and in corporate reputation.
Focus your creative writing on seven statements that provide guiderails to current operations and a path to the future:
- Statement of purpose explaining why your company exists.
- Statement of the company’s competitive advantage and core competencies.
- Value Proposition for your customers.
- Value Proposition for your owners.
- Vision statement that frames the company’s future direction.
- Values and ethics statement that defines the company’s culture, describes the organization as a place to work, and is directed at employees.
- Strategy proposition, founded upon the value propositions, that ties together the vision of the future with sources of competitive advantage and the values of the workplace.
Each of these needs to be operationalized, measured, and reviewed regularly in the spirit of continuous improvement.
Well-crafted, widely disseminated statements of purpose, competitive advantage, and value propositions are helpful in reminding employees, customers and investors about the essence and purpose of an organization, and form the foundation of a business plan. In contrast, sloppy, generic statements generate apathy and cynicism at best, and active resistance and sabotage at worst.
Which will you choose?
There is a family-owned metal stamper in Northeast Ohio that I visit on occasion because they run a solid, thoughtful business. This stream of thought started years ago during an interview with them, when their 2007 mission statement was pointed out to me: “Survive.” It reflected the time. They also had a second statement: “To exceed customer expectations.” Aha! A Value Proposition for the owner/investor, and one for the customer. What more do you need?
As A One-Handed Economist, Ned Hill provides straight talk on business and markets to industry leaders looking for a new perspective. Dr. Hill is professor of Public Administration and City & Regional Planning at The Ohio State University's John Glenn College of Public Affairs and a member of the College of Engineering’s Ohio Manufacturing Institute. He came to OSU after serving as dean of the Maxine Goodman Levin College of Urban Affairs and Professor and Distinguished Scholar of Economic Development at Cleveland State University. He has also been editor of Economic Development Quarterly and chair of the National Advisory Board of the Manufacturing Extension Partnership. A One-Handed Economist featuring Ned Hill is one of a series of blogs provided to IndustryWeek by The MPI Group.