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Vision Statement describes the future. It tells where the company is going or where the company wants to go. While Mission Statements describes the presnet status: why the company exists today and / or what the company is doing to pursue its vision of the future. Together they provide direction for the business by focusing its attention on doing things day-to-day to accomplish its mission, while taking steps to pursue its vision of the future - its long-term business intent.
Vision and mission statements are often mentioned in front of annual reports of companies as well as when we log into websites of different companies, we will come across their vision and mission statements. They might also be displayed in the company’s premises as well as they are emphasized in the company’s information and major documents.
Vision Statement: What do we want to become?
Vision is the power of seeing or imaging future. In strategic planning, vision is also defined as looking ahead into future.
It is essential that the management in any organization agree upon the basic vision of the company that it strives to achieve in the long term. A vision statement should answer the question, “What do we want to become?” A clear vision statement lays a foundation for the preparation of a comprehensive mission statement.
A vision statement, thus, developed by the management should be short, preferably one sentence and should be developed consulting with as many managers and executives as possible.
Reasons for having a vision statement
1) Gets team focused.
2) Shows a picture of where the company is going.
3) Instills focus, discipline, and structure within the organization.
4) Ensures that team understands company direction.
Few questions that will help in forming strategic vision are:
1. What business are we in now?
2. What business do we want to be in?
3. What will our customer want in future?
4. What are the expectations of our stakeholders?
5. Who will be our future competitors? Suppliers? partners?
6. What should our competitive scope be?
7. How will technology impact our business?
8. What environmental scenarios are possible?
Mission Statement-What is our Business?
Mission statement should, however, answer the question, “What is our business?” Druker says that asking this question is synonymous with asking the question, “What is our mission?” Mission statements should be such that it emphasizes the company’s scope in terms of products, markets and which distinguishes the company from others in the same industry.
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Mission statement is a statement of an organization’s “reason for being”. A business mission is the foundation for priorities, strategies, plans, and work assignments. It is the starting point for the design of managerial jobs and, the design of the managerial structure.
A mission statement could be defined narrowly or broadly. A broad mission statement doesn’t limit the company to one particular field or product, but it also fails to emphasize a particular product or the market it plans to target.
A narrow statement, however, clearly states the organization’s primary business, product or service.
An organization’s mission:
1. Reflects management’s vision of what firms seek to do and become
2. Provides clear view of what the firm is trying to accomplish for its customer
3. Indicates intent to stake out a particular business position
The process of developing a Mission statement:
- Firstly all managers are asked to read several articles about mission statements.
- Managers are then asked to prepare mission statement for their organization.
- A facilitator, or committee of top managers, then merge these into a single documents and distribute the draft mission to all managers
- Then takes place the stage of modification, additions, and deletions if needed.
- Then with the support and consent of all managers involved as well as of the top management, the mission statement is then decided.
At times, companies may decide to use external consultants to help them with their expertise on developing mission statements. The greatest challenge, however, is to ensure that the mission statement is communicated to all managers, employees, and external constituencies of an organization. Some companies may even use videotapes to communicate about their mission statements and to show how they were developed.
Importance of Vision and Mission Statements:
- Rarick and Vittion found that firms with a formalized mission statement have twice the average return on shareholders’ equity than that firm’s without a formalized mission statement.
- Bart and Baetz found a positive relationship between mission statements and organizational performance.
- Business week reports that firm’s with proper mission statements have 30% higher return on certain financial measures than those firms without such statements
However, key to all these successes is that there should be involvement of as many managers and executives in developing a vision and mission statement for any company.
Characteristics of a mission statement
- A mission statement is a declaration of certain attitude and outlook of a company. A mission statement should be such that it considers alternatives that are feasible and without unduly stifling management’s creativity. For instance, a computer manufacturer’s mission statement should not open possibility to diversify into pesticides market or the car manufacturer’s into food processing.
- A mission statement should describe an organization’s purpose, customer, products/services, market, philosophy, and basic technology. It should:
1. define what the organization is and what it aspires to become
2. distinguish the company from others
3. serve as a basis for evaluating both the current and future activities
4. should be clear so that it is clearly understood thorough out the organization.
Components of a Mission Statement
There are nine components in a mission statement.
1. Customer: Who are the firm’s customer
2. Products/services- what are the firm’s major product/services
3. Markets: where does the firm compete
4. Technology: Is the firm technologically current
5. Concern for survival, growth and profitability: IS the firm committed to growth and financial soundness
6. Philosophy: what are the basic beliefs, values, aspirations, and ethical priorities of he firm
7. Self Concept: what is the firm’s distinctive competence
8. Concern for public image: is the firm responsive to social community and environmental concerns
9. Cinder for employees: Are the employees as valuable assets of the firm
Dell Computer’s mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of highest quality, leading technology, competitive pricing, individual and company accountability, best in class service and support, flexible customization capability, superior corporate citizenship, financial stability.
Concern for survival, growth and profitability: Yes
Self Concept: what Yes
Concern for public image: Yes
Concern for employees: No
Building Your Company’s Vision by James C. Collins and Jerry I. Porras
A well-conceived vision consists of two major components: core ideology and envisioned future. Core ideology, the yin in our scheme, defines what we stand for and why we exist. Yin is unchanging and complements yang, the envisioned future. The envisioned future is what we aspire to become, to achieve, to create—something that will require significant change and progress to attain.
Core ideology defines the enduring character of an organization—a consistent identity that transcends product or market life cycles, technological breakthroughs, management fads, and individual leaders. In fact, the most lasting and significant contribution of those who build visionary companies is the core ideology. Leaders die, products become obsolete, markets change, new technologies emerge, and management fads come and go, but core ideology in a great company endures as a source of guidance and inspiration. Any effective vision must embody the core ideology of the organization, which in turn consists of two distinct parts: core values, a system of guiding principles and tenets; and core purpose, the organization’s most fundamental reason for existence.
Core values are the essential and enduring tenets of an organization. A small set of timeless guiding principles, core values require no external justification; they have intrinsic value and importance to those inside the organization.
William Procter and James Gamble didn’t instill in P&G’s culture a focus on product excellence merely as a strategy for success but as an almost religious tenet. And that value has been passed down for more than 15 decades by P&G people. For Bill Hewlett and David Packard, respect for the individual was first and foremost a deep personal value; they didn’t get it from a book or hear it from a management guru.
Core purpose, the second part of core ideology, is the organization’s reason for being. An effective purpose reflects people’s idealistic motivations for doing the company’s work. It doesn’t just describe the organization’s output or target customers; it captures the soul of the organization. According to David Packard gave, core purpose gets at the deeper reasons for an organization’s existence beyond just making money.
The second primary component of the vision framework is envisioned future . It consists of two parts: a 10-to-30-year audacious goal plus vivid descriptions of what it will be like to achieve the goal.
Sony in the 1950s
• Elevation of the Japanese culture and national status
• Being a pioneer—not following others; doing the impossible
• Encouraging individual ability and creativity
To experience the sheer joy of innovation and the application of technology for the benefit and pleasure of the general public
Become the company most known for changing the worldwide poor-quality image of Japanese products
We will create products that become pervasive around the world... We will be the first Japanese company to go into the U.S. market and distribute directly...We will succeed with innovations that U.S. companies have failed at—such as the transistor radio... Fifty years from now, our brand name will be as well known as any in the world...and will signify innovation and quality that rival the most innovative companies anywhere... “Made in Japan” will mean something fine, not something shoddy.