You ask your entrepreneurial management team to join you in the conference room to develop the company’s mission statement. Reaction from your entrepreneurial team may be “ho-hum”, “do we really need to waste time – we know what business we are in,” or maybe ” let’s spend our time doing real work – designing, developing, selling.” Understandable response in today’s fast- moving, entrepreneurial companies.
But mission statements drive companies, especially startups seeking to secure a sustainable business that creates high value.
Mission statements provide many benefits- here are three examples:
1. Ensures all staff is in sync, understands where the company is heading, how it will get there.
Emphasize that the company will be the lowest cost provider with well defined cost metrics sends one message; emphasize providing the highest quality, differentiated products sends another. Remember these not-too-subtle differences drive corporate strategy, operational plans, messages to investors, and often define an organization’s future success.
2. Communicates what the company thinks is most important, what are its core values.
Emphasize customers, products, technologies, staff development or social benefits sends different messages to the company’s “community of interest” (i.e., staff, customers, investors, suppliers, etc.). You need to ensure these messages are clear, focused. and support the company’s business model and value creation strategy.
Learn from traditional leading firms- one example I often refer to is the mission statement for innovation leader 3M. 3M’s commitment to innovation is reinforced in the company’s mission statement: “To solve unsolved problems innovatively.” And 3M backs that mission statement with solid operational plans and policies that reinforce this commitment. May sound boring to some, but make no mistake- mission statements can successfully drive companies, both entrepreneurial firms and market leaders.
3. Defines the “reach” of the company’s business- what are the real business targets going beyond today’s technologies, markets and products.
Defining how your company will evolve, to what extent you will protect a current business or create new ones, and similar issues, define your company’s “reach” and strategy roadmap. For dealing with investors, this is particularly important.
My counseling with many entrepreneurial firms shows that spending time to define mission statements and particularly “reach” provides high value.
As an example, in my recent book, Worm on a Chopstick: Understanding Today’s Entrepreneurial Age: Directions, Strategies, Management Perspectives (“Chopstick”), I compared Google and GM’s mission statements. First, here is GM’s:
“G.M. is a multinational corporation engaged in socially responsible operations, worldwide. It is dedicated to provide products and services of such quality that our customers will receive superior value while our employees and business partners will share in our success and our stock-holders will receive a sustained superior return on their investment.”
Now here is Google’s mission statement:
“To organize the world’s information and make it universally accessible and useful.”
It sure looks like Google is reaching for the stars here. And the results? Google, founded in 1998 by two Stanford University students, started as a basic search engine, ramped up sales to about $17 billion in 2007, and achieved a market cap of about $220 billion. Compare that to General Motors, started in 1908, led sales for seventy-seven consecutive years from 1931 to 2007, and valued at less than $20 billion in late 2007, less than 10 percent of Google. Even after a $50 billion government bailout in 2009, today, GM’s market cap is only about $51 billion, less than one-third of Google’s $173 billion.
You can argue I selected a dramatic example here. You may also argue that Google was in the right place at the right time, at the cusp of the Internet revolution, while GM is stuck in a tough, mature business, automobile manufacturing, with nowhere to go but fight for global market.
I consider this traditional thinking that really doesn’t work well with markets and technologies morphing, emerging global players, and intense competition from non-traditional players. Looking deeper, like many major traditional companies, we learn GM had opportunities to improve competitive positioning but did not pursue them for various reasons.
To succeed today, what’s needed is ‘entrepreneurial thinking’, a term I suggested in “Chopstick”, driving mission statements and all facets of a company’s business, whether you manage a startup entrepreneurial company or a large traditional company like GM.
So when you and your team leave the conference room after creating your company’s new mission statement, you may be excited that you are now on track to create the next “Google”. Maybe, but you will at least now have a strategic roadmap that will drive your company’s operations at all levels, send a coherent message to all, help you grow your company and create value.
Paul B. Silverman is the author of a new entrepreneurial management strategy book Worm on a Chopstick: Understanding Today’s Entrepreneurial Age: Directions, Strategies, Management Perspectives. A seasoned entrepreneur, global management executive, public and private company CEO, educator, management consultant, speaker, and former founding Director of the Entrepreneurial Step Up Program at George Mason University targeting CEOs of early stage high growth companies, the author recently launched a global entrepreneurial seminar series and is well known in the global information industry and venture community.
The author has conducted hundreds of presentations worldwide and published many articles addressing management strategy, policy and new business development issues. The author serves as CEO of Sante Corporation, an early stage personal health care management company developing a new vision to improve today’s health care system, Managing Partner-Gemini Business Group, LLC, and was appointed to serve as adjunct professor in the Center for Entrepreneurial Excellence Program (“CFEE”) in the George Washington University School of Business.