Transcript Mission & Value Statements

DIRECTION SETTING:
VISIONS, MISSIONS, VALUES,
AND OBJECTIVES
Payne
(2)
Key Text Reading: Chapter 5
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Determining Strategic Direction
• Strategic direction setting refers to the
development of roadmap or set of guidelines
that help strategists make key organizaitonal
decisions.
• Generally, there are four types of guiding
statements or ideals.
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Vision
Mission
Values
Goals / Objectives
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What is a Vision?
“An articulation of what the company wishes to become
or where it seeks to go” or, “the firm’s aspirations of
what it really wants to be…designed to capture the
imagination of the firm’s people and galvanize their
efforts to achieve a higher purpose.”
• Visions often describe organizations in a lofty, even
romantic or mystical tone – and “expression of hope”.
• Four attributes of “good” visions:
1) Idealism
2) Uniqueness
A well-conceived strategic vision:
3) Future Orientation  Guides managerial decision-making
 Arouses employee buy-in and commitment
4) Imagery
 Prepares a company for the future
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Examples: Strategic Visions
• BIOGEN: “We dedicate ourselves daily to improving the
lives of people around the world.”
• “TENET will distinguish itself as a leader in redefining
health care delivery and will be recognized for the passion
of its people and partners in providing quality, innovative
care to the patients it serves in each community.”
• Allina Hospitals: “We will 1) put the patient first, 2) make
a difference in people’s lives by providing exceptional care
and service, 3) create a healing environment where
passionate people thrive and excel, 4) lead collaborative
efforts that solve our community’s health care challenges.
• Disneyland: “To be the happiest place on earth.”
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What is a Mission?
• “A mission statement is more a statement of corporate
purpose, and often defines the area of business in
which it competes.”
• “Captures the organization’s distinctive purpose or
reason for being.”
• Or, “Describes the firm or organization in terms of its
business. Mission statements answer the questions,
‘What business are we in?’ and ‘What do we intend to
do to succeed?’ …[they] are more concrete than
visions, but still do not specify the goals and objectives
necessary to translate the mission into reality.”
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Mission Statements
• Encompasses both the purpose of the company as well as the
basis of competition and competitive advantage. Should
answer, “What is unique about our organization?”
• More specific, focused, and concrete than the vision.
• Employees are usually the most important audience for
mission statements.
• Components:
1) Should explicitly target customers and market.
2) Should indicate the principal products and/or services provided by
the organization.
3) Should specify the geographical area of concentration.
“Writing a mission statement is important;
however, living it is more important.”
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Mission Statement Examples
• MedCath: “Improve clinical outcomes for
cardiac patients through a physician-driven,
patient-focused approach.”
• Alcon: “To discover, develop, produce and
market innovative, high-quality eye care
products that preserve, restore and enhance
sight. We accomplish this by partnering with
eye care professionals around the world to
advance the treatment of eye disease and help
people to experience the best vision possible.”
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Value Statements
Values are the things organizations and people stand for or the
fundamental principles that, along with the mission, make an
organization unique. Usually associated with ethical behavior and
social responsibility.
Questions for discussion:
1) Why are value statements important (or not)?
2) Are value statements (or codes of ethics) simply impression
management devices?
3) How do you get employees to exhibit behaviors that reflect the
stated values of the organization?
4) Can creating organizational virtue (i.e., integrity, courage,
empathy, conscientiousness, warmth, and zeal) create a
competitive advantage for your organization?
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Values:
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Our business is preserving and improving human life. All of our actions must be
measured by our success in achieving this goal. We value, above all, our ability to
serve everyone who can benefit from the appropriate use of our products and services,
thereby providing lasting consumer satisfaction.
We are committed to the highest standards of ethics and integrity. We are
responsible to our customers, to Merck employees and their families, to the
environments we inhabit, and to the societies we serve worldwide. In discharging our
responsibilities, we do not take professional or ethical shortcuts. Our interactions with
all segments of society must reflect the high standards we profess.
We are dedicated to the highest level of scientific excellence and commit our
research to improving human and animal health and the quality of life. We strive
to identify the most critical needs of consumers and customers, and we devote our
resources to meeting those needs.
We expect profits, but only from work that satisfies customer needs and benefits
humanity. Our ability to meet our responsibilities depends on maintaining a financial
position that invites investment in leading-edge research and that makes possible
effective delivery of research results.
We recognize that the ability to excel -- to most competitively meet society's and
customers' needs -- depends on the integrity, knowledge, imagination, skill,
diversity and teamwork of our employees, and we value these qualities most
highly. To this end, we strive to create an environment of mutual respect,
encouragement and teamwork -- an environment that rewards commitment and
performance and is responsive to the needs of our employees and their families.
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Core Value Proposition (CVP) (Hardy, 2005)
• Provides a starting point for business planning and/or
innovative business development.
• Developed through 5 “Value Drivers” and related questions:
1. IDEA: What does your service or product do for
customers?
2. BENEFIT: What benefit does your product or service
provide to customers (above and beyond competitors or
substitutes)?
3. TARGET: Who are your key customers? How can they be
identified and reached?
4. PERCEPTION: How do you want to be perceived by
customers, employees and other stakeholders?
5. REWARD: What is in it for you, your employees, and
stockholders?
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Goals & Objectives
• Follows vision, mission, and values to more
specifically give direction and goals for the
organization. These also serve to determine if
appropriate control is been set for strategic decisions:
 Represent
commitment to achieve specific
performance targets by a certain time.
 Must
be stated in quantifiable terms and contain a
deadline for achievement.
 Spell-out
how much of what kind of performance by
when.
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Types of Objectives (Controls) Required
Financial Objectives
Strategic Objectives
Outcomes focused on
Outcomes focused on
improving a firm’s
improving a firm’s
financial performance. competitiveness and its
long-term business
position.
Every company needs both strategic and
financial objectives!
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Examples: Financial Objectives
• Increase sales growth 6 to 8 percent and accelerate core net
earnings per share growth to 13 to 15 percent in each of the next
five years (P&G)
• Generate Internet-related revenue of $1.5 billion (Automation)
• Cut overhead costs by $30 million per year (Fortune Brands)
Examples: Strategic (Non-financial) Objectives
• Capitalize on e-commerce (FedEx)
• We want a majority of our customers,when surveyed, to say they
consider us the best financial institution in the community (Wells
Fargo)
• We want to operate 6,000 stores by 2010—up from 3000 in the
year 2000 (Walgreen’s)
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Strategic vs Financial Objectives
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Pressures for better short-term (~1 yr) financial
performance become pronounced when
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Firm is struggling financially
Resource commitments for new strategic initiatives may
hurt bottom-line for several years
Proposed strategic moves are risky
A firm that consistently passes up opportunities
to strengthen its long-term (3-5 yrs) competitive
position
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Risks diluting its competitiveness
Risks losing momentum in its markets
Can hurt its ability to fend off rivals’ challenges
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Setting Objectives
Birnbaum (2004) suggests a 3-step process:
1. Decide
on the essence of the objective (e.g.,
profitability, product quality, absenteeism).
- These should be specific to the organization...the
“Key Performance Indicators” and tied to Key Success
Factors
2. Decide
on the formula to measure the objective (e.g.,
annual profit as % of sales, # of product defects, ratio
of hours missed to total employee hours).
3. Quantify
(outcome and timeframe) the objectives.
(Ask yourself what matters most? How do we track it?)
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Objectives Are Needed at All Levels
Process is top-down, not bottom-up!
1. First, establish organization-wide objectives
2. Next, set business and product line objectives
3. Then, establish functional and departmental
objectives
4. Individual objectives come last
Objective-setting needs to be more of a top-down than a bottomup process in order to guide lower-level managers and
organizational units toward outcomes that support the
achievement of overall business and company objectives.
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