Every business, like every human being, needs a reason to exist – a “hill” to aim for. This gives them context, direction, and an overarching goal, to both guide and inspire them.
Vision and mission statements are meant to do the job. Some firms have swung to “strategic intent,” a term which has been around since Gary Hamel and C.K. Prahalad invented it in 1989.[i] And now “purpose” is gaining favour.[ii] So we have four notions that capture the essence of what a business is up to, and it’s not unusual for managers to use them all, depending on what pops into their minds.
Even when firms are consistent, few of them use any of these “tools” well. Managers lose sight of why they’re necessary. Instead of being specific about where they want to go, and what they will and will not do, they waste their time on flowery prose that says nothing. Their first and possibly most crucial decisions fail to inform the goals and activities that follow. Without a compass, their people flail about and do their own thing, regardless of the greater good. And as it becomes increasingly impossible to align them, controls have to be tightened and even the smallest decisions have to be delegated upwards.
When CEOs brief me ahead of a strategy project, they almost always tell me, “We need to revisit our vision and mission.” But more often than not they can’t remember what these say – and when I talk to their colleagues, it turns out that none of them can either. It’s the same in my business school classes, where 20 or 30 senior executives from a variety of big companies have no idea what’s in their own statements. (And these are often the very people who so enthusiastically crafted that guff!)
You have only to suffer through one or two strategy sessions where senior executives argue about the precise wording in vision or mission statements, to understand just how hard it is to create shared meaning. “Excellent,” “the leader,” and “world class,” can be interpreted in countless ways. Companies inevitably fall back on the same words – service, innovation, integrity, responsibility, accountability, professionalism … yakkety-yak – for added gravity and excitement, but these also mean different things to different people, and are forgotten before the ink dries.
Debating whether to declare that shareholders rank above customers, or to put employees above everyone, can waste a ridiculous amount of time. Even worse are tortuous arguments about whether to insert a comma in a sentence, or a full stop; or to call your employees “associates” or “colleagues.”
To help clients deal with this muddle, I remind them why they need any statement at all, and I suggest they stick with purpose. It is, after all, what vision, mission or strategic intent are about. I also warn them that what they wind up with will only be useful if they ruthlessly edit their thoughts, and express them in language that people will understand.
There are four questions to consider:
- Who do you serve? Who is your “right” customer? What other stakeholders must you satisfy? What trade-offs are you willing to make between their various demands?
- What value do you deliver? What do customers get from a relationship with you? What is your “difference” and why does it matter?[iii] What do you do for other stakeholders?
- How will you do it? What should your business model look like?
- What is your ambition? What do you want to achieve, and by when?[iv]
When you draft your company’s purpose, you might be tempted – or pushed – to say more than you need to. But it won’t help to cobble together every thought you have about customers, your people, and saving the planet. Nor will it help to proclaim your goal to be “No. 1,” or “the leader,” or the “most admired,” without a clear explanation of what that means[v]and a convincing story about how you’ll get there.
And go lightly on boasts about your ethics and integrity, or your deep commitment to shared value, brands, the environment, equality, or diversity. Oh, and by the way, that you make superior profits too. And all this while you “have fun!”
Such beliefs and aspirations might be laudable, and you might indeed mean to give them serious attention. But they can’t all be the reason your firm exists.
Besides, the more bloated your purpose becomes, the harder it will be for you to remember and communicate, and the less likely it will be to guide or inspire anyone.
Your business purpose must signal immediately what you’re about, so it must be clear, concise, and coherent. It must be worth signing up for. It must be believable. And it must lead logically to the activities that will bring it to life.
If it doesn’t meet all these criteria, and if there’s even a hint that you don’t quite mean it, your uncertainty will infuse everything you do. The pressures you face to be everything to everybody will have you bouncing from one stakeholder agenda to another, and you’ll satisfy no one.
One thing you shouldn’t expect from your purpose is that by its mere existence it will unleash some hidden passion in your people, unite them in their efforts, and trigger unheard-of achievement. That has been the promise of visions and missions, and it has proved to be an empty one. The fervour with which “purpose” is bandied about suggests it holds some deeper spiritual meaning, and touches a deeper psychological need. The result shows up, too often, in soaring, fluffy language that equates better sales of baked beans with getting to Mars.
Your purpose serves a real and vital purpose. But only if you think it through rigorously, frame it tightly, and don’t get carried away as a wordsmith.
(From my book, The Critical Core, Penguin Random House 2017)
[i1] Rosser Reeves, a famous advertising pioneer, called this the unique selling proposition or USP, and there’s no better definition (Rosser Reeves, Reality In Advertising, New York: MacGibbon and Key, 1961). Today, it’s commonly termed a value proposition.
[ii] Any of these could refer to various aspects of performance, from sales, market share, and profits, to quality, productivity, or innovation
[iii] Gary Hamel & C.K. Prahalad,“Strategic Intent,” Harvard Business Review, May–June, 1989
[iv] Christopher A. Bartlett and Sumantra Ghoshal, “Changing the Role of Top Management: Beyond Strategy to Purpose,” Harvard Business Review, November 1994; Tony Manning, Making Sense of Strategy, Cape Town: Zebra Press, 2001; Rick Warren, The Purpose-Driven Life, Grand Rapids Michigan: Zondervan, 2002; Nikos Mourkogiannis, Purpose, New York: Palgrave Macmillan, 2006
[v] Tony Manning, Making Sense of Strategy, Cape Town: Zebra Press, 2001