Dec 7, 2023

Are Mission Statements a Waste of Time?

Are Mission Statements a Waste of Time?

Are Mission Statements a Waste of Time?

Nathan King

How important is a corporate mission to your company? Does a mission separate good companies, or the not so good, from great ones? Many leadership teams have assumed it to be critical and invested significant time and resources in defining one.

But it could be over done.

Paul Millerd points out the story of Hellman's Mayonnaise, who changed its corporate mission statement a few years ago to include:

to fight against food waste

He quotes Terry Smith, an investor in Hellman's parent company, Unilever:

A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot. The Hellmann’s brand has existed since 1913, so we would guess that by now consumers have figured out its purpose

Unilever trailed its competitors in stock growth. The CEO who orchestrated the formulation of Hellman's mission was fired.

It's popular to treat profit and mission as separate, or as profit flowing from mission. A helpful rule of thumb is "no margin, no mission." Casey Rosengren writes:

The phrase “No margin, no mission” was coined in the mid-1900s by Sister Irene Kraus, a Catholic nun who became president of a network of more than 80 nonprofit hospitals. As the leader of this organization, she extolled the benefits of fiscal responsibility in healthcare. In her eyes, a threat to a hospital’s financial health was also a threat to its core mission.

One could argue that strategy is what will drive profit, much more than mission. Richard Rumelt writes in his worthwhile book, The Crux:

You don’t need a vision or mission statement to lead a business. You decide and create your actual mission as you design and implement your strategic response to change and opportunity. Your publicly expressed mission is more advertising and social signaling than guidance; it will change with shifts in fashion and leadership.

So why has it become so prevalent to pursue mission statements over the last 40 or 50 years? Two primary reasons:

  1. Mission statements are aspirational.

They look beyond the day to day blocking and tackling. This helps leadership teams keep in mind a destination that is most important. Peter Drucker writes in The Effective Executive:

If the executive lets the flow of events determine what he does, what he works on, and what he takes seriously, he will fritter himself away “operating.” He may be an excellent man. But he is certain to waste his knowledge and ability and to throw away what little Effectiveness he might have achieved. What the executive needs are criteria which enable him to work on the truly important, that is, on contributions and results, even though the criteria are not found in the flow of events.

Mission statements call every member of the organization to look beyond the flow of events.

Moreover, humanity has a basic need to do something more than measure and tend to profit margin. We crave the ability to transcend our present challenges and tedium and to connect with something much deeper. Psychologist James Hollis writes that doing so will help us:

reframe the perspectives received from your history, and provide the agenda of growth, purpose, and meaning that we all are meant to carry into the world and to share with others.

Organizational leaders seek to infuse their own need for transcendence into the company, and rally others to it.

2. We are generally misaligned inside of organizations, and mission statements intend to unite.

There are so many conflicting interests inside of the firm, which has been much written about in concepts like the prinicipal-agent problem, in which diverging motivations cause people to become stuck. Or the collective action problem, in which groups would benefit from working together, but siloed thinking and competing interests cause them to get worse results.

What to Do with Mission Statements

I tend to agree with Rumelt's take that crafting a mission statement is ultimately a marketing exercise. It helps the market understand what you are after and what you are about.

And framing it that way, the mission becomes most useful when used to concretely describe what your company does and the problem it solves in the market. 3 examples:

Wal-Mart, the discount retailer:

To save people money so they can live better.

Airbnb, the app that allows you to rent a house/apartment/room:

To help create a world where you can belong anywhere and where people can live in a place, instead of just traveling to it.

Southwest Airlines:

To be the world's most loved, most efficient, and most profitable airline.

Keep it simple, and keep it specific to the service or product you offer. You are part of an organization that must make money, whether you are for-profit company, a school, or a hospital.




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