Mission THE THREE STRATEGY-MAKING TASKS Developing a

Mission

THE THREE STRATEGY-MAKING TASKS Developing a Strategic Vision, Setting Objectives, and Crafting a Strategy n In this lecture, we take a more in-depth look at the three strategy-making tasks: developing a strategic vision and business mission n

DEVELOPING A STRATEGIC VISION AND MISSION: THE FIRST DIRECTION-SETTING TASK n n n Management's views and conclusions about the organization's future course, the customer focus it should have, the market position it should try to occupy, and the business activities to be pursued constitute a strategic vision for the company. A strategic vision indicates management's aspirations for the organization, providing a panoramic view of "what businesses we want to be in, where we are headed, and the kind of company we are trying to create. " It spells out a direction and describes the destination.

. . . we want Delta to be the Worldwide Airline of Choice n Worldwide, because we are and intend to remain an innovative, aggressive, ethical, and successful competitor that offers access to the world at the highest standards of customer service. We will continue to look for opportunities to extend our reach through new routes and creative global alliances.

. . . we want Delta to be the Worldwide Airline of Choice. n Airline, because we intend to stay in the business we know best—air transportation and related services. We won't stray from our roots. We believe in the long-term prospects for profitable growth in the airline industry, and we will continue to focus time, attention, and investment on enhancing our place in that business environment.

. . . we want Delta to be the Worldwide Airline of Choice n Of Choice, because we value the loyalty of our customers, employees, and investors. For passengers and shippers, we will continue to provide the best service and value. For our personnel, we will continue to offer an ever more challenging, rewarding, and result-oriented workplace that recognizes and appreciates their contributions. For our shareholders, we will earn a consistent, superior financial return.

Why Have a Mission or Strategic Vision? n A clear strategic vision is a prerequisite to effective strategic leadership. A manager cannot function effectively as either leader or strategy maker without a future-oriented concept of the business—what customer needs to work toward satisfying, what business activities to pursue, and what kind of long-term market position to build vis-a-vis competitors.

Mission slogan n Forming a strategic vision is thus not a wordsmithing exercise to create a catchy company slogan; rather, it is an exercise in thinking strategically about a company's future, forming a viable concept of the company's future business, and putting the company on a strategic path that management is deeply committed to. Mission is a foundation of a strategy. Slogan part of advertisement.

Mission slogan (2) n n When creating advertisement (slogan) we are trying to persuade somebody (our customers) to buy our goods When creating mission we are trying to persuade ourselves why our customers will buy our goods

Mission helps managers at all levels n When management's strategic vision communicates something important about what business position it intends for the company to stake out and what course the company is going to follow, then the vision truly able of guiding managerial decision making, shaping the company's strategy, and impacting how the company is run. Such outcomes have real managerial value.

Strategic Visions Are Company. Specific, Not Generic n n Strategic visions and company mission statements ought to be highly personalized – unique to the organization for which they were developed. There's nothing unusual about companies in the same industry pursuing significantly, even radically, different strategic paths. The whole idea behind developing a strategic vision/mission statement is to set an organization apart from others in its industry and give it its own special identity, business emphasis, and path far development.

General mission is bad mission n n Generically worded statements, couched in everything-andeverybody language that could apply just as well to many companies and lines of business, are not managerially useful – they paint no mental picture of where the company is destined and offer no guidance to managers in deciding which business activities to pursue and not to pursue, what strategies make the best sense, or how to operate the company. Nor do they communicate useful information about a company's long-term direction and future business makeup to employees and investors. Doubtful worded mission/vision statements may have some public relations value, but they don't help managers manage. The best vision statements are worded in a manner that explain the direction in which an organization needs to move.

The Mission or Vision Is Not to Make a Profit n n n Sometimes companies set their business purpose or mission in terms of making a profit. This is misguided - profit is more correctly an objective and a result of what the company does. The desire to make a profit says nothing about the business arena in which profits are to be sought. Missions or visions based on making a profit are incapable of differentiating one type of profit-seeking enterprise from another. A company that says its mission/business purpose/strategic vision is to make a profit begs the question "What will we do to make a profit? " To understand a company's business and future direction, we must know management's answer to "make a profit doing what and for whom? "

The Elements of a Strategic Vision n n There are three distinct pieces to the task of forming a strategic vision of a company's business future: Defining what business the company is presently in. Deciding on a long-term strategic course for the company to pursue. Communicating the vision in ways that are clear, exciting, and inspiring.

Defining a Company's Present Business n n To arrive at a strategically revealing business definition, three elements need to be incorporated: 1. Customer needs, or what is being satisfied. 2. Customer groups, or who is being satisfied. 3. The technologies used and functions performed - how customers' needs are satisfied.

Need (what, who, how) product definition n Defining a business in terms of what to satisfy, who to satisfy, and how the organization will go about producing the satisfaction produces a comprehensive definition of what a company does and what business it is in. Just knowing what products or services a firm provides is never enough. Products or services per se are not important to customers; a product or service becomes a business when it satisfies a need or want. Without the need or want there is no business.

Mission: Adding Customer Group & Technology n n Customer groups are relevant because they indicate the market to be served—the geographic domain to be covered and the types of buyers the firm is going after. Technology and functions performed are important because they indicate how the company will satisfy the customers' needs and how much of the industry's production-distribution chain its activities will span.

A Broad or Narrow Business Definition? n Merck, one of the world's foremost pharmaceutical companies, has defined its business broadly as "providing society with superior products and services— innovations and solutions that satisfy customer needs and improve the quality of life”. Such broad language, however, offers no practical strategic guidance. With such a definition Merck could pursue limitless strategic paths—developing innovative computer software, producing and marketing uniquely satisfying snack foods, manufacturing very appealing sports utility vehicles, or providing tax preparation services.

Broad → Narrow Business Definition n n To have managerial value, strategic visions, business definitions, and mission statements must be narrow enough to pin down the company's real arena of business interest. Consider the following definitions based on broadnarrow scope: Broad Definition. Narrow Definition ¨ Beverages • Soft drinks • ¨ Children's products • Toys • ¨ Global mail delivery • Overnight package delivery • ¨ Travel and tourism • Ship cruises in the Caribbean

Broad → Narrow Business Definition: Example n Broad-narrow definitions are relative to a company's business focus and intent, however. The U. S. Postal Service operates with a broad definition, providing global mail-delivery services to all types of senders. Federal Express, however, operates with a narrow business definition based on handling overnight package delivery for customers who have unplanned emergencies and tight deadlines.

Missions for Diversified Firms n n Diversified firms, understandably, have to create several missions. P&G: diapers “Pampers”, potato chips “Pringles”, tooth paste, sanitary towel etc. can’t be in one mission/

Mission Statements for Functional Departments n There's also a place for mission statements for key functions (R&D, marketing, finance) and support units (human resources, training, information systems). Every department can benefit from a consensus statement spelling out its contribution to the company mission, its principal role and activities, and the direction it needs to be moving. Functional and departmental managers who think through and debate with subordinates and higher ups what their unit needs to focus on and do have a clearer view of how to lead the unit.

Mission Statements for Functional Departments: Examples n n Three examples from actual companies indicate how a functional mission statement puts the spotlight on a unit's organizational role and scope: • The mission of the human resources department is to contribute to organizational success by developing effective leaders, creating high-performance teams, and maximizing the potential of individuals. • The mission of the corporate claims department is to minimize the overall cost of liability, workers compensation, and property damage claims through competitive cost containment techniques and loss prevention and control programs. • The mission of corporate security is to provide services for the protection of corporate personnel and assets through preventive measures and investigations.

Mission: managerial value n n n . A well-conceived, well-worded strategic vision/mission statement has real managerial value: (1) it crystallizes senior executives' own views about the firm's long-term direction and future business makeup; (2) it reduces the risk of visionless management and rudderless decision making; (3) it conveys an organizational purpose that arouses employee buy-in and commitment and that motivates employees to go all out and contribute to making the vision a reality; (4) it provides a beacon lower-level managers can use to form departmental missions, set departmental objectives, and craft functional and departmental strategies that are in sync with the company's direction and strategy; (5) it helps an organization prepare for the future.