5 Corporate Vision, Mission and Objectives

1.   Learning Outcome:

After completing this module the students will be able to:

Understand the role and meaning of corporate vision and mission. Differentiate between vision and mission Describe the characteristics of an effective vision. Understand the concepts of goals and objectives

2. Introduction

The first step in the strategic formulation process is to establish the strategic intent in form of vision, mission, goals and objectives. This the starting point of all the managerial actions. Vision and mission are often considered as an essential part of strategic management. There is probably not a strategic management book that does not mention or explain the importance of these two elements. In history we can find beautiful examples of great visions of e.g. Bill Gates, Steve Jobs or Henry Ford that stay behind companies’ success

In a business it’s difficult or impossible to agree on strategic or even tactical decisions if everyone in the organization is not headed in the same direction, toward some common purpose. Therefore experts believe that developing shared mission, vision and values is the first step in laying a strong foundation for making strategic and tactical decisions that will help the business grow and succeed.

Many a times these terms are used interchangeably therefore it is important to understand the differences between them. This module focuses on introducing these concepts in detail, highlighting various characteristics and differences between these terms.

3.   Meaning of Vision

The vision is the source and the main idea of a company. Vision refers to what an organization aspires to be in future. It acts as a company’s roadmap and depicts what a company wants to become. Nanus, (1992) defines vision as realistic, credible, attractive future for an organization. Over decades the management researchers and practitioners have argued that vision is important to leadership, strategy implementation and organizational change. Clarifying the vision of the company and communicating it to the employees of an organization can have powerful results. Visionary organizations are capable of leading change, when the leaders realize that their visions of the future are not firmly fixed and remain flexible to accommodate change.

Mark Lipton (1996) in their article published in Sloan Management review proposes that managing with a vision can benefit the organization in the following ways

A vision enhances a wide range of performance measures A vision provides a basis for a strategic plan

A vision promotes change

A vision motivates individuals and facilitates recruitment of talent A vision keeps decision making in context

A vision paints a vivid picture of an organization and serves as a concrete foundation for the organization. It serves as an enduring promise and does not fluctuate from year to year. On the basis of vision statement, the organization aligns all its activities. In simple words we can say that a vision of an organization tells that where organization want to reach in future.

A vision statement of the organization is in written format. Vision statement of an organization should be inspiring and provide a base to frame strategy for achieving the ultimate vision of the organization. The normal life span of a vision statement is 10 to 20 years and it articulates the ultimate long-range goal of an organization.

When developing a vision statement, it should be seen that the following questions are answered:

What do we want to do going forward? When do we want to do it?

How do we want to do it?

For example vision of NHPC is a world class, diversified & transnational organization for sustainable development of hydro power and water resources with strong environment conscience. Vision of NTPC is “To be the world’s largest and best power producer, powering India’s growth.”

The vision of ITC is “Sustain ITC’s position as one of India’s most valuable corporations through world class performance, creating growing value for the Indian economy and the company’s stakeholders”. Similarly the vision of Nike is “To be the number one athletic company in the world”. The vision of Google is “Organize World’s information and make it universally accessible and useful”The Coca Cola Company while presenting its vision focuses on the following factors – People, Portfolio, Partners, Planet, Profit and Productivity.

A powerful vision, if fully embraced and executed by an organization. It can also position the firm for industry-wide leadership.

4.   Characteristics of Vision statement

An effective vision statement should be compelling and meaningful for the employees working in an organization. A vision statement can be evaluated on the basis of the following characteristics

1.      Future Focused – An effective vision statement should describe the organizations desired future. It should answer the following question – “How will our organization look like in 10 years from now?” It should promote long term thinking within an organization.

2.      Clarity – A good vision statement should be clearly articulated and should be easy to understand for even the junior most employees in an organization.

3.      Relevant – An effective vision statement should be relevant to an organization in all times and should relate with the history and values of an organization.

4.      Challenging – Vision statement should be challenging enough and should set high standards enabling the members of the organization to perform.

5.      Inspirational – A good vision statement should inspire the employees on an organization to move them emotionally and guide them towards a meaningful purpose.

According to a leading management thinker Philip Kotler, a well worded vision statement should be graphic (painting a picture of the kind of company that management intends to create), directional (indicate kind of business and strategic changes that may be forthcoming), focused (should be specific so that managers are able allocate resources and make decisions), flexible (should be capable of change whenever required), feasible (should be achievable), durable (should cater to the long term interest of the stakeholders) and easy to communicate.

5.   Vision Formulation

An important question that comes next is how can companies develop their vision? In other words Jim Collins and Jerry Porras in their classic article published in Harvard Business Review in September 1996 proposed how successful companies create their vision statement. They further proposed a Built to Last Vision Framework according to which there are two major components of establishing an effective vision statement. These are core ideology and envisioned future.

According to Collins and Porras, “Core ideology defines a company’s timeless character.” This is integral to the process of setting up the company’s vision. They emphasized it is essential to identify those elements of company which will never change. Core Ideology includes two components i.e. core values and core purpose. Core values are the handful of beliefs, guiding principles or tenets that are absolutely non-negotiable within an organisation. Similarly the core purpose is the organization’s fundamental reason for being. The core purpose guides and directs an organization and it motivates and inspires the employees working for the company. Purpose is essentially permanent; it could easily ensure for 50 or more years. Though it never achieved, yet it is clear For example Coca Cola describes their winning culture and they list down their values across leadership, collaboration, Intergrity, Accountability, Passion, Diversity and Quality. For instance on passion, they have identified their value as “Committed in heart and mind”. Similarly on quality, they mention – “What we do, we do well”. The company also strongly emphasize on values like “Work Smart”, “Act like owners”, “Be a Brand”. Infosys, a leading IT company of India has identified their values that drive them to commitment as – Client Value, Leadership by Example, Integrity and Transparency, Fairness and Excellence.Collins and Porras suggest that the core values should revolve around 3-5 major issues and more important the values are reflected in the actions and not merely on the website or company related material.

According to Collins and Porras, an envisioned future is the means through which core ideology is translated into a tangible goal. It includes a long term goal which was described by them as BHAG [Big, Hairy, Audacious Goals]. BHAG can be measured and companies can easily make an assessment on the progress. The goals should be inspiring so that it stimulates the employees and get the people going. The BHAG’s can change once they are achieved are they are major milestones which take the company towards its path of purpose. While formulating BHAG’s the company should think about the four categories i.e. Target (For example : Become a 10,000 crore company by 2020), Common enemy (For example : Nike is 1960’s had a goal – Crush Adidas), Role Model (For example:  Become the Apple of the footwear industry) and Internal Transformation (For example : Transform the company from telecom service provider to a total communication solution provider)

The second part of the envisioned future is vivid description – It basically communicates about what the company will be like when the BHAG are achieved. Vivid narrative description: In simple terms, vivid description pertains to the the story of the company as their preferred future? John Kotter, author of Leading Change, suggests that the vision should vivid, repeatable, and possible to convey in no more than 5 minutes. According to Collins and Porras, the essential parts of vivid description are passion, emotion and conviction.

A well crafted visioning exercise can have a major impact on an organization. While formulating or revising the vision the top level executives can answer the following questions

Where are we Now?

Where do we want to Go?

Where do we want to be?

Why is this important to us?

What are the obstacles in the way?

What actions can we take to overcome them? What are our priorities?

When do we know that we are on track?

Finding answers to these questions can help the executives to formulate a vision.

6.   Meaning of Mission

Mission gives the answer of why organization exists and also defines the path to achieve vision of an organization. Mission statement is written process that communicate why organization exist. A firm’s mission describes the organization in terms of business it is in, the customers it serves, and the skills it intends to develop to fulfill its vision.

In other words, the mission statement is the heart of a company. The mission statement guides the actions of employees, partners, and management. The mission statement tries to answer the following questions

What do we do today? For whom do we do it? What is the benefit?

For example, the mission of ITC is “To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value.” Similarly the mission of Harley Davidson is “We fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments.” Coca Cola puts its mission as “To refresh the world…, To inspire moments of optimism and happiness…, To create value and make a difference.”

7.   Characteristics of a Mission Statement

There are no hard and fast rules to develop a mission statement; however, if an organization keeps in mind the following characteristics, it can develop an effective mission statement.

1.      Simple – Generally companies tend to develop mission statements which are long and full of management words. Research indicates that if the mission statements are small, they are not only memorable but also effective. Many experts believe that mission statements which are 8 words or less are easy to remember and are effective. For example, the mission of Domino is“Sell More Pizza, Have More Fun”.

2.      Be Specific – A good mission statement should include some description about the function of the business. For example, a mission that includes “become the industry leader” does not specify anything and mean nothing to the stakeholders. However, if the mission statement indicates “To provide world class travel services” is more specific.

3.      Be Realistic – Mission statements should be developed in a way that it includes something that is possible. Generally mission statements include statements which are impossible to achieve and then later discourage the employees.

4.      Strategic Positioning – An effective mission statement should include a brief description of the strategic position of the company within the market.

5.      Relevant to Stakeholders – A good mission statement should focus on the interest of the relevant stakeholders especially the customers. The mission statement should aim at satisfying the customer needs.

6.      Long Term Orientation – An effective mission statement should take a long term view and should be designed keeping in view a long term perspective. However, the flexibility should not be compromised.

Many strategists believe that the true impact can be expected if the mission statements focus on the following dimensions.

Define what the company is Key values and beliefs

Concern for satisfying multiple stakeholders Distinctive competence

Broad enough to allow for creative growth Desired competitive position

Competitive strategy

Specific customers served and products or services offered Serve as framework to evaluate current activities

Stated clearly so that it is understood by all

8.   Difference between Vision and mission

9.   Goals and Objectives

A goal is an overarching principle that guides decision making. A goal illustrates what is to be achieved in some future time. Goals are related directly to vision and mission and they direct everyday actions and decisions.

Objectives are specific, measurable steps that can be taken to meet the goal. They specify organization issues and milestones. The objectives should fulfill the SMART criterion which stands for Specific, Measurable, Attainable, Relevant and Time-Bound. For example a company could set its objective as “We want to increase our sales by 35% in the next 12 months” or “We will recruit 35 new engineers from a premier technical institute and they will start working on the new projects by the end of the current financial year”

To differentiate between goals and objectives one can view it like this

For example, some of the common business goals can be

Increase customer satisfaction Improve employee satisfaction

Introduce new product or services Increase the Brand Equity

Diversify into new markets

Penetrate into existing markets Reduce Operational costs

Increase the network with stakeholders Enhance profitability by reducing costs

While developing goals and objectives the executive should keep the following points into consideration

Goals and Objectives should be linked to the mission and vision of the company Goals should always be measurable

Goals can be designed keeping view the acronym ACES i.e. Achieve, Conserve, Eliminate and Steer Clear. In other words, goals are also meant to identify what a company intends to eliminate in addition to what it intends to achieve.

Goals can be of various types including – day to day work goals, problem solving goals, development goals, innovation goals and profitability goals.

The goals set forth should be clear and simple The goals should be specific and realistic

The goals should be acceptable with the values of the company and employees

The goals should be flexible so that it can be changed and adopted whenever needed The following example can help to understand how goals and objectives can be setup

10. Conclusion

Setting up a vision of a company is considered to be a very important step in strategic management. It gives direction to a company and acts as a reference point in the future. Vision tells us also about the future and suggests how we should change. Similarly the mission should be defined before the strategy is developed. The mission defines the space in which the company will operate. Once the vision and mission are established, the company then set up goals and objectives. This module emphasizes on setting up of inspirational, motivational, specific, realistic, and easy to understand statements about the vision, mission, goals and objectives.