You ask your entrepreneurial management team to join you in the conference room to develop the company’s mission statement. Reaction from your entrepreneurial team may be “ho-hum” , “do we really need to waste time- we know what business we are in,” or maybe ” let’s spend our time designing, developing, selling- doing ‘real business’ ”. Understandable response in today’s fast moving, entrepreneurial companies.
But mission statements drive companies, especially startups seeking to secure a sustainable business creating high value. Mission statements provide many benefits- here are three examples:
1. Ensures all staff is in sync, understands where the company is heading, how it will get there
Emphasize that the company will be the lowest cost provider sends one message; emphasize providing the highest quality, differentiated products sends another. Remember these not-too-subtle differences drive corporate strategy, operational plans, and often define an organization’s future success.
2. Communicates what the company thinks is most important, what are its core values
Emphasize customers, products, technologies, staff development or ethics sends different messages to the company’s ‘community of interest’ (i.e., staff, customers, investors, suppliers, etc.). You need to ensure these messages are clear and focused.
3. Defines the “reach” of the company’s business- what are the real business targets going beyond today’s technologies, markets and products.
Defining how your company will evolve, to what extent you will protect a current business or create new ones, and similar issues, define your company’s ‘reach’ and strategy roadmap. For dealing with investors, this is particularly important.
My counseling with many entrepreneurial firms shows that spending time to define mission statements and particularly “reach” provides high value.
As an example, in my recent book, Worm on a Chopstick: Understanding Today’s Entrepreneurial Age: Directions, Strategies, Management Perspectives , I compared Google and GM’s mission statements. First, here is GM’s:
“G.M. is a multinational corporation engaged in socially responsible operations, worldwide. It is dedicated to provide products and services of such quality that our customers will receive superior value while our employees and business partners will share in our success and our stock-holders will receive a sustained superior return on their investment.”
Now here is Google’s mission statement:
“To organize the world’s information and make it universally accessible and useful.”
It sure looks like Google is reaching for the stars here.
And the results? Google, founded in 1998 by two Stanford University students, started as a basic search engine, ramped up sales to about $17 billion in 2007, and achieved a market cap of about $220 billion. Compare that to General Motors, started in 1908, led sales for seventy-seven consecutive years from 1931 to 2007, and valued at less than $20 billion in late 2007, less than 10 percent of Google. Even after a $50 billion government bailout in 2009, today, GM’s market cap is only about $51 billion, less than one third of Google’s $173 billion.
You can argue I selected a dramatic example here. You may also argue that Google “was in the right place at the right time,” at the cusp of the Internet revolution, while GM is stuck in a tough, mature business, automobile manufacturing, with nowhere to go but fight for global market.
I consider this traditional thinking that really doesn’t work well with markets and technologies morphing, emerging global players, and intense competition from non-traditional players. Looking deeper, like many major traditional companies, we learn GM had opportunities to improve competitive positioning but did not pursue them for various reasons.
To succeed today, what’s needed is ‘entrepreneurial thinking’ driving mission statements and all facets of a company’s business, whether you manage a startup entrepreneurial company or a large traditional company like GM.
When you and your team leave the conference room after creating your company’s new mission statement, you may be excited that you are now on track to create the next “Google”. Maybe, but I expect it is more likely you now have a strategic roadmap that will drive your company’s operations at all levels, send a coherent message to all, and help you grow the company and create value.
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Paul B. Silverman is the author of a new entrepreneurial management strategy book Worm on a Chopstick: Understanding today’s Entrepreneurial Age: Directions, Strategies, Management Perspectives; serves as CEO of Sante Corporation creating a new vision for personal health care management; and is an Adjunct Professor in the Center For Entrepreneurial Excellence in the School of Business at George Washington University.