Every organization to be successful needs to be guided by a clear strategy. Vision, mission, and values form the ground for building the strategic foundation of the organization. They direct and guide the purpose, principles and values that govern the activities of the organization and communicate this purpose of the organization internally and externally.
Successful organizations ensure that their goals and objectives are always in synergy with their vision, mission and values and consider this as the basis for all strategic planning and decision making.
By developing clear and meaningful mission and vision statements, organizations can powerfully communicate their intentions and inspire people within and outside the organization to ensure that they understand the objectives of the organization, and align their expectations and goals toward a common sense of purpose.
Importance of Mission, Vision, and Values
Vision and mission statements play an important role in strategy development by −
- Providing means to create and weigh various strategic plans and alternatives.
- Laying down the fundamentals of an organization’s identity and defining its purpose for existence.
- Providing an understanding of its business directions.
By identifying and understanding how values, mission, and vision interact with one another, an organization can create a well-designed and successful strategic plan leading to competitive advantage.
An organizational mission is a statement specifying the kind of business it wants to undertake. It puts forward the vision of management based on internal and external environments, capabilities, and the nature of customers of the organization.
A mission statement therefore −
- Communicates the organization’s reason for being.
- Reveals a company’s philosophy, as well as its purpose.
- Specifies how it aims to serve its key stakeholders.
- Defines the current and future business in terms of product, markets, customer, etc.
- Is often longer than vision statements and sometimes also includes a summation of the firm’s values.
Following are the mission statements of some of the most successful companies.
At Microsoft, our mission is to enable people and businesses throughout the world to realize their full potential. We consider our mission statement a commitment to our customers. We deliver on that commitment by striving to create technology that is accessible to everyone—of all ages and abilities. Microsoft is one of the industry leaders in accessibility innovation and in building products that are safer and easier to use.
Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions.
- To refresh the world…
- To inspire moments of optimism and happiness…
- To create value and make a difference
A vision is a clear, comprehensive snapshot of an organization at some point in the future. It defines the company’s direction and entails what the organization needs to be like, to be successful in future.
It is of strategic importance to an organization to create a clear and effective vision. A clear vision helps to define the values of the organization and guides the conduct of all employees. A strong vision also leads to improved productivity and efficiency.
A Vision Statement is −
- A future-oriented declaration of the organization’s purpose and aspirations.
- Lays out the organization’s purpose for being.
- A clear vision helps in aligning everyone towards the same state of objective, providing a basis for goal congruence.
For example, the Vision Statement of PepsiCo is as follows − At PepsiCo, we’re committed to achieving business and financial success while leaving a positive imprint on society − delivering what we call Performance with Purpose.
Role Played by Mission and Vision
Organization mission and vision are critical elements of a company’s organizational strategy and serves as the foundation for the establishment of company objectives.
Mission and vision statements play critical roles, such as −
- They provide unanimity of purpose to organizations and spell out the context in which the organization operates.
- They communicate the purpose of the organization to stakeholders.
- They specify the direction in which the organization must move to realize the goals in the vision and mission statements.
- They provide the employees with a sense of belonging and identity.
Every organization has a set of values. Sometimes they are written down and sometimes not. Written values help an organization define its culture and belief. Organizations that believe and pledge to a common set of values are united while dealing with issues internal or external.
An organization’s values can be defined as the moral guide for its business practices.
Every company, big or small, has its core values which forms the basis over which the members of a company make decisions, plan strategies, and interact with each other and their stakeholders. Core values reflect the core behaviors or guiding principles that guide the actions of employees as they execute plans to achieve the mission and vision.
- Core values reflect what is important to the organization and its members.
- Core values are intrinsic – they come from leaders inside of the company.
- Core values are not necessarily dependent on the type of company or industry and may vary widely, even among organizations that do similar types of work.
For many companies, adherence to their core values is a goal, not a reality.
It is often said that companies that abandon their core values may not perform as well as those that adhere to them.
Any individual or groups/group of individuals who believe and have an interest in an organization’s ability to deliver intended results and affect or are affected by its outcomes are called stakeholders. Stakeholders play an integral part in the development and ultimate success of an organization.
An organization is usually accountable to a broad range of stakeholders, including shareholders, who are an integral part of an organization’s strategy execution. This is the main reason managers must consider stakeholders’ interests, needs, and preferences. A stakeholder is anybody who can affect or is affected by an organization, strategy or project. They can be internal or external and they can be at senior or junior levels.
Types of Stakeholders
Stakeholders are people who have the power to impact an organization or a project in some way.
Stakeholders can be of two types −
- Primary or Internal stakeholders
- External stakeholders
Primary or Internal Stakeholders
These are groups or individuals who are directly engaged in economic transactions within the business, such as employees, owners, investors, suppliers, creditors, etc.
For example, employees contribute their skill/expertise and wish to earn high wages and retain their jobs. Owners exercise control over the business with a view to maximizing the profit of the business.
Secondary or External Stakeholders
These are groups or individuals who need not necessarily be engaged in transaction with the business but are affected in some way from the decisions of the business, such as customers, suppliers, creditors, community, trade unions, and the government.
For example, the trade unions are interested in the organization’s well-being so that the workers are well paid and treated fairly. Customers want the business to produce quality products at reasonable prices.
Identification of Key Stakeholders
It is very important for any business to identify its key stakeholders and scope their involvement as they play a vital role right from strategizing to implementation of outcomes throughout the lifetime of a business.
Different stakeholders have different interests in the organization and the management has to consider all their interests and create a synergy among them to achieve its objectives.
Identifying all of a firm’s stakeholders can be a daunting task. It is important to have the optimum number of stakeholders, neither too many nor too few. Having too many stakeholders will dilute the effectiveness of the company objectives by overwhelming decision makers with too much information and authority. Following are some effective techniques to identify key stakeholders −
- Brainstorming− This is done by including all the people already involved and aware of the company and its objectives, and encouraging them to come out with their ideas. Stakeholders can be brainstormed based on categories such as internal or external.
- Determining power and influence over decisions− Identify the individuals or groups that exercise power and influence over the decisions the firm makes. Once it is determined who has a stake in the outcome of the firm’s decisions as well as who has power over these decisions, there can be a basis on which to allocate prominence in the strategy-formulation and strategy-implementation processes.
- Determining influences on mission, vision and strategy formulation− Analyze the importance and roles of the individuals or groups who should be consulted as strategy is developed or who will play some part in its eventual implementation.
- Checklist− Make a checklist or questions to help identify the more influential or important stakeholders.
- Who will be affected positively or negatively, and to what extent?
- Who influences the opinions about the company?
- Who has been involved in any similar projects in the past?
- Which groups will benefit from successful execution of the strategy and which may be adversely affected?
- Involve the already identified stakeholders− Once the stakeholders are identified, it is important to manage their interests and keep them involved and supportive. This is a daunting task to be performed tactfully by managers so that the organization’s higher objectives are not subordinated by individual interests.