Of the three key categories that generate business value—“hard,” “soft,” and “intangible”—mission statements firmly belong to the third, alongside elements like brand and corporate culture. While intangible assets are often met with skepticism due to their less tangible nature, this article contends that a well-crafted and properly implemented mission statement can significantly contribute to corporate value, sometimes in the billions of dollars.
Mission Statements: Value-Creating Intangibles in Business
In the realm of building businesses, three functional categories are essential for driving value. The first involves “hard” functions like operations, finance, and programming. The second includes “soft” functions like strategy, marketing, sales, and management. Lastly, there’s the “intangible” category, which consists of abstract concepts such as brand, culture, and people—elements notorious for their difficulty in measurement but immense potential to generate value when optimized.
A mission statement—an intangible asset—serves as a powerful tool that defines an organization’s purpose. Throughout this discussion, we will analyze the features of effective mission statements, their contributions to value creation, and how to draft impactful ones. By studying real-world examples, we’ll illustrate how mission statements can be transformative, unifying organizations around a shared vision.
Mission Statements: A Business’s Reason for Being
Businesses, much like individuals, have a raison d’être—a reason to exist. Some enterprises are founded with clear direction and purpose, while others embark on a journey to discover theirs. Regardless, every business has a core reason for its existence.
Simply put, a mission statement is a concise declaration of an organization’s purpose—the “why” behind its creation. These statements vary greatly. Some, like Virgin Atlantic’s “to embrace the human spirit and let it fly,” are succinct and impactful. Others, such as Avon’s verbose 249-word mission statement, fall into the trap of being overly complex. When designed effectively, however, mission statements become invaluable tools for uniting teams, guiding decision-making, and achieving business outcomes.
The Value of a Great Mission Statement
Mission statements are unique in their ability to serve both as offensive and defensive tools for businesses. Offensively, they inspire growth and drive opportunities. Defensively, they mitigate risks and keep organizations aligned during challenging times. But what makes a mission statement “great”?
What Defines an Effective Mission Statement?
While many guides claim to offer a formula for crafting a perfect mission statement, most fall short of delivering meaningful results. However, here are the core qualities that characterize impactful mission statements:
- Simplicity and Emotion:
Great mission statements use plain, relatable language to communicate a strong and inspiring purpose. Examples include:
- Ikea: “To create a better everyday life for the many people.”
- Coca-Cola: “To refresh the world…To inspire moments of optimism and happiness…To make a difference.” Both statements are memorable and emotionally stirring without overcomplicating their message.
- Lofty Yet Achievable Goals:
A mission statement should reflect ambitious yet realistic goals. For instance:
- WeWork: “Create a world where people work to make a life, not just a living.”
- eBay: “Provide a global online marketplace where practically anyone can trade practically anything.”
- Authenticity:
A mission statement must align with a company’s identity and the expectations of its stakeholders. For example:
- Whole Foods: “With great courage, integrity and love—we embrace our responsibility to co-create a world where each of us, our communities, and our planet can flourish.”
- Reflection of Founders and Team:
Mission statements should convey the values and vision of the founders, inspiring alignment within the organization. Virgin Atlantic illustrates this point well:
- “Our mission is simple… to embrace the human spirit and let it fly.”
- A Higher Purpose:
Beyond the pursuit of profit, effective mission statements also articulate the broader impact a company seeks to achieve. Examples include:
- Google: “To organize the world’s information and make it universally accessible and useful.”
- Facebook: “To bring the world closer together.”
How Mission Statements Create Value
Mission statements, when used effectively, can generate value in multiple ways across both offensive and defensive fronts. Below are their key applications:
Offensive Uses of Mission Statements
- Sales and Business Growth:
Mission statements can establish a unique identity that resonates with customers and differentiates businesses. For example, TOMS and Warby Parker, whose missions tie to socially conscious business practices, experienced rapid growth based on their purpose-driven branding. - Fundraising:
Clear and inspiring mission statements attract investors by highlighting the company’s long-term vision. However, cautionary cases like Theranos show that even the most polished mission statements can be misused to manipulate trust. - Turnarounds:
Mission statements can revive struggling businesses by refocusing them on their core purpose. LEGO, for instance, executed one of history’s dramatic turnarounds by re-centering on its mission to “inspire and develop children.” This guiding force rallied employees and stakeholders alike, helping the company flourish despite challenges.
Defensive Uses of Mission Statements
- Employee Retention and Loyalty:
A strong mission fosters employee engagement and retention, as seen in the case of Whole Foods, where stakeholders rallied behind the company following a devastating flood. - Stakeholder Alignment:
Mission statements serve as a unifying force across stakeholders, helping organizations remain consistent in their values during turbulent times.
How to Craft a Great Mission Statement
To create an impactful mission statement, avoid these common pitfalls:
- Avoid Saying Nothing:
Mission statements like Dell’s, which aim to “be the most successful computer company delivering the best customer experience,” fail to communicate a clear or unique identity. - Don’t Be Verbose:
Overly long mission statements, such as Avon’s sprawling 249-word example, dilute impact. Instead, take inspiration from The Humane Society’s concise approach: “Celebrating Animals, Confronting Cruelty.” - Maintain Clarity:
Avoid jargon and overly complicated phrasing. Compare McDonald’s unfocused mission to Amazon Kindle’s succinct: “Every book ever printed, in any language, all available in less than 60 seconds.” - Speak Authentically:
Use authentic language that reflects the true essence of the business, resisting the urge to add corporate buzzwords. - Focus on Core Purpose:
Don’t attempt to appeal to all audiences. Instead, ensure the mission remains centered on the company’s core values, as LEGO does with its mission to inspire children. - Iterate Continuously:
A mission statement should evolve to reflect the growth and transformation of the business.
Conclusion
In today’s ever-changing business landscape, a clear and inspiring mission statement is more important than ever. Apart from driving value, it serves as a company’s foundation during turbulent times. By staying true to your mission and letting it guide your strategies, hiring, and decision-making, you build an organization that not only succeeds in business but also leaves a meaningful impact on the world.