THE Mission Statement - Why, How and its Importance

Every Company, from the inception of time until the end of time, has a mission statement. It may be written or unwritten. It may be long or short. It may be moral or immoral in its tone. But there will be a mission statement. The mission statement is the concept of the Company and explains the Company’s reason for existing. It defines every action that is taken by the Company. It will be the cornerstone for the local church, the neighborhood bar, IBM or your company. It is not to be confused with sales slogans, mottos, motivational statements or the likes. “The pause that refreshes” is not the mission statement of Coca Cola, nor is “You’ve got mail” the mission statement of AOL. The mission statement of any Company is designed to reflect the intentions of the Company. It should be constantly reviewed and updated as the Company grows or changes courses or reinvents itself. It is vitally important.

A well-conceived Mission Statement is an all-inclusive statement that addresses every aspect of the Company. It addresses stakeholders, social issues and philosophical momentums of the Company. Let’s look at only one issue: The stakeholders in the Company. By definition, a stakeholder is anyone who has a direct or indirect interest in the success or failure of the Company. (Note: Stakeholders and Shareholders are not the same.) Stakeholders to be addressed in the Mission Statement include investors, customers, the product line manufacturer, the distributor sales force, employees, suppliers, bankers and creditors, landlords and the community (or communities) in which the Company will have a direct or indirect influence.

The Company, by its existence, has obligations. To its investors it owes a conscience effort to reduce the risk of failure, and to generate a reasonable rate of return on the money invested. To its sales force, it owes the opportunity to generate an income in whatever amount consistent with effort: it may be a small supplemental income or a fulltime career generating a significant income. To employees, it owes an opportunity for life-long employment consistent with other Companies in the area. To product suppliers, it promises a constant outlet for their products and justifies their stock piling of raw materials and components in order to meet the Company’s present and future needs. For landlords, it justifies concessions made to the Company in order to obtain a long-term tenant. To bankers, it promises a stable creditor capable of repaying debt. To the community it becomes a corporate citizen who provides jobs, pays taxes, and becomes a vital element of the community. And most importantly, to the customer it becomes a source of supply of a product that the customer wants and needs at a fair price, with acceptable quality, accurately represented and consistent in its availability and delivery.

Once written, the Mission Statement forms the framework from which Organizational Charts, Policy and Procedure Statements, product lines, marketing plans, compensation plans, guarantees, and all other efforts of the Company become focused. It provides the direction the CEO will take in managing the Company. For example, if the Mission Statement emphasizes that the product line will always be the cutting edge, newest product in the industry and will be developed in-house, then the CEO will place importance on having a very heavy R&D department, having the latest manufacturing equipment, and being up to date at all times with the industry. To accomplish this, the CEO will have this department report directly to him. The emphasis placed on R&D will elevate it a lever of importance not extended to other departments even though, in the final analysis, they may make a greater contribution to the success of the Company. The Company may well become a product driven Company.

If, on the other hand, the Mission Statement emphasizes sales with no emphasis on products or quality control, then the CEO will probably offer a wide product line with prices geared for generating sales. The sales department will occupy the number one spot on his organizational chart. Revenue generation will be the driving force of the Company

Generally, a Company’s Mission Statement highlights all areas of the Company with each having equal importance: Product, Sales, Finance, legal, employees, community relations and one or two other areas of importance. From this, the classical organizational chart can be derived. Each area of importance is represented on an organizational chart in relationship to other departments and is shown to be equal. For a small start up Company, it is usually common to find one or two individuals fulfilling all functions. Enlargement of staff with unique skills and specializations comes with growth and with financial capabilities.

So why is the Mission Statement important? It drives the Company. It is the Company. It tells the world what the Company hopes to achieve and how it will achieve it. It lays out the moral and philosophical tone of the Company. It becomes the road map to the Company’s success or failure. Therefore, it must be done first; it must be constantly reviewed and updated, and it must be kept current and alive. It is the Company.

When writing, or rewriting, your Mission Statement, you must give serious consideration to all phases and aspects of your Company. It will be your mirror image, so it must be right

Dr. Bob Williams, Williams and Company

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