What is the role of a mission statement?

ADS

What is the role of a mission statement?
If the mission statement outlines the broad directions that the organisation will follow, then the role
of the mission statement is to communicate to all the stakeholders inside and outside the organisation
what the company stands for and where it is headed. It therefore needs to be expressed in a language
and with a commitment that all of those involved can understand and feel relevant to their own
circumstances

Amongst strategists, there is some dispute over the defi nition of a mission statement.  There is really no agreed defi nition. There has been a high degree of interest by companies and other practitioners but relatively limited defi nition and research of a more academic nature. In addition, some researchers have questioned the lengthy nature and content of such statements

There are considerable diff erences of view on the form, purpose and content of such statements. At the same time, many leading companies in Europe and North America have developed and quoted their mission statements in their annual reports and accounts. Even if there is no agreeddefi nition, companies still fi nd the process of developing their mission statement useful because it  encourages debate and commitment within the organisation.

How to formulate a mission statement
Because no two organisations are exactly the same in terms of ownership, resources or environmental
circumstances, the mission statement is specifi c to each organisation. Essentially, there are
fi ve elements

1. Consideration of the nature of the organisation’s business. Typical questions include: ‘What business are we in? What business should we be in?
2. The responses need to be considered from the customer perspective, rather than the organisation itself: ‘We are in the business of developing books that will inform and educate our readers about strategy’, rather than ‘We are in the business of developing textbooks on strategic issues.’
3. The mission needs to refl ect the basic values and beliefs of the organisation: 48 ‘We believe it is important to respect the environment and off er employment that is free from any prejudices associated with culture, race or religion.
4.  Where possible, the mission needs to refl ect the element of the s ustainable competitive advantage :  ‘It is our aim to be a leader in this fi eld.’ This may not be possible in a diversifi ed group of companies. It may also be more appropriate to adjust this to refl ect distinctiveness in an organisation which has no direct competitors (e.g. a charity).

All the above will rely on business judgement , which is imprecise and diffi cult to defi ne by its very
nature. Business judgements are usually made by senior managers in the company. Because a mission
statement needs to be communicated as well as to summarise the organisation’s purposes, it
needs to be worded carefully. It needs to be written in language that is commonly understood.
The need for precision and care is an important part of the analysis and development of mission
statements.

ADS