A mission statement is what every large corporation, institution, education board, charity, team and business begins contemplating when they generate the idea of needing one or how good theirs could be if developed. For these reasons, it’s no surprise that out of all the statements written by these groups some are good…some are bad…and some are even worse and barely serve a purpose. There are statements that will dictate the corporate culture in which all employees and stakeholders work within and other statements that will simply serve a purpose of looking “cool” on a large plaque hanging in the lobby of an office collecting dust over the years with absolutely no impact.
Mission statements have been around for a long time, but it seems that over the last 5-10 years the abundance or necessity of having one has become more popular. Some people/businesses use their mission statements with advertising while others simply follow the long understood function that a mission statement helps users and members to identify an organizations’ purpose. A mission statement generally states the reason and purpose of the company, as well as any important views, initiatives or goals that the company plans on attaining in the future.
What we’re all about:
How can a mission statement help you when investing? When I start research on a company, this is one of the first things I like to read up on. Yes, it’s clearly one of the easiest things to do – just go to any website run by the company/organization and odds are finding it won’t be too difficult. The statement may or may not indicate anything of worth about the company, but what I dial in on (my focus) is assessing the consistency between this statement of corporate culture (what they’re all about) and the basic product or service they provide. Whether I’m sorting through financial statements, investigating product lines or looking through my Value Rules for what I can find; I continuously remind myself what a mission statements says and how that’s applied to the company as a whole.
I am a value investor, but what can a mission statement tell me from this approach? Very simply: I am looking for the subtle tips of quality in the company. Initially I’m not scouring financial statements, assessing quantitative data on the performance of a product line or marketing initiative. What I am looking at is the most basic sentence or paragraph about what the company is all about. I look at all current and past mission statements in order to see the progression of where the company has come from and where I can anticipate it going. Can a mission statement change that much? Sure it can. If a company has existed for over 25 years, odds are the environment in which that company has operated has changed as well. The world today changes faster than any other time in history due to globalization and access to information technology. A company, regardless of any blue-chip status, needs to possess forward thinking of where they want to be in the next decade(s) in order to be able to execute, plan and strategize their success.
Am I reading too much into this? Think back to my thoughts on management. Whenever I’ve found the rarest of high quality management, I’ve always found that these individuals or groups of people put a clear stamp of their vision onto paper to show where the company is set to go in the near or distant future. If you believe in the management of a company to execute successfully then a mission statement holds the clearest potential to see directly into the future of where that company is headed.
Talking about specifics:
One of my first tasks is to see if the mission statement makes sense when applied to the company’s current visible goals, strategic operations and matches management’s public comments on the company.
I want to see a statement that’s been revised within the last five years, even by only a few words, a new sentence or updated signature of management to show that the vision is still strong. It should be concise, straightforward and relevant to past statements. What I don’t like to see is a changing corporate culture routinely every time there’s a change of management or market sentiments change. What I intently look for is what I call “mission stability” – that there’s consistency in the message being delivered. Always remember that the statements should apply as much with employees in the mailroom or shipping/receiving as it does with the CEO and Board of Directors.
A mission statement should also answer the most generic information people seek when looking at a company: who we are, who are our customers, what is our philosophy (values, beliefs, ethics), what are our core competencies or competitive advantage, what are our concerns or interest related to our customers, employees, community, society or environment. A concise statement will generally answer: what opportunities or challenges is the company facing, what is being done to address those needs (vision) and what principles guide the actions of all employees. Some may be strictly customer-focused while others may be business-focused (SBU’s – strategic business units).
A mission statement could be as effective and detailed as…
“FedEx will produce superior financial returns for shareowners by providing high value-added supply chain, transportation, business and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards”
Or as concise and straightforward as…
“Dell’s mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve.”