Tuesday, 31 March 2009

Mission and Values

In his book “Winning” Jack Welch has described about the mission statement and values of company. According to him, the mission announces exactly where you are going and values describe the behaviors that will get you there.

Mission: Setting the mission is top management’s responsibility. A mission cannot and must not be delegated to anyone except the people ultimately held accountable for it. In fact a mission is the defining moment for a company’s leadership.

An effective mission statement basically answers one question: How do we intend to win in this business? It doesn’t answer: What were we good at in the good old days? Nor does it answer: How can we describe our business so that no particular unit or division or senior executive gets pissed off?

It requires companies to make choice about people, investments and other resources and it prevents them from falling into the common mission trap of asserting they will be all things to all people at all times. The question forces companies to delineate their strength and weaknesses in order to assess where they can profitably play in competitive landscape. Without financial success, all the societal goals in the world don’t have a chance. That’s not saying a mission shouldn’t be bold or aspirational. Effective mission statements balance the possible and impossible. They give people a clear sense of direction to profitability and inspiration to feel they are part of something big and important.

GE’s mission from 1981 to 1995 was they were going to be “ The most competitive enterprise in the world” by being No. 1 or no. 2 in every market – fixing, selling or closing every underperforming business that couldn’t get there. This is specific and descriptive, with nothing abstract going on. And it was aspirational, too, in its global ambition.

Values: Values are just behaviors – specific, nitty-gritty, and so descriptive they leave little to the imagination. People must be able to use them as marching orders because they are the how of the mission, the means to the end-winning. The actual process of creating values, incidentally, has to be iterative. The executive team may come up with a first version, but it should be just that a first version. Such a document should go out to be poked and probed by all over an organization over and over again. And executive team go out of this way to be sure they’ve created an atmosphere where people feel it their obligation to contribute.

Clarity around values and behaviors is not much good unless it is backed up. To make values really mean something, companies must reward people who exhibit them and punish those who don’t. t will make winning easier. A concrete mission is great. And values that describe specific behaviors are too. But for a company’s mission and values to truly work together as a winning proposition, they have to be mutually reinforcing. A company’s values should support its mission.

The Tata Companies share a set of five core values derived from the Group’s early beliefs – and these are still drive all business decisions: Integrity, Understanding, Excellence, Unity and Responsibility.

A company’s mission and its values rupture due to little crises of daily life in business. Suppose a competitor moves into town and lowers prices, and so do you, undermining your mission of competing on extreme customer service. Or a downturn hits, so you cut your advertisement budget, forgetting your mission is to enhance and extend your brand. These examples of disconnections may sound minor or temporary, but when left unattended, they can really hurt a company.

People in business talk a lot about mission and values but too often the result is more hot air than real action. But there is too much to lose by not getting your mission straight and by not making your values concrete.

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