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Corporate vision and mission is an important statement that drives entrepreneurs to set up a business unit and operate it going forward working with various internal and external stakeholders. Corporate vision and mission are like religious oaths that specify its thrust and moral values that it is going to respect while operating the business.
It is customary to have vision and mission drafted that would be relevant for an extended period of time. For instance, a business may have a vision to help local farmers secure quality farming seeds at a low price. It is expected to respect this vision throughout the course of operation of its business. The way to achieve this vision may be drafted through its mission statement, which may change more frequently. For instance, mission statement could be revised 6 months or one year depending on the prevailing conditions. This is especially so when financial goals (half-yearly, yearly) are integrated into the mission statement, as in the Balanced Scorecard Approach under this study.
Peter Senge (1994) in his book The Fifth Discipline calls vision as a mechanism to generate a sense of commitment by "developing shared images of the future we seek to create" (p.276). While business goals may have a definite deadline, visions are broad commitments that may stretch. A mission of a business clarifies the reasons for which the business is being operated. It can explain why the business house is doing particular type of trading and what is vitally important about their operations.
One important point about mission statement is that it is customarily more focused towards motivating and inspiring internal stakeholders (employees, contractors, partners and management) than explaining its orientation to external stakeholders (customers, investors, etc.). However, in accordance to Greenhalgh (2004), a vision and mission statement that is also instrumental in raising interest of external stakeholders (say banks to invest) like raising enthusiasm of internal stakeholders can be still more effective, as we could see empirically from the case study of Saatchi & Saatchi.
The purpose of any business is to generate surplus or profit. As a consequence, vision and mission statement should be drafted so that it also takes into account profit motive of the business. After all, different components of business are interconnected and so is the case with defining vision and mission statement of a business. It is important that financial aspect of the business is appropriately included in the vision and mission statement. This should not be seen as an impediment to its public image even if one of the bigger objectives of an organization is to serve a social cause.
The ‘Balanced Scorecard’ approach put forward by Robert Kaplan and David Norton (1996), two Harvard Professors, in the 1990s may be one way to integrate profit motive with vision and mission of any organization. While traditional financial statements like Profit and Loss Account and Balance Sheet reflects past performance, under balanced scorecard technique, a forward-looking aim (such as the company wants to triple its revenue in 2 years) is incorporated into the mission statement. For instance, advertising firm Saatchi & Saatchi defined its new vision and global strategy and kept stretching its three-year financial goals.
Founded in 1970, premium advertising firm Saatchi & Saatchi headquartered in London had a splendid going throughout its first decade of operation and in the 1980s. It grew rapidly harnessing creativity of its manpower and through mergers and acquisitions. The firm was, however, in deep crisis during the economic recession in the early 1990s. According to Greenhalgh (2004), the founders of the firm, Charles and Maurice Saatchi, had left the firm by 1995 when Bob Seelert joined Saatchi & Saatchi as its Chairman along with Kevin Roberts. Both played a key role in revamping Saatchi & Saatchi through de-merging it from Cordiant Communications in December 1997. The company’s new corporate and vision statement that was redrafted played a crucial role in its future success. The new vision and strategy statement of the advertising firm in its de-merger plan during 1997 included explicitly converting 30 percent of the incremental revenue to operating profit. It also categorically included their aim of doubling their earnings per share.
It is customary to include general goals like growing revenue better than the market, which Saatchi & Saatchi too did. However, incorporations of direct financial measures were found still important in boosting enthusiasm of internal employees together with external stakeholders like shareholders and investing banks. Saatchi & Saatchi progressed from its 1997 crisis to its cherished goals by June 2000. According to the company, balanced scorecard was a massive contributor to their success.
The company followed a policy of stretch goals. It was found initially that employees dispersed in their 45 centers globally did not have a common vision despite great works being done in the individual units. Roberts, who had earlier, hold a senior post at Procter & Gamble, with Seelert and other colleagues worked hard from mid-1997 to the end of that year shaping common vision for the whole entity.
Once effective vision and financial/growth goals were clarified, it helped in their next step of carrying out stringent financial health checkups. The company carried out rigorous studies to determine which agencies were really profitable for them while prioritizing their operations. Three agency categories were created to start with: lead, drive, and prosper.
A ‘prosper’ agency was one which generally has less than 50 employees and limited potential to become a behemoth. Most of the Saatchi & Saatchi agencies fell under this category. A ‘drive’ agency has employees between 50 and 150. A goal of maintaining or marginally growing their revenue was drawn. ‘Lead’ status was given to few of the biggest agencies such as the UK, New York and China. Rapid growth was expected here and a lion chunk of investment was marked for them.
The company understood that it needs loyalty from both its clients as well as the Wall Street. The company also noted that between 20 to 30 percent of its clients accounted for 70 to 80 percent of its revenues. However, the company made it clear that each of its clients, whether small or big, would receive equal treatment, which proved to be an important step. Employees were motivated to come out with big ideas. An acronym BFI (Big Fabulous Ideas) became a watchword among all its agencies worldwide. In September 2000, Paris-headquartered Publicist Groupe SA purchased Saatchi & Saatchi for around 2.5 billion USD, which was about five times the company’s, market value.
I believe that profit goals should be thoughtfully incorporated into the mission statement of the organization. However, incorporating such financial objectives in the vision and mission statement may require more periodic updating. Realizing the benefits it brings in terms of boosting morale of both internal and external stakeholders, incorporating such clear financial goals in value and mission statement needs a strong consideration. I feel that a mission statement should not be kept watertight. While it is better to stick with one vision for prolonged time period unless serious business revamping occurs like mergers or acquisitions, missions should be frequently modified as priorities and business conditions change. As we could see from the case study of Saatchi & Saatchi, incorporating short-term financial goals as part of their mission statement helped them significantly weather their crisis and turn profitable.