Tag: Mission Statement

The Importance of Visioning

Who remembers Only Fools and Horses, the BBC sitcom in which the dodgy dealer and market trader Del Boy Trotter goes from one bungled venture to another? Del Boy’s regular catchphrase is, “This time next year, we’ll be millionaires”.

Of course, Del Boy is a dreamer. None of his business ventures, from cleaning chandeliers, to Peckham Spring Mineral Water (from a burst water pipe) or selling off second-hand sex dolls filled with hydrogen instead of compressed air, would ever get the millions he craved. When he did get the money, it was from the sale of an antique watch, which was hidden away in the back of his lock up. Even then Trotter lost his millions through bad investment.

Del Boy Trotter, like his ITV counterpart, Arthur Daly of Minder, are comic stereotypes. Like Walker the spiv in Dad’s Army, they are caricatures of a certain type of dodgy businessman.

However, all too often, I see real life examples of people who believe they can get rich quick; whether as, in my old role in Trading Standards, they are the victims (or even the perpetrators) of scams, or in my current role, they are ‘Dragons Den’ style entrepreneurs who believe they have developed a unique new product or service which is going to change the world.

I have often criticised such individuals in this blog, both real and fictional.  They are dreamers who lack SMART objectives; they are those who march on without doing the necessary market research; or they are people who assume every consumer will immediately share their individual beliefs attitudes and wants.

That said there is a place for aspiration and dreams in the world of commerce; but those aspirations must be properly channelled.

We have previously discussed the creation of mission statements and the setting of business objectives in this blog.  These are critical to the development of successful business and marketing plans.

Once you have created your business mission statement, it is critical that it is communicated to stakeholders including your employees. A mission statement is designed to provide a sense of vision and direction within your business over the longer-term.

A mission statement is of little value if your internal stakeholders are unaware of it. A mission statement should also be a living document capable of adaptation to matching external environmental change.

A mission statement should:

  •  Highlight core organisational values
  •  Be specific, not woolly or general
  •  Be realistic and not over-optimistic
  •  Rooted in organisational values so it properly reflects reality capabilities and competences

Otherwise the mission statement is just empty rhetoric.

The development of a mission statement leads to the concept of Visioning. Senior managers, heads of strategic business units and brand managers must think, in detail about what they are trying to create.  This means developing a vivid picture, a dream, of where the organisation should be in three to five years.

So a clear understanding is needed of how the trading environment might change and how organisational capabilities might change.

The visioning process should be detailed and not broad in scope. Managers must think carefully about:

  • The future size of the organisation
  • Corporate and brand values
  • The nature of your customer base and the segments you serve
  • How consumers should interact with the organisation and brand
  • How consumers should interact with the brand
  • The geographic scope of the organisation
  • Market position and corporate stance
  • Links with other organisations

Visioning does not just include a corporate of brand vision.  It can include visionary market insights and product concepts.

An organisational vision cannot be developed in isolation from the organisation’s trading environment.  It requires clarity of both insight and thinking. It must be constrained by corporate values.

The development of corporate visions has led to the growth of internal marketing; training motivation and communication designed to ensure the commitment of stakeholders to that mission.

A corporate vision is made up of ‘soft’ and ‘hard factors.

Hard factors include corporate objectives and strategies, systems of work, critical metrics, etc.

Soft factors include corporate values, priorities and styles of operating. It includes expected behaviours and attitudes.

These soft and hard factors drive performance.  the corporate vision should also inspire  the commitment to the organisation and leadership principles.

A corporate vision leads to value through innovation and develops five inspiring commitments:

  1. Market change represents opportunity
  2. Added value is competitive advantage
  3. Innovation in everything is the challenge
  4. Waste is the enemy
  5. A distinctive character is strength.

Leadership principles include:

  1. Realising the vision is a prime objective
  2. Improvement is an ambition
  3. Teamwork is the task
  4. Creativity is character
  5. The goal is to deliver results.

There are many examples of where a vison has been badly presented.

John Niven, the author and former record company A and R man, recalls one such instance.  When working for one of the UK’s larger independent record labels, he was approached by two entrepreneurs looking for investment in their firm.  the entrepreneurs pitched their belief that in future, people wouldn’t buy records. Rather than buying an LP with ten songs, consumers would buy music track by track. the entrepreneurs were laughed out of the office.  Their vision seemed as ludicrous as Del Boy’s ‘one day we’ll be millionaires’.  The entrepreneurs went on to create Spotify.

Declaring Your Mission

On a number of occasions during my career, I have been part of teams tasked with writing an organisational mission statement.  When managers have approached the team the task the response has been one of despondency.  “it isn’t my job to define the corporate mission”, colleagues have complained. “This is not part of my job”, they gripe. “Surely our mission is obvious”, they grumble.

Often the document produced is bland, generic and tells stakeholders nothing about the individuality of the organisation.

But a clear mission statement which defines the unique purpose and which distinguishes your business from that of competitors is critical to the business planning process.  The mission statement should also define the boundaries within which you want your organisation to operate.

A properly drafted mission statement combines your primary objective and your core organisational values.

There are four major influences on the content of a mission statement.

  1.  Corporate Governance:  To whom is your organisation responsible? What is the regulatory framework in which you operate? Who oversees your organisational executive? Who does your organisation serve?  What constraints are placed on senior management to ensure the rights of stakeholders are upheld?
  2. Stakeholders:  Who are you customers? Your suppliers? Shareholders; Distributors: Retailers; and the wider public.  Are your organisational policies equitable to all groups or do you favour particular stakeholders?  What power and influence does each group wield?
  3. Business Ethics:  What are your organisation’s views on social and corporate responsibility?  What are the cultural attitudes and beliefs of the society(ies) where you operate?
  4. Cultural Context:  Your mission will be affected by the cultural environment.  there will be the internal culture of your organisation and the external culture of society.  Both must be reflected in a mission statement.

Often mission statements are either too narrowly or too broadly defined.  An American shipbuilding firm’s mission statement simply says, “We make good ships”.  this statement has only a product focus and tells you nothing about the organisations wider values and the environment within which it operates.

The mission statement of Scottish Power appears to be too broadly defined:

“To be recognised as a highly-rated utility-based company trading in electricity, other utility and related markets, providing excellent quality and service to customers and above average returns to investors”

What does the Scottish Power say about the organisation.  The mission statement appears to be saying the obvious, it appears generic and trying to be all things to all stakeholder groups. If anything, it reflects the public sector, bureaucratic history of the organisation.

Richer Sounds, the specialist Hi-Fi and home electronics retailer has a mission statement which doesn’t mention electronic audio; although it does say work should be fun.

Is your mission statement too broadly or too narrowly defined?

Successful mission statements are:

  1.  Credible:  It should reflect realistic ambitions from the view of your stakeholders?
  2. Specific Capabilities:  Embrace your core expertise.  Relate that expertise to your organisational future.
  3. Aspiration:  The mission statement should act as a source of motivation to the people in your organisation.  This should matter more than financial returns.  The mission statement must make individuals want to commit to your organisation and encourage internal stakeholders to make valuable contributions.

However, you need to define the boundaries of your ambition within a mission statement.

  1. Product Scope:  How do you categorise your products?  Do you do so in technological terms? Do you offer different products in different target markets or segments? Do you categorise products individually or collectively?
  2. Market Scope:  Who utilises your products?  Are you focused on a B2C or a B2B market?  What demographic groups do you target?  Do you target particular industry segments? What distribution channels do you use?  What features of the consumer do you target?
  3. Geographic Scope:  Are you a ‘local shop for local people’?  Are you regional? Are you national? Are you international?
  4. Stakeholders:  You need to consider both internal and external stakeholders.  Internal are stakeholders with a particular interest in your organisation.  Michael Porter talks of five internal stakeholder groups – ‘The Five Forces’ affecting an organisation.  This includes staff and unions, shareholders, management and business owners.  There are primary and secondary external stakeholders.  Primary external stakeholders include suppliers, distributors, financiers and your competitors. Secondary external stakeholders have a looser relationship with your organisation and include government agencies, local government, political pressure groups and society in general.

As the aim of a mission statement is to give clarity to your business purpose, it cannot be bland or poorly defined.  Some firms use the mission statement to declare strategic intent.  Others prefer to declare such intent in a separate vision statement.

You may receive the following attitudinal responses to the idea of a mission statement:

  1.  Faint Support:  Stakeholders will pay lip service to the mission statement especially if it is dominated by the views of management whose attitude is that stakeholders and corporate governance are constraints on the organisation.
  2. Passionate Support:  This is where the mission statement is central to the values and philosophy of managers.  The mission statement becomes the driver of corporate aims and aspirations.
  3. Dissipated Mission:  Strategic decisions are the responsibility of external stakeholders concerned with corporate governance and regulation.  This is common in public sector bureaucracies.  Sometimes the mission becomes lost; dominated by day to day management and tasks.  This was a criticism of BS5750 companies before the standard morphed into ISO9000 series.  Firms using the standard were criticised for having incredibly well documented systems despite the product of those systems being poor.  The mission focus appeared to be concentrated on process and not the results of that process.
  4. Non-consensual Mission:  Passionate external stakeholders dominate your mission, particularly those stakeholders with strong ideological views.  It becomes impossible to create an organisational mission which satisfies all stakeholder groups’ demands.  Your mission may become highly political.  An example is the nationalised industries of Britain in the early 1970s.  The country entered a period of industrial strife as unions argued that the organisational mission was to satisfy the demands of their members, not the customer, not management and certainly not the demands of government.  If your mission is non-consensual, your organisation will suffer.

A mission statement is a reference point for your strategic decision-making.  It is therefore critical that you take time, thought, and care over its development.

Developing Competitive Advantage

In my home town, there are two independent cinemas.  One has taken the route of Porter’s niche generic strategy and concentrates on art house cinema.  The other, a family-owned cinema has taken a different strategic route, it shows the same range of films as the big chains but it does so in such a way as to give it a unique market presence.  It thrives by taking its unique attributes and using them to create points of competitive advantage.

The aim of marketing is to create value for customers and, in return to capture value from them.  Companies with effective marketing strategies win and keep customers by understanding their needs, by developing customer-focused marketing programmes and by building relationships with those customers.

There are three stages involved in the creation of competitive advantage:

  1. Identifying your competitors,
  2. develop competitive strategies,
  3. balance your customer orientation against your competitor orientation.

The family owned cinema competes directly against the large multiplex chains. He has analysed the market and regularly looks for changes in the way the big cinema chains present their products and services.  These are his direct competitors.  But he has gone further.

Many smaller firms have competitor myopia.  They carefully monitor their direct competition and they forget about wider latent competitors.  This doesn’t affect only small firms.  Kodak went bankrupt because it concentrated of competitors making 35mm film (such as Fuji and Ilford). Kodak was slow to recognise the rise of digital cameras manufactured by consumer electronics firms (ironic as Kodak effectively invented the digital camera).  Tower Records went bankrupt not because of other discount record stores but because it failed to see the rise of the digital download.  Borders Books went bust because it didn’t anticipate the rise of Amazon and the internet bookshop.

All these firms failed by ignoring the changes in the wider economic environment.  All were killed off by their latent, not their direct competitors.

The owners of the independent cinema didn’t just look at what the multiplex cinema chains were doing.  He recognised that consumers had wider opportunities to use their leisure time.  He wasn’t just competing against other cinemas, he was competing against theatres, bars, sports clubs and music venues.  If he was to survive and thrive he had to create a product which drew consumers away from these other sources of entertainment.

Once you have identified your competitors, you have to assess them.  You need to identify their objectives and their strategy.  You need to identify their strengths and weaknesses and you need to estimate how they will react to your strategy.

The independent cinema saw that the multiplex cinemas were aiming to attract large numbers of consumers simultaneously by offering the same film on multiple screens.  It was effectively the warehousing of entertainment.  Often they offered only the most basic of food options and only offered soft drinks.  The aim was to factory process movie entertainment e.g. consumers were processed through the site, entering the cinema through a large foyer but leaving through a separate exit.  He also found that many multiplexes were located at out of town malls and shopping centres.

Having examined both the direct and latent competition, the cinema owner looked at his business strengths and developed a strategy to use them.  He realised he couldn’t compete head on with the large chains and that he had to do things differently.

His cinema had been built in the 1930sin an art deco style.  It was located in a leafy suburb of the city and there was little off street parking in the vicinity.  His father had carried out some building work to split the large auditorium into three screens; the smallest of which was a fifty seat screening room.

He may have been showing the same product as the multiplexes, mass market blockbusters, but he realised that his venue could do it in a different way.  He installed sofa-like twin seats in his main auditorium.  He opened up a bar at the back of the auditorium so that customers could order drinks at their seats.  He showed double features with an intermission so that consumers could use the bar between films.  The smallest screen could be booked for private parties.  He used the 1930s atmosphere of his venue to build on the image of a golden age of cinema.  Staff would welcome customers to the venue and escort them to their seats.  He offers a wide-range of food and snacks, not just popcorn and nachos.  He was intent on making a visit to the cinema an event, not just an option to take up spare time. Customers are given the ‘red carpet treatment’.

Being in the suburbs, he was also keen to develop his cinema as a community asset.  He runs a cinema club where regular customers can get discounted tickets and the opportunity to see advance screenings.  He runs traditional kid’s Saturday morning film clubs and late night screenings of horror films.  He retains many customers because they see his cinema not just as a commercial venture but as an important community asset.

The family-run cinema also benefits from his competition.  The rise of the multiplex has meant a huge upturn in people going to the cinema.  In the 1970s and 1980s, cinema was in trouble.  Many venues were closing or being converted into bingo halls and nightclubs.  Now more people go to the cinema than in its golden period of the 1930s and 1940s.  The multiplex chains have allowed the development of blockbuster movies often with budgets of over a hundred million dollars.  They have increased total demand for cinemas and have allowed the development of new technologies such as surround sound, high definition and 3D.

When Apple created the Ipad, it was described by some commentators as the ‘Kindle killer’.  They expected Apple’s tablet to destroy the market for Amazon’s e-reader.  Instead, the Ipad increased the demand for tablets hugely.  Apple took the Ipad concept and turned the kindle into a multi use tablet, not just an e-reader and sales rocketed.

The independent cinemas owners worked hard to identify an uncontested market space.  They realised that there is no such thing as a one size fits all marketing strategy.  They also realised that they couldn’t follow a ‘me too’ strategy where they simply copied the strategies of their competitors.  They recognised that they needed to develop different strategies to those of their competitors and to provide a different product option for consumers.

 

Why it’s important to structure your business planning

As I have previously stated in this blog, I regularly attend small business networking groups.  At one such group, there is a lady who attends and presents her ‘business’.  I put the word business in parenthesis because she doesn’t have a business.  She has an idea for a business and she appears to be extremely muddled about how to turn that idea into a business.

When she speaks about her business idea, certain words stand out.  These are words like “maybe”, “might”, “perhaps”, “possibly” and “could”.  There appears to be little certainty in her plans and there is little evidence that she has done the necessary research to assess the workability and viability of her business idea.  This might be excusable for some one in the first few weeks of developing a business idea but this particular individual has, to my knowledge, been pushing this ‘business’ for at least three years, if not longer.

So, how do you develop business objectives?

The first stage is to do your research, you must analyse the prospects for the business AND the environment within which you business will exist.  This means examining the necessary resources required for the business to operate; what competitors are doing; what wider economic and social effects are doing to the market; and what market factors are doing to the business.

With many small businesses, this process is carried out in a haphazard manner.  All too often, objectives are set on the basis of personal perception and ‘hunches’.  It is not carried out in a structured way.  This means small businesses can miss market opportunities, ignore threats and not make the most of their existing skills base.

After researching the business opportunity and the market environment, the next part of the planning process is to develop a robust mission statement for the business.  A mission statement sets out the vision for the business. A robust mission statement is the starting point of corporate and marketing planning.

A mission statement sets out your long-term business rational.  It describes the business you are in and what business you should be in.  for example, John Menzies was for many decades Scotland’s leading newsagent chain.  However, the managers of that business analysed their market place.  They decided to change their business mission.  Menzies got out of the newsagent business and is now one of the major distributors of computer peripherals.  This wasn’t dome on a whim.  It was a carefully researched and meticulously planned transfer of the businesses priorities.  Most importantly, a mission statement must be understandable to all those involved in the business, from the shop floor to the board room.

A mission statement needs to identify:

  1.  The customer groups that need to be served,
  2. The customer needs that are to be served, and
  3. The technology and resources required to meet those needs

A mission statement should be specific enough to impact on the behaviour of staff throughout the organisation.  It should reflect the organisation’s core skills.  It should identify key opportunities and prominent threats.  It must be attainable and flexible.

One a robust mission statement is produced, its aspects should be broken down into detailed objectives.  These objectives should be SMART (Specific, Measurable, Attainable, Realistic and Time Bound).  This is where the lady mentioned above is deficient. Her objectives are uncertain, they are not set within a time frame with set monitoring dates and increasingly they appear unattainable.

Objectives must be framed within the nature of the business and the organisation’s culture.  It is important to remember that business process belongs to management but the organisational culture belongs to everyone within the organisation.  Many business transitions fail because the management try to impose a new culture on employees, resulting in industrial strife.

Objectives should take into account the effect external stakeholders, such as suppliers and shareholders.  It should also take into account the power that certain individuals and groups have over an organisation.  For example, if you run a taxi firm, you will have to consider the local council’s licensing policies.

Within any organisation, there will be primary and secondary objectives.  The primary objective of most corporations has been profit maximisation.  Secondary objectives are not inferior to primary objectives and they are needed to plan effectively for the future.  Secondary objectives could include market position, innovation, productivity, resource development, management development, work attitude, and social responsibility.

Peter Drucker has proposed that organisations should move away from a single primary objectives based on profit.  He proposes a ‘triple bottom line’ of People, Planet and Profit.  That companies should include social and environmental responsibility alongside profit growth. An example would be The Body Shop which looked to address social justice, environmentalism and human rights as a core concept of their business.

Objectives should address general issues affecting all organisations in a market together with issues which are specific to the organisation. General issues could be the scope of the business, its orientation, how it is organised, how it evaluates performance and its policy on public responsibility.

Specific objectives could include how a business classifies its customers, how it is to deal with competitors, the way it distributes production, the technology it uses and its production capabilities.  Specific objectives could relate to financing and the business environment.

For the lady mentioned at the start of this blog, She needs to sit down with a consultancy like Philmus Consulting.  She needs to write her business objectives in a structured document which give clarity and certainty to her plans.