Mission statementsWritten on the 5 September 2023 by Janet Culpitt
Mission statements: Making it clear what your business does, and most importantly, why
Mission statements emerged in the 1940s but are more important than ever in today’s competitive market. Now, everyone from global corporations to sole traders can benefit from putting their purpose on paper. Amazon sells products but exists to make life better for its customers. Tesla sells cars but exists to accelerate the world’s move to sustainable energy. Coles sells food but exists to support people and sustainability. The point is that each of these organisations has a ‘mission’ beyond the obvious delivery of its products or services. However, not every organisation is so clear about its mission. When that reason isn’t clear, there’s a chance that at the first sign of any hardship or disruption, people will lose sight of the point of it all – and the business could be at risk. This is where taking the time to form a mission statement can help. The mission statement provides a reason for the business to exist beyond churning out products and services and making a profit. There are, however, many different perspectives on what an ideal mission statement looks like, what it should contain, and the audience that they should talk to. Here are some insights into the history and value of mission statements, and some tips on how to create one that’s perfect for your business.
HISTORYFrom the 1940s to todayMission statements have been around for decades, embraced by companies like Johnson & Johnson in 1943, through to IBM in 1962, before taking off more widely in the 1990s. Now, they’re an important management tool adopted globally. Modern mission statements are usually displayed proudly on company websites and increasingly have an Environmental, Social and Governance (ESG) lens. For example:
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AmazonRetailer Amazon “strives to be Earth’s most customer-centric company, Earth’s best employer, and Earth’s safest place to work.”
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TeslaElectric vehicle company Tesla says“ Our mission is to accelerate the world’s transition to sustainable energy… we build products that replace some of the planet’s biggest polluters—while trying to do the right thing along the way.”
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ColesSupermarket retailer Coles says “Our purpose is to 'sustainably help all Australians lead healthier, happier lives'.”
Of course, mission statements are not just for big corporations. Every business including small businesses and sole traders have a mission, whether they realise it or not. A mission statement helps to focus attention.
IN THEORYDefining a mission statementMission statements are interchangeably known as purpose statements, vision statements, value statements, corporate principles, or a corporate philosophy. These could all have slightly different focuses and could in fact all be separate documents. To keep things simple, a nice, succinct summary of what a mission statement can feature is offered by Forbes: it should sum up your mission – what you do, and your purpose – why you do it. A Harvard Business Review article argues that this ‘why’ should “be moral and outward-looking”. Salem Khalifa writes in the Journal of Strategy and Management that the ‘why’ needs to be a cause that the members of the organisation are motivated by.
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The mission statement is also a good chance to “distinguish one organisation from other similar enterprises” according to David and David in Journal of Business Strategy. They add that a mission statement should be succinct and not be overly specific. Mission statements should avoid specifying dollar amounts, percentages, numbers or strategies, as these fit better into a business strategy
________________________________________________________________________________________________________________________________________________________________________________________________________________________________ IN PRACTICEWho is the audience?
Like the varying definitions of mission statements, there are also various opinions on who the audience is. Some argue they’re for staff, while others think the audience is the end customer, stakeholders, or the broader community. Others think it’s a combination, perhaps with different sentences focused on different readers. For your current and potential employees, an inspiring mission statement can help them to understand what they will be personally contributing to. A good example of this featured in a 2022 KPMG The Future of HR report, in which the HR Director of UK electric truck company Tevva said job candidates are scored on their alignment to Tevva’s sustainability mission. “Are you joining us because this is a job, or are you joining us because you want to sincerely be part of a team that’s creating a solution for future generations that will inhabit this planet?” the HR Director said. Once employed, the mission drives their learning and development, management style, and employee autonomy. Beyond employees, Forbes reports that the mission statement should include the problem you’re solving, and why your business is the one to solve it. An example of this is offered by packaging company Visy – which sets out to solve the problem of sustainable packaging – but clarifies why it’s best placed to solve this issue. It cites its innovation and work ethic, and how it drives better results for customers, community and the planet.
The benefits of a mission statementMission statements have various reported benefits, ranging from employee satisfaction through to company profit. For employees, mission statements can give people a clear focus, which is important during ‘business as usual’ periods, but even more so during disruption. A McKinsey & Company report claims, “…employees at purpose-driven companies are four times more engaged at work—a powerful source of competitive advantage.” McKinsey also points out that purpose can help senior leaders to allocate capital and resources, inform decision making, and even guide decisions around what metrics are measured and tracked. Management writers Cardona and Rey add that mission statements help a business to build organisational structures, team goals, processes, and even individual role descriptions, with everything aligned to the desired result. Importantly for the business and stakeholders, this can lead to a greater chance for growth.
THE STATSFast facts
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Of organisations had a written statement of higher purpose, according to a Washington University in St Louis survey in 2020. Of the respondents said their organisation’s purpose was ‘extremely meaningful’ for their decision making. Of respondents at organisations with a written higher purpose strongly agreed they were proud to work for their organisation.
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Of executives believe purpose matters, according to an EY Beacon/Harvard Business Review report. Of executives said purpose can affect an organization’s ability to transform. Of executives said purpose can increase customer loyalty.
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