Can mission statements keep a company on track? Absolutelybut staff input is critical
Tec laboratories, an Albany (Ore.) maker of poison oak and ivy remedies, tripled its sales in seven years while adding scarcely an employee. The secret? President Steve Smith says his 20 staffers take to heart a mission statement that calls for "innovation, trust, esprit de corps, and joie de vivre."
As many as nine out of ten companies have a mission statement, but they're often a topic of derision. Dilbert's tongue-in-cheek Web site even offers a computerized "mission statement generator," where you can plug in the overblown adjectives of your choice. But not everyone is laughing. Christopher K. Bart, a professor of business strategy at McMaster University in Ontario, concluded that mission-driven companies outperformed their rivals by an average of 30% in key financial measures. While most academic research focuses on large companies, the statements are perhaps even more critical for small ones. "The essence of great strategy is focus," says Bart. "The starting point of all strategic planning is the mission statement."
The real test comes after you write the statement. James C. Collins, co-author of Built to Last: Successful Habits of Visionary Companies, says the words matter far less than how they are brought to life. The mistake most companies make, says Collins, is not setting up procedures to make sure the mission is carried out. What's needed are teeth so sharp that even "if you wanted to ignore what's on the mission statement, you couldn't."
Consider Trinity Communications Inc., a six-year-old public-relations company in Boston with 57 employees. Bonuses are based in part on how well workers adhere to the firm's statement of values of diversity, quality, social responsibility, and honesty. Three years ago, after employees complained that co-founder Dan Logan wasn't communicating enough--a key tenet of honesty--they docked his bonus. "I got better after that," he confesses.
Getting employees to help draft and implement the mission statement is critical. At Tec Laboratories, self-managed work teams have developed mechanisms that include a "What Bugs You" list, where they can record any inconvenience that is hampering innovation. They also are privy to the company's financials and are expected to use their judgment on spending decisions.
Smith thinks the ultimate authority at Tec emanates from the company's mission itself, not the CEO, "because values last so much longer than just me." The pen, in this case, may just be mightier than the boss.
By Shirleen Holt
This article was originally published in the August 16, 1999 print edition of Business Week's Frontier. To subscribe, please see our subscription policy.