13 min read
Mission Statements Do, In Fact, Drive Corporate Value
- Mission statements are intangible assets, similar to other nebulous but very real concepts like "brand" and "corporate culture."
- Despite the skepticism that often surrounds them, mission statements have been proven to drive tremendous value as both offensive and defensive tools.
- By way of illustration, the mission statements of companies such as TOMS and Warby Parker helped drive sales and momentum far beyond what both companies' products initially suggested.
- In its first five years, TOMS grew to a $300 million revenue business without raising a dime, and Warby Parker grew into a $1.2 billion company on the back of their founding principle of "Buy a Pair, Give a Pair."
- Similarly, LEGO's $6 billion turnaround story from 2004 to date is another great example of rallying mission statements in motion.
What Constitutes Effective Mission Statements?
- First, throw out most of what you will otherwise read online where mission statements are concerned. Instead, adhere to the following (and read on for a cherry-picked shortlist of some of the greatest missions statements of all time).
- Great mission statements should be simple yet emotive—e.g., "To create a better everyday life, for the many people..."
- Great mission statements should be lofty (...almost transcendent), yet attainable—e.g., "To create a world where people work to make a life, not just a living."
- Great mission statements should be authentic...a true reflection of attitudes, beliefs, values of your organization, founder and employees—e.g. "Our mission is simple...to embrace the human spirit and let it fly." (Hint: written by the founder of a Virgin company)
- Finally, great mission statements should be capable of rallying and unifying the many toward a valiant, higher-order purpose—e.g., "Our mission is to prevent and alleviate human suffering in the face of crisis."
Author a Truly Impactful Mission Statement As Part of Your Business Plan
- Hire a business plan consultant who, in addition to assisting with your early financial/projection model, investor pitch and go-to-market strategy, can also help craft a mission statement that will speak directly to both your investors and early team as you ramp.
The Good, the Bad, and the Ugly
In the business of building businesses, there exist three functional-categories required to drive value. The first: the hard functions, which generally refer to such disciplines as finance, operations, and coding/programming. The second: the soft functions, which include strategy, marketing, sales, and management. And the third—which is notorious for being the hardest to touch, feel, see, and thus quantify/value—are what I’ve deemed intangible suppositions. These include concepts such as, brand, culture, and people. But despite the skepticism and dubiety that often surrounds them, these assets are without question some of the most value-creating once optimized.
A company’s mission/mission statement is one such intangible supposition, and one that I will explore thoroughly in this article. Specifically, I will separate the good and the bad from the ugly; analyze their role, purpose, and value-creation capacity; and discuss, using a handful of cherry-picked case-studies sieved from a couple of hundred statements, how best to create and utilize them to maximum effect.
The Mission Statement… “Ma Raison D’être”
People, entrepreneurs, and business people come in all shapes and sizes and draw from all walks of life. The lucky few among them embark on their journey with a clear sense of purpose and direction while the others do so in search of theirs—their raison d’être.
Businesses are not so dissimilar. Some, including myself, believe that businesses are crude manifestations of the ambitions, worldviews and, often, insecurities of their promoters while the rest, who are far less sacrosanct about the business of making money, probably disagree. Either way, every business, as does everything, has a purpose…a raison d’être.
A mission statement, simply defined, is a short statement of an organization’s reason for being (i.e., the “why?” of its existence). These statements come in many forms, ranging from the succinctly masterful, such as that of Virgin Atlantic: “…to embrace the human spirit and let it fly”; to 249-word, fairly clumsy epistles, such as that of Avon.
When expertly created and effectively used, however, mission statements exist as one of the most effective unification and decision-making tools available to corporates and leaders, capable of bringing together even the most disparate groups and interests and driving them toward a single, unified objective.
The Value of a Mission Statement
Uniquely, mission statements have the capacity to create value both as offensive (opportunity generating) tools, and defensive (downside mitigating) tools. Before we explore these points, however, we should first seek to understand what constitutes a good/effective mission statement.
Creating Effective Missions Statements
If you have ever googled the word “mission statement,” you would have been met by an onslaught of list-style opinion pieces attempting to convince you of some formula, shortcut, or proven method for creating a mission statement. You should know up front that I vehemently disagree with the vast majority of this collective discourse (and you should too). A large cohort of these articles share that, in some capacity, a great mission statement MUST answer/speak to the following questions:
- What is your market-defining story?
- What does your company do [for its employees, customers, and owners (i.e., shareholders)]?
- How does your company do it?
- Whom does your company do it for?
- What other unique value does your company provide?
Again, I’d like to unapologetically reiterate that the only thing answering these questions, in this form, will do is put your organization, stakeholders, and all other casual consumers of your content to sleep. Worse still is that the companies that have followed this blueprint for their mission statement have often ended up with relatively generic and uninspired messaging that has invariably titrated down through their organizations into the attitudes and behaviors of their managers and employees.
On the contrary, I believe that mission statements at their core are meant to inspire us, drive us to transcend (the ordinary), and unify us (around a common purpose). In lieu, and as an entrepreneur who so often relied on my mission statement to inspire, motivate, and focus my team, below are my parameters for what I believe constitutes great mission statements:
1. Great Mission Statements Should Be Simple and Emotive
The best mission statements are often the simplest, erring toward the down-to-earth (in language), but hyper effective at communicating a clear and powerful purpose that leaves its consumers ever-so-slightly stirred. Effective examples in this regard include Ikea’s and Coca-Cola’s.
“To create a better everyday life, for the many people…”
“To refresh the world…To inspire moments of [optimism and] happiness…To make a difference.”
Note that both these brands could have gone an alternative route, such as the one paved by the above blueprint. For example, Ikea could have talked about its “easily assembled, functional designs…” and Coca-Cola about its “refreshing, carbonated beverages”—but both would have been far less effective.
2. Great Mission Statements Should Be Lofty…Almost Transcendent; Yet Plausible and Within Reach
Great mission statements should speak to a grander, almost surreal ambition; yet an ambition that is tangible, attainable, and reasonably plausible for who your company is. Fantastic examples are those of WeWork and Ebay:
“At eBay, our mission is to provide a global online marketplace where practically anyone can trade practically anything, enabling economic opportunity around the world.”
Dammit, that’s POETRY! Straight silk!
3. Great Mission Statements Should Be Authentic, and Their Communicated Purpose Ring True to Everyone Who Comes Across the Brand and/or Its Products
Aside from WeWork, who also do a great job here, both Warby Parker’s and Whole Foods’ mission statements perfectly encapsulate this sentiment:
“Warby Parker was founded with a rebellious spirit and a lofty objective: to offer designer eyewear at revolutionary prices, while leading the way for socially conscious businesses.”
– Warby Parker
“With great courage, integrity and love—we embrace our responsibility to co-create a world where each of us, our communities, and our planet can flourish. All the while celebrating the love and joy of food.”
– Whole Foods
First of all, Whole Foods manages to use the word “love” twice in a piece of public-facing corporate literature, which alone deserves our respect. Second, both these statements ring precisely true about who these companies are and what they care about most in the world. Be true to you!
4. Great Mission Statements Should Be a Reflection of the Company’s Founder(s) and Team, Their Values, Beliefs, and Worldviews; and Also a Tool Capable of Attracting Similar Individuals
Perhaps because I am a founder who has set out to build a company in my image, I hold this tenet especially high in the list of qualities important to a great mission statement. Specifically, I believe that effective mission statements should espouse congruence within and without organizations, with sufficient gravity in its purpose to be able to attract and unify diverse groups of individuals around a common mission, attitude or belief. In this regard, both Virgin Atlantic and InVision stand out:
“Our mission is simple, yet the foundation for everything we do here at Virgin Atlantic…to embrace the human spirit and let it fly.”
– Sir Richard Branson, Virgin Atlantic
“Question Assumptions. Think Deeply. Iterate as a Lifestyle. Details, Details. Design is Everywhere. Integrity.”
With a statement like “…to embrace the human spirit and let it fly,” there can be no doubt in any of our minds that Sir Richard wrote this himself, lives it everyday, and successfully disseminated it across his organizations long ago. And similarly for InVision, this is a mission statement that so completely defines and permeates the company’s culture and people, you feel like you already know them having never set foot in their office.
4. Great Mission Statements Should Speak to a Higher Purpose Beyond the Underlying Capitalist Expression Common to All Companies
Said differently, great mission statements should serve as a constant reminder of how, in your reach that has been so high, the world has indeed been left different, and hopefully better. Some of the most effective and powerful here are those of Google, and dare I say, Facebook, despite their most recent debacle with the now infamous Cambridge Analytica.
“To organize the world’s information and make it universally accessible and useful.”
“Our Mission is simple: To bring the world closer together.”
Believe what you may about these institutions, these statements can’t help but impress upon us the breathtaking scope of human ambition, impressing upon us the near-limitlessness of what these companies have set out to achieve.
Sidebar: It likely hasn’t escaped your attention that most of my showcased statements easily fit into one or more of the buckets. It is worth noting that this is what truly makes this selection of statements and companies exceptional in a sea of corporate white noise.
How Mission Statements Create Value
Now, with what constitutes great missions statements out of the way, we can return to how these assets create value for their corporate progenitors. As earlier broached, effective mission statements are capable of serving as both offensive and defensive tools, the details of which I will now go on to discuss.
Sales and Business Development. When effectively channeled, great missions/mission statements have the power to drive sales far beyond what a given company’s product, service, or profile might initially suggest. In this regard, TOMS and Warby Parker both exist as great case studies, having both been founded on the principle of “Buy a Pair, Give a Pair” and communicated indirectly through their mission statements. For TOMS, this is: “to use business to improve lives,” and for Warby Parker, “through a rebellious spirit and a lofty objective…to lead the way for socially conscious businesses.”
On the back of these missions, both of these companies went on to be wildly successful out of the gate, with the spirit of their missions driving their momentum. In its first five years, TOMS grew to a $300 million revenue business without raising a dime, and Warby Parker into a $1.2 billion company.
Fundraising. No story so perfectly encapsulates both the extraordinary but also destructive power of a well crafted and nefariously used mission statement as the morally repulsive story of Theranos. Founded in 2003 by Elizabeth Holmes, Theranos’ mission was “to make actionable health information accessible to people everywhere in the world, at the time they most need it.” It was a lofty, inspiring, and valiantly unifying purpose, which she featured prominently in her business plans, pitch decks and public speeches. Worse, it was a perfectly crafted and nefariously manipulated message which also spoke ever so precisely to the venture capitalists that Holmes went on to raise close to a billion dollars from.
Turnarounds. The story of LEGO’s turnaround between 2004 and 2016, led by Jorgen Vig Knudstorp—the 35-year-old wunderkind and company’s first outside CEO—is another great example of how a company’s mission and values can be the fulcrum upon which immense value can be created.
Between 2003 and 2004, after 60 years of family control and dominance, LEGO posted the worst set of financial results in its history against a backdrop of mounting pressure from the video game industry, the onset of the internet, and a number of non-trivial operational missteps by the company’s management.
Further details to the former aside, Knudstorp’s arrival marked a critical turning point for the company. By his own admission, his first and most powerful act was to immediately return the company to its roots (original mission), which is “to inspire and develop children [to think creatively, reason systematically, and release their potential to shape their future]”; a mission around which he then rallied employees, managers, and critical stakeholders. Years later, Knudstorp reflected on the following:
“As leaders, you really need to think hard about some simple questions: Why do you exist as a company? What’s the compelling reason? Of course, ultimately, you want to come up with something that’s hugely relevant, and at the same time, unique and value creating for people. What’s our philosophy, or doctrine? How can I say a few things about strategy and ways of behaving that then permeate the entire organization and allow me to empower and decentralize? The battle is not won in the CEO’s office.”
The result, as has been the case for a number other notable companies that, for a time, lost sight of their founding mission only to rediscover it (e.g., Apple, Schwab, and Starbucks), Lego went on to deliver one of greatest turnaround stories of our generation.
Employee Retention, Customer Loyalty, and Stakeholder Unification. Whole Foods’ origin story serves as one of the all-time greats where value-creation and retention possibilities from a strong mission are concerned.
In 1981, three years after the company’s founding, one of the worst floods in the city of Austin’s history (Whole Foods’ home city), effectively wiped out the company and all its assets. For most, this would have marked the untimely demise of “the once promising startup”; but not for Whole Foods. As the story goes, the company’s mission was so powerful and so bought-into by its community of stakeholders (employees, customers, suppliers, and creditors) that each showed up, unsolicited, and physically rebuilt the company’s then-only retail location, financing it out of their own pockets. 30 years later, Whole Foods was acquired for a whopping ~$13.7 billion valuation—value that was uncontestably created by John Mackey’s steadfast adherence to its mission of conscious capitalism, even as it scaled and found success.
Creating Great Mission Statements: A How-to Guide
Having demonstrated the power and value-creation potential of strong, congruent mission statements, I’d like to conclude this piece with a short, more practical, how-to guide for creating effective ones. Given I already (albeit inadvertently) devoted a substantial portion of this article to ‘what effective mission statements look like,’ I will instead approach this section by detailing ‘what not to do’ in order to get to an effective mission statement. As follows:
1. For starters (and this will seem obvious), avoid using a lot of words to say nothing at all. Dell’s mission statement, as follows, is a great example of this. “To be the most successful computer company in the world at delivering the best customer experience in markets we serve.”
Listen, Dell, I literally have no idea what you are talking about.
2. Avoid overly verbose prose/content. Said differently, don’t throw the kitchen sink at your intended audience. Avon’s previously mentioned 249-word epistle that talks about everything from “how they deal with competition and create shareholder value” to “how they contribute to the fight against breast cancer” loses almost everyone before we even get started.
Instead, take a page out of The Humane Society’s book and keep it short and simple: “Celebrating Animals, Confronting Cruelty” (4 words).
3. Try as much as possible to make sense. Take McDonald’s mission statement, for example: “Our worldwide operations are aligned around a global strategy called the Plan to Win, which center on an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to continuously improving our operations and enhancing our customers’ experience.” Seriously, who is this talking to? What does this mean? Why are the 5 Ps of Marketing casually being thrown around as part of your mission? And whose idea was it to tell your customers about your “global strategy called the Plan to Win”? Honestly, too many sins here.
Now contrast this with the mission statement of Amazon’s Kindle: “Every book ever printed, in any language, all available in less than 60 seconds.” Jeff [Bezos] you may ceremoniously drop the mic and swagger off the stage.
4. Assume your audience already knows you are as smart as you are tempted to sound; instead, solve for authenticity. Said best by best-selling author Bernard Marr, avoid the usual slate of corporate superlatives—e.g., “most successful,” “world class,” “market-leading,” “best-in-class,” “best customer value,” “best customer experience,” and “superior this and that.”
More to this, avoid the temptation to throw your readers a corporate buzzword festival with your mission statement. Specifically, avoid words like “efficiently,” “operationalize,” “strategy,” “leverage,” “core competency,” “synergies,” “market share,” “functionality,” “viability,” “supply chain” …I could go on…
5. Don’t try to be all things to all people. Disney’s mission statement has long been instructive in this regard: “We create happiness by providing the finest in entertainment for people of all ages, everywhere.” The phrases “finest in entertainment” and “for people of all ages” are so broad they don’t quite communicate anything to anyone.
LEGO’s on the other hand, a brand whose primary audience is also children, does it better: “To inspire and develop children to think creatively, reason systematically and release their potential to shape their future.” This is in fact exactly what LEGO does, specifically for children.
6. Finally, speak from the heart and keep iterating. Mission statements are a living statement of purpose that will and should continue to evolve as you and your company evolve. And if you haven’t figured out the “Why?” for your company, it is ok to defer the exercise until such a time as your/its true purpose and place in the world emerges.
In an era as dynamic as ours, characterized by breathtaking change across all aspects of business/corporate life—from technology and competitive intensity, to the turbulence and pressures induced by our regulatory/policy environment—now, more than ever, companies should seek and hold fast to their core values and founding missions.
Wells Fargo’s betrayal of its mission, “…to help our customers succeed financially and satisfy their financial needs, and the result is that we make money. It’s never the other way around…”—should serve as another cautionary tale of how far and how fast we can fall when we succumb to the varying pressures that come with the pursuit of success.
Instead, take the time to reflect, crystalize your mission, and make it the foundation upon which your company is built. And then let it guide all aspects of your hiring, firing, and strategic decision-making, especially when the turbulent times come.
Understanding the Basics
What is the purpose of a mission statement?
A mission statement is a short statement of an organization's reason for being (i.e., the "why?" of its existence). Its purpose is to (1) organize, unify, and focus the disparate stakeholders of a given organization and drive them toward a single, unified objective; and to (2) serve as a decision-making guidepost.
What makes an effective mission statement?
Effective mission statements are (1) simple yet emotive; (2) lofty yet within reach; (3) authentic, through-and-through, for your company; (4) reflect the values of the company (from the founder down to the employees); (5) capable of unifying the many around a single, higher-order purpose.
What needs to be in a mission statement?
Simply stated, a mission statement should encapsulate your company’s raison d'être—i.e., the essence of why your company exists, why it has chosen this mission, and why it is important.