I just knew it: “Scientists find link between people impressed by wise-sounding, ‘profound’ quotes and low intelligence,” Helena Horton, Daily Telegraph, 12/3/2015
Which perhaps explains your average mission statement.
For years … decades, I think … I’ve preached from this pulpit that corporations have only three bottom-line “goods” — to increase revenue, decrease cost, and manage risk better.
I’ve also preached another, complementary gospel — that mission statements are worthless, but the mission is preeminently important.
Then Scott Lee and I wrote The Cognitive Enterprise, which led us to re-think the fundamentals of business.
The result was the realization that there are really four bottom-line goods, the fourth of which is mission achievement.
Which led several of you to ask, in response to last week’s column where I pointed this out, “Huh?”
(It also led to one subscriber, irate because I suggested Donald Trump and Equifax might not be my favorite endorsers, to become an unsubscriber. As the offending statement constituted 2.6% of last week’s content one wonders how my former subscriber copes with this.)
Let’s get back to getting to the point: What’s this about mission achievement being a bottom-line good? Doesn’t this seem like too much of a touchy-feelie, warm fuzzy sort of position for KJR to take?
To understand how this works, Sherman, set the WABAC machine to 2007, when neither the economy as a whole nor General Motors in particular had melted down. To oversimplify the situation slightly, General Motors had a business model in which the purpose of selling automobiles was to sell financing contracts through its GMAC subsidiary.
Because it made little profit from selling the automobiles themselves, the desirability of your average GM car, let alone its engineering, was of little apparent interest to the folks running GM back then.
So little so that GM offered rebates … bribes, really … to consumers to persuade them to buy (and finance) its products.
Then the great recession happened and GM’s already fragile business fell apart completely.
Desirability and engineering weren’t part of GM’s pre-melt-down business model. They were critical underpinnings of its long-forgotten mission: to build cars people want to buy.
Mission, that is, not mission statement, about which the best that might be said is that they achieved grammatical and syntactical correctness. That they’re both lifeless and devoid of useful information? Keep that opinion to yourself.
Before I go on, a suggestion: Rip out the mission statement you have and replace it with something prosaic and clear, like, for example, “We provide information technology that’s optimally matched to the enterprise’s needs.” Or, if you’re more enlightened, “We collaborate with our business counterparts to achieve operational excellence and intentional business change, in part through the use of information technology.”
And … returning to the point again, it’s easy for some business executive to focus on the business’s mission, because it’s embedded in the business model. These are the better-mousetrap-style businesses, whose mission is to sell products people want to buy, and whose business model is to manufacture products people want to buy at a low enough cost to sell them at a price customers can afford while maintaining profitable margins.
But there are plenty of businesses whose business models are, in one respect or another, akin to the pre-meltdown GM, where the connection between mission and business model was sufficiently indirect that executives could ignore it for a decade or two.
While less common, especially among large enterprises, there are plenty of businesses that make the same mistake only backward: They’re so focused on their mission that they ignore their business model.
In the early days of eCommerce this was endemic, encouraged by cheap and easy-to-get investment capital. The world was awash in enthusiastic web entrepreneurs who were convinced that if they just got lots of page views they could figure out how to make money from it later.
The unfortunate word “monetize” was coined to capture this business philosophy and make it seem plausible.
Charitable non-profits are also prone to this problem. With all the best of intentions they spend every dime they have and more dimes they don’t doing everything they can to fulfill their mission.
Especially, their good-hearted employees are too-often unaware that “non-profit” does not mean “can operate in the red indefinitely.”
Well-run non-profits never lose sight of their business model — accomplishing their mission attracts members of the philanthropic community, grant-making organizations, or both, creating a sense of affinity that cause them to donate to the cause.
So the big three — revenue, cost, and risk — are still there. It’s the business model that makes them happen, and makes achieving the mission financially possible.
But achieving the mission is what allows the business model to continue to work.