Monday, April 28, 2008

Russell Ackoff and Mission Statements

Participating in the AHIC 2.0 discussions, I am repeatedly reminded of an influential talk and paper delivered by Russ Ackoff several years ago. His advice should be heeded when one is talking of ambitious, sincere, and inclusive "public private partnerships."

I have located a copy of this paper attributed to him on Charles Warner's Web Site. It seems to be the paper I read long ago. I reprint in full. Emphases in bold or italics are mine.

Russell Ackoff

Most corporate mission statements are worthless. They consist largely of pious platitudes such as: "We will hold ourselves to the highest standards of professionalism and ethical behavior." They often formulate necessities as objectives; for example, "to achieve sufficient profit." This is like a person saying his mission is to breathe sufficiently.

A mission statement should not commit a firm to what it must do to survive but to what it chooses to do in order to thrive. Nor should it be filled with operationally meaningless superlatives such as biggest, best, optimum, and maximum; for example, one company says it wants to "maximize its growth potential," another "to provide products of the highest quality." How in the world can a company determine whether it has attained growth potential or highest quality?

To test for the appropriateness of an assertion in a mission statement, determine whether it can be disagreed with reasonably. If not, it should be excluded. Can you imagine any company disagreeing with the objective "to provide the best value for the money." If you can't, it's not worth saying.

What characteristics should a mission statement have?

First it should contain a formulation of the firm's objectives that enables progress toward them to be measured. To state objectives that cannot be used to evaluate performance is hypocrisy. Unless the adoption of a mission statement changes the behavior of the firm that makes it, it has no value. The behavior of a Mexican firm was profoundly affected by the following passage from its mission statement:
To create a wholesome, varied, pluralistic, multi-class recreational area incorporating tourist facilities and permanent residences, and to produce locally as much of the goods and services required by the area as possible, so as to improve the standard of living and quality of life of its inhabitants.

Second, a company's mission statement should differentiate it from other companies. It should establish the individuality, if not the uniqueness of the firm. A company that wants only what most other companies want--for example, "to manufacture products in an efficient manner, at costs that help yield adequate profits"--wastes its time in formulating a mission statement. Individuality can be attained in many ways, including that in which a company's business is defined.

Third, a mission statement should define the business that the company wants to be in, not necessarily is in. However diverse its current business, it should try to find a unifying concept that enlarges its view of itself and brings it into focus; for example, a company that produces beverages, snacks, and baked good and operates a variety of dining, recreational, and entertainment facilities identified its business as "increasing the satisfaction people derive from use of their discretionary time." This suggested completely new directions for its diversification and growth. The same was true of a company that said it was in the "sticking" business, enabling objects and materials to stick together.

Fourth, a mission statement should be relevant to all the firm's stakeholders. These include its customers, suppliers, the public, shareholders, and employees. The mission should state how the company intends to serve each of them; for example, one company committed itself "to providing all its employees with adequate and fair compensation, safe working conditions, stable employment, challenging work, opportunities for personal development, and a satisfying quality of work life." It also wanted "to provide those who supply the material used in the business with continuing, if not expanding, sources of business, and with incentives to improve their products and services and their use through research and development."
Most mission statements address only shareholders and managers. Their most serious deficiency is their failure to motivate non-managerial employees. Without their commitment, a company's mission has little chance of being fulfilled, whatever its managers and shareholders do.

Finally, and of greatest importance, a mission statement should be exciting and inspiring. It should motivate all those whose participation in its pursuit is sought; for example, one Latin American company committed itself to being "an active force for economic and social development, fostering economic integration of Latin America and, within each country, collaboration between government, industry, labor and the public." A mission should play the same role in a company that the Holy Grail did in the Crusades. It does not have to appear to be feasible; it only has to be desirable.
"man has been able to grow enthusiastic over his vision of ... unconvincing enterprises. He has put himself to work for the sake of an idea, seeking by magnificent exertions to arrive at the incredible. And in the end he has arrived there. Beyond all doubt it is one of the vital sources of man's power, to be thus able to kindle enthusiasm from the mere glimmer of something improbable, difficult, remote."
If your firm has a mission statement, test it against these five criteria. If it fails to meet any of them, it should be redone.


Blogger Michael L. Gooch said...

For me, it seems awful pompous of us to think that every for-profit organization is so unique and special that each one needs its own unique and special mission statement. It is so pretentious it’s painful to watch. Could you imagine the look on a trail boss’s face if you asked him for his mission statement prior to a trail drive? He might say, “What part of ‘sell these cattle in Omaha’ do you not understand?” I cannot help but laugh when I visualize cowboys sitting around a campfire developing a mission statement.
Everything within an organization evolves. Processes change, customers change, management and leaders change, owners change. How can a mission statement realistically encapsulate all this evolution without being so nebulous as to be worthless?
In case you are wondering, the mission statement on my ranch is this: Make Money / Have Fun. If this is not the mission, then why in the world am I doing it? All of the adjectives and descriptors that could be included in a mission I choose to simply call life. Michael L. Gooch, SPHR Author of Wingtips with Spurs: Cowboy Wisdom for Today's Business Leaders

April 29, 2008 10:17 AM  
Blogger Kenneth said...

Great post, Mark
As a practicing physician, I am struck by how interposable hospital mission statements seem. I like to learn more about the values they espouse and the stories that illuminate their culture. After all, culture trumps strategy.

June 13, 2008 12:18 PM  
Blogger Juliette Ferguson said...

I really appreciated Russell Ackoff's Mission Statement comments. I have been researching mission statements and find it refreshing to see it 'as it is'. Juliette Ferguson (non-profit manager)

August 24, 2008 2:08 AM  

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