Examples Corporate Mission Statement - PDF by uel19569

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									                                Create Value:
                                Vision & Mission


                                “Making Value Happen”
                                                Jacoline Loewen




                                       STRATEGY INTERNATIONAL
www.strategyinternaitonal.com
KEY QUESTIONS A CORPORATE ASPIRATIONS STATEMENT SHOULD
ANSWER

                  • What business are you in?
                  • What will you be known for? E.g.,
                   – Core products/technology/service?
                   – Core strengths?
                   – How you do business?

                  • How will your stakeholders benefit?
                   – Customers
                   – Employees
                   – Other stakeholders

                  • What major results will you achieve?
                  • How will you measure progress and what are the specific targets that will stretch
                   your short- to medium-term (3-5 years) performance?


                                      The aspiration statment should be written in
                                        simple language so that it can be easily
                                            communicated and understood

Jacoline Loewen                                         www.strategyinternational.com
EXAMPLES OF CORPORATE MISSION STATEMENTS

                                                                 “To bring good things to life”

   Mission
                                                                 “To make people happy”
   Statement of why a
   company exists and how                                        “To provide the most useful
   it will conduct its affairs                                   and ethical financial
   • Describes an enduring
                                                                 services in the world”
     desire
   • Not subject to a                                            “To better humanity as the
     timeframe                                                   world’s leading health care
   • Often only qualitative                                      company”
   • Provides the context for
     all decisions within the                                    “To provide products of
     organization                                                superior quality and value
                                                                 that improve the lives of the
                                                                 world’s consumers”


Jacoline Loewen                  www.strategyinternational.com
EXAMPLES OF CORPORATE VISION STATEMENTS


                                                    “To become the most innovative
                                                    and reliable provider of clean
 Vision                                             energy worldwide”

 Articulation of what the                           “Disney’s overriding objective is to
 organization wants to                              create shareholder value by
 become                                             continuing to be the world’s
  – Describes an inspiring                          premier entertainment company
    new ideal                                       from a creative, strategic, and
  – Can be achieved                                 financial standpoint”
    within a specific
    timeframe                                       “The aim of the Lloyds TSB Group is
  – Can be quantified                               to be the best and most successful
  – Guides the                                      company in the financial services
    development of                                  industry, measured by our success
    strategy and the                                over time in building value for the
    organization                                    people who own us. We aim to
                                                    double shareholder value every 3
                                                    years”
Jacoline Loewen              www.strategyinternational.com
CORPORATE ASPIRATIONS ARE TYPICALLY EMBODIED IN VISION
AND/OR MISSION STATEMENTS

    Mission                            Corporate                        Vision
    • Statement of why a               aspiration                       • Articulation of what the
      company exists and                                                 organization wants to
      how it will conduct                                                become
      its affairs                                                        –Describes an
      –Describes an                                                       inspiring new ideal
        enduring desire                                                  –Can be achieved
      –Not subject to a                                                   within a specific time
        timeframe              • Describes long-term                      period
      –Often only                ambitions                               –Can be quantified
        qualitative            • Excites and unites                      –Guides the
      –Provides the              stakeholders                             development of
        context for all        • Focuses organizational                   strategy and the
        decisions within the     resources and energy                     organization
        organization           • Clearly defines
                                 organizational performance
                                 targets linked to value-
                                 creation levers
                               • Provides the framework for
                                 performance management
Jacoline Loewen                         www.strategyinternational.com
CHARACTERISTICS OF EFFECTIVE ASPIRATION STATEMENTS

            This . . .                                   Not this . . .
            • Clear business focus                       • Broad mandate that can be
                                                           extended to multiple industries or
                                                           sectors

            • Specific and actionable                    • Motherhood statements extolling
                                                           grandiose ambitions

            • Inspirational target that stretches        • Unrealistic goal that is commonly
              performance                                  believed to be impossible

            • Clearly defined target level of            • Vague statement of intent ‘to be the
              performance that characterizes               best’
              excellence and that can be used to
              measure success or failure

            • Contains performance deadlines             • Timeless target

Jacoline Loewen                                 www.strategyinternational.com
SEVEN RECURRENT CORPORATE THEMES
                  The Industry Shaper repeatedly spots discontinuities in industries and acts pre-emptively
                  to shape the emerging new industry to its own advantage.

                  The Deal Maker systematically beats the market through its superior skill at spotting and
                  executing deals. This could either be through superior insight into the inherent value of
                  companies or through superior insight into specific industries.

                  The Scarce-Asset Allocator allocates capital across multiple business units more
                  effectively than the capital markets.

                  The Skill Replicator repeatedly transfers particular skills across business units. The skill
                  of lateral transfer is a distinct skill from the functional skill itself.

                  The Performance Manager has proven skills at instilling a high performance ethic with
                  matching incentives and MIS processes across multiple business units.


                  The Talent Agency institutionalizes a model for attracting, retaining, and developing talent
                  that is truly distinctive relative to all others in the industry.

                  The Growth Asset Attractor possesses a proven and sustained record of consistently
                  leading in innovation in multiple businesses.

Jacoline Loewen                                     www.strategyinternational.com
CAPABILITIES UNDERPINNING THE CORPORATE THEMES

   Corporate theme                   Capabilities
                  Industry shaper    • Insight/foresight to spot discontinuities and trends
                                     • Ability to set new standards
                  Deal maker         • Spot opportunities
                                     • Negotiate and execute MA&A, JVs and licensing agreements

                  Scarce-asset       • Source and allocate capital, cash, talent and time efficiently
                  allocator          • Manage risks
                  Skill replicator   • Realize synergies
                                     • Facilitate skill transfer
                                     • Manage and transfer knowledge and industry insight
                  Performance        • Realize continuous improvements in cost base and revenue growth
                  manager            • Set incentives
                  Talent agency      • Attract and develop management of creative talent
                                     • Set incentives
                  Growth asset       • Source unique intellectual property
                  attractor          • Build and maintain extensive network

Jacoline Loewen                                 www.strategyinternational.com
CORPORATE THEMES IMPLEMENTED THROUGH LEADERSHIP ACTIONS
AND DECISIONS ON CONFIGURATION
                                 Definition                             Example

                   Individuals   Senior manager,                        • Vivendi's CEO Messier, master-minding deals worth
                                 mostly CEO                               over EUR 15 billion over the last 3 years
 Leadership




                                                                        • GE's Jack Welsh emphasizing communication to link
                                                                          content and experience


                    Corporate    A few senior managers either at        • Clayton and Dubilier at Clayton, Dubilier & Rice
                       teams     corporate or at the sector level
                   Programs,     Standard corporate-wide                • Textron's performance management process
                  processes,     processes, driven at the corporate     • GE's six sigma program to drive performance in
                 and systems     level, typically supported by IT         product and service businesses
                 Business unit   The redesign of BU structures and      • 3M's constant "patching" of its business structure
                     structure   boundaries within the corporation
 Configuration




                    Dedicated    Separate, non-operational              • Mannesmann's Development Company to transfer
                        units    organizational structure, mostly         new technologies to development teams
                                 reporting directly to the senior
                                 management
                     Networks    Formal or informal group of            • "Cross-company-country-business area" teams at
                                 people across business units             ABB to foster lateral networking
                                                                        • DaimlerChrysler's mixed and cross-hierarchical
                                                                          strategy team
                      External   Agreements, alliances, JVs or          • Microsoft's minority stakes in hardware/
                     relations   other relational forms with outside      communication companies within its operating
                                 corporations                             environment

Jacoline Loewen                                               www.strategyinternational.com
TWO CATEGORIES OF CORPORATE STRATEGIC ASSETS
                              Types of assets                                    Examples

        Tradable              Physical corporate assets                        • British Airways' landing rights at Heathrow
       corporate
          assets              Stores of value                                  • Disney's cartoon library or proprietary databases (credit
                                                                                  history, patient databases)

                              Knowledge factories                              • Lucent Technologies' Bell Labs
                              Distribution channel                             • Gillette's leveraging of Duracell's access to supermarkets
                                                                                 and convenience stores
                                                                               • Merck's sales force
          Tough-              Financial strength                               • AIG's leveraging of its AAA rating into new markets such as
         to-trade                                                                 derivatives
       corporate
          assets*             Corporate brand/reputation                       • BMW: "The ultimate driving machine"
                              Privileged relationships**                       • SAP's broad installed customer base
                                                                               • Li Ka-Shing's powerful web of contacts
                              Values/culture                                   • "The HP way"
                                                                               • Goldman Sachs' business principles
                              Knowledge                                        • Boeing's superior know-how about commercial aircraft
                              Talent pool***                                   • GE's top-500-manager pool shared between divisions
        * Derived from the "Corporation of the future" initiative. Distinguishes between brand, reputation, knowledge, and special relationships
       ** Linkages (non-commercial) with customers, governments, sources of talent, industry participants, educational and scientific institutions
      *** Although individual talent is marketable, it is hard to be seen as a corporate asset <<last clause unclear>>
Jacoline Loewen                                                                  www.strategyinternational.com
             PORTFOLIO CHANGES TO FOCUS AROUND SOURCES OF
             CORPORATE VALUE ADDED
                             Corporate
              Company        value added            Portfolio management actions
                             • Performance        • Leveraged its operating skills in the acquisition
                              management            of Amoco and downstream JV with Mobil
              (‘93-’97)
                             • Relationships      • Acquired air-related service businesses
                              in air transport      (e.g., Gate Gourmet, Nuance Global
              (‘93-’97)
                              industry              Traders duty free shops) that represented
                                                    60% of revenues by 1997
                             • Biotech R&D        • Disposed of commodity chemicals business
                                                    which represented 41% of revenues in 1995 to
              (‘95-’98)                             refocus on food, agriculture, pharmaceuticals

                             • Skills in          • Disposed of traditional low-growth
                              wireless              businesses (utility, pulp and paper, etc.) to
              (‘91-’97)       telecoms              focus on wireless telecoms
                             • (Decision that     • Disposed of all “old” industrial assets and
                              there was no          transformed itself through acquisitions into a
                              value added in        media company (CBS) with extensive TV
              Westinghouse    the industrial        and radio assets
              (‘93-’98)       portfolio)

Jacoline Loewen                                  www.strategyinternational.com
PROCESS TO DEVELOP THE CORPORATE CONTEXT

      Diagnosis and                Interactive                             Communication
      analysis                     workshops

    • Qualitative assessment of                                            • Internal
      aspirations, targets, and         Aspirations                        • Financial community
      corporate value added             and targets
    • Great company
      assessment
    • Economic profit portfolio
                                            Senior
      analysis
                                          management
    • Three horizons growth             team workshops
                                                               Corporate
    • Hexagon restructuring                                      value
    • Shareholder expectations                                  added
      analysis against internal   Portfolio
      business plan




Jacoline Loewen                        www.strategyinternational.com
QUICK AND DIRTY ECONOMIC VALUE CREATION ANALYSIS



           Post-tax return on invested
           capital above WACC                                             Comments

                                                                          • This analysis can be
                                                                           completed relatively
                           Business
                                                                           quickly and allows
                            units
                                                                           businesses with negative
                                                                           historic economicprofit to
                                                                           be identified

                                                                          • The area of each box is in
                                                                           proportion to the
                  A    B                                                   economic profit generated
                                                                           the previous year

                                      C                                   • This analysis fails to
                                          D                                capture full value creation
                                                                           as it does not take into
                                                                           account the future
                                                                           potential of each business
                                                                           unit
                                                              Capital
                                                              employed
Jacoline Loewen                           www.strategyinternational.com
IDENTIFYING VALUE CREATION OPPORTUNITIES
                                                  Market determined
                                                        value

                                                           1
                      Current perceptions gap                              Maximum opportunity


                          Company        2                                         6    Optimal
                          value as is                                                   value


                  Internal improvement                                                 Financial engineering
                  opportunities                                                        opportunities


                      Potential value    3                                         5   Potential value
                      with internal                                                    with
                      improvements                                                     improvements
                                                                                       and growth
                                  Disposal                  4           Growth
                                  opportunities                         opportunities (organic
                                                                        and acquisition)
                                                  Potential value
                                                  after disposals

Jacoline Loewen                                    www.strategyinternational.com
CALIBRATE CORPORATE TARGETS AGAINST MARKET                                              HEINEKEN EXAMPLE

EXPECTATIONS                                                                         Based on share price of x
                                                                                     + 100%
%
                                                                                     Based on current share
 Operating                                                                           price of x + 50%
 margin (m)                                                                          Based on current share
            30
             30                                                                      price of x




            25
             25

                                  m = 11.2%
            20
             20                   g = 12.5%
                                          m = 8.7%
                       m = 8.6%           g = 15.2%
            15
             15                                             m = 6.0%
                                                            g = 19.0%
                        m = 6.0%      g = 16.4%
            10
             10         g = 12.5%


              55



              0                                                                    Revenue
               0
                 0.0
                0.0         5.0
                            5.0               10.0
                                              10.0                    15.0
                                                                      15.0    20.0 growth (g)
                                                                              20.0

Jacoline Loewen                               www.strategyinternational.com
CAUSES THAT EXCITE AND UNIFY A CORPORATION


           Burning platform   • An imminent crisis that must be remedied if the company is to
                               survive

           Evil competitor    • Focus on displacing a single dominant competitor

           New creation       • Desire to innovate and create something fundamentally new;
                               may also be the revitalization of an old dream in a new
                               organization

           Noble purpose      • Change the world – Organization seeks to influence the
                                interaction and behavior of society to increase net societal
                                benefit
                              • Adhere to values – Principles underlying a corporate culture are
                                believed to be fundamental to its existence and long-term
                                success
                              • Grow and sustain the organization – Longevity of the
                                organization is paramount, and although decisions may aim to
                                increase wealth a priority is placed on preserving value

           Wealth creation    • Opportunity to create personal wealth for management team and
                               employees

Jacoline Loewen                            www.strategyinternational.com
EXAMPLES OF UNIFYING CAUSES

   Burning platform                                    • Across-the-board pay cuts to stave off bankruptcy

                                                       • Need to pay down $6 billion of long-term debt or
                                                         face bondholder action

   Evil competitor                                     • “Encircle Caterpillar”
                                                       • “Beat Xerox”
                                Nike (1960s)           • “Crush Adidas”

   New creation                                        • “Connect more people and organizations to
                                                         information in more innovative, simple, and reliable
                                                         ways”
                                                       • “Recreate the real McKinsey”

   Noble purpose                                       • “To dedicate our business to the pursuit of social
                                                         and environmental change”



   Wealth creation    Clayton, Dubilier & Rice • “Dedicated management and financial
                                                         skills produce superior results ”
                      Kohlberg Kravis Roberts & Co.    • “Creating value by focusing on a few
                                                         unshakeable fundatmentals”
Jacoline Loewen                           www.strategyinternational.com
SETTING CORPORATE TARGETS – BEST-PRACTICE OBSERVATIONS


  Best practice                                          Examples
  1.Simply set extremely aggressive                      • “Our goal is to be the number 1 beverage,
    demand targets and objectives                          ahead of water”
    (sometimes multiple sets of                          • “Goals are set so that there is 60%
    goals)                                                 certainty of achieving them”

  2.Goals are not necessarily                            • NW Mutual: Uses “policy persistence
    financial, but linked to the                           rate” (% of policy owners who renew) as
    performance levers                                     one of main goals

  3.Long-term targets and goals                          • All divisions that in1997 had operating profits
    must be translated into concrete                       below 12% must achieve 12% by 1998;
    and measurable short/medium-                           divisions that reached or surpassed 12% in
    term goals                                             1997, must attain best operating profit in
                                                           history by 1998. Every division currently at its
                                                           historical-high operating profit, must achieve a
                                                           1% point improvement by 1998
  4.Adjust targets over time as they                     • “There is a constant updating of goals.
    are achieved or as reality                             When one major target is met, another is
    changes                                                immediately created”
Jacoline Loewen                        www.strategyinternational.com
DIMENSIONS OF CORPORATE TARGET-SETTING
                                      The CEO/management beliefs
                                      • What am I/are we truly excited and
                                        passionate about?
                                      • What are the beliefs that I/we hold
                                        that may limit my/our thinking?
                                      • What I/we do not believe in and
                                        want to avoid?
  Operating stretch                                                                  Great companies
  • How is our business doing?                                                       • What kind of aspirations do they
    What is the baseline? How                        Corporate                         set? With what dimensions? How
    large is the gap?                                 targets                          challenging are they?
  • Are our aspirations linked to                                                    • What have they done to be
    value drivers?                                                                     consistently above average?


                  Financial market expectations                  Industry context
                  • What dimensions and metrics are              • What are the fundamental trends in the industry?
                    the markets focusing on?                     • What are the expected growth rates in each
                  • What are the forecasts for the                 segment and territory?
                    company, competitors, and the                • What discontinuities could potentially change the
                    industry, and the implied                      game?
                    expectations embedded in the                 • What do our competitors say about their
                    share price?                                   aspirations?

Jacoline Loewen                                      www.strategyinternational.com
ENSURE THE CORPORATE CENTER IS ALIGNED TO ADD VALUE

   Corporate themes     • Are the themes the right ones to help achieve the aspirations and
                          targets?
                        • Is the corporate competence distinctive?
                        • Are the themes transferable and scalable?
   Leadership actions   • Do the leadership actions of the entire senior team reinforce the
                          corporate themes?
                        • Are the skills truly organizational and not dependent on a few
                          individuals?

   Configuration        • Is the corporate portfolio one that will benefit from the themes?
                        • Are there mechanisms in place to retain the skill in the theme?
                        • Is there a renewal process in place to ensure continuous
                         improvement?

   Alignment            • Is there a tight fit between the corporate theme, the leadership model
                          and configuration, and the corporate strategic assets? Are they
                          mutually reinforcing?
                        • Is there a tight fit with the aspirations and targets, the portfolio
                          decisions, and the choice of strategic pace?
Jacoline Loewen                          www.strategyinternational.com
OPERATIONAL RULES TO SET THE “WAY WE WORK”
                       Description                                                Key questions

  Decision authority   The authority to make and execute decisions,               • How is authority divided among the
                       including gathering relevant information and                   corporate center and other business
                       allocation resources to implement decisions                    units/functions?

  Performance          Activity-specific financial, behavioral, and attitudinal   • What are the specific performance targets
  expectations         parameters used to define the desired level of                 and what are the consequences if they’re
                       performance                                                    not met?

  Incentives           Financial and personal/social rewards and                  • How are incentives linked to performance
                       penalties used to motivate individuals to adopt the            measures?
                       desired course of action

  Monitoring           Activities undertaken to determine whether                 • What are the formal and informal reporting
                       performance expectations are being met                         systems to monitor performance?

                       Corporate center’s ability to commit itself (or makes      • How will the corporate center have
                       its commitment credible) to act according to the               credibility and influence in the new
                       roles of the game                                              organization?


  Commitment           Corporate center’s ability to commit itself (or makes      • How will the corporate center have
                       its commitment credible) to act according to the               credibility and influence in the new
                       roles of the game                                              organization?

  Coordination         The glue which holds the corporation together to           • How will the corporate center use
  mechanism            align interests and share knowledge                            knowledge, systems, processes, and culture
                                                                                      to connect and control the organization?

Jacoline Loewen                                       www.strategyinternational.com
BRINGING IT ALL TOGETHER
                  Draft statement of intent
                  We are not a bank… but we will consistently redefine the Canadian’s
                  expectations of financial services. We will be fair, responsive, and trusted
                  providing unprecedented value through innovative delivery of products and
                  services to loyal Loblaws customers. We will be their primary financial
                  services relationship. Our employees will be fulfilled and our shareholders will
                  earn superior returns.
                  By 2003 we will achieve
                  • More than 0.5 million customers
                  • Funds managed of $10 billion
                  • Earnings of $35 million and we will turn a profit by year 2000

                  Statement of intent
                  Together with our Labatt partners, we will be the
                  best brewery in the Prairies, and one of the best in Canada.
                  We will be recognized for our individual excellence, teamwork, integrity, and
                  passion to win. By 2002, our enviable work environment and innovative
                  portfolio of top quality brands, combined with disciplined execution, will allow
                  us to reach
                  • A 49.5% share of total market; and
                  • Compounded annual EBIT growth in excess of 15%
Jacoline Loewen                       www.strategyinternational.com
INVESTOR RELATIONS COMMUNICATIONS LEVERS


                  Understand root cause of differences
                  between investors’ perceptions and             Educate investors
                  internal aspirations

                  Two principal root causes:

                  1. Differences in the mental model             • Spend time with key investors
                     of the business. Investors have a               articulating mental model
                     different understanding of the true         •   Ensure that annual report includes
                     value drivers of the business                   performance on true value drivers


                  2. Differences in investor                     • Focus investor communications
                     expectations for future                         around expectations for future
                     performance                                     performance against value drivers
                                                                 •   Publish progress against key value
                                                                     levers and use progress to build
                                                                     investor confidence




Jacoline Loewen                                     www.strategyinternational.com

								
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