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2 The positioning of mission in the strategic planning process
3 The role of mission for the strategic planning process
Many textbooks and articles describe how best to plan strategically and what the fundamental steps must be taken in the strategic planning process. One main issue is that many authors are unanimous in relation to the mission statement, which should be the first step in the corporate planning process. However, others think the mission’s mapping should be stated in another level of the planning hierarchy. Therefore, it is essential to specify the role of mission in that process to be able to dwell on the different perspectives. But first, before the general role of mission is described, there will be an outline of the reasons why many authors put the mission in different levels of the process. This could help to understand the general role of the mission in that context more precisely. At least, writers are of the same opinion that the major argument in favour of planning is in the co-ordination of decision-making in order that an organisation moves in a well-focused direction. Without planning, the efforts of the organisation may not be well coordinated and managers and staff may be headed in different directions. Planning also helps to ensure that the corporate future is taken into account, so that the organisation can control the situation it finds itself in and prepare for unexpected eventualities (Hannagan, 1995).
2 The positioning of mission in the strategic planning process
With regards to the mission, some authors state that mission should precede the planning process because “it is describing the organization’s basic function in society, the reason for its existence being including its specific services and products” (Mintzberg, 1983, p. 278). The mission statement is an essential element in the strategic planning of a business organisation. According to Coates (1998) every company must have a clear comprehension of its overall purpose before it can begin to address the task of planning and setting objectives. This is stated as the mission and communicated by the use of a mission statement. Rather, the mission of an organisation is better seen as its crucial purpose, whereas the mission statement is an instrument of communication to key stakeholders. It should point out the primary purpose of the organisation, its values and typical features, and provide the ultimate principle for further steps to the strategic plan. Thereby the outcome of this is to map the strategic planning process, first with the general mission statement, and then by identifying and setting specific objectives of the company. In comparison to the mission, objectives are not only specific but also measurable, realistic and with a defined timescale. Afterwards, and as a next level, the business environmental analysis can take place in the strategic planning process. Thomson suggests, like Coates idea, in which organisations should firstly clarify what values and behaviours are critical for carrying out corporate and competitive strategies, and for pursuing the mission, both now and in the future. “Therefore the mission statement is the over-riding raison d’etre for the business. It is the reason for the existence of the organization, which should be at the top of the planning process” (Thomson, 1997, p.143).
Another motive for the first positioning is that the mission statement must be updated periodically to make sure that it still defines the best direction for the company. The more rapid the speed of change in a market or industry, the more often the mission statement will need to be re-examined. All managers in an organisation must clearly understand the mission statement and accept its definition. No amount of planning can help a firm prosper unless it is known in which business the company operates and where it wants to thrive. The mission statement is translated into a set of objectives that serve as the basis for the business plan. Strategies then determine the overall design or program for achieving the objectives. This is another main reason why a mission should take place at the highest level of the planning hierarchy (Hamper, 1992). Hannagan (2002, p.30-31) too, claims that “the mission statement provides a valuable starting point for establishing afterwards more specific objectives and strategies, and in turn the performance of the organization should be assessed against both the mission and objectives”. In general, a clear, shared and, understood mission statement at the top is helpful for strategic planning and for explaining current strategies.
In spite of this, there are some other authors who have quite different opinions in relation to the mission’s position. Argenti (1980) states, that the mission statement should not precede the corporate planning process. In his view, the planning system consists of three main parts: the first part is the corporate purpose. This explains why a company was formed and why it continues to exist, as described earlier. As a consequence, this can then help the company to decide about the corporate objectives. Additionally, an organization’s corporate purpose is permanent. If it is changed, the organisation itself would have to be reestablished as a new legal enterprise. The second part in the Argenti’s process is the corporate conduct. This refers to any action in organizations which are taken to achieve more or less its corporate purpose. The organizations’ behaviour is mostly independent of purpose because it is also marked as code of ethics, culture, social responsibilities, and so on. Moreover it helps in defining its corporate conduct. This part also relieves to determine the corporate strategies of a company through resolving how it is going to achieve its objectives while adhering to its code of conduct. It is seen that corporate purpose and corporate conduct are the only legitimate inputs to the corporate planning process while strategies are the output of it. Corporate strategies differ from corporate objectives, because the whole company is concerned with strategies whereas the objectives are more specific, for example to increase the market share for instance. As a result, the output will be to increase the profits. Back to the mission, it is important in which mission statements should come out of the planning process precisely because these are like strategy statements. They should not be given the status of specific corporate aims or objectives. Moreover they are supposed to guide a company’s strategic decision over the next few years. Therefore mission statements should be outputs which stand for the last step in the planning process. However, if missions precede the process then they should be considered as inputs and thus appear to be public relations and not more. Today, some organizations like Honeywell, IBM or Ernst and Young are using this idea or method namely known as the “Argenti System” (Argenti associates, 2005). The latter company has not positioned a mission statement because it is seen as an output of the whole strategic planning process. Rather Ernst and Young itemize its input to the global code of conduct. This corporate conduct provides a comprehensive ethical and behavioral framework that guides the decision-making process. The corporate conduct also refers to value statements for its employees, which could also help to create commitment in its employees (Ernst and Young, 2004). That point will be clarified more precisely later in this work.