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Home > Blog > Beyond shareholder value
Out of Our Minds
Monday, April 05, 2004 9:55 AM
Beyond shareholder value
David Weinberger on Ethics

I've long thought that corporate mission statements ought to begin with a phrase like, 'XYZ company makes the world better by _____.' If it can't fill in that blank, the company ought not be allowed to get to the phrase about 'creating shareholder value.'

PS: No fair filling in the blank with a variant of 'enabling its owners to keep their swimming pools filled with Perrier'


13 comments

Cynthia Barnes - 7/11/2004 2:52:52 PM
I think it is not a bad idea to do a mission statement It can act as a direction for the company and a motivator to keep in mind what is really important.It can be useless however, if the owner does not buy into it or is corrupt when the rest of the company is trying to be ethical.(my experience)
Trevor Cook - 4/14/2004 10:16:03 PM
I agree with Dean Landsman - mission statements are a waste of time and they are done by committee so that they end up being too bland. But they also fail the big test no-one pays any attention to them at all. I sat through a marketing workshop a couple of years ago where people debated why the organisation existed what business it was in etc. There was no resolution. Most distressingly for the CEO, this debate went on within plain view of the posters on the wall with the mission statement on them. People seemed blissfully unaware of the MS and if they were aware of it, it clearly had no impact on how they viewed the purpose of their organisation and their own daily activities.
I came across this problem a lot with Internet start-ups in the pre-crash days - they couldn't tell you what their new product / service was except that it was a solution to something or other - usually it wasn't. If you have to sit in a room and think about why you're here - perhaps you've already lost the plot and ought to be doing something different.
Another problem with MS is that they have convinced people that the 'why we're here' answer has to be something formal with big words - you can't say 'cook great hamburgers' you have to say 'improve the world by providing meal solutions that are nutritious, value for money and flavoursome' As if we've forgotten what a great hamburger is and why people buy them.
Trevor Cook - 4/14/2004 10:15:20 PM
I agree with Dean Landsman - mission statements are a waste of time and they are done by committee so that they end up being too bland. But they also fail the big test no-one pays any attention to them at all. I sat through a marketing workshop a couple of years ago where people debated why the organisation existed what business it was in etc. There was no resolution. Most distressingly for the CEO, this debate went on within plain view of the posters on the wall with the mission statement on them. People seemed blissfully unaware of the MS and if they were aware of it, it clearly had no impact on how they viewed the purpose of their organisation and their own daily activities.
I came across this problem a lot with Internet start-ups in the pre-crash days - they couldn't tell you what their new product / service was except that it was a solution to something or other - usually it wasn't. If you have to sit in a room and think about why you're here - perhaps you've already lost the plot and ought to be doing something different.
Another problem with MS is that they have convinced people that the 'why we're here' answer has to be something formal with big words - you can't say 'cook great hamburgers' you have to say 'improve the world by providing meal solutions that are nutritious, value for money and flavoursome' As if we've forgotten what a great hamburger is and why people buy them.
Gary Turner - 4/7/2004 2:20:59 PM
I think the ideal mission statement would be something along the lines of 'To be the kind of company that doesn't use bullshit mission statements with which to patronise its staff, shareholders or customers.'

Or, if you prefer, a Remission Statement.
Dean Landsman - 4/6/2004 7:27:30 PM
While I will echo (I would say ditto, but that might inidicate my being in a repulsive sort of political camp) much of what Doc wrote, let me share some comments on mission statements.

They are generaly horseshit, designed more as a project of the PR people, than as a true statement of company mission.

ALSO: when Jane or Joe Blow of the low totem pole position comes to work at most companies of any size, they are not infused with a personal sense of corporate mission. Nope, they are there to do their jobs, get their paycheck, and live their lives. That is A) their lives at work, for which they are compensated, and B) their lives apart from work, which are theirs and theirs alone, not necessarily having anything at all to do with work, or the so-called mission of the workplace.

There are the rare and few companies that take their mission to heart, do their best to include all of the members of their working environment in the mission, for sure. And then there's the other 99% of companies out there.

Some years back, in a consulting capacity, I was asked by a client to join in on their big corporate endeavor: complete an MBO. They had this huge, time consuming and step-by-step, descriptive modas operandi, designed by some productivity and management consulting firm (what was I then, wondered I, a consultant brought in to manage a specific area to productivity), and it came in a massive looseleaf book with exercises, practice sessions, role-playing, all sorts of chic shit that took away from time one might spend, uh, working!

Oh, of course they suggested the employees take the looseleaf home and do some of it on their own time,even manage their personal lives with this great program.

What a crock of shit.

I looked at it, and told them that I could short circuit the process. In five years I wanted to no longer have them as a client, as I wanted to be gone within two years, having successfully accomplished my very specific tasks for and with them. Secondly, I wanted to achieve certain goals that would incerase their bottom lines, and would thus increase mine, as well. As a consultant with defined bonus levels based on performance, I was set on meeting and beating expectation. And third, to set an example, I would waste no time on this MBO mental masturbation, which took away from my time working with their people, and was not something I would waste my personal time with.

After they realized that they'd already failed in trying to get me to change my religion (really!), htey came to see that that this MBO shit was truly something I would not do. So they bought me out of my contract.

Heh, I actually outperfomred myself on that one, albeit by accident.

A few years later, as VP of a company, I stormed out of a meeting of the top brass. The topic of the day: 'Let's create a company mission statement!' I stood up, told the assembled minitude that they could have fun playing that creative game, but I had work to do.

The biggest of the bug Kahunas told me I was making a tactical mistake. He said this in front of the minitude. I told him (and them) that I valued my time and my workday, and had no time to waste on their silly exercise.

Then I told them my motto: be productive, be honest, and don't do anything you would be sorry about, or embarrassed to tell anyone. I said in business as in life, the golden rule was good enough for me.

Then I left the room.

For the rest of that day and the next, I did my job. They spent those two days in that conference room, rewriting the Golden Rule to make it sound like a company mantra. A few times they asked me for help on wording.

I told them another part of my personal mission statement was to not waste my time on self-serving platitudes. Let the work speak for itself, I said.

They were confused. But in the end, I managed to get my work done, and they wasted two full days trying to turn the Golden Rule into a glorious descriptive string of words that would be their mission statement.

The Big Kahuna never much liked me after that incident. But that was okay, since the feeling was mutual.
joan king - 4/6/2004 2:24:22 PM
I'm with Bill on this one. I'd be afraid of a corporation that is so confident of its ability to do good that it begins to confuse itself with the Brownies. Most successful things bring with them a host of unintended consequences, some of which may be more enduring and of greater social import than the stated mission. The WalMart example is a good one in realm of business. In the realm of liberating oppressed peoples thirsting for democracy, another example comes to mind.
Bill Seitz - 4/6/2004 10:47:29 AM
Sometimes companies are 'too good' at fulfilling their mission, driving things out of balance. Consider Sam Walton's desire to provide stuff more cheaply to the lower-middle class...
Doc Searls - 4/6/2004 7:56:52 AM
Mission statements, in my long experience, tend to be bullshit rationalizations. But that's not to say companies don't have missions. They just don't always put 'deliver shareholder value' at the top of the list. Usually it's at the bottom, after whatever passions drove the company into existence in the first place, and keep it going, even in the absence of the founders' presence.

Think back on Apple's first slogan, voiced by Dick Cavett: The most personal computer. Look at how Apple continues to be driven by Steve Jobs' transcendant obsession with art and design -- with look and feel and taste.

Look at the DNA in Ford, Microsoft, Charles Schwab, Sony. Were the men who founded those companies motivated entirely by making money? Even in Microsoft's case, I'd say no. It was something else, *plus* a commitment to making money.

Look at Motorola, which always wanted to make radios that move -- in cars, in pockets, in satellites. Also government work, from police departments to the Deparment of Defense.

Real mission statements are found in questions that need not be asked because everybody knows how the dead guy whose picture hangs in the headquarters lobby would answer them.

Want to see a mission statement that puts Responsibility To Shareholders in perspective? Check out Robert Wood Johnson's Credo ...

http://www.jnj.com/our_company/our_credo/index.htm;jsessionid=KGTT123RSHORCCQPCCECZOYKB2IIWNSC

Here's a truly strange coincidence. My sister in law, who's visiting from out of town, happens to work for a division of Johnson & Johnson. She just walked into my office and asked me what's up. I told her I was in the middle of saying something about General Johnson's Credo.

'We're a health care company,' she said. Providing health care is our first responsibility. We take the credo very seriously. There are people whose job is to study the credo and make sure we follow it the best we can.'

Note that the Credo lists and details four responsibilities: 1) To doctors, nurses and patients; 2) To employees; 3) To 'the communities in which we live and work and to the world community as well; and 4) To stockholders.

An worthy model for a successful company of any kind.
John Moore - 4/6/2004 4:48:06 AM
Great article.

Ole says 'C-corporations are organized to generate income for their owners, and regardless of their mission statements improving the world as a whole is always going to be a secondary activity.'

As if - in the long term - income for shareholders is somehow inevitably at odds with value for others. I beg to differ. There are businesses out there that do create value for all, including shareholders. Like Southwest Airlines. Which incidentally doesn't do absure executive pay, as I understand it.
Ole Eichhorn - 4/6/2004 4:41:08 AM
David -

Sounds like you're talking about 501(3)(c) non-profit organizations. They are typically organized to improve the world in some way, and their mission statements say so.

C-corporations are organized to generate income for their owners, and regardless of their mission statements improving the world as a whole is always going to be a secondary activity.

The best you can hope for in the real world is that the [monetary] value created in C-corporations for shareholders will get turned into the [real] value created in non-profits when wealthy businessman become philanthropists.

Ole
brydon - 4/5/2004 12:28:55 PM
Sorry, good point Kevin. I suppose it should read 'generates high short-term shareholder value'.
Kevin Salwen - 4/5/2004 12:13:23 PM
When you speak of shareholder value, Brydon, are you aiming for this week's returns or long-term shareholder value? If you want the short-term, build for now, with a whatever-it-takes attitude. But as Jim Collins proves clearly in 'Good to Great,' among other sources, if you want the long-term you need the passion and devotion in your workforce that management by fear and misery will never get you. The dotcom era, with its 20-hour workdays, proved at least part of that pretty clearly.
brydon - 4/5/2004 12:03:06 PM
In thinking about the people, I've always posed the question which is more successful?

- Company A with it's disconcertingly happy people making reasonable salaries and breaking even.
- Company B, full of underpaid miserable miserpusses that turns a large profit and generates high shareholder value?

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