Capítulo IV: Conclusiones generales
4.3 Recomendaciones
2.3.5.4 Teoría de diseño de experiencias
4
STRATEGIC PURPOSE
Learning outcomes
After reading this chapter you should be able to:
● Assess the strategic purpose of an organisation in terms of mission, vision, values and objectives .
● Analyse the strategic significance of different ownership models for an organisation’s purpose.
● Evaluate the implications for strategic purpose of the
shareholder and stakeholder models of corporate governance.
● Undertake stakeholder analysis as a means of identifying the influence of different stakeholder groups in terms of their power and interest.
● Relate corporate responsibility and personal ethics to purpose and strategy.
Strategy in Action
Strategic Position
Capability
Culture
Purpose
Strategic Choices
INTRODUCTION 107
4.1 INTRODUCTION
I
n Spring 2012, Sir Stelios Haji-Ioannou, founder of the easyJet airline, took his former com-pany to court as part of his campaign to curb what he saw as its excessive growth. Although he had retired from a management role, Sir Stelios and his family were still major shareholders in easyJet, with 38 per cent ownership, and they had become fi erce critics of the company’s growth strategy. According to Sir Stelios, easyJet’s current management were investing in growth at the expense of dividends for shareholders. At stake in the clash between founder and managers were crucial issues about the purpose of business – long-term growth or immediate dividends – and who has the right to control strategy – owners or management.The previous two chapters have looked at the importance of the external environment and internal capabilities for an organisation’s strategic position. This chapter examines how exter-nal pressures and interexter-nal aspirations interact in the setting of organisatioexter-nal purpose. The chapter warns that organisational purpose can rarely be reduced to a simple formula such as
‘profi t maximisation’. Organisational purposes are typically complex and diverse. It is import-ant to be clear about what purposes drive strategy, who infl uences such purposes and who monitors performance against them. These are the concerns of this chapter.
An important concept here is that of stakeholders , those individuals or groups that depend on an organisation to fulfi l their own goals and on whom, in turn, the organisation depends . An underlying question is whether the strategic purpose of the organisation should refl ect the expectations of a particular stakeholder, for example shareholders, or incorporate broader stakeholder interests, such as employees, customers and the local community. Figure 4.1 sum-marises the different infl uences on strategic purpose discussed in the chapter:
● The chapter begins in section 4.2 by developing the discussion in Chapter 1 about different ways in which organisations express strategic purpose , including statements of mission, vision, values and objectives .
● Section 4.3 considers the ownership structures and the corporate governance framework within which organisations operate. The concern is with the way in which formally consti-tuted bodies such as investors or boards infl uence strategic purpose through the formalised processes for supervising executive decisions and actions.
Figure 4.1 Influences on strategic purpose
● In determining purpose, it is important to understand how different stakeholders may be involved in strategy. Section 4.4 addresses the different power and interest of various stake-holders through stakeholder analysis .
● Section 4.5 is concerned with issues of social responsibility and ethics . Here the question is which purposes an organisation should fulfi l. How should managers respond to the expecta-tions society has of their organisaexpecta-tions, both in terms of corporate responsibility and in terms of the behaviour of individuals within organisations, not least themselves?
4.2 MISSION, VISION, VALUES AND OBJECTIVES
Harvard University’s Cynthia Montgomery 1 argues that defi ning and expressing a clear and motivating purpose for the organisation is the core of a strategist’s job. Even for private-sector organisations, this purpose is typically more than simple profi t maximisation. Long-term pros-perity and employee motivation usually require expressions of purpose that go beyond just profi ts. According to Montgomery, the stated purpose of the organisation should address two related questions: how does the organisation make a difference; and for whom does the organ-isation make that difference? If the stakeholders of an organorgan-isation can relate to such a purpose it can be highly motivating. Indeed, research by Jim Collins and Jerry Porras suggests that the long-run success of many US corporations – such as Disney, General Electric or 3M – can be attributed (at least in part) to the clear guidance and motivation offered by such statements of purpose. 2
There are four ways in which organisations typically defi ne their purpose:
● A mission statement aims to provide employees and stakeholders with clarity about what the organisation is fundamentally there to do. This is often expressed in the apparently simple but challenging question: ‘What business are we in?’ Two linked questions that can clarify an organisation’s ‘business’ are: ‘What would be lost if the organisation did not exist?’; and ‘How do we make a difference?’ Though they do not use the term ‘mission state-ment’, Collins and Porras 3 suggest that understanding the fundamental mission can be done by starting with a descriptive statement of what the organisation actually does, then repeatedly delving deeper into the organisation’s purpose by asking ‘why do we do this?’
They use the example of managers in a gravel-and-asphalt company arriving at the conclu-sion that its misconclu-sion is to make people’s lives better by improving the quality of built struc-tures. At the University of Utrecht (see Illustration 1.2 ), the mission includes educating students, training the next generation of researchers and addressing social issues.
● A vision statement is concerned with the future the organisation seeks to create. The vision typically expresses an aspiration that will enthuse, gain commitment and stretch perfor-mance. So here the question is: ‘What do we want to achieve?’ Porras and Collins suggest managers can identify this by asking: ‘If we were sitting here in twenty years what do we want to have created or achieved?’ They cite the example of Henry Ford’s original vision in the very early days of automobile production that the ownership of a car should be within the reach of everyone. For the Swedish music site Spotify, the vision is to become ‘the Operating System of music’, a universal platform for listening just as Microsoft is for offi ce software.
● Statements of corporate values communicate the underlying and enduring core
‘principles’ that guide an organisation’s strategy and defi ne the way that the organisation
MISSION, VISION, VALUES AND OBJECTIVES 109
should operate. For example, Google famously includes in its values ‘you can be serious without a suit’, ‘fast is better than slow’ and ‘don’t be evil’. It is important that these values be enduring, so a question to ask is: ‘Would these values change with circumstances?’ If the answer is ‘yes’, then they are not ‘core’ and not ‘enduring’. An example is the importance of leading-edge research in some universities. Whatever the constraints on funding, such universities hold to the enduring centrality of research. On the other hand, as Google has grown and diversifi ed, some critics wonder whether the company still abides by its principle of ‘don’t be evil’ (see Chapter 12 end case).
● Objectives are statements of specifi c outcomes that are to be achieved. These are often expressed in precise fi nancial terms, for instance the level of sales, profi ts or share valuation in one, two or three years’ time. 4 Organisations may also have quantifi able market-based objectives, such as market share, customer service, repeat business and so on. Sometimes objectives focus on the basis of competitive advantage: for example, low-cost airlines such as Ryanair set objectives on turnaround time for their aircraft because this is at the core of their distinctive low-cost advantage. Increasingly organisations are also setting objectives referred to as ‘the triple bottom line’, by which is meant not only economic objectives such as those above, but also environmental and social objectives to do with their corporate responsibility to wider society (see section 4.4.1 below).
Some critics regard vision, mission and values statements as liable to become bland and too wide-ranging. 5 Objectives can seem attractively precise by contrast. However, vision, mission and values statements provide a longer-term view of the organisation and its under-lying strategy. While objectives are useful for guiding and monitoring performance in the short term, visions, missions and values can offer more enduring sources of direction and motivation. But it remains crucial to make vision, mission and values statements meaningful.
Three principles are helpful in creating meaningful vision, mission and values statements: 6 ● Focus : statements should focus attention and help guide real decisions. Effective vision,
mission and values statements should defi ne what is excluded from the organisation’s strategy as much as what is included. At Apple, the visionary founder Steve Jobs regarded as crucial the ability to say ‘no’ to non-core activities. Statements should also be practical decision-making tools. Google’s value of ‘fast’ can guide choices between strategic options with different levels of complexity: Google’s product development managers will cut product features which slow down its essential search and advertising functions, even if they might be nice to have.
● Motivational : statements should motivate employees to do their best. Here it is important that they not be so bland as to be applicable to nearly all organisations, but rather be dis-tinctive and authentic to the particular organisation in question. To motivate, they should stretch organisational performance to higher levels, but at the same time the targets must be credible. Thus Apple’s vision of making computers available to everybody inspired Steve Jobs’ employees in the early years of the company.
● Clear : the third important principle in such statements is clarity. In order to motivate employees in their day-to-day work, visions, missions and values should be easy to communicate, understand and remember. Here it is often useful to be crisp and simple. Thus founder Mark Zuckerberg identifi ed three of Facebook’s values as ‘move fast’, ‘be bold’ and
‘be open’: these are clear, memorable and actionable.