Entrepreneurs must understand the key differences and similarities between mission statements and visions statements, and should have both for their organization. These statements can help define the organization, and support team cohesiveness and focus.
Understanding the key differences and similarities can help the entrepreneur formulate both statements, to drive organizational efficiencies and success.
In very general terms, the mission statement is a short statement of the organization’s overall purpose, providing an operational roadmap to build the business toward success. A vision statement is a concise statement for the future of the organizations — the ultimate goal for which the business was created.
In one sense, the mission statement is the guide for achieving the vision statement of the organization.
An effective mission statement should outline the goals of the business, its target market area (geographic focus), its target customer(s), its products and/or services, and its competitive advantages.
Unlike a vision statement, the mission statement should be updated on a periodic basis, as the stage of development of the organization evolves, and as the operational focus of the business changes over time. The vision statement should remain unchanged, unless the organization makes a major pivot with regard to product or service offering, customer focus, or some other significant change that requires a reassessment of the core vision of the organization.
A good mission statement is usually a few sentences in length (a single paragraph), and should be formulated with the executive management team’s active participation. Operational goals from all key departments — finance/accounting, operations, manufacturing, product development, sales and marketing, etc., with the direction and input of the CEO. All key stakeholders, including management, employees, customers, suppliers and investors should be considered when formulating the mission statement.
Since the vision statement informs the mission statement, sometimes the vision statement is included within the mission statement. This is often more a matter of formatting the two statements rather than a design decision for the two statements.
As with the mission statement, the construction of the vision statement should involve the key executive management team members, and should take into consideration all key stakeholders.
A good vision statement will be a concise but somewhat general statement of the ultimate goal for the business. It represents a snapshot of the future vision the founders, executive management team and/or board of directors have for the business.
It should remain virtually unchanged over the life of the organization, with minimal revisions. It should clearly define the primary goal for the business, and should include some reference to time, in terms of when the organization should achieve the stated goal.
It should be challenging and inspiring for the entire team, including executive management, and should be general enough to encompass the totality of the organization’s strategic plan and core direction. Often the vision statement will serve as the starting point for more specific strategic planning for the business.
As with the mission statement, the vision statement should clearly communicate the core goal of the business to all stakeholders.
Vision statements, like mission statements, can be unrealistic, and thus irrelevant or even counter-productive. Creating and implementing mission and vision statements presents major challenges to organizations.
They can be challenging to write because they must balance encompassing the operational pathway that the organization must follow to achieve its ultimate goal, without being too utopian, unrealistic or ambitious.
Mission and vision statements that are unattainable tend to hurt more than help, as they can demotivate employees and cause a waste of resources as operational initiatives are undertaken that ultimately must be abandoned. These opportunity costs can kill the organization, especially if a major pivot is required early in the company’s development, when funding is difficult, expensive and time-consuming to acquire.
Well-conceived and executed mission and vision statements can provide cohesiveness, direction and clarity for the team, while a divergence between the statements and operational and management policies can be highly detrimental to the business.
Today, many organizations use remote employees, or independent contractors. With the diversity of team member type and location, the mission and vision statements become even more vital to the success of the organization as they serve to provide clarity of purpose and direction for the entire team.
Understanding the key differences and similarities between the mission and vision statements will help the team formulate and write these statements effectively. Ample time should be invested in creating both statements, with the understanding that the mission statement will be updated and finetuned over time, while the vision statement should be more general and abstract, and should not be altered much, if at all, over time.
As more detailed and specific strategic planning initiatives are developed from these statements, entrepreneurs should never allow operational and management policies to conflict with these statements, as team members, employees and key outside stakeholders can become disillusioned, resulting in a loss of focus and direction.
Adherence to well-conceived and executed mission and vision statements can drive team focus and organizational effectiveness and efficiency, resulting in much improved chances for success.
— Craig Allen, CFA, CFP, CIMA, is president of Allen Wealth Management, and has been managing assets for foundations, corporations and high-net worth individuals for more than 25 years. He can be contacted at craig@craigdallen.com or 805.898.1400. Click here to read previous columns or follow him on Twitter: @MPAMCraig. The opinions expressed are his own.