In the world’s most successful companies, members of the top management team (TMT) feel a remarkable sense of ownership. The more involved TMT members are in setting the company’s direction, i.e. the company’s vision, mission and values, the more vested they are in its success. They are more engaged in formulating the company’s strategy and more willing to go the extra mile to see its flawless execution. Boards also play a crucial role in helping to define a company’s future direction. However, few Indian companies formally engage in a regular process to define and fine tune their “Vision, Mission, and Values”. Why?
Although the call centers and outsourcing firms were initially important catalysts to the fast-moving Indian economy, local Indian conglomerates are the ones creating true sustainable value. The opportunity to generate revenue today is so rich that companies favor opportunistic growth over strategic growth. The status of activities such as strategic planning and long term visioning are something Indian managers consider ‘nice to do’ but certainly ‘not necessary’. This is a pitfall most managers’ fall into when growth and opportunities are rampant. The result is short term gain often at the cost of important competitive missteps and oversights. Nevertheless, the most savvy of Indian CEOs recognize that ‘what got them here, won’t get them there’; they worry that as competition increases and growth slows, their most senior managers will not be ready for the competitive onslaught. They will lack the depth and breadth of skills necessary to be: (1) strong strategic planners, (2) thinkers, and (3) executors.
The world’s most successful TMTs have a great deal of consistency between these three elements of strategy. When TMTs spend the time developing visions, missions and values together, this level of sophisticated coordination is often the result. Executive Development can play an important role in helping top managers develop this level of coordination. However, before exploring this role, let’s define why a company’s vision, mission and values are important?
The vision statement delineates what the company wants to be in a way that challenges the company to perform at its peak. A vision statement motivates people at all levels in the organization around the possible. It elevates how people see the organization. It creates that momentum of growing anticipation about the organization’s future. It fosters visceral reactions such as inspiration and excitement in those setting and espousing the vision. While vision statements attempt to capture what a company wants to be, mission statements capture why a company exists. A mission statement describes the company’s guiding philosophy in a way that is clear, compelling and deeply rooted in the company’s value proposition.
A mission statement guides the actions of the organization, spells out its overall goals, provides a sense of direction, and guides decision-making. It provides the framework or context within which the company's strategies are formulated and executed always pushing the bounds of success and merit. When a company’s TMT actively participates in setting its vision and mission, the inevitable result is the articulation of the company’s values. Values provide a framework for the collective leadership of an organization. They represent the basic beliefs that govern personal work behaviors, decision making, contribution, and interpersonal interaction. Values are detailed and specific and represent the building blocks of a company’s success. They speak directly to how leaders should prioritize and make decisions about revenue and cost drivers. They represent action oriented convictions on how the company’s business is to be conducted serving as a yardstick for gauging the appropriateness of particular actions, decisions and policies. Values guide every decision that is made when the organization has cooperatively created the values and the value statements.
There are two sides to the debate about the process TMTs should follow to set a company’s vision, mission and values. One side argues that this process is an internal activity – best left to the senior managers and the CEO. The other side argues that outside facilitators are crucial to the process as they can bring a level of rigor and candor that often goes missing in an insular process. The simple truth is there are many advantages and disadvantages to both options and depending on your perspective sometimes both options have the same advantages and disadvantages. For example, some would argue that not involving an outside facilitator keeps the process ‘in the family’ and managers can be more candid in their responses. Others would suggest that an outside facilitator would mitigate political fears and enable managers to be more open and honest about different processes that affect the organization’s future.I suggest the very reason Indian firms need to become more regular in the setting of their missions; visions and values are to help them increase their competitiveness in the market place. In today’s Indian business environment, competitiveness is at odds with concepts such insularity or ‘keeping it in the family’.
The benefits of involving an outside facilitator far outweigh the costs. Certainly there will be a learning curve investment that senior managers will have to make to bring the facilitator up to speed on various industry nuances. However, a professional facilitator brings a great deal to the table including (1) an unbiased view on the industry and the organization, (2) the ability to allow minority voices to be heard, (3) the capability to ask difficult and uncomfortable questions that get at some of the core deficits in the firm’s business model, (4) access to cutting edge research in pertinent areas, (5) the experience of helping dozens of other firms through similar processes.
Choosing the right facilitator is crucial because he or she will also be responsible for designing the process the company will follow to set its vision, mission, and values. Firms should ask five key questions in choosing a facilitator: (1) How much experience do you have in working directly with senior management teams? (2) Have you conducted similar facilitations in the past? (3) Are you a subject matter expert in the areas of leadership and strategy - do you have a Ph.D. in these areas? (4) Do you have an active research agenda that speaks to issues facing senior managers? (5) How deep is your facilitation experience? You may be surprised that the facilitator’s industry or geographic knowledge does not make the list of the top 5 questions. Knowledge about an industry or geography is much more explicit than knowledge about strategy and leadership or what can be learned from previous experience; this is much more tacit knowlege. Of course the ideal facilitator will have depth in the areas of leadership and strategy, strong industry and geographic knowledge, along with experience in helping other firms set their visions, missions and values. However, when this ideal candidate is not available, I recommend erring on the side of choosing an expert in the area of strategy and leadership with previous facilitation experience; teaching someone about an industry or geography is a much easier task.
Finally, although each facilitator will recommend his/her own process for the setting of missions, visions and values, the following broad-based process is recommended:PHASE 1: DATA COLLECTION
• During this first phase, the facilitator must spend time with each senior manager to understand how the firm creates and captures value and what they think individually and collectively about the company’s strategy for the future
PHASE 2: “VISION, MISSION, AND VALUES” SESSION WITH THE BOARD OF DIRECTORS
• During this second phase, the facilitator must spend time with key members of the board to understand how they think about the company’s vision, mission and values. The goal is not to have the board define the company’s mission, vision and values; these need to be defined by the company’s management team and then be approved by the board. Instead the goal is to discuss broad based strategic questions such as: (1) Will what has driven the company’s success in the past drive its success in the future? (2) What will success look like 5 years from now? (3) How will performance among the top firms differ from the rest of the firms in the industry? (4) What kinds of managers will lead the company to a successful future? (5) What will it take for the company to be a player that truly matters in the industry 5 years from now? The answers to these questions will define a set of principles that will be used to guide the facilitator as he or she engages in the formal discussions to help the TMT define the company’s vision, mission and values
PHASE 3: “VISION, MISSION, AND VALUES” SESSION WITH THE TMT
• During this phase the facilitator will engage the entire top management team to define the company’s vision, mission and core values. This process is iterative and is where the outside facilitator adds the most value
Looking to the future, CEOs of Indian companies are saying that they need their top managers to have world-class skills related to setting organizational direction, allocating resources in scarce resource environments, competing for market share, fostering and encouraging creativity that improves process effectiveness and efficiency and finally skills related to identifying and acting on potential opportunities in the external environment. Choosing the right facilitator to help the management team set the vision, mission and values of the firm and making sure he or she has a credible process, is the best way to ensure the firm is setting a direction that will allow it to be more competitive in the future.
Reprint from Ivey Business Journal
[© Reprinted and used by permission of the Ivey Business School]