- how an organization provides value to stakeholders, for example by delivering returns to investors or types of products or services to attract customers;
- a declaration of an organization's core purpose; a mission statement should answer the question, 'Why do we exist?'
Mission statements are often vague and fail to reveal the truth as to why the entity exists. Here is one description of what a mission statement might contain:
A mission statement should:
1 define what the company is about;
2 be broad enough to allow for creative growth;
3 distinguish the company from all others;
4 serve as framework to evaluate current activities.
Defining what the company is about is admirable - if it really does; why does the company exist? The others could be helpful but will often be answered in a vague manner.
Here is another example of a mission statement which illustrates that often mission statements are focused only on one aspect of business, in this case sales:
A mission statement consists of three essential components:
Target or key market - who is your target client or customer?
Offerings - what products or services do you provide to that client?
Distinction - what makes your product or service unique so that a customer will chose your company?
Financial strategies can be clearly set out in a carefully crafted mission statement. Mission statements can be helpful when focusing on strategies, but again as long as they are not vague. A specific financial strategy could be sold to management and employees as a mission.
- a reason for doing something.
This is not a commonly used term but one I like to use, particularly when asked to assist with improving budgets. Too often we are told that there are clear budget objectives when in fact the reason for budgeting is not simply to achieve an objective but to achieve some (hidden) objective. More generally, a good question to ask the instigator of a financial strategy is 'What are your motives?' along with 'Are they really aligned with the stated objectives?'
- an action or strategy carefully planned to achieve a specific end: a device for accomplishing an end;
- commonly tactics is the deployment of forces or actions in some specific instance of applying strategy.
Common thinking is that a tactic is an action taken to further a strategy. The first definition above indicates that even wordsmiths seem to confuse tactic with strategy. In this book, tactic will be taken as an action or device for accomplishing a strategy; the term sub-strategy is also used, meaning a strategy (aligned) with and contributing to the principal strategy.
- a goal to be achieved;
- to aim at or for.
A synonym for goal but useful when implementing strategies, eg sales, where sales people may be excited by the idea of sport - taking aim, winning.
- principles that guide an organization's external and internal conduct.
Core values are often summarized in the mission statement or in a separate statement of core values.
- something seen in a dream, trance, or ecstasy; especially: a supernatural appearance that conveys a revelation;
- the ability to think about or plan the future with imagination or wisdom.
It is of course the second definition that successful CEOs believe they have the power to comprehend and reveal to lesser mortals; however, 'vision' is often used in far too vague a manner.
To be useful, an overall vision of where an entity should be in, say, 10 years should have clear objectives to which strategies can be linked.
The issue as regards financial strategy is: 'Does the overall financial strategy or individual strategies and tactics conflict with stated company values?'