We make the case that IBM changed the understanding of vision statements for the better and GM's bankruptcy marked the end of the use of mission statements.
It's time to revisit your vision and mission statements with this in mind.
IBM changed our understanding of vision statements
The vision statement went in a new, better direction 20 years ago when Lou Gerstner took the helm of IBM in 1993 and saved it from imminent collapse.
Gerstner was asked at his first press conference whether he had a vision for IBM. He answered “IBM doesn’t need a vision statement. It needs to execute the strategies it has.”
Academics and the business press were horrified and shocked. They didn’t know what Gerstner meant. All they could think was “How can you run a company without a vision?”
What Gerstner was saying was that IBM already had a long term direction, a vision, as a consequence of the strategies it was pursuing. He was saying that he didn’t feel well enough informed on IBM’s strategies driving that long term direction to make any change to them. At least, not at that time!
Nine months later, after a lot of study and discussion, Gerstner fundamentally changed IBM’s strategies, in particular its dominant strategy. We think Gerstner showed us that strategy, not vision, comes first, particularly the choice of dominant strategy. Once strategy choices are understood and made, then a vision statement can be developed. Vision is a consequence; not a starting point of strategy.
GM changed our understanding of mission statements
As for mission statements, they were already falling out of use when GM went bankrupt in 2009.
Changes in securities legislation in the early 2000's, Sarbanes Oxley for example, impacted the way North American public companies were drafting vision and mission statements. Today, many publicly-traded companies don't use mission statements. IBM doesn't have one. And their vision statements are very much toned-down.
Let's look at GM's contribution to this change, GM was a global icon. GM was the very heart of American business. Yet GM’s pre-bankruptcy mission statement was the stuff of Dilbert cartoons. The GM mission could have been applied to any company in any industry; which meant it was meaningless.
Old GM's Mission Statement
“We are a multinational corporation engaged in socially responsible operations, worldwide. We are dedicated to provide products and services of such quality that our customers will receive superior value while our employees and business partners will share in our success and our stock-holders will receive a sustained superior return on their investment.”
The new GM, post bankruptcy, has no mission statement. GM does provide a carefully worded vision summarizing what it would like its strategies to achieve in the long term. So goes GM, so goes America.
The mission statement is no longer in use.
What this means for your vision and mission statements
To have a meaningful vision statement, you need to understand your strategy system, and in particular, your dominant strategy.
We define a vision statement as a description of the hoped-for outcome from successful long-term pursuit of dominant strategy.
You have to think like Gerstner. Ask yourself, “Am I well enough informed on current strategy of the organization to understand which strategy is its dominant strategy?”
If you don’t think you know which strategy is dominant for your business or nonprofit, what does that say about the possible quality of your present vision statement?
As for mission statements, we take the position that "mission" has always been just 1 strategy of 8 in a strategy system common to all for-profit and nonprofit organizations. See: Strategy Models: Where are They?
We define mission as the Business Definition strategy, also known as the Mandate strategy in nonprofits and government organizations.
The Business Definition/Mandate strategy provides the answer to Peter Drucker's famous question "What is my business?" posed in his 1954 classic, The Practice of Management. It is not supposed to address anything else.
Over the years since 1954, missions turned into convoluted attempts to address more than business positioning or mandate, as the old GM mission statement above demonstrates. In short, in addition to describing business definition, mission statements were trying to address a number of the other strategies in the strategy system.
But thinking on vision and mission statements has changed dramatically.
The focus is now solidly on first understanding the strategy system in your organization.
That focus will enable you to understand your Business Defintion / Mandate strategy and your entire strategy system.
You will then be able to understand which strategy is dominant for your organization, which will , in turn, drive development of a much better vision statement that describes the outcome of long term pursuit of that strategy.
And you will probably stop using mission statements all together.
For more thoughts on this and other aspects of strategy, be sure to read The Alpha Strategies, Understanding Strategy, Risk, and Values in Any Organization.