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10.03.05

Do entrepreneurs really need a mission statement?

Literature on management strategy highlights the importance of a clear and consistent mission statement for organisations. I doubt, if this is really true for very small (like the interlinked one-man enterprises within a project-based network) organisations in fast changing environments.

In an article by Collins and Porras (Building a visionary company; hardcopy print), the authors cite two organisations which didn’t have a vision at all. Bill Hewlett (co-founder of HP) is cited as: “When I talk to business schools occasionally, the professor of management is devastated when I say we didn’t have any plans when we started - we were just opportunistic. We did anything that would bring in a nickel. We had a bowling foul-line indicator, a clock drive for a telescope, a thing to make a urinal flush automatically, and a shock machine to make people lose weight. Here we were, with about $500 in capital, trying whatever someone thought we might be able to do.” More interestingly, the company continued its unfocused way several years at it grew bigger.

Another example is Sony. In the article, the authors write “…Ibuka (founder of Sony) and his seven initial employees had a brainstorming sesssion - after starting the company - to decide what products to make”. Morita is cited: “The small group sat in conference and for weeks they tried to figure out what kind of business this new company could enter in order to make money to operate.”

So it may be assumed that there is a certain point in time when the growing company needs to decide what resources and capabilities to build and in which future direction to head. Depending of course on the kind of industry, this may be sooner or later. This kind of direction supports a positioning of the company as well as a guidance for its employees. But the situation is completly different for small enterprises operating in turbulent environments. They must permanently adapt to the changing situations. Consequently, they have two options: either develop a mission statement that is so broad that it covers almost all future adaption/corrections/changes, or re-state the statement permanently. The first option creates statements like “We want to be the number one in satisfying customers”, which are not saying anything about the real issue of the business. The second option would cause confusion rather than direction for stakeholders of the company.

Consequently, entrepreneurial organisations should show a consistent line of activities which make sense in strategic terms. Rather than develop a mission statement on the first day of operation, describe what you are doing. If the company grows and has found its prime objectives, then a mission statement could enhance the quality of messages to the stakeholders.

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