Defining Organizational Mission, Vision, and Value Strategy
Organizational Mission: Purpose and Scope
The organizational mission is the statement of its purpose and scope. The mission must be defined in terms of satisfying a need in the external environment, rather than simply offering a product or service.
A Cause of Business Failure: Management Focus
One cause of business failure is managers focusing internally rather than on external needs.
Five Key Aspects of the Organizational Mission
- The reason for the organization’s existence.
- The organization’s role in society.
- The nature (or character) that the organization creates for its stakeholders.
- The value that the organization creates for its stakeholders.
- Types of future activities on which the organization should concentrate its efforts.
Preliminary Definition of the Business
Three Elements Defining the Organization’s Business
- Customer needs: what the organization is trying to satisfy.
- Customer groups: whom the organization is trying to satisfy.
- Technological activities and capabilities: how the company deals with the creation and delivery of value to customers, as well as the satisfaction of their needs.
The organization’s business represents what must be done to satisfy the customer. A product or service is realized when it successfully satisfies a need or desire.
Three Dimensions for Defining a Business
- Markets or segments.
- Sectors of action (products or services).
- Technology and processes (operational excellence).
Redefining the Business
Redefinition occurs when market conditions change or when the organization’s direction has long deviated from its mission. This process involves rethinking the markets of action and the products and services offered to implement necessary modifications.
Organizational Vision
“Vision” literally means “an image.” The business vision, organizational vision, or vision of the future is understood as the dream the organization longs for. It is the image of how the organization will look in the future.
Premises for the Business Vision
The business vision must comply with these premises:
- Adherence to real facts.
- Concise but powerful description.
- Balance of all stakeholders.
Developing the Business Vision
This is a process full of emotion because it attempts to recognize the organization’s reason for being.
Stages of the Business Vision Development Process
- First draft
- Coalition stage
- Group dynamics (strategic conversation)
- Misalignment of the process
- Duration
- Final product
Corporate Philosophy of the Organization
The corporate philosophy is a construction designed from the inside out, independent of the external environment. It is composed of organizational principles, values, and mission objectives.
Ideology (from the Greek idea + logos, treatise) means the “way of thinking” that characterizes an individual, group, or organization. Ideology constitutes a system of general ideas that forms the basis of individual or collective behavior. The corporate philosophy specifically includes the organization’s principles and values.
Organizational Principles and Values
Organizational principles and values are a set of concepts and general beliefs that the organization respects and observes. These concepts stand above daily practices and the pursuit of short-term gains.
Interest Groups (Stakeholders)
Interest groups, or stakeholders, are the strategic groups found in a given organization. (Note: Stakeholder is often confused with Shareholder (accionista), but the former is a broader term.)
Stakeholders refer to all those involved in a process: shareholders, clients, employees, collaborators, investors, suppliers, regulatory entities, unions, surrounding community, among others.
Stakeholders by Market Category
Capital Market Stakeholders:
- Shareholders
- Investors
- External sources of capital
Supplier Market Stakeholders:
- Raw material suppliers
- Technology providers
- Service providers
Product/Service Market Stakeholders:
- Customers
- Distribution channels
- Wholesalers
- Retailers
Internal Stakeholders (Within the Organization):
- Directors and leaders
- Executives
- Employees
- Subcontracted personnel
External Stakeholders:
- Regulatory Entities
- Unions
- Government Bodies
- Society
- Community
- Media
The Value Proposition
All stakeholders seek to maximize the value they receive from their relationship with an organization.
For example, customers will buy from the organization that provides them with more value, defined as the difference between the total value and the total cost of obtaining the product or service.
Defining Customer Value and Cost
Total Value for the Client: Understood as the sum of benefits the client expects to receive from using a product or service, or from accepting a concept.
Total Cost for the Client: Understood as all the costs generated by evaluating, obtaining, using, and discarding the product, service, or concept.
The organization must also evaluate the value its offer deserves in comparison with that of its competitors.
Value Creation and Diffusion Processes
- Creation or identification of value
- Development and delivery of value
- Alignment of people to organizational values
Organizational Goals
The organizational mission and business vision are effective to the extent that they are associated with clear and explicit objectives that will be achieved over time.
An organizational objective is a desired situation that the organization intends to achieve. When an objective is hit, it ceases to be the expected result, and the organization assimilates it as something real and present.
In many organizations, organizational objectives are formally established by a vote of its shareholders.