Deconstructing Management Maxims, Volume II

Kevin Wayne

• Publisher: Business Expert Press
• Year: 2017
• Print ISBN: 9781631577918
• eBook ISBN: 9781631577925
• Topic: Business
• Subtopic: Management
• Index: Business

A contrarian challenge to the status quo, this book vigorously champi­ons healthy skepticism in management theory and practice. Several com­mon management maxims — often taken for granted as truisms — are examined and debunked with evidence-based arguments. The constant repetition of these flawed tropes perpetuates their mythological status and limits personal and organizational performance. Eleven management maxims are rebuked using empirical data, original scholarship, literature reviews, field observations, and thoughtful opinions from numerous ex­perts. Far from a business as usual business book, Deconstructing Manage­ment Maxims has been researched with academic rigor yet written in an approachable style. Unafraid of taking on conventional business wisdom, it contains some controversial yet substantiated positions that will pro­voke critical thinking and debate. After all, sacred cows and long-believed tenets of management lore do not go away quietly. A clear message from this book is that you don't have to believe everything you read or hear—be it in the classroom or at work! It offers a refreshing break from the constant drumbeat of dronish corporate and academic clichés. This book is best appreciated by readers wanting to think critically about important management phenomena.

CHAPTER 1

Mission Statement is a Must for Survival

Mission statements are among the most blatant and common means that organizations use to substitute talk for action.

—Jeffrey Pfeffer and Robert Sutton, The Knowledge-doing Gap: How Smart Companies Turn Knowledge Into Action

Know thyself.

—Ancient Greek inscription, forecourt of Delphi Oracle

A widely held belief is that every organization, large and small, must have a mission statement. Conventional business wisdom tells us that success will elude an organization without a well-articulated beacon of prose to guide it forward. How else are employees, customers, investors, community stakeholders, media outlets, and suppliers supposed to know what business you are in without a clearly defined mission statement? How could your firm face the day and its inevitable uncertainties without a framed, needlepointed statement of purpose hanging on the lobby wall, or a highlighted raison d’être easily queried on the About Us page on the company website? The truth is that if your organization’s employees need to look at a poster or business card B-side to get direction and motivation, your organization is in big trouble.

In reality, the mission statement is not the indispensable communication tool we’ve believed it to be for so many years. I’ll bet the majority of people that have taken college business courses were told by professors and textbooks that a mission statement is critical to the success of any enterprise. How can you have a strategy without a mission? You have to start with a mission, right?

Wrong! But before we get too far ahead of ourselves, let’s review some well-respected and time-honored definitions of this beloved corporate mainstay. Mission statements have primarily been looked upon as indicators of organizational direction and purpose. The iconic management guru Peter Drucker succinctly claimed that when employed, mission statements should answer the following questions: What business are we in? And, what are we trying to achieve?¹ The venerable strategist Henry Mintzberg noted that a mission statement “describes the organization’s basic function in society, in terms of the products and services it produces for its customers.”² Simple enough.

Strategy scholar Jay Barney looks at a firm’s mission simply as “its long-term purpose” and the impetus for the strategic management process.³ One can argue, however, that the mission may be developed after a strategic analysis of the firm’s capabilities and discovery of opportunities. The latter scenario tends to be more emergent and opportunistic than the former.

Others prefer a more comprehensive definition consisting of eight suggested tenets, including target customers, products, geographic domain, core technologies, commitment to growth and profits, philosophical elements, self-concept, and desired public image.⁴ Still another definition captures the common parlance of contemporary mission statements as, “It [mission statement] describes the firm’s product, market, and technological areas of emphasis, and it does so in a way that reflects the values and priorities of the firm’s strategic decision makers.”⁵

Although there is no universally accepted definition for a mission statement, the last of the preceding examples will likely pass the sniff test from most corporate leaders and academics. Although I prefer the simplicity of the legendary Drucker, most agree the mission statement should be an informative descriptor of what kind of organization you are (e.g., What markets do you participate in?) with a sprinkling of some high ranking position or objective (e.g., world leader, most respected, or #1 market share). I’ll provide examples later in the chapter that are very descriptive as well as others that will leave you clueless. I’ll also include examples of wildly successful firms that do not subscribe to the ethos-building powers of the exalted mission statement. Contrary to the textbooks and popular opinion, there are dozens of blue chip firms that have been immensely successful while seemingly on a rudderless mission to nowhere!

First, I’ll briefly review a representative batch of research and facts from the mission, strategy, and corporate communications literature. In particular, we’ll look at studies ambitiously attempting to find statistically significant links between mission statement content and organizational performance. This research discussion is by no means comprehensive due to the hundreds of studies completed. My goal here is to provide a brief and balanced accounting of the research. I’ll then offer findings and analysis from my own data collection of all the firms in the Standard & Poor’s (S&P) 100 and Fortune 500. And for a little fun, a short quiz is provided for those of you wanting to test your mission statement aptitude.

As you read on, ponder the following questions: Do you think the contemporary corporate mission statement is an explicit, short-hand manifesto of the firm? Or, is it simply unnecessary, bemused corporate speak? Is it somewhere in between? I contend that the ubiquitous and sanctimonious maxim spouting that a Mission statement is a must for survival is patently untrue. Business has few absolutes, and this overhyped maxim is not one of them.

Perspectives from Mission Research

Despite involving a straightforward communication device, the mission statement research domain has been a lively and controversial area for academic researchers and practitioners alike. Research, including my own work, indicates that statements of mission do not exist in many organizations and are inadequate in others. One study suggested that mission statements are often “merely window dressing.”⁶

Noted mission statement researcher Christopher Bart questioned the credibility and usefulness of mission statements, but praised these hopeful objectives:

the power of mission statements rests in their ability to achieve two key results: (1) to inspire and motivate organizational members to exceptional performance — that is, to influence behavior; and (2) to guide the resource allocation process in a manner that produces consistency and focus.⁷

Bart surmised that managers are either using their mission statements for purposes other than motivation and resource allocation, or are simply unaware of the benefits that can accrue from pursuing these two purposes. This mission statement proponent ultimately concluded that mission statements have the potential to be the “elan vital of corporate life.”⁸ However, Bart warned that misuse of this planning and communication tool occurs frequently and breeds cynicism. My take is that missions are more often ignored, viewed as symbols of hypocrisy and political correctness, or used to co-opt stakeholder opinions.

Citing a research stream that has produced either “no link” or “weak support” for the mission statement-performance dynamic, a researcher in Holland described the lack of empirical evidence on this relationship as “surprising” and “embarrassing.” Published in the European Management Journal, a study of 38 Dutch multimedia firms revealed a link between mission statements and performance (measured loosely by sales growth vis-a-vis competitors). While this Dutch study began with healthy skepticism, it concluded with a lethargic compromise (i.e., “probably too early to relegate mission statements to the shelf”) as well as a more positive finding of, “A mission statement can lead to superior performance.” The study also claimed that the more comprehensive the mission statement content, the better the performance. Notably, this study acknowledged the lack of uniformity for terminology in the mission domain among academics and practitioners in the field.⁹

This Dutch study was flawed by a casually operationalized dependent variable (perception of relative sales growth) as well as a small sample size. While the researcher asked good questions, it’s hard to fathom how the performance outcomes of professional firms can be so influenced by a few generic sentences containing some keywords. Many of these keywords do not have shared meanings across an organization.

Researchers from Old Dominion University (ODU) queried the websites of the 30 largest European, Japanese, and American firms listed in the Fortune Global 500. They were only able to find 22, 15, and 19 mission statements, respectively, from the 30 queries per continent or country. This noncompliance is indicative of the traditional mission statement’s lack of importance. In their study, the ODU team looked at mission statement quality (i.e., inclusion of stakeholders, components, and objectives) and their relationship with financial performance. They did find that the inclusion of employee concern, social responsibility and corporate values had positive relationships with financial performance. However, they concluded the bulk of their findings “cast doubt on the notion that firms should develop comprehensive mission statements.”¹⁰

As a by-product of environmental awareness and stewardship, corporate social responsibility (CSR) has gained much traction within corporate communications protocols. The rise of CSR is emblematic of firms being held accountable to stakeholders other than shareholders. Gone are the days of the late Harvard economist Milton Friedman declaring that corporations should be strictly beholden to shareholders, provided they obey the law, of course.

The mission statement has been a prime communications vehicle for firms to publically disseminate their social responsibility initiatives. One study suggested parallels between everyday family values and those that organizations should exhibit. This same research stated that an organization’s mission statement guides the development of the organization’s desired ethical profile, and this profile is a projection to external publics with whom the organization interacts.¹¹ Consequently, CSR demands can lead to denser (i.e., higher word count) mission statements that pivot toward a more politically correct and public relations orientation.

A study published in Corporate Reputation Review analyzed the top 100 retailers in the United States for the purpose of discovering the context in which CSR was being addressed. The study reported that 20 percent of retailers presented CSR statements on their websites separate from their mission statements; 38 percent had CSR principles embedded in their general mission statements; and 42 percent did not present CSR principles at all on their web pages. The study authors also found that 36 of the non-CSR related mission statements had instead emphasized economic language or used wording that was more philanthropic in nature.¹²

Researchers in Spain examined the mission statements and sustainability reports of 52 Spanish listed firms. The authors suggested that a clearly defined mission statement is capable of influencing a firm’s performance because it affects the behavior of employees. The study claimed that companies whose...

Table of contents

• Cover
• Half Title Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Preface
• Acknowledgements
• Chapter 1 Mission Statement is a Must for Survival
• Chapter 2 Learn a Second Language (Other than English)
• Chapter 3 Introverts Cannot Lead Effectively
• Chapter 4 Worrying is Counterproductive
• Chapter 5 Failure is Not an Option
• Chapter 6 Consensus Decision Making is Optimal
• Index