Strategic Performance Management

Prof. K. B. L. Srivastava
Department of Humanities and Social Sciences
Indian Institute of Technology, Kharagpur

Lecture – 08
Strategic Planning and Performance – 2

We talked about the environmental analysis of how we go about scanning the environment
looking at the external and environmental external factors, and see how these environmental
factors are creating opportunities and threats.

Based on this analysis, we identified the gap. Once the gap is identified, then we decide what
kind of vision and mission you are going to have. In many cases, we have seen that first
vision comes, and then mission or purpose. But many authors also argue that first, we should
talk about the mission as it suggests what we want to do and then we think about where we
want to go.

It is a two-way process. First, you identify your vision statement, then you think about the
mission statement, or you think about your mission and then based on this mission statement,
you talk about what kind of vision you want to have. So, in this lecture, we will be discussing
how we go about identifying vision and mission, which is going to help you to adopt different
strategies.

(Refer Slide Time: 01:39)

We will start with the mission. I am not discussing the vision first because I think that once
we have the mission, probably that would help you to guide what kind of vision we should
have for the future. The mission is why we exist, right and vision talk about what kind of
future you are anticipating, where you want to go from here. First, you know what you are
doing, where you are, why you exist, and then you move to discuss the vision statement. If
you look at the mission statement of any organization, it provides certain information and
reasons for the existence of the organization. For example, IIT Kharagpur.

The basic purpose of IIT Kharagpur is to provide quality teaching, produce good quality
students in the field of engineering, science, and management. It could be one of the purposes
of the organization, indicating its scope. You have to see when you are going to write a
mission statement. It is going to provide answers to the final question- why does the
organization exist. It means that the organization exists to serve a purpose. What is the scope
of organizational activities?

For example, when you say producing good qualities students in the field of engineering,
science, and management, then this scope includes going for teaching, doing research
innovations, training, and consultancy. So, this is the scope of activities in which the
organization is involved. Who are the customers to be served? Could it be different kinds of
organizations? What kind of products and services we are offering depends upon the scope of
activities. The institute is offering good quality students, and providing training and
consulting services.

The mission indicates the reason for the existence, scope of activities, and customers served,
and products and services offered.
(Refer Slide Time: 04:00)

The mission statement is going to define what kind of role you play in society. For example,
if you look at IIT Kharagpur, it is written " Dedicated to the service of the nation," but it is a
generic statement. Every organization can be said to be dedicated to the service of the nation.
You need to specify which kind of need it is going to satisfy.

Maybe IIT Kharagpur is going to satisfy the needs of the student or the products or the good
quality students in the field of engineering or sciences. When you are going to define the
mission, the basic objective of the organization is related explicitly to existence to the kind of
business it is doing, what kind of customer it seeks to serve and satisfy. So, it ultimately
describes the product, the market, and the areas of your business. Here the product is student,
technology, services; the market could be industry government and others.
(Refer Slide Time: 05:18)

It includes various services you offer. What are your primary markets or customers to be
serviced and satisfied? What are the benefits and advantages of the products and services that
will be offered? When you are going to offer products and services, you need to ensure that it
is going to satisfy the requirements of the market or the customers. What kind of technology
are you going to use? Your mission statement also ensures that while you are talking about
growth and profitability through your activities, you ensure that you survive in the long term.
Mission statements give a direction you need, what you are going to do in the future, and next
comes your vision, but before we discuss the vision, we need to talk more about mission
statements and related things.
(Refer Slide Time: 06:20)

If you look at the mission statement of an Indian IT company Infosys, If you look at those
parameters that we just talked. It talks about the product, who the customers are, the markets,
and the kind of technology used and growth and survival in the business. If you look at these
parameters and look at Infosys' mission statement and see the extent to which it fits into that.
It says that is it is dedicated to providing the people, services, and solutions our clients need.

It means you are talking about meeting customer needs in a particular area and how you are
going to achieve your business goals and work to understand the need and requirements of
the customers before proposing solutions.

You provide IT related solutions to the industry. Next, you develop proposals that are cost-
effective solutions to clients. You need to ensure that your solutions are cost-effective;
otherwise, you will not be able to compete in the market. You use people and products to
deliver value-added services to serve your clients. The idea is that you use these kinds of
things to provide better quality services to your clients to make them happy.

Suppose a company wants some solution for their requirements. You are submitting a
proposal and make sure that your proposals are cost-effective so that you can compete with
others, and it is meeting the requirement of the client. The most important thing is the kind of
services you are providing. So, service quality is critical. We need to make sure that solutions
are going to be satisfying to the clients. You need to trust your clients. You work with them to
help the business to improve. A mission statement provides a direction of what to do, and
why do we exist? What kind of product markets you serve. You have what kind of customers,
what the requirement is, how do you satisfy them, and whether it helps you to achieve
competitive advantage or not.

(Refer Slide Time: 09:07)

Based on this mission statement, it would be clear to you how you go about it. Now, look at
another company example. The mission statement of the coca-cola company suggests
refreshing the world in body, mind, and spirit to inspire moments of optimism through our
brands and our actions to create value and make a difference everywhere we engage.

How is this mission statement developed? If you look at these mission statements, it
precedes environmental analysis examining both internal and external trends. You have to see
the competitors in both the companies. Infosys has a lot of competitors internally and
externally. There could be IBM, Microsoft in international markets, and in Indian markets,
they have competitors like TCS, WIPRO.

So, unless your mission statement suggests that you are going to provide good quality
services cost-effectively, you are not going to compete. A mission statement of the company
talks about products, markets, technology, and customer. You need to do analyze the internal
environment and the external environment. The external environment includes technology,
economy, society, and internal environment, system, culture, and processes. If you look at
these two companies and their mission statements, it will show you how we go about
environmental analysis. For example, when we have this kind of mission statement for coca-
cola, which provides health drinks and also other kinds of soft drinks.

The major competitor for coca-cola is Pepsi in the international market. There may be other
companies that are not well known, but they could also be competitors in the domestic
market. So, when coca-cola is analyzing its external environment, it is going to see what kind
of opportunities are available in the market. What kind of threats it has. Threats come from
competitors. Pepsi may be a good competitor, and it has now on tapped the market. For
example, coca-cola has been in the business of soft drinks, and now coca-cola is migrating to
health drinks. It is a kind of opportunity which is available to coca-cola.

After going through this environmental analysis, you can identify the opportunities and
threats available to you in the market or the business. So, coca-cola is going to identify its
opportunities in the market and will offer different kinds of similar products like going for
health drinks because people are moving towards health drinks. They are going to satisfy the
requirement of the customers. Then threat is also there from its competitors i.e., Pepsi. What
kind of products and services they are will they offer to the people? You need to match it after
identifying these opportunities. They also need to look at other threats.

It is the external environment, and then you look at the internal environment. What is the
competence in terms of knowledge and skill base and technology they use? What type of
structure, culture, and process is there in the organization, which is going to provide them
strength. You remember we talked about opportunities plus strength. So, it is going to offer
you leverage. If threats versus strength are there, then it is going to provide you a constraint
because you have the strength, but you are not able to make use of the market or exploit the
market. You are not able to make use of the opportunities that are available to you.

Look at this mission statement. It has been derived from the environmental analysis, both
external and internal, by identifying the opportunities and threats, strengths, and weaknesses.
Based on it, you come out with this mission statement, which suggests that refresh the world
by their products and services, with their offering that is cold drinks and health drinks. If you
look at the advertisement, it suggests an inspiring moment’s optimism.

They have a brand and the kind of activities they do. They also try to create value and make a
difference not only for their growth and profit but also for survival. Now, the company is
engaged in CSR activities saving water and the environment, which is going to help the
company in the long run. That is how we derive the mission statement of a particular
company, and these two examples clearly state what does it mean.

(Refer Slide Time: 14:22)

From the mission statement, we are moving to the next part, which is vision. In many cases,
you will find that they discussed vision first, and then they talk about the mission. I have
deliberately talked about the mission statement first. Then I am going to talk about vision.
The idea is that once you have the mission, then you know the purpose of your existence,
your products, and services, the technology used. Now you can think about what you like to
achieve in the future. Vision statements are written after the mission statement because you
need to know first what it is, and what it the purpose for which you are there.

If you know your business, your reasons for existence, your product market, and customers,
the kind of technology that you have, then you can think about utilizing these would be your
future. Vision statements talk about the future. For example, if you say what could be the
vision statement for IIT Kharagpur, we say what we do, and based on this, we want to be in
the top 200 technical institutions of the world. Currently, we are somewhere in the range of
500 to 600 in the world ranking.

From this ranking, you want to move to a better ranking. You are going to say that you want
to be in the top 200 or the top 100 institutions in the world. It suggests what the future
aspiration for a company is. You want to increase your market share by ten percent, or you
want to have a profitable growth by twenty percent. So, these are statements related to
futures. Your vision statement suggestS where you are and where you want to go. It is going
to provide a context for the evaluation of your opportunities and threats. Looking at your
opportunities and threats, you are going to decide about the kind of vision you will have.

So, look at your strengths and weaknesses, also look at your opportunities and the
competitors, and accordingly, you decide what you can do in the future. It is where your
vision statement is going to be very important.

(Refer Slide Time: 16:54)

When we are going to talk about the key elements of a vision, it could be either very generic
or definite. Does the vision statement suggest where we are going from here? Where we want
to move in terms of market, product, services, growth, and development. We have to be very
distinctive and specific. It depends upon the kind of organization you are. For IIT Kharagpur
or any IIT, it could be a prestige to be in the top 100 institutions of the world. So, if you are
going to develop a particular vision and distinctive, then you can say we want to move to the
top 100 clubs of technical institutions. When we are going to have a strategic vision, you are
not going to be very generic.

For example, you cannot say that we want to be the best technical institution. It is not very
distinctive or specific because any organization can have the same kind of vision that we
want to be one of the best technical institutions in the world. What would be your position? It
tells you about your future position, which you are anticipating based upon your
environmental analysis. It has to be distinctive and specific, depending upon the nature of the
business. You also need to avoid using generic language like one of the best technical
institutions, or you want to have the best markets, or you want to offer the best product and
services. It appears to be dull, and it could be applied to any kind of company. So, you need
to go for a more strategic vision.

(Refer Slide Time: 18:52)

We are comparing here the vision and mission both. You look at something that is written
downside, which says that the mission statement emphasizes the present. In contrast, a
mission statement emphasizes the future. It means that if you have a strategic vision. It is
concerned about the firm's future business. Where should we be heading in terms of markets,
products, services, technology? Whatever is focussed depends upon the nature of the
organization. While the mission statement of a firm focuses on its existing business and
market purpose, who we are and what we do. For example, what is our current products and
services that we are going to offer is our customer. If we look at strategy, mission, and vision
of IIT Kharagpur, and we say that we want to be in the top 100 institutions of the world by
offering the best quality services or technical education. That could be a part of the strategic
vision that you have. It means that depending upon your position, you want to go for the
mission statement. It means where you are based upon the analysis. It means how many
students you have, what is their current status, what kind of services you are offering,
whether you are meeting their requirements, in what way you are meeting their requirements,
what kind of product, markets, technology, and customers you have. So, mission and vision
are interrelated. Mission talks about the present, and vision talks about the future.
(Refer Slide Time: 20:42)

When you are going to write a vision, what kind of statement should be used or effectively
worded? A vision statement should be more graphical. You create a picture of the type of
company you want to have in the future. I will give you some examples to explain it further
when you say that in 2020, you want to capture twenty percent of the market in the telecom
sector. So, that is a direction, forecasts to guide decision making. It is going to provide you an
action plan of how you are going to reach there.

You also need to be flexible. The environment doesn't need to be going to be very favorable
to you, and if it is not going to be favorable, then you may not be able to achieve what you
want. So you need to make certain changes depending upon the requirement of the
organization and the environmental analysis. You need to and make sure that you can reach
there whatever you have decided.

It must be feasible. So you are not going to say it in such a way which is very difficult to
achieve, suppose I say that I want to be in the top 100 institutions in the world, which is not
feasible and desirable. So, you make sure that people understand this, and it makes sense. We
s need to make an effort to realize and communicate it to everyone what we want to achieve.
You will find that most of the vision statements on the walls of the organization or the firms.
(Refer Slide Time: 22:39)

What is the product or payoff of a clear strategic vision? It is going to crystallize an

organization’s long term vision, reduces the risk of rudderless decision making. So, a clear
strategic vision provides a direction and also reduces the risk. It also creates a committed
enterprise how this vision can be made a reality so that everybody works for this and also
provides a beacon to keep strategy related actions of all managers in the common path. They
think commonly. They understand the common goals or objectives for which everybody has
to work. It also helps an organization to prepare for the future, and that is why you need to
have a very clear strategic vision.

(Refer Slide Time: 23:32)

A good vision statement should be very brief. It is written in one or two sentences. It should
be verifiable. It means that it has to stand the reality test. You will be able to measure your
achievement. You can achieve vision within a given time frame. There must be a timeline.
You make sure that we will be within 200 in 2020. It is a very fabulous statement as we also
created a schedule that, by 2020. We should be able to realize this vision. Then it is current. It
means that you are talking about where you are now and where you want to go. You can also
make certain changes over a period as it has to be focused. It means that it has to focus
usually on a few aspects of the performance, which is going to be critical for future success.

You make sure that efforts are focused in such a way so that you can realize your vision and
achieve success. Everybody is able to understand. It has to be in very simple terms, clear and
straight forward, which is understood by every employee. It also motivates employees so that
they feel good about it, and are inspired by the vision statement. You will find these vision
statements are clearly and frequently communicated to employees. They understand what
they have to do and achieve for the organization. It should be stretchable. If you are not able
to find it, or you are not able to reach it, then you can stretch upon it. Stretching means you
can move beyond what you have thought of, or you can also adjust your goals and objectives
depending upon the environment. These are the qualities of a good vision statement.

(Refer Slide Time: 25:39)

Now, look at some of the vision statements which are more strategic and see whether these
vision statements fit into the descriptions of a strategic vision or not.
For example, here, I have taken two different examples. One is an e-commerce company. So,
when you are talking about a global trading platform where practically anyone can trade
practically anything. It talks about where they want to go and how they want to achieve it. If
you look at Infosys, an Indian IT company, i is a globally respected corporation that provides
the best of business solutions leveraging technology delivered by best in class people. It is
more specific compared to eBay because it is more generic, and this could be an example of
any e-commerce company. If you look at Infosys, it is more specific or more strategic
because it says what it wants to achieve and how it wishes to achieve using technology or the
kind of IT solution that it wants to provide and the quality of services that they provide.

(Refer Slide Time: 27:02)

I am giving another example of apple, which is committed to bringing the best personal
computing experience to students, educators, and creative professionals and consumers in the
world through its innovative hardware software and internal offerings. It has a very strategic
and clear vision. They have also identified their mission statement, protecting the
environmental, health and safety of the employees and customers, integrating sound
environmental health and safety management practices in their systems, and continuously
improving this kind of thing.

You have seen how vision and mission statements are linked with each other. It says there is
not only a question of survival but also growth and development and how it is linked with the
vision.