Creating Future Direction

Learning Objectives
Upon completing this chapter you should be able to:
1. Formulate a strategy which include an understanding of what that
strategy is designed to achieve.
2. Utilize the key concepts of effective vision, values, mission and
objectives.
3. Apply the concept of vision, values, mission and objectives at both
the corporate and the business unit level.
4. Give examples of non-financial as well as financial objectives.
5. Integrate the concepts of vision, values, mission and objectives in a
consistent manner.
INTRODUCTION
The above example illustrates that Canon’s senior managers
see developing a sense of the future of the firm as an important
component in the strategic management process. Managers and all
employees in an organization have an interest in the future of the
firm and we believe that senior managers should be able to give
reasonable answers to such questions as:
 What do you think the firm will look like ten years into the
future?
 What organizational values can we be committed to?
 What changes can we expect in the next year or two?
 What are we expected to achieve over the next few time
periods?
Internally, vision, values, mission and objectives:
 Guide management’s thinking on strategic issues,
particularly during periods of turbulence;
 Guide employee decision-making;
 Inspire employees to work more effectively by creating a
focus and common goals;
 Define expected performance standards.
Externally, vision, values, mission and objectives:
 Creates links and better communication with key external
stakeholders, customers, suppliers, media and so on;
 Serve as a public relations tool;
 Help in enlisting external support.
VISION
Vision without action is daydream; Action without vision is a
nightmare.
Japanese proverb

The development of a vision is a major responsibility of senior

management as it is the logical antecedent to strategy development as well
as a major motivator for employees.

BBC vision
To be the most creative organization in the
world (BBC, 2010).
VALUES
Values (organizational values) A common set of
beliefs designed to guide the behaviour of
organizational members.
BBC values
Trust is the foundation of the BBC: we are independent, impartial
and honest.
 Audiences are the heart of everything we do.
 We take pride in delivering quality and value for money.
 Creativity is the lifeblood of our organization.
 We respect each other and celebrate our diversity so that
everyone can give their best.
 We are on BBC: great things happen when we work together.
Values in practice – Balfour Beatty
Our values provide the identity by which Balfour Betty Ireland is recognized, demonstrated through our
actions and behaviour which consistently match our words.
Integrity
We are open, honest and trustworthy and deliver on our promises.
Safety
Health and safety is central to everything we do.
Passion
We believe in providing an exciting, enjoyable and stimulating work environment that encourages
creativity.
Innovation
We encourage and reward initiative and flair to develop new ideas.
Respect
We value our customers, partners an staff and are socially and environmentally responsible.
Excellence
We are committed to delivering superior value and quality and developing the full potential of our
staff.
Mission
A generalized statement specifying the domain of
the firm where and how it elects to compete, and its
activities and operations.
BBC mission
To enrich people’s lives with programmes and
services that inform, educate and entertain.

Objectives
Quantitative targets to be achieved by the firm or
one of its units.
6.2 Vision
A firm consists of a voluntary collection of
individuals for a common purpose, and an important
task for strategic managers is to generate a sense of
the future for the entity that is widely shared and
understood within and outside of the firm.
 A vision can be created at the corporate level, for
the firm as a whole, or at a lower level, such as business
unit. Regardless, a vision should process several
characteristics.
First, it must provide a general sense of direction, and
thus will focus on strategy development and decision-
making. A well-designed vision statement provides the
inspiration around which all members of the firm or unit
can focus their energy and creativity. Finally, it must
clearly convey to other stakeholders the forward
direction of the organization.
The global Pharmaceuticals firm, provides an
example of such a vision statement
(GlaxoSmithKline, 2009)

Vision in practice – GlaxoSmithKline

Our global quest is to improve the quality of human life by enabling
people to do more, feel better and live longer.
Characteristics of vision
statements
1.Its description of the desirable
future for the organization.
2.The vision statement must motivate
and inspire all employees.
3.To be effective a vision must be
shared, it must be owned by all
organizational personnel.
 A shared vision is not an idea. It is not even an
important idea such as freedom. It is, rather, a force
in people’s hearts, a force of impressive power… [it]
is the answer to the question ‘What do we want to
create?’ Just as personal visions are pictures or
images that people carry in their heads and hearts,
[emphasis added] so too are shared visions that
people throughout an organization carry. They create
a sense of commonality that permeates the
organization and gives coherence to diverse
activities. (Senge, 1990)
 As Senge also elaborates, however, too many visions
are imposed on organizations, and at best create compliance
rather than commitment. To evaluate the effectiveness of a
vision statement, we must ask such questions as:
 Are we sure the vision is shared?
 Is the vision compelling and inspiring?
 Does it ask something of us?
 Does it create a sense of direction for the
organization?
 Does it facilitate personal meaning and involvement?
 Is it difficult to achieve, will it stretch the firm?
 Is it unique and differentiating?
 Do all employees embrace ownership?
Creating a vision statement
1. Developing a good vision statement is fundamentally a
creative act. Indeed, we must begin with an understanding
that we are attempting to affect human emotions.
 Ask yourself what are the phenomena that stir your
emotions?
 Unless such stirring occurs, the vision will not achieve its
intended ends.
2. Creating the vision also requires foresight among the senior
managers – who are the organizational personnel primarily
responsible for its creation (Hamel & Prahalad, 1994).
3. Creating good visions also requires some diversity of views
to facilitate creativity.
6.3 VALUES
The second element in creating a future direction is
creating and reinforcing organizational values – a
common set of beliefs that guide the behavior of
organizational members .
 Tata has always been values-driven. These values continue to direct the
growth and business of Tata companies. The five core values underpinning the way
we do business are:
 Integrity: We must conduct our business fairly, with honesty and transparency.
Everything we do must stand the test of public scrutiny.
 Understanding: we must be caring, show respect, compassion and humanity for
our colleagues and customers around the world, and always work for the benefit
of the communities we serve.
 Excellence: we must constantly strive to achieve the highest possible standards in
our day-to-day work and in the quality of the goods and services we provide.
 Unity: we must work cohesively with our colleagues across the group and with
our customers and partners around the world, building strong relationships based
on tolerance, understanding and mutual cooperation.
 Responsibility: We must continue to be responsible, sensitive to the countries,
communities and environments in which we work, always ensuring that what
comes from the people goes back to the people many time over.
Vales as a source of problems;
1.Values can also present problems.
2.Values can also impede problems.
3.Values can also create difficulties in hiring.
4.Values can also create major impediments to
organizational change.
6.4 MISSION
1.Should be externally focused and contain a
general description of the scope of the activities
of the firm.
2.Defines the areas in which the company wishes to
do business.
 Decisions about mission are among the most
important decisions, and should not be taken lightly.
Managing the evolution of mission statements is a
responsibility of senior management, who may decide to
broaden or narrow the mission.
 Broaden the mission due to:
-Lack of sufficient growth opportunities
-A target of opportunity has been identified.
 Narrow the mission statement due to:
-Resources are stretched too thinly
-Poor financial performance
-To defend against a takeover
Characteristics of Mission Statements
Encourages unanimity of purpose, specifies what
the organization does, and, just as important,
what it does not do
Directs the search for new activities
Highlights points of differentiation and basis of
competitive advantage
Attracts and deters potential staff
Does not change too frequently
Bases for Mission Definition
 Natural Resources
 Technology
 Product/Service
 Market/Market segment
 Customer Needs
6.5 OBJECTIVES
Organizations must specify what they hope to
achieve in the future by formulating a set of
objectives – measurable targets. All objectives
should contain:
 An attribute which can be measured, such as revenue growth
 A scale on which that attribute can be measured, such as $
 A level to be achieved, such as $100m
 A time scale for the achievement of the target, such as the
year 2020