Strategic Overview
Reviewed August 2009
Vincent Amanor-Boadu, Ph.D.
Department of Agricultural Economics
vincent@agecon.ksu.edu
Strategic overview encompasses the vision, mission, core values and the overall objectives the organization seeks to achieve. Leaders who learn how to use the strategic overview of the company effectively can draw on it to build and boost morale, attract committed employees and get people to go beyond themselves to contribute to something bigger than themselves. It is a powerful tool that when well articulated, orchestrated and implemented, can help make management easy. We discuss each of these components in the following subsections.
Vision Statement
The vision is what the organization wants to be recognized for. We may think about the vision as answering the following question: “Ten years hence, describe what this company has achieved to warrant receiving a national recognition from the most influential organization in the land.” The achievement that warrants recognition beyond the self is the vision of the organization. As an organizational vision, it must be shared by all involved and associated with the business organization – employees, officers, and directors. As individuals, well-articulated visions help us define our place and the role we can play in building something bigger and better for humanity. In this sense, the vision is bigger than the individual objectives – e.g., profitability, sustainability, employment, etc. – articulated by the organization or its people. It becomes the common thread that binds everything in the organization together in serene times and during crises. Because of its importance is defining the organization’s culture, the vision quest is non-trivial exercise, requiring the same effort that the saints and the sages of historic times invested to discover their calling.
The vision statement is concise, clear, timeless and broad enough for current and future individuals associated with the organization to find a personal connection to it. A vision that is incapable of evoking action through behavioral change must be regarded as dead! To this Warren Bennis, the renowned management thinker and author said, “Action without vision is stumbling in the dark, and vision without action is povertystricken poetry.” Margaret Wheatley, management researcher and author, emphasized the importance of the vision influencing employees’ behavior rather than being an evocative message about some desired future state. Basically, therefore, the vision should inspire action by influencing individuals and the organizational behavior.
Whole Foods Market®, the Austin, Texas-based organic and natural food retailer, states its vision as “Whole Foods, Whole People, Whole Planet.” Shred-It, the mobile, on-site document destruction company headquartered in Oakville, Ontario, Canada, presents its vision as “Relentless pursuit of success and innovation.” And for global delivery company, Memphis-based FedEx Corporation, the vision statement is simply “Leading the way.” Microsoft Corporation, Redmond, WA-based software giant started off with a very clear and compelling vision: “A computer on every desk and in every home.” In each of these examples, we are left with a clear meaning of what the vision says and while our interpretations may differ, our ideas about what needs to be done to achieve the vision will be complementary. That is the power of effective vision statements: they help individuals within the organization to know what they need to do; they provide people with a compass to help them decide the role they want to play within the bigger scheme of things. A good vision calls people to act on the courage of their own convictions evoked by the invitation to be part of something bigger than themselves.
Mission Statement
Many companies do not distinguish between the vision and the mission statements. Dallas, Texas-based Southwest Airlines, one of the most successful airlines in recent history, for example, does not specify a vision, but articulates a mission that is as compelling as a vision statement: “Dedication to the highest quality of customer service, delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” Shred-It states its mission as “Shred-it will consistently deliver the greatest security, cost effectiveness, convenience and environmentally-friendly service available.” FedEx states its mission as “FedEx Corporation will produce superior financial returns for its shareowners by providing high value-added logistics, transportation and related information services through focused operating companies.” In each of these mission statements, we observe ends and means – “dedicated to customer service with a sense of humor,” “deliver security, savings, convenience,” and “produce profits by providing value-added logistics.” The difference between vision and mission starts to become clear in the nature of statements themselves. Thus, while missions change as they are achieved, visions remain as pillars of guidance for the organizations over long periods. In a sense, while the vision may be considered an oasis, the mission is a waterhole on the journey towards the oasis. Therefore, mission statements are defined as the timely hurdles that need to be overcome in order to advance towards the timeless target expressed by the vision. For FedEx Corporation, these hurdles include providing high value-added logistics, transportation and related information services while Shred-It is confronted with delivering the greatest security, cost effectiveness, convenience and environmentally-friendly service.
Core Values
Core values specify minimum value standards that will guide actions and behavior of the organization’s people. General Electric’s core values encompass integrity, governance, social performance, environment, health and safety, quality and innovation. The company defines each of these values such that their expected meanings are communicated clearly to its employees. Each employee is expected to sign the integrity policy, suggesting that GE will not tolerate any deviance from its integrity value. Microsoft Corporation links the achievement of its mission directly to its core values: Integrity and honesty; Passion for customers, partners, and technology; Open and respectful with others and dedicated to making them better; Willingness to take on big challenges and see them through; Self critical, questioning, and committed to personal excellence and self improvement. For Family Tradition Foods, Inc., a Wheatley, Ontario, Canada-based vegetable processing company, the employees used the first letters of the company’s core values to form an acronym that helps them to not only remember their values but to challenge behavior deviating from them: Respect IRIS, where IRIS represented Innovation, Responsibility, Integrity and common Sense.
Organizational Structure
The vision, mission and core values together define the foundations of the organization’s culture and help with internal relationships as well as behavior. They also provide a framework to judge the organization’s trustworthiness. When the organization structure and functional relations are defined, it becomes possible to predict the organization’s cultural framework. For a start-up, defining this framework is important because it determines the organization’s ability to attract, retain and grow people who contribute to its growth and success. It also allows the organization to acculturate new people who join it to live the organization’s culture. Southwest Airlines has been able to do this since Herb Kelleher, one of its founders, decided to build a flat organization, where rank was no excuse for not delivering exceptional customer service. Thus, unlike most other unionized airlines, it is not surprising to see a Southwest Airlines’ pilot picking up customers’ baggage to help baggage handlers so that a flight can leave on time. It has been reported that Southwest’s executives often fly the airline in order to experience what customers experience on their airlines. This is in line with the company’s mission of delivering customer service with “warmth, friendliness, individual pride and company spirit.” Similarly, the President of Family Tradition Foods, John Omstead, proudly feeds his family and guests the company’s products at every opportunity. Contrast this with the behavior of executives of a grocery retail chain I consulted for recently who had never shopped in their own stores, and therefore had no idea about their customers’ experiences. The message to other employees from these executives was loud and clear by their behavior and their words for commitment to the company sounded hollow and insincere. As leaders, they failed to build the requisite trust every leadership needs to lead boldly and successfully.
The traditional organizational structure is hierarchical, as in the military, and the decision-making is top-down. While they have been effective over time, they have been shown to be slow in responding to opportunities. Therefore, in a rapidly changing marketplace, hierarchies could become a constraint. IBM’s inability to identify and seize the personal computer opportunity that emerged in the early 1980s, for example, has been attributed to its hierarchical structure. Similarly, the fact that Nestlé controlled the global coffee market but missed the business opportunity that catapulted Starbucks into leadership position in the coffee market has been explained by Nestlé’s command and control structure. In short, an organization’s structure influences its entrepreneurial quotient. But Harold Leavitt, an organizational behavior expert, writing in Harvard Business Review (March 2003) noted that hierarchies, despite all their limitations, are thriving organizational structures because they deliver real practical and psychological value, and fulfill our deep need for order and security.
Other organizational structures are bureaucratic, human and system organizational structures. Bureaucratic structures are characterized by rules and procedures, and an abdication of direct human authority. Thus, responsibility is diffused, with its focus being on efficiency embedded in the bureaucracy. Theory X is used to explain behavior in bureaucratic organizations.5 Governments and very large organizations tend to be structured like bureaucracies. Human structures are people-centered because information and knowledge are critical components of the organization’s activities. The structure organizes people in groups but focuses on individual performance, creating a Theory Y view of people. In many knowledge organizations, system structures are used because people are influenced by their environment and vice-versa. Feedback is critical in these organizations as people depend on each other’s information flow in making decisions.
As information and knowledge become more important in all industries, some innovative organizations have been moving towards hybrid organizational structures in attempts to capture the benefits of the different structures. They may be clusters of distributed hierarchies or self-managed teams in the human or system structures, but each cluster or team is endowed with a strong leader. These leaders from the different clusters or teams provide the organization’s hierarchy (Figure 2). The principal advantage of hybrid organizational structures is that they are scaleable – i.e., new clusters or teams can be formed as the organization grows – allowing the structure to be reformatted to provide the most efficient management system.
Figure 2: Clusters, Distributed Hierarchies in Hybrid Organizational Structure
Since the organizational structure determines expectations about employees, it defines how work is structured and how responsibilities and accountabilities are distributed. It will contribute significantly to how the business is managed and the results that emanate from investments of resources. For these reasons, it is important to pay significant attention to the nature and components of the organization structure when developing a new business.
The management function is very important in the business, and must therefore be clearly defined. It is often necessary to have the management team identified for the business for which the plan is being written to help the different stakeholders (bankers, investors, etc.) assess its ability to execute. Where the management team has not been identified, it is important to define the skills and experience necessary for each management team member to ensure success and also to identify where and how they will be recruited.
The final component of the organizational structure is governance. Corporate governance is the system by which business corporations are directed and controlled. It specifies the distribution of the rights and responsibilities among different participants in the corporation – the board, managers, shareholders and other stakeholders – and spells out the rules and procedures for making decisions on corporate affairs. Through these activities, governance provides the structure through which the organization’s objectives are specified, the strategies by which they are attained and the means of monitoring management's performance. Governance authority rests in the board of directors. It is important that board members take their responsibilities seriously be it that they represent the interest of all other stakeholders, including the general public, in the corporation. For effectiveness, it is important to structure the board with people who are not only knowledgeable about the business of the organization and have the resources to help the organization seize all the profitable opportunities within its strategic sphere, but also people who respect and trust each other and as a result are able to be honest and fair in their challenging and criticism of the ideas of other directors.
While the relative size of investment has often guaranteed a seat on the board, it is important for business owners and other stakeholders to recognize that this is not a sufficient criterion for directors’ performance. When deemed supportive of the organization’s success, certain investor board members have given up their board seats to make way for others they believe have the knowledge, commitment and passion to create results. In other words, individuals invited to sit on boards should demand of themselves their level of knowledge, commitment and passion about the organization’s business before accepting such invitations. And the level of self scrutiny should be even higher if one has investments in the organization. In a September 2002recent article in the Harvard Business Review, Jeffrey Sonnenfeld noted that many organizations fail because their boards are ineffective – poor knowledge about the organization’s business even though they are well accomplished individuals in their own rights and have low commitment to the organization because they are over-committed. Finally, Sonnenfeld points out that the chemistry among board members is critical for individual members to perform effectively in their role as directors.
The general perception in the business literature is to develop innovative structures that are consistent with the vision, mission and core values of the organization. The vision determines the mission, the core values and the organization structure. It is important that these components are consistent with each other for the organization’s overall strategy to be harmonious. Inconsistency in the organization’s strategic overview can yield significant identity problems later and affect the organization’s ability to perform. The relationships among the components of the strategic overview step of the cascading approach to business planning are summarized in Figure 3.
Figure 3: Components of the Strategic Overview Step
